The Allahabad High Court has issued a GST notice in response to a legal case questioning whether some rules in the Central Goods and Services Tax (CGST) Act, 2017, are fair. These rules limit the ability of businesses to claim tax credits if their suppliers fail to meet certain requirements.
A Division Bench, including Justice Saumitra Dayal Singh and Justice Swarupama Chaturvedi, was hearing the writ petition submitted by M/s Lohum Materials Private Limited. At the time of hearing, the Court allowed the applicant to implead the State of Uttar Pradesh as a respondent in the case.
In the petition, the challenge has been raised against the revised provisions of Sections 16(2)(aa), 16(2)(ba), and 38(2)(b) of the CGST Act, 2017. The applicant contends that these rules discriminate against legitimate consumers of goods and services, even when they have met all their GST obligations.
Before the Court, the applicant claimed that a purchasing dealer who has paid the whole value of goods or services along with the applicable GST, and who has obtained goods against a valid tax invoice, must not be refused the benefit of ITC because of subsequent defaults or irregularities of the supplier. The argument was made that the laws unfairly punish innocent recipients for circumstances they couldn’t influence.
It was claimed under the writ petition that the “primary right” of a registered recipient to claim ITC has been “arbitrarily obstructed” even after full compliance on the recipient’s end.
The applicant stated that the input tax credit (ITC) entitlement cannot be restricted only because of the events that take place after the receipt of goods or services, especially when the purchasing dealer does not have any practical procedure to track the tax compliance of the supplier in real time.
The Court, after hearing the counsel for the applicant, the Union of India, the State authorities, and the CGST authorities, stated that the case needs consideration. Thereafter, the Bench issued notice to the Attorney General of India along with the Advocate General of Uttar Pradesh.
The Revenue requested time to submit its counter-affidavit, and the Court granted it. The Bench provided four weeks to the respondents to submit their responses and two weeks thereafter to the applicant to submit a rejoinder affidavit.
Read Also: Allahabad HC Grants Relief to Vibhuti Tyres, Quashes GST Demand as Illegal Beyond SCN Scope
The case is now scheduled for the week of July 13, 2026. The Court explained that the prayer for an interim stay shall be considered after the parties have exchanged affidavits.
| Case Title | M/S Lohum Materials Private Limited vs. Union Of India |
| Case No. | WRIT TAX No. – 2021 of 2026 |
| Counsel For Petitioner | Pooja Talwar |
| Counsel For Respondent | Amit Mahajan, Dhananjay Awasthi, and Krishna Agarawal |
| Allahabad High Court | Read Order |
