GST Calendar –Compliances for the month of August ’2026

Key Highlights of the August 2026

Gujarat HC Retains GST on Corporate Guarantees, Permits Valuation Below 1% Where Lower Consideration is Established.

Case: Torrent Power Ltd. v. Union of India & Ors

Facts

The petitioners challenged the levy of GST on corporate guarantees furnished by holding companies for their subsidiaries and also questioned the constitutional validity of Rule 28(2) of the CGST Rules. The Rule prescribed the value of such services at 1% of the amount of guarantee per annum or the actual consideration, whichever is higher. The petitioners contended that imposing a mandatory 1% valuation was excessive, particularly where the actual consideration charged for providing the guarantee was lower than 1%. 

Issue

Whether a corporate guarantee furnished by one related entity for another constitutes a taxable supply of service under GST, and whether Rule 28(2) can mandatorily prescribe 1% of the guarantee amount per annum as the taxable value even where the actual consideration is lower.

Held

The Gujarat High Court upheld the levy of GST on corporate guarantees furnished between related persons, holding that such guarantees constitute a supply of services under Section 7(1)(c) read with Schedule I of the CGST Act, even where no consideration is charged. However, the Court read down the expression “whichever is higher” in Rule 28(2) as arbitrary and unconstitutional. Where actual, ascertainable consideration exists and is lower than 1%, GST is to be levied on the actual consideration; the 1% deemed valuation can operate where the actual value is not ascertainable or where no consideration is charged

Supreme Court Allows Benefit of Rule 96(10) Omission to Pending IGST Refund Proceedings

Case: M/s Goodluck India Limited & Anr. v. Union of India & Ors.

Facts

Rule 96(10) of the CGST Rules restricted exporters from claiming refund of IGST paid on exports where specified benefits under exemption notifications, including benefits relating to Advance Authorisation and EPCG schemes, had been availed. The Government subsequently omitted Rule 96(10) with effect from 8 October 2024 through Notification No. 20/2024. However, the notification did not contain any saving clause preserving the applicability of the omitted rule to proceedings that were already pending. 

The dispute before the Supreme Court was whether the omission of Rule 96(10) would benefit exporters whose refund proceedings were already pending when the rule was omitted.

Issue

Whether the omission of Rule 96(10) of the CGST Rules, with effect from 8 October 2024 and without a saving clause, would apply to pending proceedings relating to IGST refund claims, or whether the restrictions under the erstwhile rule would continue to apply to such proceedings.

Held

The Supreme Court held that Rule 96(10) could not continue to govern pending proceedings after its omission, since the omission was not accompanied by any saving clause. The Court observed that omission of a rule effectively removes it from the statute book, and Section 6 of the General Clauses Act, 1897 does not automatically preserve proceedings upon omission of a rule. An express saving provision would have been necessary to continue the operation of the omitted rule in pending matters. 

Accordingly, exporters with pending IGST refund claims could not be denied refunds by continuing to apply the restrictions contained in Rule 96(10). The Supreme Court upheld the Gujarat High Court’s view and dismissed the Revenue’s appeals. It also directed that the judgment be circulated to the High Courts so that similar pending matters could be disposed of expeditiously.

However, it is equally important to note that judicial opinion is not uniform. Some High Courts have held that making a notice or order available on the common portal is itself a statutorily recognized mode of service under Section 169(1)(d), and a registered taxpayer is expected to regularly monitor the GST portal. Thus, whether portal upload alone amounts to valid service depends on the facts of each case and the approach adopted by the jurisdictional High Court.

Delhi HC Rules 10% Penalty Pre-Deposit Inapplicable to Proceedings Initiated Before Amendment

Case: Gaurav Jain & Anr. v. Joint Commissioner (Appeals-II), CGST Delhi Zone & Anr.- Delhi High Court

Facts

The petitioners were issued a Show Cause Notice (SCN) on 25 June 2025 under Section 122(1A) of the CGST Act, proposing substantial penalties without any corresponding tax demand against them personally. At that time, the law did not require a percentage-based pre-deposit for filing an appeal against such penalty-only orders.

However, with effect from 1 October 2025, the proviso to Section 107(6) was substituted to require a 10% pre-deposit of the penalty for filing an appeal against an order involving penalty but no tax demand. Although the SCN had been issued before the amendment, the Order-in-Original was passed subsequently, on 16 December 2025. 

Issue

Whether the newly introduced requirement of 10% pre-deposit of penalty would apply where the SCN was issued before 1 October 2025, but the adjudication order imposing the penalty was passed after the amendment came into force.

Held

The Delhi High Court held that the 10% pre-deposit requirement would not apply in such cases. The Court observed that the right of appeal is a substantive right and becomes vested when the legal dispute, or lis, commences. In tax proceedings, the lis commences with the issuance of the SCN, because that is when the Department formally asserts liability against the taxpayer and calls upon them to respond.

Since the SCN in the present case was issued on 25 June 2025, before the amended provision came into force, the subsequent amendment could not impose the new and more onerous 10% pre-deposit condition on the petitioners. The Court accordingly directed the appellate authority to entertain the appeals without insisting on the 10% penalty pre-deposit.