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Daily Intelligence Capsule — 28 August 2026

Live EditionFriday, 28 August 2026

Books Don't Decide Taxes: ITAT Hands Reliance Jio a ₹11,003 Crore Win

and Clears Its Overseas Telecom Payments of Royalty/FTS Tax Too

Income Tax

The ITAT Mumbai Bench dismisses the Revenue's appeals against Reliance Jio, holding that capitalising an expense in the books doesn't conclusively determine its tax treatment, and that payments to non-resident telecom operators for voice termination, bandwidth and O&M services aren't taxable as royalty or FTS under India's DTAAs.

Read the briefing

GST / Case Law

Blocked for Two and a Half Years: Madras HC Says Rule 86A's One-Year Limit on ITC Blocking Isn't a Suggestion

The Madras High Court orders immediate unblocking of Input Tax Credit frozen for over two and a half years, holding that Rule 86A(3)'s one-year limit operates automatically and cannot be extended by a later departmental communication.

Read: Blocked for Two and a Half Years: Madras HC Says Rule 86A's One-Year Limit on ITC Blocking Isn't a Suggestion

GST / Case Law

Five Years Later, Section 16(5) Comes Through: Gauhati HC Quashes a GST Order Because the Taxpayer Filed on Time All Along

The Gauhati High Court sets aside a GST Order-in-Original denying ₹84.58 lakh of Input Tax Credit, holding that a return filed on 23 October 2019 for FY 2018-19 falls squarely within Section 16(5)'s retrospective cut-off of 30 November 2021.

Read: Five Years Later, Section 16(5) Comes Through: Gauhati HC Quashes a GST Order Because the Taxpayer Filed on Time All Along

Did You Know

An Automatic Sunset Clause Is Only Automatic If Someone Acts On It

Rule 86A(3) of the CGST Rules doesn't ask the department to do anything to end an ITC block after one year — it simply says the restriction "shall cease to have effect," automatically, the moment the year runs out. Yet in this week's Madras High Court ruling, a taxpayer's credit stayed frozen for two and a half years anyway, because nobody at the department actually acted on the rule's own built-in expiry — proof that an automatic sunset clause is only as good as someone remembering to honour it.

Quiz of the Day

What's the Penalty?

Your client filed their GSTR-3B return for FY 2018-19 on 23 October 2019 — well within any deadline anyone was applying at the time. In March 2024, the department passes an Order-in-Original denying ₹84,58,480 of Input Tax Credit claimed in that return and confirming a demand. Your client comes to you in 2026, after the Finance Act, 2024 has since inserted Section 16(5) into the CGST Act. Does Section 16(5) help your client at all, given that the order denying the credit was passed in 2024 — before your client even raised this argument? And what single fact actually decides the outcome?