The Daily Tax Law Briefing – 18 July 2026 presents a comprehensive overview of the latest judicial developments under the Goods and Services Tax (GST) and Income-tax laws. This edition analyses nine significant judgments, including four GST decisions and five Income Tax rulings, delivered by the Karnataka High Court, Calcutta High Court, Allahabad High Court, CESTAT Kolkata and various Benches of the Income Tax Appellate Tribunal. The judgments examine important issues relating to works contract deductions, service tax on electricity, healthcare services, GST prosecution, the new tax regime under Section 115BAC, share valuation, limitation under Section 153C, CSR expenditure, Section 14A disallowance and voluntary retirement compensation.
The GST section highlights four important decisions. The Karnataka High Court reaffirmed that revisional jurisdiction under the Karnataka VAT Act can be exercised only when the statutory conditions are satisfied and that deductions relating to security charges, transportation and similar expenses in works contracts cannot be disallowed merely because the revisional authority holds a different opinion. CESTAT Kolkata also ruled that the supply of electricity constitutes a sale of goods and is not liable to service tax under management, maintenance or repair services. It further clarified that refundable maintenance and security deposits do not constitute consideration for taxable services when they remain refundable and are not adjusted towards service charges.
Another important ruling of the Calcutta High Court concerns GST on medicines supplied to inpatients by hospitals. The Court recognised the substantial legal issues involved regarding composite healthcare services and the applicability of Section 76 of the GST Act, granting interim protection by restraining the authorities from taking coercive action pending adjudication. The Allahabad High Court also held that delayed or non-deposit of GST/TDS is governed by the complete statutory framework under the U.P. GST Act and, in the absence of allegations of independent criminal offences, prosecution under the Bharatiya Nyaya Sanhita is not maintainable.
The Income Tax section covers five noteworthy judgments. The Pune Bench of the ITAT held that once an assessee validly opts for the new tax regime under Section 115BAC, the benefit cannot be denied merely because of a clerical mistake in the return of income. The Delhi Bench of the ITAT clarified that while an Assessing Officer cannot substitute the assessee’s chosen DCF valuation method with the NAV method under Rule 11UA, a defective DCF valuation may nevertheless require a fresh valuation by an approved valuer. The Gujarat High Court also held that reassessment proceedings initiated under Section 153C beyond the statutory ten-year period are without jurisdiction and liable to be quashed.
The briefing further includes significant rulings of the ITAT on the computation of Section 14A disallowance, deductibility of CSR expenditure and pension fund contributions, allowability of software development expenditure and accrued liabilities, as well as the taxability of compensation received under a voluntary retirement scheme. In the latter case, the Pune Bench held that ex gratia compensation received under the Pfizer voluntary retirement scheme constituted a capital receipt and was not taxable as income from other sources.
This edition provides valuable insights for advocates, chartered accountants, company secretaries, tax consultants, businesses and corporate tax teams by summarising the latest judicial principles affecting GST litigation, indirect tax administration, reassessment proceedings, valuation disputes and corporate taxation. It serves as a practical reference for professionals seeking to remain updated with the latest judicial developments impacting tax compliance and litigation.