Gujarat High Court Imposes ₹1 Lakh Cost on Tax Authorities for not allowing ITC credit.

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Hon’ble Gujarat High Court has imposed a token cost of ₹1,00,000 on the Central tax authorities for procedural lapses in handling a GST dispute involving Grasim Industries Ltd. A division bench comprising Justice Bhargav D. Karia and Justice D.N. Ray passed the order while hearing Special Civil Application in the case of an order-in-original (OIO) dated April 25, 2024 passed by the tax department without considering the petitioner’s replies and rectifications. The Union of India and associated tax officers have filed a common affidavit-in-reply tendering an unconditional apology for issuing the order in original and justifying a subsequent rectification based on their verification reports. However,  the Court rejecting the submissions made by the department, found that the original order failed to take into account critical submissions and rectified GST returns filed by appellant M/s. Grasim Industries for the months of June and July 2019, as part of the 2019–2020 financial year. These observations, the bench observed, were already highlighted in its earlier order dated April 2, 2025. 

The High Court has imposed a token cost of ₹1,00,000 on the Central Tax Authorities whereas in its earlier order dated 02.04.2025, the High Court had  proposed to impose exemplary cost upon the respondents for passing of such an order-in-original contrary to the submissions made by the petitioner and the reconciliation statements as well as without verification of the facts presented before the adjudication officer.

GRASIM INDUSTRIES LTD.  Versus UNION OF INDIA & ORS.


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