GST and indirect tax: May-June 2026 roundup

The May-June 2026 cycle in Indian GST and indirect-tax law has run on three parallel threads, each of which the practitioner has to track if the architecture of advice is to remain current. The first is the constitutional ferment around the foundational input-tax-credit architecture — the s.16(2)(c) challenge now sitting before the Supreme Court alongside contrary High Court treatment, the continuing s.16(4) time-limit challenges, and the retrospective Safari Retreats override sitting under writ petition in multiple High Courts. The second is the operational aftermath of the September 2025 rate-rationalisation in the High Courts — ITC denial litigation under the new dual-rate regime, inverted-duty-structure refund applications, and the s.74 fraud-detection cycles that have followed the rate transition. The third is the operational implementation of the post-NAA anti-profiteering architecture, with the GSTAT Principal Bench now actively hearing the residual matters under the s.171 framework. Read together, the cycle is one of structural recalibration of the GST architecture eight years on from inception, and is the operational backdrop for the practitioner advising on any indirect-tax question through mid-2026.

What changed in policy

The principal policy thread through May-June 2026 is the working-through of the September 2025 rate-rationalisation. The 56th GST Council Meeting (3 September 2025) had implemented the largest rate recalibration since GST inception — a dual-rate regime structured around an 18 per cent standard rate and a 5 per cent merit rate, with most 28 per cent and 12 per cent items collapsed into the new bands. The transition was effective 22 September 2025 for both services and goods, phased through 1 November 2025. The compensation cess regime is sunsetting on 31 March 2026. The May-June 2026 window is the operational tail of the transition — the period in which the substantive product-pricing exercise across taxpayers has been worked through against the inverted-duty-structure refund framework and the ITC re-balancing that the rate change has required.

The 57th GST Council Meeting, expected through this window to address the compensation-cess-replacement framework and the inclusion of natural gas and electricity in the GST ambit, was not confirmed as held at the time of writing. Press reporting through April-May 2026 had indicated a likely meeting after the state-election cycle concluded, but no formal date or recommendations had been published by the GST Council secretariat. The agenda expectations include the compensation-cess-replacement architecture, the natural-gas-and-electricity inclusion question (where the dominant industry critique is that the exclusion breaks the ITC chain), the expansion of B2C e-invoicing for large taxpayers, and a review of the September 2025 rate-rationalisation impacts on inverted-duty-structure refund applications. The practitioner is best served by treating the 57th Council outcomes as pending until formal notification.

The 36-month extension benefit under s.16(5) CGST — inserted via the Finance (No. 2) Act 2024 with effect from 1 November 2024 — has worked through to operational closure through this window. The benefit allowed ITC claims for financial years 2017-18 to 2020-21 to be taken up to 30 November 2021, addressing a substantial cohort of early-GST ITC claims that had been time-barred under the unmodified s.16(4) framework. The operational closure of the s.16(5) window is now a matter of tribunal and High Court engagement rather than primary policy.

The anti-profiteering architecture has continued its post-NAA recalibration. The National Anti-Profiteering Authority was dissolved in November 2022. The Competition Commission of India was initially designated as the appellate authority but stepped back in 2024. By Notification 18/2024-CT dated 30 September 2024, the GST Appellate Tribunal Principal Bench was designated as the authority to hear pending and new anti-profiteering complaints. The sunset on new profiteering complaints was 1 April 2025. By May-June 2026 the GSTAT Principal Bench is actively hearing the residual approximately 184 anti-profiteering matters, including the substantial Hindustan Unilever Limited claim (around ₹462 crore), Jubilant FoodWorks, Patanjali, Reckitt Benckiser and Procter and Gamble matters. The Reckitt Benckiser matter sits before the Delhi High Court on price-protocol grounds. Industry watch suggests the government is considering reviving a two-year anti-profiteering window aligned to the September 2025 rate-rationalisation gains, though no formal proposal has been notified.

What changed in the courts

The most consequential High Court development through May-June 2026 is the Gujarat High Court's ruling in Maruti Enterprise v. Union of India (1 May 2026), in which the Supehia and Pranav Trivedi bench upheld the constitutional validity of s.16(2)(c) CGST. The Court held that ITC is a "statutory entitlement" subject to conditions, not a vested right in the Eicher Motors sense, and that the recipient has a reasonable compliance pathway under Rule 37A (the annual checkpoint by 30 September) with a 60-day cure window through 30 November. The Court explicitly rejected the double-taxation challenge, holding that credit arises only when tax is paid into the exchequer and that the framework allows reversal and reclaim. The framing — "statutory entitlement, not vested right" — sits in tension with the credit-as-vested-right architecture Eicher Motors (1999) had established, and will be tested in the apex appellate trajectory the same week saw open.

The apex test is M/s Prime Metals v. Union of India (SLP(C) 18577/2026), in which the Supreme Court issued notice on the constitutional validity of s.16(2)(c) CGST. The petitioner — a metals supplier from Alwar, Rajasthan — contends that denying ITC to a bona fide purchaser for the supplier's default is arbitrary, violative of Article 14, and inconsistent with the Eicher Motors and Dai Ichi Karkaria credit-as-right lineage. The SLP was listed at the notice stage on 29 May 2026; final disposition is pending and should not be over-read by the practitioner. The structural significance is substantial — the matter is the long-awaited apex test of the foundational GST ITC architecture and the outcome will determine whether the Eicher Motors vested-right doctrine translates intact into the GST framework or is re-cast for the matching-system architecture of the GST era.

The s.16(4) time-limit constitutional challenge continues to sit before the Supreme Court in Mrityunjay Kumar v. Union of India (SLP(C) 28270/2023). The matter challenges the Patna High Court's decision in Gobinda Construction v. Union of India upholding s.16(4) as constitutionally valid. As of 1 June 2026 notice has been issued (3 January 2024) but no final hearing has been listed. Through 2025-26, the Madras, Kerala and Andhra Pradesh High Courts have continued to apply s.16(4) strictly. The Government's policy response — the 36-month s.16(5) extension for FYs 2017-18 to 2020-21 — has addressed the substantive cohort but does not engage with the constitutional question. The matter remains pending and practitioner advice should treat the s.16(4) discipline as operative pending apex disposition.

The Safari Retreats retrospective override is itself under writ petition in multiple High Courts. The Supreme Court had dismissed the Revenue's review petition against the 3 October 2024 ruling on 22 May 2025 — the Court had held that "plant or machinery" in s.17(5)(d) CGST allows ITC on commercial buildings (shopping malls, warehouses) constructed for leasing, applying a functionality test. The Finance Act 2025 then retrospectively substituted "plant or machinery" with "plant and machinery" with effect from 1 July 2017 — designed to legislatively override Safari Retreats prospectively and retrospectively. The retrospective amendment is now under writ challenge in multiple High Courts. The constitutional framing draws on the Eicher Motors line: a retrospective extinction of credit that has accrued under the existing law is, on the Eicher Motors discipline, beyond the legislative power without express compensatory mechanism. The High Court engagements through May-June 2026 are at the writ-admission stage and final disposition is pending.

The s.74 fraud-detection cycles have continued to generate High Court engagement through this window. The migration from rate-rationalisation to operational ITC re-balancing has produced a cohort of show-cause notices under s.74 on the substantive ITC-availment side, and the s.130 confiscation framework has been invoked in a substantial number of transit-and-goods-detention matters. The High Court engagements have followed the established framework — the Radha Krishan Industries (2021) discipline on s.83 provisional attachment, the State of Karnataka v. Ecom Gill Coffee Trading (2023) framework on burden of proof in ITC disputes, and the developing line on s.130 confiscation proportionality. The operational discipline for the practitioner is that the s.74 and s.130 engagements through this window have not produced doctrinal recalibrations of the apex framework; the established discipline applies.

The IGST refund line has continued through the High Courts on the inverted-duty-structure architecture. The post-rate-rationalisation cohort of refund applications has produced a substantial backlog at the proper officer level and the High Court engagements through this window have followed the VKC Footsteps India (2021) discipline on the constitutional validity of the inverted-duty-structure framework. The operational discipline is unchanged; the engagement is at the implementation level.

What practitioners are tracking

The principal item on the practitioner watch list through the next six months is the Prime Metals appellate trajectory. The Supreme Court engagement with s.16(2)(c) will determine the doctrinal hinge on which the GST ITC architecture turns. The Gujarat High Court's "statutory entitlement, not vested right" framing in Maruti Enterprise is the framing the Revenue will press; the Eicher Motors and Dai Ichi Karkaria credit-as-right lineage is the framing the petitioners will press. The outcome will determine whether ITC denials for supplier-side defaults — a substantial cohort of the s.74 show-cause-notice docket — survive constitutional scrutiny or are recast as requiring fault on the recipient side. The matter is at the notice stage and final disposition is pending; the practitioner is best served by treating the constitutional question as live and pleading on both the statutory-entitlement and the vested-right frames in parallel.

The second item is the 57th GST Council Meeting. The compensation-cess regime sunsets on 31 March 2026 and the replacement framework is the principal substantive question. The natural-gas-and-electricity inclusion question — long pending — is the structural question that has been ripe for Council engagement through the post-rate-rationalisation window. The B2C e-invoicing expansion is the operational question that will affect the compliance architecture across taxpayers. The expected meeting through May-June 2026 had not been confirmed as held at the time of writing; the practitioner is best served by treating the Council outcomes as pending until formal notification.

The third item is the operational closure of the s.16(5) 36-month extension cohort. The benefit allowed ITC claims for FYs 2017-18 to 2020-21 to be taken up to 30 November 2021. The substantive cohort has now worked through. The residual engagement is at the tribunal and High Court level on the specific claim profiles. The discipline for the practitioner is that the s.16(5) window is closed for substantive new claims and the engagement is now at the dispute-resolution stage.

The fourth item is the GSTAT anti-profiteering docket. The residual NAA caseload — approximately 184 matters — has migrated to the GSTAT Principal Bench. The HUL claim (around ₹462 crore) is the substantial matter on the docket; the Jubilant FoodWorks, Patanjali, Reckitt Benckiser and P&G matters are the supporting cohort. The price-protocol architecture that has been the substantive doctrinal hinge in the NAA jurisprudence will be tested in the GSTAT engagement. The Delhi High Court's engagement with the Reckitt Benckiser matter on price-protocol grounds is the immediately consequential development. The discipline for the practitioner is that the post-September 2025 rate-rationalisation gains may attract a revived anti-profiteering window if the Government's stated consideration matures into formal notification.

The fifth item is the retrospective Safari Retreats override. The constitutional challenge to the Finance Act 2025 retrospective amendment to s.17(5)(d) is at the writ-admission stage in multiple High Courts. The Eicher Motors and Dai Ichi Karkaria credit-as-right lineage is the doctrinal hinge; the legislative-override-of-judicial-decision discipline that the Madras Bar Association line has developed is the constitutional hinge. The outcome will affect substantial commercial real-estate ITC positions and the practitioner advising on those positions is best served by treating both the Safari Retreats functionality test and the retrospective override as live until the constitutional challenge is finally disposed.

Read together, the May-June 2026 cycle is the operational backdrop for the practitioner advising on any GST or indirect-tax question through mid-2026. The architecture is in structural recalibration eight years on from GST inception. The foundational ITC question sits before the Supreme Court; the rate-rationalisation aftermath sits before the High Courts; the anti-profiteering migration sits before the GSTAT. The discipline for the practitioner is to treat the architecture as live and the doctrinal hinges as moving, and to advise on the established framework with the appellate trajectories explicitly flagged.

Related on Valkya

• Eicher Motors v. Union of India: when input credit becomes a vested right
• Filco Trade Centre v. Union of India: the TRAN-1 transitional credit opening
• Mohit Minerals v. Union of India: GST Council recommendations and ocean-freight reverse charge
• Bharti Airtel v. Union of India: GSTR-3B rectification and electronic-ledger finality

Sources

1. Supreme Court of India — cause list and judgments archive: https://main.sci.gov.in/
2. GST Council — official press-release page: https://gstcouncil.gov.in/press-release
3. Taxsutra — GST rulings and analysis: https://www.taxsutra.com/gst/rulings
4. LiveLaw — GST and indirect-tax coverage: https://www.livelaw.in/
5. BarandBench — GST constitutional litigation coverage: https://www.barandbench.com/
6. CBIC — notifications and circulars: https://www.cbic.gov.in/