INDIRECT TAXUPDATES
Goyal Rathi & Associates, Chartered Accountants
Overview
This Week at a Glance
Important Case Laws
Seven rulings — Supreme Court affirms Section 16(2)(c); GSTAT drops an anti-profiteering demand where the ITC benefit was actually passed on; a portal-only, no-hearing adjudication is set aside; a Section 74 order built on a Section 73 notice is quashed; retrospective Section 16(5) relief applied; delay in appeal condoned; and a Customs Section 129A appeal held maintainable.
7 rulings
GST — Notifications & Circulars
CBIC Circular No. 256/02/2026-GST dated 25th July 2026 clarifies the review and departmental-appeal procedure before the GSTAT in DGGI cases adjudicated by a Common Adjudicating Authority — separate appeals to be filed before the taxpayer’s jurisdictional Bench.
1 circular
Customs Notifications
Notification No. 18/2026-Customs (ADD) dated 27th July 2026 imposes a definitive anti-dumping duty on imports of Low Ash Metallurgical Coke from Australia, China PR, Colombia, Indonesia, Japan and Russia.
1 measure
Foreign Trade Policy (DGFT)
DGFT Notification No. 26/2026-27 dated 27th July 2026 harmonises Schedule-II (Export Policy) of the ITC(HS) 2022 with the Finance Act, 2026 — aligning export policy tariff lines with the amended customs tariff.
1 update
Indirect Tax Updates · 25th–31st July 2026
Important Case Laws · GST (ITC)
Case 1 of 7
Bhandari Scrap Traders v. Union of India & Ors.
SLPs dismissed
Supreme Court of India · SLP(C) No. 23931/2026 (with 24088 & 24103/2026) · 2026 (7) TMI 1839 · Decided 24 July 2026
Section 16(2)(c) of the CGST Act is constitutionally valid and need not be read down to protect a bona fide purchasing dealer where the supplier fails to remit tax.
Facts. The petitions arose from the Gujarat High Court’s decision in Maruti Enterprise & Bhandari Scrap Traders (2026 (5) TMI 127), which had upheld Section 16(2)(c) and declined to read it down. The petitioners sought parity with the protection extended to bona fide purchasing dealers under the Delhi VAT Act, 2004 where the selling dealer defaults, contending that ITC ought not to be denied to a genuine buyer. A separate SLP against the Tripura High Court’s ruling in Sahil Enterprises was noted, but that judgment lacked the detailed comparative analysis the Gujarat High Court had undertaken.
Ruling. The Court held that the Gujarat High Court’s analysis (from para 42 onwards) demonstrated material differences between the Delhi VAT Act and the CGST Act, leaving no basis to draw parity on ITC where the supplier fails to pay. The CGST scheme — read with Sections 41, 73 and 74 — itself allows a purchasing dealer to re-avail reversed credit once the supplier is made to discharge the tax. In “complete and respectful agreement” with the High Court, the Court found no ground to declare Section 16(2)(c) unconstitutional or to read it down; the SLPs were dismissed and the impugned judgment affirmed.
Our Take. A significant apex-court affirmation. Continue advising buyers to verify supplier compliance before availing ITC, retain proof of payment, and where credit is reversed for supplier default, pursue re-availment through the Section 41/73/74 route once the supplier discharges the tax.
Important Case Laws · GST (Natural Justice)
Case 2 of 7
Barua and Co. v. State of West Bengal & Anr.
Set aside / Remand
Calcutta High Court · W.P.A. 960 of 2026 · 2026 (7) TMI 1838 · Decided 23 July 2026
Uploading notices only in the “Additional Notices and Orders” tab, and passing an order without fixing a hearing, breaches Sections 73(9)/75(4) and natural justice.
Facts. An ex-parte order dated 09.04.2024 under Section 73(9) of the WBGST/CGST Act alleged excess ITC for 2018-19. The pre-SCN, the SCN dated 08.12.2023, the reminders and the adjudication order were all uploaded only in the “Additional Notices and Orders” tab of the portal, not the “Normal” tab. The petitioner learnt of the order only on receiving a Final Reminder in Form GST DRC-13 dated 05.03.2026 and at once moved the writ court. No reply could be filed in time and no personal hearing was granted before the adverse order was passed.
Ruling. The Court reiterated the settled position that uploading notices only in the Additional Notices tab is not sufficient communication under Section 73. It held that Section 75(4) mandates an opportunity of personal hearing wherever an adverse decision is contemplated, and that the SCN and reminder had specified no date, time or venue of hearing — breaching a mandatory requirement. The ex-parte order was set aside for breach of Sections 73(9)/75(4) and natural justice; the petitioner was granted 14 working days to reply, and the officer was directed to fix a hearing and pass a fresh reasoned order.
Our Take. A recurring, litigable defect. Scrutinise the portal’s “Additional Notices” tab in every matter, and where an adverse order was passed without a specified hearing date, press for it to be set aside under Sections 73(9)/75(4) and remanded for a fresh, reasoned order.
Important Case Laws · GST (Anti-Profiteering)
Case 3 of 7
DG Anti-Profiteering (DGAP) v. PRL Developers Pvt. Ltd.
No contravention
GST Appellate Tribunal, Principal Bench, New Delhi · NAPA/139/PB/2025 · 2026 (7) TMI 1827 · Decided 23 July 2026
No contravention of Section 171 arises where the developer has, in fact, passed on the entire (indeed an excess) ITC benefit — a drafting inconsistency in the DGAP report cannot create liability.
Facts. A complaint alleged that the developer of “Piramal Revanta – Tower 1” failed to pass on ITC benefit by a commensurate price reduction post-GST, contravening Section 171. After the Delhi High Court’s Reckitt Benckiser guidance, the CCI remanded the matter for re-investigation. The DGAP’s revised report dated 29.06.2026 — after including the pre-GST goods component directed by the Tribunal — recomputed the additional ITC benefit at 4.23% and the profiteered amount at Rs. 87.98 lakh, against which the developer had already passed on Rs. 99.67 lakh to the 31 eligible pre-GST buyers, an excess of Rs. 11.68 lakh.
Ruling. The Tribunal noted that its earlier direction to include the goods component had been complied with, raising the benefit ratio, yet the revised report itself confirmed — through documentary credit notes — that the developer had passed on more than the recomputed requirement. Section 171(1) requires only that the benefit be passed on by a commensurate price reduction; once the entire benefit (and more) has been passed on, the requirement stands satisfied regardless of any later change in methodology or a stray concluding line alleging contravention. Holding no contravention established, the Tribunal accepted the revised DGAP report and disposed of the proceedings.
Our Take. An early and instructive GSTAT anti-profiteering ruling for real-estate ITC matters. Maintain contemporaneous, buyer-wise credit-note evidence of benefit pass-through; substance (actual pass-on) prevails over methodology disputes or drafting slips in the DGAP’s report.
Important Case Laws · GST (Appeals)
Case 4 of 7
M/s Bhagwati Industries v. Union of India & Ors.
Delay condoned
Rajasthan High Court · D.B. Civil Writ Petition No. 11651/2026 · 2026 (7) TMI 1835 · Decided 20 July 2026
Delay in filing a statutory appeal caused by circumstances beyond the taxpayer’s control may be condoned even beyond the Section 107 condonable period, so the appeal is heard on merits.
Facts. An Order-in-Original dated 28.11.2025 raised a GST demand of Rs. 79,85,472 for FY 2018-19 and 2023-24 for non-payment of RCM on royalty, DMET and RMSET/NMET expenses. The petitioner could not appeal in time as the portal showed the appeal as time-barred, and claimed it never received effective intimation of the SCN/order beyond the portal upload. It had carried on no business since 2024, had nil turnover, was dependent on its CA for compliance, and cited financial distress and ill health; the writ was filed on 03.07.2026 seeking condonation and a direction to entertain the appeal.
Ruling. The Court accepted that while the Appellate Authority is bound by the Section 107 limitation framework, denying merits adjudication in circumstances beyond the petitioner’s control would cause grave injury and prejudice. Following its consistent line of Division Bench precedents (M R Traders, Molana Construction, Man Singh Tanwar and the RPC PSIPL JV matters), it condoned the delay and directed the Appellate Authority to entertain and decide the appeal on merits, provided it was filed within 30 days of the order being uploaded. The challenge to Section 107(4) was left open, not being pressed.
Our Take. A useful precedent for time-barred GST appeals in Rajasthan. Where delay is genuinely beyond the client’s control, document the cause fully (non-communication, business closure, health/financial distress) and seek writ relief to have the appeal restored and heard on merits.
Important Case Laws · GST (Section 73 v. 74)
Case 5 of 7
WFB Baird and Company India Pvt. Ltd. v. State Tax Officer-I
Set aside / Remand
Madras High Court · (2026) 44 Centax 264 (Mad.)
A demand cannot travel from a Section 73 show cause notice into a Section 74 order absent fraud, wilful misstatement or suppression; Section 75(2) requires conclusion under the correct section.
Facts. The petitioner challenged an order dated 08.12.2023 and a further order dated 06.01.2026 rejecting its application under Section 128A. The SCN dated 29.09.2023 raised three defects; defect 3 was dropped and defect 2 confirmed for a small sum, the bulk of the demand relating to defect 1 — excess ITC in GSTR-3B compared with GSTR-2A. Curiously, the summary order was captioned under Section 73, while the detailed order invoked Section 74 and imposed a 100% penalty; the Section 128A application was then rejected on the footing that it was a Section 74 order.
Ruling. The Court found that the SCN, beyond comparing GSTR-3B with GSTR-2A, disclosed nothing indicating fraud, wilful misstatement or suppression with intent to evade tax, and that the detailed order had merely placed the burden on the taxpayer to substantiate the ITC. Applying Section 75(2), it held the proceedings ought to have been initiated and concluded under Section 73, not Section 74; mislabelling vitiated both the assessment and the consequential Section 128A rejection. The order and the rejection were set aside and the matter remanded for a fresh Section 73 order, with liberty to file a fresh Section 128A application.
Our Take. Scrutinise every mismatch-based ITC demand for wrongful invocation of Section 74. A bare GSTR-3B vs 2A difference cannot support fraud allegations; challenge the mislabelling under Section 75(2) and protect the client’s amnesty rights under Section 128A.
Important Case Laws · GST (ITC)
Case 6 of 7
Santu Das v. Assistant Commissioner of CGST & C. Ex, Chandannagore Division
Allowed partly / Remand
Calcutta High Court · (2026) 44 Centax 260 (Cal.)
The retrospective insertion of Section 16(5) extinguishes ITC demands founded on the earlier time-bar; factual disputes on payment and supplier default are to be remitted, and penalty follows the principal demand.
Facts. An SCN dated 06.07.2021 under Section 73(1) raised three issues for 2017-18 and 2018-19: ITC for 2018-19 allegedly time-barred due to delayed returns; excess ITC of Rs. 4,04,174 for 2017-18 on a GSTR-3B vs GSTR-2A/9 mismatch (purchases from Aircel, then under insolvency); and short payment of Rs. 52,208 for August 2017. A demand of Rs. 19,02,986 with penalty was confirmed; the assessee’s appeal was rejected while the Department’s appeal enhanced the penalty to Rs. 3,80,597. The petitioner challenged the adjudication and both appellate orders.
Ruling. Since the returns for 2018-19 were filed before 30 November 2021, the Court held the petitioner entitled to the benefit of Section 16(5) — inserted retrospectively with effect from 01.07.2017 by the Finance (No. 2) Act, 2024 — and quashed the demand denying ITC on the time-bar ground. The short-payment issue, though the figures appeared to match the DRC-03 paid on 31.01.2020, required factual verification and was remanded; the Aircel mismatch, turning on the supplier’s pending insolvency, was likewise remitted. As the principal demand fell, the enhanced penalty could not survive and was also remanded; all three orders were set aside.
Our Take. Retrospective beneficial amendments like Section 16(5) apply to pending disputes. Review every live time-bar demand for 2017-18 to 2020-21 for Section 16(5) relief, and remember that penalty quantum abates with the principal demand once the core liability is set aside.
Important Case Laws · Customs
Case 7 of 7
Navalai Enterprises v. Commissioner of Customs (Airport and General)
Appeal maintainable
Delhi High Court · (2026) 44 Centax 234 (Del.)
A representation remedy under the Courier Regulations does not oust the statutory right of appeal under Section 129A of the Customs Act against an adjudicatory order of the Commissioner.
Facts. The appellant, an Authorised Courier under the Courier Imports and Exports (Clearance) Regulations, 2010, had its authorisation revoked, security forfeited and penalty imposed by an Order-in-Original dated 13.05.2024 under Regulation 13(1). Its representation to the Chief Commissioner under Regulation 13(2) was rejected. Its appeal to CESTAT under Section 129A was then dismissed as not maintainable, the Tribunal holding that the Regulations’ representation remedy displaced the statutory appeal; the appellant carried the matter to the High Court.
Ruling. Agreeing with the Bombay High Court in Bombino Express, the Court held that the availability of a representation remedy under the Regulations does not displace the statutory appellate remedy under Section 129A. It distinguished Pacific Express, which concerned an appeal against a Chief Commissioner’s order under Regulation 13(2), not a Commissioner’s original order under Regulation 13(1). Since the Courier Regulations are framed under the Customs Act and the Commissioner, in revoking the licence and imposing penalty, exercised adjudicatory powers under the statutory scheme, an appeal under Section 129A was maintainable; the CESTAT order was set aside and the appeal remanded for a decision on merits.
Our Take. Do not treat a rejected Regulation 13(2) representation as the end of the road. Against an adjudicatory order of the Commissioner — licence revocation, forfeiture, penalty — the Section 129A appeal to CESTAT remains available; the two remedies are not mutually exclusive.
GST · Notifications & Circulars
Departmental GSTAT Appeals in DGGI / CAA Cases
Circular No. 256/02/2026-GST, dated 25th July 2026 [F. No. CBIC-20010/12/2026-GST]
Circular
In DGGI matters, show cause notices are adjudicated by a Common Adjudicating Authority (CAA) with all-India jurisdiction under Notification No. 02/2017-Central Tax (as amended). Field formations sought clarity on who reviews the appellate order and which GSTAT Bench hears a departmental appeal. The Board, in consultation with the Ministry of Law, clarifies: the appellate authority must upload its order-in-appeal and also send a copy to the Commissioner having jurisdiction over the CAA; that Commissioner examines the order (with DGGI inputs) and forwards comments to the jurisdictional Commissioner of each noticee; the jurisdictional Commissioner of a particular noticee is the reviewing authority under Section 112(3); and separate appeals must be filed for each noticee before the GSTAT Bench having territorial jurisdiction over that noticee — not the Bench over the CAA’s Commissionerate.
Action point. Clients with pending DGGI-origin appellate orders should map the correct GSTAT Bench (their own jurisdiction, not the CAA’s) and expect noticee-wise departmental appeals, so that limitation and cause-title objections can be raised promptly.
Our Take. The circular removes a real jurisdictional ambiguity for multi-noticee DGGI cases. Track the review timelines under Section 112(3), since a departmental appeal filed before the wrong Bench, or beyond limitation, is itself open to challenge.
Customs · Notifications
Anti-Dumping Duty on Low Ash Metallurgical Coke
Notification No. 18/2026-Customs (ADD), dated 27th July 2026
Notification
Effective 27 July 2026
Acting on the final findings of the Directorate General of Trade Remedies, the Central Government has imposed a definitive anti-dumping duty on imports of “Low Ash Metallurgical Coke” (falling under tariff items 2704 00 10, 2704 00 20, 2704 00 30 and 2704 00 90) originating in or exported from Australia, China PR, Colombia, Indonesia, Japan and Russia. A provisional duty had been imposed on 31.12.2025 and the DGTR issued its final findings on 28.04.2026, concluding that the product was exported to India at dumped prices causing material injury to the domestic industry. The definitive duty, at the country- and producer-wise rates in the notification’s duty table, ordinarily continues for five years unless revoked, superseded or amended earlier.
Action point. Importers of met-coke from the six subject countries must factor the country/producer-specific ADD into landed cost from 27.07.2026, verify the correct producer-exporter rate, and review live contracts and any duty pass-through clauses.
Our Take. The measure materially affects steel, foundry and ferro-alloy users reliant on imported met-coke. Confirm the exact rate applicable to your supplier in the duty table and reassess sourcing; domestic-industry buyers may find pricing relief, importers a cost increase.
Foreign Trade Policy · DGFT
Schedule-II Export Policy Aligned to Finance Act 2026
DGFT Notification No. 26/2026-27, dated 27th July 2026
Notification
The Directorate General of Foreign Trade has amended Schedule-II (Export Policy) of the ITC(HS), 2022 to harmonise it with the changes to the First Schedule to the Customs Tariff Act introduced by the Finance Act, 2026. The exercise aligns the export-policy tariff lines — HS codes, descriptions and, where relevant, policy conditions — with the amended customs tariff nomenclature, so that the export policy remains consistent with the current classification framework. This is primarily a classification-alignment measure to keep the ITC(HS) export schedule in step with the statutory tariff.
Action point. Exporters should re-verify the HS code and export-policy status (free / restricted / prohibited) of their products against the harmonised Schedule-II, and update product masters, shipping-bill classifications and any licence/authorisation references accordingly.
Our Take. Though largely a housekeeping alignment, mis-mapped HS codes can trigger shipping-bill queries or wrongful restricted-status flags. A quick reconciliation of your export SKUs to the updated Schedule-II now will prevent clearance friction later.
Indirect Tax Updates · 25th–31st July 2026
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Goyal Rathi & Associates, Chartered Accountants
Specialists in GST · Income Tax · Internal & Statutory Audit · MOOWR · GST Litigation
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