GST Calendar –Compliances for the month of September ’2026

                                    Indirect Tax News Letter

Key Highlights of the September 2026

ITC Blocking under Rule 86A Cannot Continue Beyond One Year

Case: S.S. Gold v. Union of India & Ors.
Court: Bombay High Court

Facts

The petitioner’s Electronic Credit Ledger was blocked under Rule 86A on 17 May 2024 for an amount of approximately ₹7.16 crore. The GST portal reflected the reason for blocking as the supplier being non-functional and its registration having been cancelled.

The taxpayer challenged the blocking before the Bombay High Court. 

Issue

Whether the restriction imposed on utilization of ITC under Rule 86A can continue beyond one year from the date on which such restriction was imposed.

Held

The Bombay High Court held that Rule 86A(3) expressly provides that the restriction ceases to have effect after expiry of one year from the date of its imposition.

Since the ITC had been blocked on 17 May 2024, the statutory one-year period had expired. The Court accordingly allowed the petition and quashed the blocking order.

ITC BLOCKED UNDER RULE 86A CANNOT BE TREATED AS PRE-DEPOSIT FOR APPEAL

Case: Spherion Solutions Private Limited v. Additional Commissioner, Adjudication, CGST Delhi North & Ors.
Court: Delhi High Court

Facts

The taxpayer’s ITC had been blocked under Rule 86A. The taxpayer was required to make the statutory pre-deposit for filing an appeal under Section 107(6).

The taxpayer contended that the blocked ITC could not be utilized for making the pre-deposit because the Department itself had restricted its utilization.

Issue

Whether ITC blocked under Rule 86A can be utilized or treated as available credit for satisfying the pre-deposit requirement under Section 107(6) for filing an appeal.

Held

The Delhi High Court held that blocked ITC cannot be treated as freely available credit for satisfying the statutory pre-deposit requirement while the Rule 86A restriction continues.

The Court recognized the practical difficulty faced by a taxpayer where its credit ledger is blocked and consequently directed appropriate relief in the circumstances of the case.

EMPLOYEE RECOVERY OF SUBSIDISED CANTEEN CHARGES NOT A TAXABLE SUPPLY

Case: Torrent Pharmaceuticals Ltd.
Authority: Gujarat Authority for Advance Ruling

Facts

Torrent Pharmaceuticals provided subsidized canteen facilities to employees at its:

• Indrad manufacturing plant; 
• Bhat R&D facility; and 
• Corporate Office, Ahmedabad. 

Part of the canteen cost was borne by the company, while the balance amount was recovered from employees through salary deductions.

The company sought clarification regarding the GST treatment of such employee recoveries and the availability of ITC on GST charged by the canteen service provider. 

Issue

Whether the amount recovered from employees towards subsidized canteen facilities constitutes a “supply” under Section 7 of the CGST Act, and whether ITC is available on the GST charged by the canteen service provider.

Held

The Gujarat AAR held that the amount recovered from employees towards the subsidized canteen facility does not constitute a taxable supply by the employer.

The AAR also held that ITC on the GST charged by the canteen service provider is available to the extent of the cost borne by the employer, subject to the applicable conditions.

The ruling also considered the statutory requirement relating to provision of canteen facilities and the proviso to Section 17(5)(b). 

BIOMETRIC AADHAAR AUTHENTICATION FOR GST REGISTRATION

Case: Neha v. Union of India & Ors.
Court: Delhi High Court

Facts

The proceedings concerned concerns relating to fraudulent GST registrations, including registrations obtained using stolen or frozen PAN/Aadhaar details.

The Court was informed that biometric Aadhaar authentication was being undertaken in cases identified as risky by the system, but concerns remained regarding fraudulent registrations.

The Court also noted data placed before it concerning fraudulent GST registrations and tax evasion.

Issue

Whether GST authorities should permit registration without biometric-based Aadhaar authentication, particularly in view of concerns regarding fraudulent registrations.

Held

The Delhi High Court directed that, henceforth, GST registration should not be allowed without biometric-based Aadhaar authentication. The Court granted liberty to the authorities to place before it any practical difficulties in implementing the direction.