All about GST Litigations and GST Legal Cases

Updated on: Jun 3rd, 2025

8 min read

GST litigation is becoming prevalent for taxpayers with every passing year of Goods and Services Tax (GST) implementation. The law is no longer new, and so are the anomalies faced by businesses, which are at constant loggerheads with the GST department while interpreting the law. All this eventually leads to GST disputes. Our article covers GST legal cases at length and different types of GST litigation.

What is GST Litigation?

GST litigation refers to the process of resolving disputes arising between the tax authorities and taxpayers regarding the interpretation or application of GST laws. It happens when a disagreement about GST involves input tax credit claims, GST refund claims, payment of GST liability, etc.

The GST law is fairly new and complex, involving frequent changes. It might happen that both taxpayers and the tax authorities interpret the law differently, leading to disputes. In other cases, delays in the processing of applications can cause disputes.

Some instances of GST litigation are listed below-

Whether a snack should be taxed at 5% or 18%
Disallowing the input tax credit claims due to non-compliance by the vendor
Rejecting GST refund claims for exporters
Penalties for late or incorrect filing of GST returns due to a technical glitch

GST litigation is said to profoundly impact businesses, especially small businesses. It leads to an increase in compliance burden, may cause financial strain, give rise to competitive disadvantage, could put the finance team under stress, and, in many cases, can cause business disruptions.

What Triggers GST Litigation?

GST litigation can arise due to discrepancies about

The current relevant GST rate that is correct for a product or service and classification
Whether a business can claim the input tax credit (ITC) on the GST it paid on its purchases
Whether a GST refund claim is valid and any delays
Mistakes or differences in GST data found during a tax audit
Penalties or interest chargeable versus paid

Stages of GST Litigation

GST litigation starts with a disagreement, goes through a process of notices and replies, and can end up in court if not resolved earlier. The GST litigation process passes through several stages and takes time to reach a resolution.

Audit or Assessment: The tax authorities review your GST returns and documents. If they find something wrong, they may raise a question or objection.

Show Cause Notice (SCN): If the department believes there’s an issue, it sends a formal notice explaining what it thinks is wrong and asking for your explanation.

Reply: You can respond with evidence or arguments to defend your position.

Order: The tax authority reviews your reply and issues an order, which is its final decision.

Appeal: If you do not agree with the order, you can appeal to higher authorities, such as the Appellate Authority, GST Tribunal, High Court, or even the Supreme Court in some cases.

Types of Notices Issued by the GST Department

Below is a summary of the types of notices issued by the GST department-

S No	Category of notice	Possible reasons for notice
1	Compliance	ITC or Tax liability mismatches between GST returns (System based DRC-01B/ DRC-01C)
1	Compliance	Mismatches in the data reported (ASMT-10)
2	Law interpretation	- Different GST rates due to HSN codes - Place of supply
3	GST registration	- Additional place of business - Authorised signatory
4	Audit: DGGI	Discrepancies during physical verification

Responding to Notices and Orders

Different actions are expected for different types of notices and orders. Below is a summary of the notices, respective actions, time limit, and consequences of not taking the necessary action within the defined timeline.

Sl no	Name of the Form- Notice	Description	Reply or Action to be taken	Time limit to respond	Consequence of non-response
1	GSTR-3A	Default notice to non-filers of GST returns in GSTR-1 or GSTR-3B or GSTR-4 or GSTR-8	File the pending GST return along with late fees and interest	15 days from the date of receiving notice	Tax is assessed to the best judgment using the information available with the department. The penalty will be applicable of Rs. 10,000 or 10% of the tax due, whichever is higher.
2	ASMT-02	Notice for seeking additional information for provisional assessment under GST	Reply in ASMT-03 along with documents	Within 15 days from the date of service of this notice	Application for provisional assessment may be rejected
3	ASMT-06	Notice for seeking additional information for the final assessment under GST (for those who applied for a provisional assessment)	Reply in form ASMT-03 within 15 days of receipt of the notice	Within 15 days from the date of receipt of this notice	Final assessment order in form ASMT-07 can be passed without considering the views of the taxpayer being assessed
4	ASMT-10	Scrutiny notice issued u/s 61 of the CGST Act -Notice for intimating discrepancies in the GST return after scrutiny along with tax, interest and any other amount payable in relation to such discrepancy, if any	Reply in ASMT-11, giving reasons for discrepancies in the GST returns	Within the time prescribed in the show cause notice or a maximum of thirty days from the date of service of notice, or such deadline as notified	Proceed to assess the taxpayer based on the information at hand and issue of order in ASMT-12 – may lead to prosecution and penalty
5	ASMT-14	Show Cause Notice for assessment under section 63- reasons for conducting the assessment on a best judgment basis	Reply in written form and appear before the GST authority issuing the notice	Within 15 days of notice	Assessment order in ASMT-15 may not be in favour of the assessee
6	DRC-01	Show cause Notice for Demand of Tax- is issued for demanding tax paid shortly or not paid with or without an intent to defraud. It is served along with a statement of details in DRC-02	Reply in DRC-03 for paying the amount of tax demanded in the notice, along with Interest and penalty, if any applicable. Use DRC-06 to reply to the show cause notice Note: Where no fraud is committed, the penalty is chargeable only if payment is made beyond the thirty days time limit	*Within 60 days of receipt of the notice	Order in form DRC-07 can be passed with a higher penalty or prosecution, within three years from the due date of annual returns for the particular financial year for which tax is demanded
7	ASMT-04	Order for provisional assessment	Comply with conditions, pay tax as per order	As specified in order	Non-compliance may lead to penalty and interest
8	ASMT-07	Final assessment order	Pay any tax/interest/penalty as determined	As specified in order	Recovery proceedings for unpaid amounts
9	ASMT-13	Summary assessment order	File an application for withdrawal (ASMT-14) or appeal	Within thirty days of the order	Amount becomes recoverable; assets may be attached
10	DRC-07	Summary of order creating demand (tax/interest/penalty)	Pay the demanded amount or file appeal	Within three months of the order	Recovery proceedings for unpaid amounts
11	DRC-09	Order for the recovery of dues	Pay outstanding dues	As specified in order	Recovery actions (bank attachment, property seizure, etc.)

For further details about notices regarding GST registration and other kinds, read our page on types of notices.

Filing a GST Appeal

GST appeals are relief options provided to taxpayers who are dissatisfied with tax authorities' orders or judgments by lower courts and want to contest them by filing with the higher authorities. Appeals refer to an application to the higher court to reverse a decision of a lower court.

Appeal level	Orders passed by	Appeal to	Time Limit to Apply for Appeal
1st	Adjudicating Authority	First Appellate Authority	Within three months from order communication (with a possible one month condonation)
2nd	First Appellate Authority	Appellate Tribunal	Within three months from order communication (condonation up to three months possible)
3rd	Appellate Tribunal	High Court	Within three months of the order communication
4th	High Court	Supreme Court	Within thirty days of the order or as certified by the High Court

Frequently Asked Questions

What do you mean by GST litigation?

GST litigation means legal disputes arising from interpreting GST laws between taxpayers and tax authorities.

Why lawyers don’t pay GST?

Lawyers generally do not pay GST on their professional services if their aggregate turnover is below the GST threshold or if their services are exempt under GST law. Otherwise, 18% GST is charged on legal services.

What are the common reasons for GST litigation?

Common reasons for GST litigation include disputes over classification and valuation of goods/services, eligibility and denial of input tax credit, refund claims, tax assessments, and penalties.

What are the stages of GST litigation?

The stages of GST litigation include audit and assessment, issuance of show cause notices, reply to notices, order in original, and appeals to appellate authorities, tribunals, and courts.

What happens if I lose a GST appeal?

If you lose a GST appeal with the appellate authority, you must comply with the order by paying the demanded tax, interest, and penalties, or file an appeal with the High Court within the time limit. Any failure to do so may lead to recovery proceedings.

About the Author

Annapoorna

Assistant Manager - Content

I preach the words, “Learning never exhausts the mind.” An aspiring CA and a passionate content writer having 4+ years of hands-on experience in deciphering jargon in Indian GST, Income Tax, off late also into the much larger Indian finance ecosystem, I love curating content in various forms to the interest of tax professionals, and enterprises, both big and small. While not writing, you can catch me singing Shāstriya Sangeetha and tuning my violin ;). Read more

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