LiveLawBiz Indirect Tax Weekly Round-Up: July 27 - August 02, 2026

SUPREME COURTITC Can Be Denied To Buyer If Supplier Fails To Pay Tax: Supreme Court Upholds S.16(2)(c) Of CGST ActCase Title : Bhandari Scrap Traders v. Union of India & Ors. and connected matters Case Number : SLP (C) No. 23931/2026 and connected matters CITATION : 2026 LLBiz SC 250The Supreme Court has recently upheld the Gujarat High Court's judgment sustaining the constitutional validity of Section 16(2)(c) of the Central Goods and Services Tax Act, 2017. In doing so, it affirmed that...

CESTAT Chennai Sets Aside Reclassification Of Poultry Cage Components As Iron and Steel Structures

The Chennai bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has set aside the reclassification of weld mesh components used in poultry battery cages. It held that the Revenue failed to explain how products admittedly manufactured exclusively for use in poultry battery cages could be treated as iron and steel structures under the Central Excise Tariff."The Revenue has not made any attempt in placing on record conceivable and convincing reasons as to how the goods under...

Delhi High Court Closes Long-Pending Challenge To Special Audit Order, Directs Centre To Bear Audit Cost

The Delhi High Court has closed a 19-year-old writ petition challenging an order directing a special audit under Section 142(2A) of the Income Tax Act, holding that the proceedings had become infructuous since the audit had already been completed.Petitioner had challenged an order dated March 30, 2006, by which the assessing officer had directed a special audit. The writ petition was instituted in 2007, and notices were issued on May 30 that year, without any interim stay.The division bench of...

Cut Umbrella Panels Treated As Made-Up Textile Articles, Not Woven Fabric For Tax: CESTAT Kolkata

The Kolkata Customs, Excise and Service Tax Appellate Tribunal (CESTAT) on 4 August held that umbrella panel fabric cut into predetermined triangular shapes and sizes is classifiable as a “made-up textile article” under Customs Tariff Heading (CTH) 6307 and not as woven fabric of synthetic filament yarn under CTH 5407. A Bench comprising Judicial Member Justice R. Muralidhar and Technical Member K. Anpazhakan set aside the demand of differential customs duty, interest and penalty, holding that...

Madras High Court Holds Later Clarifications Cannot Take Away 7% Drawback On Bus Bodies, Quashes Denial

The Madras High Court on 30 July held that Customs authorities cannot deny exporters the benefit of a beneficial drawback circular through later clarifications unless the original circular granting the concession has been withdrawn, quashing orders rejecting 7% brand rate drawback claims on the bus body portion of exported passenger buses. Justice Hemant Chandangoudar allowed the petitions filed by Ashok Leyland Limited and set aside the revisional orders dated 8 March 2022 and the CBEC...

LiveLawBiz Direct Tax Weekly Round-Up: July 27 - August 02, 2026

HIGH COURTSBombay HCBombay High Court Quashes Criminal Prosecution For Late ITR Filing As Taxpayer Entitled To RefundCase Title : Rajesh Somandas Sachdev v. Income Tax Officer & Ors. Case Number : Writ Petition No. 5692 of 2025 CITATION : 2026 LLBiz HC(BOM) 414The Bombay High Court on 22 July held that criminal prosecution for failure to file an income tax return cannot continue when a subsequent assessment shows that the taxpayer had no tax liability and was instead entitled to a refund,...

Natural Gas Compression For Transport Is Not Manufacture; CESTAT Kolkata Quashes ₹8.97 Crore Excise Demand

The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), Kolkata, has set aside an excise duty demand of ₹8.97 crore against Great Eastern Energy Corporation Ltd. (GEECL), ruling that compressing natural gas solely to facilitate transportation does not amount to the manufacture of compressed natural gas (CNG).Relying on its earlier ruling in GEECL's own case and its decision in Essar Oil and Gas Exploration and Production Ltd., the tribunal observed, "The above two case laws make it...

Financial Crisis Reasonable Cause To Waive Service Tax Penalty: Madras High Court

The Madras High Court on 27 July held that penalties under the Finance Act, 1994 cannot be imposed where a taxpayer proves a genuine financial crisis as a reasonable cause for delayed payment of service tax, ruling that a Tribunal's finding of financial incapacity based on material on record cannot be interfered with in appeal. A Division Bench of Justices G. Jayachandran and N. Mala dismissed two appeals filed by the GST and Central Excise Department against the CESTAT order that waived...

Madras High Court Quashes Reassessment Against Stock Broker Over Misreading Client Funds As Income

The Madras High Court on 31 July held that reassessment proceedings cannot be initiated merely on the basis of suspicion arising from a misunderstanding of a stock broker's business model, ruling that client funds received by a broker in a fiduciary capacity cannot be treated as the broker's own income without tangible material. A Division Bench comprising Chief Justice Sushrut Arvind Dharmadhikari and Justice G. Arul Murugan dismissed the Revenue's appeal against the Income Tax Appellate...

Punjab and Haryana High Court Quashes ₹59.77 Lakh Stamp Duty Demand Initiated Beyond Limitation

The Punjab and Haryana High Court on 15 July held that proceedings for recovery of deficient stamp duty cannot be initiated after the expiry of the statutory limitation period, and that stamp duty liability must be determined based on the market value and nature of the property as they existed on the date of execution and registration of the sale deed. Justice Kuldeep Tiwari allowed a writ petition filed by Sandeep Singh and another and set aside the orders passed by the Collector and the...

Bombay High Court Pulls Up ITAT Over Failure To Pronounce Reserved Judgments Within 90-Day Deadline

The Bombay High Court has pulled up the Income Tax Appellate Tribunal (ITAT) over the repeated practice of releasing matters reserved for judgment without pronouncing orders. A Division Bench of Acting Chief Justice Ravindra V. Ghuge and Justice Gautam A. Ankhad observed that Rule 34(5)(c) of the Income Tax (Appellate Tribunal) Rules, 1963, requires the tribunal to pronounce its judgment within 60 days of concluding the hearing and, in exceptional circumstances, within a further period of 30...

LiveLawBiz Indirect Tax Monthly Digest: July 2026

SUPREME COURTSupreme Court Upholds Karnataka's Retrospective Withdrawal Of Sales Tax Exemption For Imported SugarCase Title : Asia Sugar & Chemical Co., Davangere v. State of Karnataka & Ors. Case Number : Civil Appeal No. 48 of 2009 CITATION : 2026 LLBiz SC 235The Supreme Court on Monday held that the Karnataka Legislature was competent to retrospectively withdraw the sales tax exemption available to imported sugar, but dealers who had acted under the earlier exemption regime cannot...