The case could have implications beyond Jio for large businesses with multiple GST registrations that distribute common-service credits across states.
The government seeks to overturn the order, which directed GST authorities to reconsider the show-cause notices issued to Jio.
The Centre has approached the Supreme Court against a 5 March 2026 order of the Madras high court that granted relief to telecom company Reliance Jio Infocomm in a dispute over the distribution of goods and services (GST) credits among its various registrations.
The government filed its plea on 20 August, seeking to overturn the order, which directed GST authorities to reconsider the show-cause notices issued to the company.
The plea is yet to be assigned a bench or a hearing date, according to the Supreme Court website.
The case file
The case centred on when the telecom company should distribute GST credit among its different GST registrations: when the invoice is issued or when the credit becomes legally available.
Jio has 36 GST registrations across different states and Union territories. When the telecom company purchases common services used across its operations in different states, the GST paid on those services can be availed as input tax credit (ITC).
Under the GST law, ITC is the credit of GST paid on a business’s purchases of goods or services, which can be used to pay its GST liability.
Since such services may be used by Jio’s operations across multiple states, the tax credit must be distributed among its different GST registrations through an Input Service Distributor (ISD).
The dispute over the distribution of these credits arose from show-cause notices issued by GST authorities in June 2025, covering the period from 2018-19 to 2023-24.
The tax department alleged that Jio distributed certain ITC after the month in which the original invoices were issued. According to the authorities, this violated Rule 39(1)(a) of the Central Goods and Services Tax Rules, 2017, which governs the distribution of ITC through an ISD.
Jio challenged the notices before the Madras high court in 2025. It argued that merely receiving an invoice does not mean the credit mentioned in it can be immediately claimed or distributed.
Jio asked the court to strike down the same-month ITC distribution requirement and quash the GST show-cause notice issued against it.
The company said that before distributing credit from a common service, it must determine whether the credit is eligible, which of its registrations are entitled to it, and whether the requirements under the GST law have been met.
Jio also argued that there is no loss to the government if ITC is distributed a month later, because Jio itself cannot use the credit until it is distributed.
Jio said that because it has multiple GST registrations and receives common services, the GST credit for those services must be distributed among the relevant registrations rather than retained at the head office. The credit is distributed based on the turnover of the individual units.
Teleco further argued that before 1 April 2025, the law did not clearly empower the government to prescribe a specific time limit for the distribution of such credit.
Mint‘s queries emailed to Reliance Jio and the GST department remained unanswered.
Bone of contention
To be sure, all notices predate the 1 April 2025 changes. The changes made the ISD mechanism mandatory for distributing credit from common services and expressly empowered the government to prescribe the manner and timing of such distribution.
The GST department opposed Jio’s petition, arguing that the distribution of credit through an ISD was essentially an internal transfer of credit from one Jio GST registration to another, distinct from actually claiming or using the credit.
The department said Jio did not need to satisfy all the conditions for claiming ITC at the stage when the credit was merely being distributed between its registrations.
The department also defended the same-month requirement, saying it helped maintain proper records, prevent wrongful claims of credit and protect government revenue.
It further argued that the provision requiring same-month distribution did not create a new power for the government but merely clarified an existing power.
On 5 March 2026, the Madras high court ruled in Jio’s favour on the key interpretation. It held that the issuance of an invoice by itself cannot determine when the credit becomes available. The credit becomes available only after the requirements under the GST law are fulfilled.
However, the high court did not strike down Rule 39(1)(a) and did not completely quash the show-cause notices issued to Jio. Instead, it directed GST authorities to re-examine the notices in light of its interpretation of the law.
The Centre has now challenged that interpretation before the Supreme Court.
Radhika Goyal is Author of Taxconcept Gurugram head office, for deeply reported tax, gst and income tax articles on issues that matter. He splits her time between New Delhi and Bengaluru, and has worked as a reporter, a podcaster and an editor for publications across India.