In Sun Infrasite Pvt. Ltd. v. State of U.P. & Ors. (Allahabad High Court, January 19, 2026), the court ruled that physical service of a Show Cause Notice (SCN) is mandatory after cancellation of GST registration. The adjudication was set aside because authorities relied only on electronic communication. The judgment emphasized that Section 169 and Section 75(4) of the GST Act require proper service to ensure natural justice. This case reinforces the importance of procedural compliance in GST disputes.

Input Tax Credit Cannot Be Denied to Bona Fide Purchaser

The Tripura High Court (January 2026) ruled that Input Tax Credit (ITC) cannot be denied to a bona fide purchaser merely because the supplier failed to deposit GST with the government. As long as the purchaser has paid tax to the supplier and the transaction is genuine, ITC entitlement remains valid. This case protects honest buyers from being penalized for supplier defaults and clarifies the scope of ITC under GST law.

SC Clarifies Refund of Pre-Deposit

In January 2026, the Supreme Court clarified that refunds of pre-deposits made during GST appeals are governed by Sections 107 and 115, not Section 54. This ruling ensures that taxpayers who deposit amounts for appeal purposes can claim refunds under specific provisions designed for appellate procedures, avoiding confusion with general refund rules.

Co-operative Housing Society Dues Not Barred by Limitation

The Bombay High Court (January 16, 2026) held that maintenance dues of co-operative housing societies are continuing liabilities and cannot be barred by limitation. The court emphasized that GST-related recovery certificates remain enforceable for such dues. This case is significant for real estate and housing societies, clarifying that GST obligations tied to maintenance charges are ongoing and enforceable.

GST Compliance Challenges in 2026

A broader legal update published in February 2026 highlighted that GST compliance is entering a phase of consolidation, digital integration, and stricter enforcement. Courts and regulators are increasingly focusing on procedural fairness, ITC safeguards, and clarity in refund mechanisms. The trend shows that businesses must adopt stronger compliance systems, especially with digital notices and cross-border transactions.