1. Your GST Credit Can Be Denied Even If You Did Everything Right(GST Updates)

The Situation
This is the one that affects almost every business that claims input tax credit.
You buy goods or services, pay your supplier the full invoice amount (including GST), and claim your input tax credit (ITC) based on a proper tax invoice. Straightforward, right?
Not always. In a case called Bhandari Scrap Traders, the business did exactly this — but the tax department found that the supplier had collected the GST from the buyer and never deposited it with the government. The department denied the buyer’s ITC anyway.
The buyer argued: “I paid what I owed. I can’t see my supplier’s tax filings. Why am I being punished for someone else’s failure?”

What the Court Said
On 24 July 2026, the Supreme Court ruled against the buyer. It confirmed that under Section 16(2)(c) of the GST law:
You can only claim ITC if your supplier has actually deposited that tax with the government — not just because you paid your bill.
This is now settled law. There is one small relief: if your credit is reversed for this reason, you can re-claim it later once your supplier eventually pays up.
What This Means for You
● Check your GSTR-2B before claiming any credit. If a purchase doesn’t show up there, that supplier hasn’t reported/paid the tax — treat it as a warning sign, not a technicality to ignore.
● Be selective about suppliers. A supplier’s GST compliance track record is now a genuine financial risk to your business, not just their problem.
● Consider adding a clause in your contracts that lets you recover losses from a supplier if their non-payment of GST causes you to lose your credit.
● Got a similar notice already? The legal question is settled against buyers in general, but factual defences (like showing the supplier has since paid) may still be available — get it reviewed rather than assuming it’s a lost cause.

2. Found With “Excess Stock” During a GST Survey? That Alone Doesn’t Mean Confiscation

The Situation
This one matters a lot for traders, shopkeepers, and manufacturers who keep physical inventory.
When GST officers visit a business premises for a survey or inspection and find more stock than what’s recorded in the books, some officers have jumped straight to the harshest tool available — Section 130, which allows confiscation of goods and steep penalties, treating it as if the business was deliberately evading tax.
Businesses have long argued this is excessive: excess stock could simply be a recording gap, a counting error, or a timing mismatch — not proof of intentional tax evasion.

What the Court Said
This position has now been repeatedly and firmly confirmed — most recently by the Allahabad High Court on 30 May 2026, following the Supreme Court’s own refusal (in April 2025) to disturb this same principle in an earlier case:
Merely finding excess stock during a survey is not enough to confiscate goods under Section 130. The department must first assess and determine the actual tax liability under Sections 73 or 74 — the normal assessment route — not jump straight to confiscation.
Confiscation under Section 130 is meant for cases with clear, demonstrable intent to evade tax — not routine stock discrepancies.
What This Means for You
● If GST officers ever conduct a survey at your premises and find excess stock, know that confiscation is not the automatic or correct response — you have strong legal ground to push back if that route is used.
● If you’ve already faced a confiscation order or penalty on these grounds, this is worth challenging — several High Court rulings and the Supreme Court’s own stance are in your favour.
● Keep stock records tight regardless. While this ruling protects you from disproportionate action, maintaining accurate books remains your best first line of defence — the normal tax demand process (Sections 73/74) still applies if a genuine discrepancy is found.