Judicial Trends in GST: Key Rulings by High Courts and the Supreme Court

The last week of October 2025 witnessed a series of significant rulings across various High Courts and the Supreme Court, shaping critical aspects of GST administration and interpretation — from valuation mechanisms and jurisdictional authority to procedural fairness and system-based limitations. Below is a detailed roundup of the most noteworthy judgments.

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1. Karnataka HC Stays SCN Applying Deemed 70:30 Valuation for Wind Project Contracts

Case: Directorate General of GST Intelligence, Chennai vs. Vestas Wind Technology Pvt. Ltd.
Citation: [WP 26470/2025, Karnataka High Court]

Facts & Background

The Directorate General of GST Intelligence (DGGI), Chennai, issued a show cause notice (SCN) to the assessee applying a deemed valuation ratio of 70:30 (for goods and services) under Explanation to Entry 234 of Notification No. 01/2017-CT (Rate) in relation to composite wind power projects.
The assessee challenged the notice on the ground that the contracts contained a clear bifurcation between goods and service components, making the deemed valuation arbitrary and inapplicable.

Arguments

• Assessee’s Contention: The application of the 70:30 ratio, being a statutory fiction, cannot override the actual, ascertainable transactional values. Reliance was placed on the landmark decisions of Gannon Dunkerley & Co. and Wipro Ltd., both emphasizing that valuation under indirect tax laws must align with actual transaction values.

• Ultra Vires Argument: Citing Munjaal Manishbhai Bhatt v. Union of India (Gujarat HC), where a similar deeming fiction in Notification No. 11/2017-CT (Rate) was struck down, the assessee argued that the arbitrary ratio violated constitutional principles of reasonableness and equality under Article 14.

• Jurisdictional Challenge: The assessee also contended that DGGI lacked jurisdiction under Section 74 of the CGST Act, asserting that only a “Proper Officer” under the Act could issue such notices. Circular No. 3/3/2017 granting such powers to DGGI was challenged as ultra vires.

Court’s Observations

Taking note of the substantial legal and jurisdictional issues, the Karnataka High Court granted an interim stay on the SCN’s operation, pending final adjudication. The case was tagged with the ongoing matter of Selco Solar Light Pvt. Ltd., which raises similar challenges concerning deemed valuation in renewable energy projects.

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2. SC to Decide Whether Assignment of Leasehold Rights Constitutes ‘Land Transfer’ or ‘Service’

Case: Union of India vs. Life Sciences and Chemical and Anr.
Citation: [SLP (Civil) Diary No. 52380/2025, Supreme Court of India]

Issue

The Supreme Court has admitted the Revenue’s Special Leave Petition (SLP) against a Gujarat High Court decision which had quashed the levy of GST on transfer of leasehold rights in land, holding it as a ‘transfer of land’ rather than a taxable supply of service.

Background

The Gujarat High Court, in line with its earlier judgment in Gujarat Chamber of Commerce and Industry & Ors., held that assignment or transfer of leasehold rights amounts to transfer of land, excluded from the GST ambit under Schedule III of the CGST Act.

The case involved transfer of leasehold rights by a partnership firm to a sole proprietor who was one of its partners — held non-taxable as an intra-entity transfer.

Developments

The Supreme Court condoned delay, admitted the SLP, and tagged it with the pending GCCI case, signaling that it will decide the broader issue of whether leasehold rights in land amount to a supply of service for GST purposes.

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3. HC Upholds Dual Requirement of Written Reply and Oral Hearing – Order Quashed

Case: A to Z Car Solutions vs. State of UP & Ors.
Citation: [Writ Tax No. 3851 of 2025, Allahabad High Court]

Key Takeaway

The Allahabad High Court reaffirmed that principles of natural justice under the UPGST Act necessitate bothopportunities — to file a written reply and to be personally heard. These are independent and cumulative, not substitutable.

Ruling

The assessment order was quashed since the SCN and subsequent reminder had marked “N.A.” in the columns for hearing date, time, and venue, effectively denying the petitioner a statutory right to a personal hearing under Section 75(4).

The Court clarified that:

• Failure to submit a written reply does not extinguish the right to a personal hearing.

• Both procedural steps are distinct safeguards of due process.

• Any order passed without compliance violates natural justice.

The case was remanded for fresh proceedings in accordance with law.

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4. HC Quashes Electronic Credit Ledger Blocking Beyond ?1 Crore

Case: Mahendra Enterprises vs. State of UP & Anr.
Citation: [Writ Tax No. 2809 of 2025, Allahabad High Court]

Facts

The Deputy Commissioner had blocked the assessee’s Electronic Credit Ledger (ECL) under Rule 86A to the extent of ?5.09 crore. The taxpayer contended that the officer exceeded his pecuniary jurisdiction.

Court’s Findings

Referring to the Departmental Guidelines dated 23 November 2021, the Court held:

• The Deputy Commissioner’s jurisdiction is limited to ?1 crore,

• Amounts beyond ?1 crore fall under the Joint/Additional Commissioner’s authority.

Hence, the ECL blocking beyond ?1 crore was without jurisdiction and liable to be quashed to that extent.
The taxpayer was permitted to utilize the balance ITC, and the officer was directed to reconsider unblocking requests in compliance with due process.

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5. HC: Revenue Cannot Withhold ITC Re-Credit Due to Portal Limitations

Case: Mohan Footcare Pvt. Ltd. vs. Deputy Commissioner of CGST
Citation: [W.P.(C) 6804/2024, Delhi High Court]

Issue

Whether technical limitations of the GST Portal can justify denial of re-credit of ITC to the Electronic Credit Ledger.

Ruling

The Delhi High Court held that technical or procedural deficiencies of the GSTN system cannot deprive taxpayers of substantive entitlements.
The Revenue had admitted that re-credit could not be processed due to portal constraints despite issuance of Form PMT-03.

Outcome

The Court directed the Department to manually re-credit the eligible ITC of ?23,32,278, emphasizing that:

• System deficiencies cannot override statutory rights.

• Authorities must facilitate manual relief mechanisms where technology fails.

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6. HC: Writ Not Maintainable When Assessee Fails to File Timely Appeal

Case: Moms Cradle Pvt. Ltd. vs. Union of India & Anr.
Citation: [W.P.(C) 15509/2025, Delhi High Court]

Facts

The assessee’s refund-withholding order was challenged under writ jurisdiction after expiry of the limitation period for appeal under Section 107 (3+1 months) of the CGST Act.

Court’s Observations

• Writ petitions cannot be used to circumvent statutory appellate remedies.

• The plea that the order was “illegible” was untenable — the assessee should have sought a legible copy within time.

• Delay beyond the statutory condonable period cannot be excused.

The Court upheld the Department’s adjustment of withheld refund against fraudulent ITC demand and dismissed the writ petition.

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7. HC: Unsigned Order Not Invalid if Officer Details Available – Remedy Lies in Appeal

Case: Future Consumer Ltd. vs. Union of India & Ors.
Citation: [W.P.(C) 15611/2025, Delhi High Court]

Facts & Issue

The assessee contended that the rectification order issued under Section 161 was invalid as it lacked the officer’s signature.

Ruling

The Court rejected this argument, holding that:

• When the accompanying DRC-07 mentions the officer’s name, designation, and ward, the absence of a physical signature does not invalidate the order.

• The defect was merely procedural, not substantive.

Outcome

The writ petition was dismissed with liberty to pursue the statutory appeal. The Court relied on the Madras High Court’s decision in HVR Solar Pvt. Ltd. to uphold this view.

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???? Conclusion: Key Judicial Trends

Legal Theme	Judicial Position	Courts Involved
Deemed Valuation Ratios	Subject to judicial scrutiny where actual transaction values are ascertainable.	Karnataka HC
Transfer of Leasehold Rights	SC to finally settle whether such transfers amount to land sale or service.	SC of India
Natural Justice (Written + Oral)	Both opportunities are mandatory and independent.	Allahabad HC
Jurisdiction in ECL Blocking	Officer’s pecuniary limits strictly enforceable.	Allahabad HC
Technical Limitations of GST Portal	Cannot defeat substantive rights; manual relief permissible.	Delhi HC
Writ Maintainability	Cannot replace appeal where limitation expired.	Delhi HC
Unsigned Orders	Valid if officer details identifiable.	Delhi HC

Author’s Insight:
These rulings highlight the judiciary’s growing emphasis on jurisdictional propriety, procedural fairness, and technology neutrality in tax administration. Taxpayers should ensure that both procedural and jurisdictional aspects of notices are meticulously reviewed before responding.

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