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Corporate News *  Service tax penalty can’t survive when assessee acted on dept.’s own view of non-taxability: Delhi High Court. *  GST section 74 extended limitation questionable when form 26AS mismatch was already known: Karnataka High Court grants interim relief. *  CGST demand prima facie impermissible after state GST settlement under section 128A: Bombay High Court. *  Supreme Court asks GSTAT to sympathetically consider delay as taxpayers pursued remedy before wrong forum. *  Supreme Court stays Tripura High Court ruling protecting genuine buyers from ITC denial over supplier’s GST default. *  Diary entries alone can’t prove clandestine removal of goods: CESTAT quashes excise penalty on steel trader. *  Customs could investigate preferential tariff claims even before sec. 28DA: Delhi High Court. *  Customs dept. relied on fake AI generated case laws: supreme court quashes Rs. 425.28 crore penalty. *  No GST exemption in affiliation and annual registration charges for admission or conduct Of examinations: GSTAT. *  Mere invoices, cheque payments insufficient to establish genuine movement of goods: GSTAT restores Rs. 43.44 lakh ITC demand. *  Consolidated GST show cause notice covering multiple financial years is not without jurisdiction: Delhi High Court. *  Construction of independent houses on separate plots not taxable as ‘Residential Complex’ without common facilities: CESTAT. *  GST penalty exceeding statutory maximum unsustainable; Allahabad High Court quashes ? 50,000/- penalty after taxpayer filed return and paid late fee. *  GST order against standard chartered bank passed without hearing set aside by Bombay High Court. *  Retracted statements can’t be relied upon without cross-examination: CESTAT quashes gold confiscation. *  Burden to prove misclassification lies on customs department: CESTAT. *  CESTAT quashes Rs. 98 lakh excise demand on clearance of used refractory brick scrap. *  Service tax demand on irrigation works quashed: Karnataka High Court rules sale of goods component not taxable as service. *  GSTAT restores tax and penalty for transporting iron scrap without E-way bill citing intent to evade tax. *  Madras High Court stays GST recovery from directors without opportunity to show cause under section 89. *  Madras high court stays GST recovery notice against directors; finds prima facie case on applicability of section 79(1)(c). *  Procedural lapses can’t justify harsh punishment without serious customs breach: CESTAT quashes customs broker licence revocation. *  Service tax payable on land leasing and sports complex charges: CESTAT. *  Settled customs dispute can’t be reopened through Article 226 challenge to interest liability: Delhi High Court. *  Mere facilitation of customs clearance can’t establish knowledge of smuggling: Madras High Court. *  GST registration cancellation stayed: Allahabad High Court questions 99% ITC utilisation cap under rule 86B. *  Composition scheme lapses automatically on crossing Rs. 1.5 crore turnover: GSTAT. *  Gujarat High Court quashes GST cancellation orders after officer relied on non-existent AI-generated case laws. *  Importers liable for customs duty benefits availed through manipulated scrips: Delhi High Court. *  Procedural E-way bill lapse alone can’t justify penalty where genuine transaction and absence of tax evasion are established: GSTAT.
Subject News *  Documentary evidence dominates probe, further custody unwarranted: mumbai court grants bail in Rs. 22.44 crore customs duty evasion case. *  Business premises can’t remain sealed for non-participation in GST search: Allahabad High Court. *  GST pre-deposit must be refunded proportionately when taxpayer partly succeeds in appeal: Bombay High Court. *  Supreme Court grants 30 days to file GST appeal; keeps pre-deposit issue open due to deposit in parallel CGST proceedings. *  GST demand can’t exceed amount proposed in SCN: Allahabad High Court quashes Rs. 20.47 Crore order. *  Hundreds-of-crores GST demand and heavy 10% pre-deposit no ground to bypass statutory appeal: Punjab & Haryana High Court. *  Delhi High Court refuses to entertain challenge to gold confiscation due to statutory appeal remedy and unexplained delay. *  Procedural error in customs broker licence inquiry can be rectified through remand: Delhi High Court. *  GSTR-2A mismatch alone can’t justify ITC denial without invoice-wise verification; personal hearing mandatory: GSTAT. *  GST order passed without uploading personal hearing notices violates sec. 75(4): Allahabad High Court. *  TAX EVASION - Sec. 74 GST SCN quashed for not spelling out fraud, wilful misstatement or suppression: Allahabad High Court. *  STPI’s SOFTEX certification and NoC charges taxable as business support services: CESTAT. *  Suspicion can’t replace proof: CESTAT quashes penalty in alleged gold-smuggling operation. *   Limitation runs from communication of order: Madras High Court upholds rejection of delayed GST Appeals. *  Rajasthan High Court quashes GST demand over unsigned show cause notice. *  ITC recovery upheld where supplier failed to deposit GST: Rajasthan High Court. *  Customs commissioner’s empowered to make port trust liable for duty on pilfered goods: Supreme Court. *  Rectification proceedings can’t be used to challenge an uncontested GST assessment through a writ petition: Andhra Pradesh HC. *  GST proceedings against deceased proprietor unsustainable without notice to legal heir: GSTAT. *  Mere availment of ineligible self-assessed ITC doesn’t amount to suppression without evidence of fraud or wilful misstatement: GSTAT. *  Disposal of mining overburden by entity authorised by mining lease holder constitutes taxable service: CESTAT. *  Toll plaza data not mandatory for ITC refund: GSTAT. *  Disputed GST fraud allegations require investigation: Punjab and Haryana High Court makes interim bail absolute in alleged fraud and GST fraud case. *  Non-manufacturer contractor liable to deposit excess excise duty collected from buyer: CESTAT. *  GST order can’t reject taxpayer’s reply as “not satisfactory” without reasons: Madhya Pradesh High Court. *  Uncorroborated statements can’t establish alleged diversion of duty-free goods: CESTAT. *  Erection services were not liable to service tax prior to 10th september 2004: CESTAT. *  Sec. 74 GST notice must spell out statutory ingredients for invoking extended tax demand proceedings: Allahabad High Court. *  No jurisdictional bar under section 6(2)(b) in parallel CGST SGST proceedings: Delhi High Court refuses to bypass GST appeal remedy. *  Madras High Court remits GST demand for fresh adjudication after taxpayer claims it was unaware of SCN following business closure.  

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GST update /2026-27/0041

YOUNG MEN'S CHRISTIAN ASSOCIATION vs UNION OF INDIA & ORS.
Hon’ble Court: HIGH COURT OF GUJARAT AT AHMEDABAD
Case Title: YOUNG MEN'S CHRISTIAN ASSOCIATION vs UNION OF INDIA & ORS.
Petition No. & Citation: CIVIL APPLICATION NO. 19303 of 2015
Hon’ble Judge(s) JUSTICE A.S. SUPEHIA & JUSTICE VAIBHAVI D. NANAVATI
Date of Order 10/06/2026 
Outcome In favour of the Petitioner
 
Brief Facts of the Case
The petitioner, Young Men’s Christian Association (YMCA), challenged the refund order dated 09.09.2015 whereby the department rejected its refund claim relating to service tax paid during FY 2009-10 to FY 2012-13 collected on services provided by the club to its members. The refund application was filed after the levy of service tax on club-member transactions had been declared ultra vires by the Supreme Court in State of West Bengal v. Calcutta Club Limited. The said refund was rejected on the ground that the claim was time-barred under Section 11B of the Central Excise Act, 1944. Accordingly, the petitioner filed the writ petition challenging the refund rejection order.
Relevant Section 
• Sections 65(25a), 65(105)(zzze) and 66 of the Finance (No.2) Act, 1994
• Section 11B of the Central Excise Act, 1944
Question before Hon’ble Court 
• Whether limitation under Section 11B would apply where the levy and collection of service tax itself had been declared ultra vires?
Brief Arguments by Petitioner 
• Levy of Service Tax Already Declared Ultra Vires
The petitioner submitted that the issue was squarely covered by the Supreme Court judgment in State of West Bengal v. Calcutta Club Limited, which affirmed the Gujarat High Court judgment in Sports Club of Gujarat Limited v. Union of India. The Gujarat High Court had categorically declared Sections 65(25a), 65(105)(zzze) and 66 of the Finance Act, 1994, insofar as they sought to levy service tax on services provided by clubs to their members, as ultra vires.
 
• Refund Could Not Be Denied on Limitation
The petitioner contended that once the levy itself was held to be unconstitutional and ultra vires, the refund claim could not be defeated by invoking the limitation provisions under Section 11B.
 
Brief Arguments by Respondent
The department argued that:
• The refund application was filed only on 29.12.2014 and the Gujarat High Court judgment in Sports Club of Gujarat Limited had been delivered on 25.03.2013. Therefore, the refund claim for FY 2009-10 to FY 2012-13 was filed beyond the limitation period prescribed under Section 11B. 
• Reliance was placed upon the Constitution Bench decision in Mafatlal Industries Ltd. v. Union of India, 1997 (89) ELT 247 (SC), to support rejection of the claim as time-barred. 
Cases Relied Upon
Petitioner / Appellant Respondent
State of West Bengal Vs. Calcutta Club Limited 2019 (29) GSTL 545 (SC)
Sports Club of Gujarat Limited Vs. Union of India 2013 (31) STR 645 (Guj.)
Mafatlal Industries LTD. Vs. Union of India 1997 (89) ELT 247 (SC)
Abdul Samad Vs. Commissioner of C.Ex and Service Tax, Mangaluru 2019 (367) ELT 189 (Kar.)
vide 3E Infotech Vs. CESTAT, Chennai 2018 (18) GSTL 410 (Mad.)
Findings and Judgement 
• Levy of Service Tax on Club-Member Transactions Already Declared Ultra Vires
The Court noted that there was no dispute regarding the legal position that the levy of service tax on services provided by clubs to their members under Sections 65(25a), 65(105)(zzze) and 66 of the Finance Act, 1994 had already been declared ultra vires by the Gujarat High Court in Sports Club of Gujarat Ltd. v. Union of India. The Apex Court affirmed the view taken by the Gujarat High Court and held that from 2005 onwards, the Finance Act, 1994 did not contemplate levy of service tax on incorporated members’ clubs. Therefore, the very foundation for collection of service tax from incorporated clubs stood invalidated.
• Limitation Cannot Defeat Refund of Tax Collected Without Authority of Law
The Court held that once the levy and collection of service tax itself had been declared ultra vires, the refund claim could not be rejected merely on the ground of limitation.
• Refund of Tax Paid Under Mistake of Law Cannot Be Denied
Placing reliance on judicial precedents, the Court reiterated that refund of tax paid under a mistake of law cannot be frustrated on the ground of limitation, as retention of such amount by the State would be contrary to Article 265 of the Constitution of India. The department cannot retain an amount which it had no authority to levy or collect.
Accordingly, the Court remanded the matter to the respondent authorities for adjudication of the refund claim on merits and directed the authorities to also consider the petitioner's claim for interest on the refund amount.
CA PRADEEP JAIN
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