LATEST GST CASE LAWS: 23.03.2026

Telangana HC dismisses writ filed by Fino Payments Bank MD challenging his arrest

The Telangana High Court dismissed the writ petition challenging the arrest of the Managing Director of Fino Payments Bank in a GST evasion case, holding that the petition lacked merit. The Court thereby upheld the legality of the arrest and investigation in connection with alleged large-scale tax evasion through merchant entities using the bank’s platform.

The petitioner’s core argument was that a payment aggregator merely provides technological infrastructure and cannot be held liable for GST defaults of independent merchants. It was contended that there was no personal involvement in onboarding or transactions, and that liability under GST law should rest with the actual suppliers or buyers, not intermediaries facilitating payments.

The Revenue authorities argued that the case involved serious economic offences, supported by preliminary findings of significant violations, including non-issuance of invoices for transactions allegedly amounting to around ₹10,000 crore. They emphasized that due process was followed in the arrest, including proper authorization and issuance of summons, and sought custodial interrogation based on the scale of the alleged evasion.

The petitioner relied on judicial precedents to stress that intermediaries should be distinguished from principal offenders and that procedural safeguards in arrests must be strictly followed. It was also argued that there was no deliberate non-cooperation, citing lack of proper service of summons and highlighting partial GST payments as evidence of bona fide conduct.

The case underscores that in GST enforcement, courts may permit investigation against platform operators where prima facie evidence suggests systemic misuse of their infrastructure, especially in large-scale evasion cases. It highlights the importance for intermediaries to demonstrate robust compliance, clear separation from merchant activities, and full cooperation with authorities to mitigate exposure to criminal liability.

Telangana HC – Rishi Nand Kishore Gupta v. Union of India & Ors. [WP 6657/2026]

HC: Pre-determination of unregistered person’s classification/taxability in SCN proposing best judgment assessment, impermissible

The Kerala High Court quashed the show cause notice (SCN) issued under Section 63 for best judgment assessment against an unregistered person, holding that the notice was vitiated by a pre-conceived conclusion that the petitioner’s services were mandatorily taxable and required GST registration, thereby impermissibly deciding liability at the SCN stage itself.

The Court emphasized that an SCN must only propose a view based on prima facie material and cannot reflect a final determination; such pre-determination violates the principle of natural justice by denying the assessee a meaningful opportunity to contest taxability, as reiterated in the Supreme Court’s ruling in Oryx Fisheries Pvt. Ltd.

It was further held that issuing a composite SCN covering multiple assessment years is legally unsustainable, in line with earlier Division Bench rulings (e.g., Lakshmi Mobiles and Tharayil Medicals), which require separate notices for each assessment year to ensure procedural fairness and clarity.

The petitioner contended that its services of conducting admission processes for pharmacy colleges fall under the exemption in Entry 66(b)(iv) of Notification No. 12/2017-CT (Rate), and therefore it was neither liable for GST nor required to obtain registration; however, the Court refrained from ruling on taxability or classification at this stage.

Disposing of the writ, the Court granted liberty to the Revenue to issue fresh, legally compliant SCNs for each relevant assessment year, directing that such notices must avoid pre-judgment, properly consider the assessee’s submissions, and adhere to principles of natural justice as highlighted in Oryx Fisheries.

Kerala HC – Kerala State Self-Financing B.Pharm College Management Association (KSSBCMA) Vs Intelligence Officer [WP(C) NO. 9108 OF 2026]

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