GST is a young law and a large part of its working meaning has come from judicial decisions rather than from the text alone. For anyone advising on the subject, reading judgments is not optional. Reading them well is a separate skill.
This article does not summarise particular decisions. It sets out how to read one so that the practical consequence is clear.
Establish what was actually decided
The first task is to separate the ratio from the observations. A judgment may run to many paragraphs while deciding a single narrow question. The binding part is the reasoning necessary to the decision on the facts before the court.
Identify the precise question framed by the court.
Identify the facts that the answer depended on.
Identify what relief was granted, which is often narrower than the discussion suggests.
Separate obiter observations, which may be persuasive but are not binding.
Assess how far the decision travels
The weight of a decision depends on which forum delivered it and on what was before that forum.
Forum | Binding effect |
|---|---|
Supreme Court | Binding across India under Article 141 |
High Court | Binding within its territorial jurisdiction, persuasive elsewhere |
Appellate Tribunal | Persuasive, and followed where the reasoning is sound |
Advance Ruling Authority | Binding only on the applicant and the officer concerned in that case |
An advance ruling in favour of another taxpayer is useful as an indication of thinking. It is not authority that can be cited as binding, and presenting it as such weakens a submission.
Check whether the decision still stands
Before relying on any decision, verify three things.
Whether it has been stayed or reversed in appeal
Whether the provision it interpreted has since been amended, sometimes with retrospective effect
Whether a circular or notification issued afterwards addresses the same question
Legislative amendment following an adverse decision is common in indirect tax. A judgment that was correct when delivered may have been overtaken by a change in the text.
Themes that recur in GST litigation
Certain themes appear repeatedly across decisions and are worth tracking as categories rather than as individual cases.
Natural justice, particularly orders passed without an effective hearing or without considering the reply on record
Reasoned orders, where the order records a conclusion without dealing with the submissions made
Input tax credit denial for supplier default, and the extent of the recipient burden
Provisional attachment, and the limits on that power
Registration cancellation, especially cancellation with retrospective effect
Limitation and extension, including the treatment of notifications extending time limits
A judgment is useful to a business only when it changes what the business does on Monday morning.
Turning a decision into practice
After reading a decision, three practical questions decide whether anything needs to change.
Does it apply to a position we have taken, on facts that are genuinely comparable?
Does it affect a pending proceeding, so that an additional submission should be filed?
Does it suggest a documentation gap that should be closed for future periods, regardless of the outcome in that case?
The third question is usually the most valuable. Many decisions turn on whether the taxpayer could produce a particular record. That is within the control of the business, and it can be fixed before any dispute arises.