The Daily Tax Law Briefing – 21 July 2026 presents the latest judicial developments under the Goods and Services Tax (GST) and Income-tax laws. This edition analyses nine significant judicial pronouncements, comprising six GST judgments and three Income Tax decisions, delivered by the Supreme Court of India, Allahabad High Court, Madras High Court, Calcutta High Court and various Benches of the Income Tax Appellate Tribunal. The rulings examine important issues relating to input tax credit, assessment proceedings under Sections 73 and 74 of the CGST Act, service tax on business auxiliary services, rectification of GST payment errors, charitable trust registration, unexplained foreign bank credits and exemption under Section 54 of the Income-tax Act.
The GST section features six important judgments covering both procedural and substantive aspects of indirect taxation. The Allahabad High Court reiterated that Section 74 proceedings require cogent evidence of fraud, wilful misstatement or suppression of facts, and held that genuine purchasers cannot be denied Input Tax Credit merely because the supplier’s registration was subsequently cancelled, especially where the recipient establishes genuine movement of goods, payment through banking channels and proper tax documentation. The Supreme Court also held that petroleum companies operating CNG outlets acted as commission agents rendering Business Auxiliary Services, restoring the service tax demands after finding that the agreements created a principal-agent relationship rather than a principal-to-principal transaction.
The briefing further includes important rulings of the Madras High Court and the Calcutta High Court on GST adjudication. The Madras High Court emphasised that tax authorities must properly examine documentary evidence before rejecting Input Tax Credit claims and cannot merely rely upon the subsequent cancellation of a supplier’s registration. It also held that proceedings initiated under one statutory provision cannot culminate in an order under another provision without due process, leading to the matter being remanded for fresh adjudication. The Calcutta High Court granted interim protection in a case involving an alleged clerical error in Form GST DRC-03, while another decision recognised the benefit of the retrospective insertion of Section 16(5) of the CGST Act, resulting in partial relief to the taxpayer and remand of the remaining issues for fresh examination. The Madras High Court also examined the levy of interest on delayed payment of GST and remanded the matter for reconsideration in light of the petitioner’s claim for the benefit of the statutory amnesty provisions.
The Income Tax section analyses three significant decisions. The Mumbai Bench of the ITAT held that a hospital engaged in providing medical relief continues to qualify as a charitable institution under Section 2(15), and that charging fees or generating surplus does not by itself negate charitable status. Accordingly, the Tribunal quashed the rejection of renewal and retrospective cancellation of registration under Section 12AB. The Hyderabad Bench of the ITAT restored an appeal relating to unexplained foreign bank credits after accepting that the assessee’s prolonged judicial custody constituted sufficient cause for the earlier inability to produce evidence.
Another noteworthy ruling of the Delhi Bench of the ITAT reaffirmed that Section 54 exemption cannot be denied merely because a reconstructed residential property consists of multiple floors forming one residential house. The Tribunal also held that the Assessing Officer could not reject the reports of Government-registered valuers without identifying specific defects or making a reference to the Departmental Valuation Officer, thereby directing recomputation of capital gains and allowing the full exemption claimed by the assessee.
The Daily Tax Law Briefing – 21 July 2026 serves as a practical resource for advocates, chartered accountants, company secretaries, tax consultants, businesses and corporate tax teams seeking concise updates on the latest judicial developments. The briefing provides valuable insights into evolving legal principles governing GST litigation, charitable institutions, capital gains taxation and income-tax assessments while enabling professionals to remain informed of recent judicial trends.
