Key TakeawayA partner-level briefing on the top GST disputes being adjudicated at the High Court and GST Appellate Authority level — and what they mean for your working capital and compliance posture.
The GST appellate landscape in FY 2026–27 is marked by a surge in disputes around Input Tax Credit (ITC) reversals, the scope of intermediary services, and the taxability of warranties and liquidated damages. The GST Council's clarificatory circulars, while intended to reduce litigation, have in several cases generated new questions that taxpayers are now taking to the High Courts.
The most contested category continues to be ITC eligibility on capital goods used for mixed supply purposes. Several High Courts have taken divergent views on whether proportionate reversal under Rule 42/43 is mandatory in all cases, or only where direct attribution is not possible. Businesses with significant capital expenditure programmes should obtain partner-level advice before finalising FY 2025–26 ITC positions.
The intermediary services definition — always a difficult one — has become more complex following the Supreme Court's observations in a pending reference. Export-oriented businesses, particularly in IT and ITeS, need to map their service delivery model carefully against the emerging judicial positions before issuing invoices or claiming refunds for FY 2026–27.
On enforcement, the GST department has significantly increased scrutiny of GSTR-2A/2B reconciliation gaps. APRA's recommendation: conduct a full ITC reconciliation for FY 2024–25 and FY 2025–26 before June 2026, and obtain explanations for all gaps above threshold, even if the legal position is defensible. The cost of a reconciliation exercise is always lower than the cost of an ex-parte assessment.
What this means for your business
This briefing is based on current regulatory positions as of 12 May 2026. Laws and regulatory positions change frequently. Before acting on any information in this publication, we strongly recommend consulting with a qualified partner who can assess your specific facts and circumstances. Contact our GST Litigation team at info@aprafirm.com or 0124-4477824/825.