Fact of the Case:  The present group of petitions was filed before the Gujarat High Court challenging the constitutional validity of Section 16(2)(c) of the CGST Act, 2017. The petitioners were registered dealers who had purchased goods/services from registered suppliers and had claimed Input Tax Credit (ITC) based on tax invoices and reflection of invoices in GSTR-2A/GSTR-2B. However, the suppliers failed to deposit the tax collected from the petitioners with the Government by not filing GSTR-3B or by defaulting in payment of tax.
The petitioners contended that denial of ITC to bona fide purchasers for default committed by suppliers was arbitrary and violative of Articles 14, 19(1)(g), 265 and 300A of the Constitution. It was argued that the purchasers had no mechanism to verify whether suppliers had actually paid tax to Government. Therefore, Section 16(2)(c) should either be declared ultra vires or be read down to apply only in cases involving fraud or collusion. 

Held by court : The Gujarat High Court upheld the constitutional validity of Section 16(2)(c) of the CGST Act and rejected the challenge made by the petitioners. The Court held that ITC is not a vested or constitutional right but a statutory concession subject to fulfilment of prescribed conditions. Since Section 16(2)(c) clearly mandates actual payment of tax to Government as a condition for availing ITC, the provision cannot be termed arbitrary or unconstitutional. The Court observed that GST is a destination-based tax system involving inter-State settlement mechanism under Section 53, and permitting ITC without actual tax payment would adversely affect fiscal balance.

The Court further held that Section 41(2) and Rule 37A adequately protect purchasers because once supplier deposits tax, the recipient can re-avail the reversed ITC. Therefore, temporary hardship or delay does not make the provision unconstitutional. The Court distinguished earlier Delhi High Court judgments under DVAT law and held that GST framework is materially different due to inter-State credit mechanism and statutory safeguards under CGST Act.

Fact of the Case:  The present matter arose from a Special Leave Petition filed by the Union of India and other authorities against the final judgment and order dated 11.09.2025 passed by the High Court of Gujarat at Ahmedabad in SCA No. 515/2023. The respondent in the matter was Torrent Power Ltd. The petitioners approached the Supreme Court challenging the order passed by the Gujarat High Court in a GST-related dispute.
The matter came before the Supreme Court for admission and interim relief. The petition was accompanied by an application seeking condonation of delay in filing the Special Leave Petition. During the hearing, the respondent accepted notice through its counsel and waived formal service. The Supreme Court considered the submissions made by both parties and proceeded to pass procedural directions regarding the matter.

Held by court : The Supreme Court condoned the delay in filing the Special Leave Petition filed by the Union of India and issued notice to the respondent, returnable within six weeks. The Court recorded that the respondent’s counsel accepted and waived service of notice on behalf of the respondent company.The order passed by the Supreme Court is procedural in nature and does not decide the substantive GST issue involved in the dispute. The Court has only admitted the matter for further consideration and directed issuance of notice to the respondent for adjudication in subsequent proceedings.

Fact of the Case:  The Directorate General of GST Intelligence (DGGI) conducted investigation against fake invoicing and fraudulent availment and passing of Input Tax Credit through non-operational entities including M/s Naksh Enterprises, M/s AAI Metalics and M/s Shakti International. Investigation revealed that fraudulent ITC involving more than Rs.14 crores was availed and passed on without actual supply of goods. Statements of various persons including the petitioner were recorded under Section 70 of the CGST Act.
Based on material collected during investigation, the Additional Director General recorded “reasons to believe” under Section 69 of the CGST Act and authorized arrest of the petitioner for offences punishable under Section 132(1)(b) and 132(1)(c). The petitioner challenged the arrest and remand proceedings through habeas corpus petition mainly on the ground that verbatim copy of “reasons to believe” signed by the Commissioner was not supplied to him and therefore arrest was illegal.

Held by court : The Gujarat High Court held that the writ petition seeking habeas corpus was maintainable where allegation relates to violation of statutory mandate affecting personal liberty. The Court referred to Supreme Court judgments in Radhika Agarwal and Arvind Kejriwal and observed that “reasons to believe” are jurisdictional conditions necessary for valid arrest under Section 69 of the CGST Act.
However, the Court further held that there was sufficient compliance with Section 69 since the petitioner was supplied the grounds of arrest and reasons to believe, which were acknowledged by him. The Court rejected the contention that verbatim signed copy of reasons recorded by the Commissioner was mandatorily required to be furnished. Therefore, the arrest and remand proceedings were not held illegal merely on technical objections raised by the petitioner.

Fact of the Case:  The petitioner, being the consignor, supplied and transported 34,650 kgs of dried areca nuts to M/s Barman Tradecomm, New Delhi. During transit, the vehicle carrying the goods was intercepted by the CGST Anti-Evasion authorities, and both the goods and conveyance were detained under Section 129 of the CGST Act. The department issued a show cause notice alleging discrepancies in tax invoices, e-way bills, ownership, quantity and genuineness of the goods. Subsequently, a demand of Rs. 51,87,380/- along with conveyance penalty of Rs. 2,00,000/- was raised.The petitioner contended that all relevant documents accompanied the goods and relied upon Circular dated 31.12.2018 and judicial precedents to argue that the consignor should be treated as owner for release under Section 129(1)(a). The petitioner also expressed willingness to pay penalty equivalent to 200% of tax payable for securing release of perishable goods and undertook to file statutory appeal against the demand order.

Held by court : The Calcutta High Court held that Section 129 of the CGST Act provides a complete mechanism for detention and release of goods during transit and once the statutory conditions are fulfilled, the revenue authorities are obligated to release the goods. The Court observed that the show cause notice itself identified the petitioner as consignor and no material evidence was produced by the department to conclusively establish that the petitioner was not the owner of the goods.The Court further held that adjudication regarding ultimate ownership was irrelevant at the stage of provisional release under Section 129. Since the petitioner claimed ownership and agreed to pay penalty under Section 129(1)(a), the goods were directed to be released within three days upon payment of applicable penalty. The Court also noted that recovery proceedings could always be initiated later if the demand attained finality.