Input tax credit is at the centre of most GST demands. This digest covers 11 recent rulings on blocked credits under section 17(5)(d), the retrospective relief in section 16(5), credit notes and discounts, purchases from suppliers later found non-existent, and GSTR-2A versus GSTR-3B mismatches.
Click any case to read the full analysis.
Key trends from these rulings
- Telecom towers are movable, so ITC on them is not blocked by section 17(5)(d); the Supreme Court dismissed the Revenue's SLP and review against the Delhi High Court's ruling.
- Buildings remain blocked: after the retrospective substitution of 'plant and machinery' in 2025, GSTAT Bengaluru denied ITC on construction of a resort.
- Section 16(5) is being applied in pending appeals to save ITC of FY 2017-18 to 2020-21 taken in returns filed by 30.11.2021, and new grounds cannot be added in appeal (Three Aces).
- Bona fide buyers are protected where purchases are documented; retrospective cancellation of a supplier's GSTIN alone does not prove the purchase was fake (Hema Industries, L&T Technology Services). Without supplier certificates or e-way bills, however, ITC can be denied (Vintek).
- On credit notes, buyers receiving financial credit note discounts need not reverse ITC (Maltown, applying Circular 251/08/2025), while suppliers reducing tax may need to show the recipient reversed ITC (Hindustan Unilever, interim) and reporting errors are not excess ITC (Agrico).
Blocked credit under section 17(5)(d)
- Delhi HC - Bharti Airtel and Indus Towers: Delhi HC quashes orders and SCNs denying ITC on telecom towers under s.17(5)(d); SC dismissed Revenue's SLPs in Aug 2025 and its review in Aug 2026.
- GSTAT Bengaluru - Flora Kingdom Farm Resort: GSTAT Bengaluru denies ITC on building a resort: retrospective 'plant and machinery' excludes buildings; Safari Retreats kept hotels out of the functionality test.
Time limit and section 16(5)
- GSTAT Ghaziabad - Three Aces Global Logistics: GSTAT Ghaziabad: ITC of 2018-19 taken in GSTR-3B before 30.11.2021 is saved by section 16(5); new s.16(2)(b)/(c) grounds can't be added in appeal.
Supplier issues and section 16(2)(c)
- GSTAT Agra - Hema Industries: GSTAT Agra dismisses department appeal: bona fide buyer with invoice, e-way bill, bilty and bank payment keeps ITC even if supplier was later declared fake.
- GSTAT Lucknow - L&T Technology Services: GSTAT Lucknow: retrospective cancellation of a supplier's GSTIN does not by itself prove purchases were fake; ITC relief of Rs 76,750 upheld.
- GSTAT Bengaluru - Vintek Control Systems: GSTAT Bengaluru upholds ITC demand: buyer gave no supplier certificate under Circular 183/2022 and no e-way bill; right to re-avail if supplier pays.
- GSTAT Ernakulam - Sansco Technologies: GSTAT Ernakulam quashes ₹13.97 lakh ITC demand: GSTR-2A vs 3B comparison must be overall; surplus IGST offsets CGST/SGST shortfall; order without hearing void.
Credit notes, discounts and branch cross-charges
- GSTAT Bengaluru - Maltown Electricals: GSTAT Bengaluru: no ITC reversal where supplier waives balance by commercial credit note (Circular 251/08/2025); only interim interest, no s.74 penalty.
- Rajasthan HC - Hindustan Unilever (interim): Rajasthan HC in Hindustan Unilever: without a matching mechanism, a supplier reducing tax via credit notes must prove the recipient reversed ITC. Interim order.
- GSTAT Bengaluru - Agrico Organics: GSTAT Bengaluru sets aside ₹9.56 lakh demand: tax on credit notes reported as ITC instead of reducing output tax caused no revenue loss; s.75(7) bars new grounds.
- Gujarat HC - Amul (GCMMF): Gujarat HC quashes section 74 order against Amul federation: HO services to branches with full ITC and no invoice are valued Nil under Rule 28 and circulars.
What businesses should do now
- Review any section 16(4) demand for 2017-18 to 2020-21 and claim section 16(5) relief where the return was filed by 30.11.2021.
- For purchases from suppliers later cancelled, keep invoices, e-way bills, transport and bank records to prove genuine receipt.
- Obtain supplier or CA certificates under Circular 183/15/2022 for old 2A-3B mismatches.
- Segregate movable equipment from building costs; claim ITC on items that are not construction of immovable property.
Frequently asked questions
Is ITC available on telecom towers?
Yes. The Delhi High Court held towers are movable, and the Supreme Court dismissed the Revenue's SLP and review.
Does section 16(5) help in pending appeals?
Yes. GSTAT Ghaziabad applied it to ITC of FY 2018-19 taken in returns filed before 30.11.2021, following Circular 237/31/2024.
Need help with a GST dispute?
GST Folio prepares replies to show cause notices, appeals before the Appellate Authority and GSTAT, refund claims and ITC reconciliations for businesses across India. Call or WhatsApp +91 80513 31315 or email gstfolio@zohomail.in.
This digest summarises judgments and orders added to our case law library in October 2026. Each linked post explains one ruling in more detail. It is general information, not legal advice; the outcome of any case depends on its own facts and the full text of the order.