This half-yearly round-up analytically summarizes the key Direct and Indirect Tax Judgments of the Supreme Court and all High Courts of India reported at Taxscan.in during the First half of 2024.
The Kerala High Court dismissed a writ petition challenging the denial of Input Tax Credit (ITC) under the Central Goods and Service Tax (CGST) Act, 2017. Kuriakose Parappottu Binu, the petitioner, contested an order from the State Tax Officer determining their liability to CGST/SGST for the assessment year 2018-19. The Government Pleader argued that the petitioner failed to appear before the officer or file a reply to the show cause notice. The court noted that the petitioner has the statutory remedy of filing an appeal against the order within the specified time frame.
Thus, the court dismissed the writ petition, stating that no further relief is required since the petitioner can avail of the statutory remedy.
The Delhi High Court upheld the Income Tax Appellate Tribunal’s ( ITAT ) decision today, confirming the recovery of outstanding income taxes demand exceeding Rs. 100 crores for the assessment year 2018-19. The court refused to grant stay on recovery notice.
The dispute arose from the denial of tax exemption claimed by Congress under Section 13A of the Income Tax Act,1961, based on the timing of their income declaration and receipt of donations exceeding the prescribed limit.
The Kerala High Court set aside an order denying Input Tax Credit (ITC) to Philips Auto Agencies due to a mismatch between GSTR-2A and GSTR-3B under the Goods and Services Tax Act for the year 2018-19. The petitioner argued that GSTR-2A was introduced only in September 2018 and thus, the denial of ITC based on the mismatch was unjustified. They also contended that they were not provided with a statement of mismatch as required by Section 73(3) of the GST Act.
The court directed the Assessing Authority to reconsider the petitioner’s claim, taking into account the Circular dated 27.12.2022. If requested, the statement of mismatch should be provided to the petitioner. The court set aside the assessment order and remitted the matter for fresh consideration, directing the petitioner to appear before the authority on 20.03.2024 for further proceedings.
The Bombay High Court ruled that interest paid on borrowed funds for investment in shares is disallowed under Section 14A of the Income Tax Act, 1961 if the dividend received on shares does not form part of the total income.
The appellant, a Chartered Accountant turned stockbroker, faced disallowance of interest by the Assessing Officer as the purpose of investment was to earn tax-free dividend income. The ITAT upheld the disallowance, stating that the borrowed funds were primarily invested in shares of the appellant’s own group companies, from which no income was received.
The appellant argued that the borrowed funds were utilised to expand his business as a corporate entity, and the interest paid was a business expenditure. However, the court held that since the dividend income from the invested shares was not taxable, the expenditure on interest incurred did not qualify for deduction under Section 14A of the Income Tax Act.
The Delhi High Court directed the competent authority to decide the claim of refund under the Delhi Value Added Tax (DVAT) Act, 2004 within four weeks, as the refund request by Central Herbal Expo (India) was under consideration. The petitioner sought a refund of Rs 12,70,879/- for the fourth quarter of 2013-2014, along with statutory interest due to the delay in refund. The respondents assured that the refund request was under review, and a decision would be made within four weeks.
The division bench, comprising Justice Sanjeev Sachdeva and Justice Ravinder Dudeja, disposed of the writ petition, directing the competent authority to decide the refund claim within the stipulated time. Additionally, if the refund is deemed admissible, it should be paid along with statutory interest at 6% per annum.
However, if the competent authority finds the refund claim inadmissible, a reasoned order must be passed and communicated to the petitioner, who may pursue further remedies as permissible by law.
The division bench of the Delhi High Court modified the order cancelling Goods and Service Tax (GST) registration retrospectively, emphasizing that registration cannot be cancelled merely for failure to furnish returns for a continuous period of six months. Manish Anand, the petitioner, challenged the retrospective cancellation of GST registration, citing deficiencies in the show cause notice and the order. The notice lacked specific reasons for cancellation and did not inform the petitioner of the retrospective cancellation.
The court observed that registration cannot be cancelled retroactively without valid grounds, especially when the taxpayer was compliant during the period in question. Since the petitioner ceased business activities and shifted abroad, the court modified the order, cancelling registration from the date of the show cause notice issuance, i.e., 02.12.2021. The petitioner must comply with Section 29 of the Central Goods and Services Tax Act, 2017.
The Delhi High Court set aside the order cancelling Goods and Service Tax (GST) registration of Ganesh Sales Corporation due to deficiencies in the Show Cause Notice (SCN). The SCN lacked crucial details such as the name of the officer to appear before and did not specify the place for appearance.
Moreover, the notice did not notify the petitioner of the retrospective cancellation of registration, depriving them of the opportunity to object. The subsequent order also lacked reasons for cancellation and merely referenced the SCN date.
The court emphasised that cancellation with retrospective effect should consider the impact on taxpayers’ input tax credit. The petitioner must comply with Rule 23 of the Central Goods and Services Tax Rules, 2017. The respondents are not precluded from taking steps for recovery under the law, including retrospective cancellation.
The Delhi High Court directed the re-adjudication of a show cause notice (SCN) by the Proper Officer as the petitioner, Polytec Industries, failed to reply due to non-access to the Goods and Service Tax (GST) portal. The petitioner’s registration was retrospectively cancelled, preventing access to the portal until the cancellation became prospective following a subsequent order. Consequently, the petitioner couldn’t upload a reply to the SCN.
The court, comprising Justice Sanjeev Sachdeva and Justice Ravinder Dudeja, deemed it necessary to grant the petitioner an opportunity to respond and ordered the re-adjudication of the SCN. The previous order was set aside, and the proceedings were restored on the record of the Proper Officer. The petitioner must upload a reply within one week, following which the Proper Officer will adjudicate the SCN in accordance with the law.
The Delhi High Court upheld the order of the Income Tax Appellate Tribunal (ITAT) regarding reassessment proceedings under the Income Tax Act, 1961, stating they were conducted without proper application of mind. Pioneer Town Planners Pvt Ltd, the respondent-assessee, had its income tax return processed under Section 143(1) of the Act, but reassessment proceedings were initiated after a search operation on Shriji Group entities.
The respondent appealed to the Commissioner of Income Tax (Appeals) [CIT (A)], and then to the ITAT, which found the AO’s actions lacked independent application of mind. The Revenue argued that the AO’s actions were based on subjective satisfaction and met the requirements of Section 151 of the Act. However, the respondent argued that the approval for reassessment was not satisfactory, akin to rubber-stamping. The Court upheld the ITAT’s order, dismissing the appeal.
Puneet Kothapa, the son-in-law of former Municipal Administration Minister P Narayana, received temporary relief as the High Court of Andhra Pradesh issued interim orders on Tuesday, instructing the police to refrain from taking immediate action, such as arrest, against him for alleged charges of GST evasion related to vehicle purchases.
In the proceedings at the High Court of Andhra Pradesh in Amaravati, the case number being Criminal Petition No.1583 of 2024, the learned Assistant Public Prosecutor sought time to gather instructions. The court directed the petitioner’s counsel to serve personal notice on the respondent within three weeks and file proof of service.
The Bombay High Court recently ruled that ex gratia bonuses provided to employees, exceeding the eligible bonus under the Payment of Bonus Act, qualify as permissible business expenditures.
The bench, comprising Justices K. R. Shriram and Neela Gokhale, noted that the earlier decision by the Income Tax Appellate Tribunal ( ITAT ) was legally incorrect in asserting that liabilities for salary and wages resulting from the Justice Palekar Award are not deductible in the current year but only in the year of agreement between management and employees. The Bombay High Court further clarified that bonuses paid to employees for services rendered cannot be claimed under Section 37(1) of the Income Tax Act.
The Delhi High Court applied the rule of consistency in a recent decision regarding the withdrawal of upward adjustments of income proposed by the Transfer Pricing Officer (TPO). The case involved a wholly owned subsidiary of Oriflame International SA engaged in selling skin care and cosmetic products.
The TPO rejected selected comparable entities and proposed upward income adjustments, leading to assessment orders reflecting these adjustments. The Income Tax Appellate Tribunal (ITAT) remanded the matter to the TPO, ultimately ruling that the selected comparable entity, Modicare, was unsuitable and recommending the Transactional Net Margin Method (TNMM) for benchmarking.
The Department appealed these findings. However, during the hearing, it was revealed that for the assessment year 2014-15, Modicare was excluded from the comparables list, and no upward adjustments were made. The court noted that this approach was accepted and followed in subsequent years, indicating consistency.
The Allahabad High Court recently ruled that the confiscation of goods under the Customs Act, 1962 must be based on credible material and a valid “reason to believe.” In the case, the petitioner challenged the seizure of 49,210 kgs of arecanuts based on opinions from traders, a report from the Arecanuts Research and Development Foundation, and alleged discrepancies in quantity and valuation.
The petitioner’s counsel argued that seizure requires a valid “reason to believe” that the goods are liable for confiscation, which was lacking. The revenue authorities claimed they acted bona fide and presented opinions and reports as evidence.
However, the court found that the authorities failed to provide credible objective material or establish a valid reason for their belief, rendering the seizure invalid. The court emphasized that without proper justification, seizure and confiscation actions lack jurisdiction and are non-actionable.
The Allahabad High Court has rejected the anticipatory bail application of the accused involved in the Goods and Services Tax (GST) – Input Tax Credit (ITC) scam of Rs. 2645.2 Crore at a PAN-India level. Due to the severity of the offence, the court opted not to grant bail.
Justice Samit Gopal, presiding over the bench, noted the gravity of the economic offence, citing the law established by the Apex Court. Considering the elaborate scheme employed to defraud the government exchequer and the potential need for custodial interrogation, the court deemed the case unfit for anticipatory bail.
Furthermore, the state revealed during submissions that an investigation has uncovered a network of individuals involved in the scam, collectively claiming Input Tax Credit amounting to Rs. 26,452,895,600. This extensive fraudulent activity has resulted in substantial revenue loss, strengthening the court’s decision to reject anticipatory bail for the accused.
The Allahabad High Court has rebuked the GST Department for its inconsistent handling of Unutilised Input Tax Credit (ITC) refund claims by Samsung India Electronics. The petitioner, exporting IT design and software development services to its overseas holding company, criticized the department’s varying treatment of refund applications stemming from identical circumstances.
M.P. Devnath, representing the petitioner, argued against the Department’s inconsistent approach, emphasizing its legal inaccuracy. However, the Additional Chief Standing Counsel for the respondents contended that the principle of res judicata doesn’t apply in tax matters, asserting that previous refund approvals don’t guarantee subsequent ones.
The Bench stressed the importance of consistency in taxation, highlighting its pivotal role in maintaining public trust, ensuring compliance, and upholding the tax system’s integrity. Inconsistencies, they argued, can undermine these pillars, necessitating standardized rules and principles to govern taxpayers facing similar factual and legal situations.
The Bombay High Court recently ruled that ex gratia bonuses paid to employees, exceeding the eligible bonus under the Payment of Bonus Act, qualify as permissible business expenditures. The court overturned the Income Tax Appellate Tribunal’s decision, which disallowed deductions for such payments.
The case involved Indian Express, engaged in newspaper printing and publishing, facing disallowances by the Assessing Officer concerning additional salary and wages due to the Justice Palekar Award. Additionally, the AO disallowed ex gratia bonuses exceeding the statutory limit. The Commissioner of Income Tax (Appeals) overturned the AO’s decision, but the ITAT reinstated it.
However, the High Court ruled in favor of the appellant, citing previous judgments, and clarified that bonuses paid for services rendered cannot be claimed under Section 37(1) of the Income Tax Act. Nonetheless, ex gratia payments exceeding the Bonus Act’s limit were deemed allowable as business expenditures.
The Telangana High Court has served notice to the government regarding a writ petition lodged by M/s GVK Power and Infra Limited, contesting the Central Board of Indirect Taxes and Customs ( CBIC ) circular’s clarification on the taxability of Personal and Corporate Guarantees under the Goods and Services Tax ( GST ) regime.
R.K. Associates represented the petitioner, while Gadi Praveen Kumar, Deputy Solicitor General of India, appeared for the respondents. The trade and field formations have forwarded representations seeking clarification on certain issues concerning the taxability of providing personal bank guarantees by directors to banks to secure credit facilities for the company. Similar clarifications are sought regarding the taxability and valuation of providing corporate guarantees by related persons to banks/financial institutions for other related persons, as well as by a holding company to secure credit facilities for its subsidiary company.
A Single Bench of the Madras High Court has remanded a Goods and Services Tax ( GST ) Assessment and Demand Order, issued based on all India turnover instead of State-wise turnover.
The Bench noted that, “On examining the impugned assessment order, it is noticeable that the assessing officer has taken into consideration the closing balance of creditors on all India basis. Similarly, based on the profit and loss account of the petitioner, the total revenue and expenditure of the corporate entity were made the basis for imposing GST.”
In a major relief to Adani Wilmar, the Calcutta High Court sanctioned incentives under the West Bengal State Support for Industries Scheme, 2008 post GST.
A Single Bench of Justice Sabyasachi Bhattacharyya observed that “The concession given by the scheme has been accepted by the petitioners and the petitioners, acting on the said promise of the State, have continued commercial production for a considerable time. The respondents have acceded to the claim of the petitioners under the Scheme, concession or otherwise, by granting RC-I and RC-II and also disbursing a part of the payment. Hence, it is too late in the day to raise a demur to the entitlement of the petitioners to the scheme itself.”
The Calcutta High Court ruled that tea saplings were not liable to tax under the Bengal Agriculture Income Tax Act, 1944. The writ petition has been filed praying to quash the impugned order passed by the West Bengal Taxation Tribunal, Kolkata. The petitioner has also sought relief for a direction to the respondents to calculate depreciation in accordance with Section 7A of the Bengal Agricultural Income Tax Act, 1944 and not under Section 7 thereof.
A Division Bench of Justices Surya Prakash Kesarwani and Rajarshi Bharadwaj observed that “Definition of “tea” as given in Section 3(n) of the Tea Act of 1953 is not liable to be adopted for the purpose of the Bengal Agricultural Income Tax Act. That apart, even the definition of “tea” given under Section 3(n) of the Tea Act, 1953 does not include saplings. Thus, by any stretch of imagination or logic “tea” shall not include saplings.”
In a significant ruling the Delhi High Court observed that appending the phrase ‘Yes’ by the Principal Commissioner of Income Tax ( PCIT ) is not valid under Section 151 of the Income Tax Act, 1961.
Section 151 of the Income Tax Act stipulates that the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner must be “satisfied”, on the reasons recorded by the AO, that it is a fit case for the issuance of such notice. Thus, the satisfaction of the prescribed authority is a sine qua non for a valid approval as per the said Section.
A Division Bench of Justices Yashwant Varma and Purushaindra Kumar Kaurav observed that “The said approval cannot be granted in a mechanical manner as it acts as a linkage between the facts considered and conclusion reached. In the instant case, merely appending the phrase “Yes” does not appropriately align with the mandate of Section 151 of the Income Tax Act as it fails to set out any degree of satisfaction, much less an unassailable satisfaction, for the said purpose.”
A Single Bench of the Madras High Court ruled that the Income Tax Department should mandatorily follow Digital Evidence Investigation Manual by the Central Board of Direct Taxes ( CBDT ) while conducting searches and seizing electronic evidence.
The Court of Justice Krishnan Ramasamy observed that “Under these circumstances, this Court is of the considered view that since the respondents had not followed the Digital Evidence Investigation Manual while collecting and preserving the evidences, as per the law laid down by the Hon’ble Apex Court, if there is no corroborative evidence and proved in the manner known to law, the digital data collected by the Department in the course of search and seizure and thus, the said search and seizure is against the law and ab initio bad.”
In a major ruling, the Himachal Pradesh High Court declared ‘water cess’ levy on hydropower generation as ‘unconstitutional’.
A Division Bench of Justices Tarlok Singh Chauhan and Satyen Vaidya observed that “The provisions of the Himachal Pradesh Water Cess on Hydropower Electricity Generation Act, 2023, are declared to be beyond the legislative competence of the State Government in terms of Articles 246 and 265 of the Constitution of India and, thus, ultra vires the Constitution. (ii) Consequently, the Himachal Pradesh Water Cess on Hydropower Electricity Generation Rules 2023, are also quashed and set aside.”
In a recent development at the Madras High Court, the Commissioner of Customs, Chennai II Commissionerate, withdrew appeals filed against various entities in a tax dispute.
The appeals were brought before the Madras High Court in response to final orders issued by the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ), Chennai, on 25th January 2023. The appeals filed under Section 130 of the Customs Act, challenging the final orders passed by CESTAT, Chennai.
The Apex court has also allowed the income tax and indirect tax appeals to be withdrawn, owing to low tax effects. As per the Notification dated 08.08.2019 at Instruction No.17 of 2019”the Central Board of Direct Taxes enhanced the specified monetary limits for filing of income tax appeals by the Department before Income Tax Appellate Tribunal. High Courts and SLPs/appeals before the Supreme Court .
A Single Bench of the Allahabad High Court quashed the penalty imposed for vehicle number discrepancy in consignment note – bility as the Part-B of the e-way bills were updated with the new vehicle registration number after a vehicle breakdown.
The Bench noted that, “It is to be noted that the goods were in order and the e-way bill was also as per the goods that were being transported.” The Bench observed that, “Upon perusal of the documents, it is clear that Part-B of the eway bill has been changed due to change of the vehicle. It is obvious that when a vehicle is changed, the number in the bilty could not be changed as the goods were in transit. Consequently, the first ground is baseless and is rejected out rightly.”
The Allahabad High Court directed the Central Bureau of Investigation (CBI) to provide a post-trap memo or arrest memo to the accused in a case involving alleged demands of a bribe by an EPFO Inspector. The complainant alleged that demands of Rs. 12 lakh were made to avoid tax imposition by EPFO officials. The CBI conducted a trap, resulting in the arrest of the accused. The accused sought a copy of the post-trap memo to understand the grounds of arrest. The CBI argued that providing the memo may hamper the investigation.
However, the court emphasized the accused’s right to a fair trial and ordered the CBI to provide the memo within seven days, stating that the accused should be provided with necessary documents even during the investigation stage.
The Delhi High Court directed the revenue department to refund Rs. 35,00,000/- deposited involuntarily during a search operation to reverse Input Tax Credit (ITC), along with interest. The petitioner, Mahavir Singh, argued that the deposit was coerced during the search, and there was no claim against him at the time of deposit. The court observed that the deposit lacked voluntariness and violated CBIC instructions. As a result, the court ordered the refund of the amount with interest within four weeks.
The Bombay High Court ruled that service tax is not applicable on ocean freight or sea transportation services for goods imported under CIF contracts. The petitioner, a yarn manufacturing company, faced a demand for service tax payment for transportation services covered by foreign suppliers. The court cited the “Negative List of Taxation Scheme” and the precedent set by the Gujarat High Court, holding that service tax on ocean freight is not legally valid. However, the petitioner must apply for a refund, adhering to lawful requirements, including unjust enrichment principles.
The Kerala High Court granted relief to Cherian Koshy by staying the recovery proceedings under the income tax assessment order until a final decision is made on the stay petitions filed in appeals pending before the 4th respondent. Koshy sought limited relief, requesting that the demands in the assessment order not be enforced until a decision is reached on the stay petitions. Justice Gopinath P directed that the demands in the assessment order shall not be enforced until the 4th respondent decides on the stay application, with a mandate to do so within two months from the receipt of the judgment’s certified copy.
The Kerala High Court upheld the denial of Input Tax Credit (ITC) claimed by Sri Puthaparambil Shereef Shanavas, stating that it was based on a forged invoice. The court dismissed Shanavas’s writ petition seeking to quash the intimation blocking the input tax credit. Rule 86A of the GST Rules empowers the Commissioner or authorized officers to disallow debits on electronic credit ledgers if fraudulent claims are suspected. The government argued that Shanavas claimed ITC based on forged invoices without actual supply of goods or services. Justice Dinesh Kumar Singh found no grounds to interfere with the notices, dismissing the petition and directing the adjudication authority to conclude the process promptly.
The Supreme Court recently ruled on the applicability of Section 71 of the Customs Act, 1962 concerning imported goods stored outside a notified public bonded warehouse. In a case involving imported machinery parts, the Court noted that goods remaining beyond the warehouse’s permitted period would be considered improperly removed. Despite permission from the designated officer, discrepancies arose regarding the storage location of certain cases of machinery parts.
The Court’s decision clarified the application of customs regulations regarding warehousing and unauthorized removal. While acknowledging the lawful storage of goods outside the bonded warehouse with official approval, it upheld penalties for cases where such authorization was lacking.
The Supreme Court, in a Disproportionate Assets case, upheld that proceedings under the Income Tax Act are not conclusive proof for the discharge of an accused. The appellant, Puneet Sabharwal, argued against the High Court’s decision, highlighting errors in considering his involvement based solely on being named as a beneficiary in a trust deed. Despite arguments referencing exoneration by the Income Tax Appellate Tribunal, the Court emphasized that such orders do not suffice as conclusive evidence and warrant a full-fledged trial. Justices Vikram Nath and K V Viswanathan stressed that the trial, pending for nearly 25 years, must be expedited and concluded by December 31, 2024.
The Court’s ruling clarified that orders from the Income Tax Authorities, while relevant, do not serve as conclusive proof in criminal proceedings. Notably, the Court distinguished this case from others, emphasizing that the Income Tax Act proceedings pertain to income assessment rather than the source of income or allegations of disproportionate assets under the Prevention of Corruption Act. Despite the appellant’s arguments regarding exoneration in civil adjudication, the Court maintained that the criminal trial must proceed independently, urging for its swift conclusion.
The Kerala High Court, in a recent ruling, determined that compliance with the prerequisites outlined in Section 148A of the Income Tax Act, 1961, is not obligatory prior to the issuance of notices under Section 148 of the same Act. Justice Gopinath P, presiding over a Single Bench, emphasized that when assets or cash are presented before a Criminal Court, the Income Tax Department cannot issue notices under Section 132A to that specific Court.
Instead, any application concerning the release or custody of such items must adhere to the provisions of the Code of Criminal Procedure, particularly Section 451 Cr.P.C. The petitioner challenged the notices issued under Section 148 for the assessment years 2020–2021, 2023–2024, arguing that the procedure outlined in Section 148A had not been followed. Despite the petitioner’s claims, the Court ruled in favor of the Income Tax Department, stating that in this instance, adherence to the procedure under Section 148A was unnecessary before issuing notices under Section 148.
The Madras High Court directed income tax authorities to conduct a re-assessment, granting the petitioner a fair opportunity within 12 weeks. The case involved Pallazzio Energy Farms LLP, whose Chartered Accountant, a senior citizen, couldn’t represent them due to the COVID-19 pandemic when income tax notices were issued. The petitioner challenged the order dated 30.03.2021 under Section 264 of the Income Tax Act, 1961, citing inadequate opportunity. Despite the issuance of notices, the petitioner’s CA couldn’t attend due to pandemic-related risks, supported by medical reports. The court, noting the necessity for a fair opportunity, remanded the matter for reassessment, with a 12-week deadline, as requested by the petitioner’s counsel and unopposed by the Income Tax department.
The Madras High Court dismissed a writ petition filed by a borrower who sought access to the income tax returns (ITR) of the lender.
The court advised the petitioner to address any grievances or complaints regarding the lending business to the Reserve Bank of India (RBI) instead. The bench, led by Chief Justice Sanjay V. Gangapurwala and Justice D. Bharatha Chakravarthy, deemed the petitioner’s request for the lender’s ITR as misconceived, stating that the petitioner lacked the right to make such a demand.
The petitioner, who had borrowed from the third respondent engaged in lending activities, alleged that the lender had not disclosed their income in their ITR. Despite submitting a representation and subsequent writ petition concerning the lender’s conduct, the court emphasized that civil claims should be pursued through the appropriate civil court. Additionally, any grievances regarding the lender’s business practices should be directed to the RBI rather than the court. Consequently, the writ petition was dismissed by the High Court.
The Madras High Court affirmed that secured creditors hold priority charges over the claims of Sales Tax, Commercial Tax, and Income Tax. The court granted relief to ICICI in a writ petition concerning the removal of an attachment order and registration of a sale certificate, clarifying the rights of secured creditors under the SARFAESI Act.
Chief Justice Sanjay V. Gangapurwala and Justice D. Bharatha Chakravarthy’s bench ordered that the registering authority must register auction sales by secured creditors, despite attachments by tax departments. Additionally, if the secured creditor receives excess amounts from the auction, they are obligated to remit the surplus to the respective departments. However, if the creditor hasn’t received any excess amounts, they are not required to remit anything, and the departments cannot pursue prosecution against the creditor’s officers. Dr. B. Ramasamy and Mr. K. Karthik Jegannath represented the 1st and 4th respondents, respectively.
The Madras High Court has resolved writ petitions filed by various companies challenging the constitutionality of Income Tax provisions Section 115 WA(2) and 115 WB(2)&(1) as these provisions were removed from the statute. The petitioners, represented by Ms. G. Pramila, argued that these sections, introduced by the Finance Act, 2005, violated several articles of the Constitution and exceeded Parliament’s legislative competence. With no representation made by the respondents, including the Union of India and CBDT, the petitioners highlighted that the contested provisions were eliminated by the Finance Act 2/2009, rendering the petitions moot. Consequently, Chief Justice Sanjay V. Gangapurwala and Justice D. Bharatha Chakravarthy’s bench concluded that since the provisions were no longer in effect and no further relief was sought, the petitions were disposed of as academic.
The Madras High Court has disposed of a writ petition filed by Ramco Cements challenging the constitutionality of Sections 115 WA to 115 WL of the Income Tax Act, 1961, as these provisions have been removed from the statute. The petitioner sought a Writ of Declaration, alleging that these sections were ultra vires to Article 14 and 19(1)(g) of the Constitution.
Represented by Mr. J. Balachander, the petitioners argued that the provisions were eliminated from the statute book by the Finance Act 2/2009, effective from April 1, 2010, raising questions about their constitutionality and compatibility with fundamental rights. Chief Justice Sanjay V. Gangapurwala and Justice D. Bharatha Chakravarthy’s bench concluded that since no consequential relief was sought and the petition was now academic, it was unnecessary to decide on the prayer made in the writ petition, leading to its disposal.
A Single Bench of the Patna High Court recently dismissed the bail applications of six individuals accused in a Cyber Fraud case involving a Work From Home Scam perpetrated via WhatsApp and Telegram. The prosecution alleged that the accused posed as bank Directors and a Chartered Accountant to open bank accounts, through which they lured unsuspecting victims into depositing money for promised online work opportunities. The Economic Offences Unit conducted investigations, leading to the arrest of several individuals involved in the scam. Despite pleas of innocence from the defendants’ counsels, the court noted the severity of the offence and the defendants’ alleged pivotal roles in it, emphasising the difficulty in detecting and prosecuting cyber criminals due to their sophisticated understanding of technology.
The Madras High Court intervened in a long-pending income tax appeal filed by Pandyan Grama Bank, directing the Commissioner of Income Tax (Appeals) to resolve the matter within three months. The appeal, initiated in January 2019 following a reassessment order issued in December 2018, had remained unresolved for five years, prompting the petitioner to seek court intervention. The issue at hand concerns the petitioner’s eligibility for deduction under Section 80B(2) of the Income Tax Act, 1961, which has been extensively debated in various judgments of the Income Tax Appellate Tribunal. Acknowledging the delay and recognizing the importance of swift resolution, the court instructed both parties to cooperate and set a maximum time frame of three months for the appeal’s disposal.
The Calcutta High Court recently affirmed the validity of disability findings provided by experts in an insurance claim case, emphasizing the acceptance of disability certificates for assessing the extent of disablement. In the case brought by Pandyan Grama Bank against the National Insurance Co. Ltd, the tribunal initially awarded compensation amounting to Rs. 11,44,937/- along with interest, under Section 166 of the Motor Vehicles Act, 1988.
Furthermore, the court referenced previous Supreme Court judgments, asserting that in the absence of cross-objection from claimants, the compensation awarded by the tribunal stands final, with no scope for enhancement in appeals filed by insurance companies. Noting the absence of evidence indicating deliberate delay from the insurance company, the court ordered compensation of Rs. 2,23,709/- along with interest, based on the statutory deposit made by the appellant-insurance company, ultimately resolving the long-standing dispute.
The Madhya Pradesh High Court recently dismissed a writ petition challenging a show cause notice and provisional attachment order issued under the Prohibition of Benami Property Transactions Act, 1988, emphasizing the availability of statutory remedies under the Act.
Despite arguments from the petitioner’s counsel, that the show cause notice and attachment order were invalidated by the aforementioned Supreme Court judgment, the High Court upheld the availability of statutory remedies provided under the Act. The court emphasized that the adjudicating authority under the Act is best suited to decide questions regarding the nature of property transactions, and petitioners can present factual and legal grounds before it. Referring to relevant judgments, the court ruled out entertaining the petitions, directing the petitioners to avail themselves of the statutory remedies available and indicating that the court had not taken a stance on the case’s merits.
The Calcutta High Court intervened in a matter concerning a typographical error in an Income Tax Department order and directed the department to rectify it. SS Commotrade Pvt. Ltd filed a writ petition, highlighting the mistake where the writ petition number mentioned in the income tax order was incorrect. Upon submission by the petitioner’s advocates, Justice Md. Nizamuddin acknowledged the error and directed that the correct writ petition number, WPA 4122 of 2023, be recorded instead of WPA 4122 of 2022. The court instructed the Income Tax Department to consider the rectified order accordingly, treating it as part of the original order dated February 13, 2024.
The Andhra Pradesh High Court recently dismissed a revision petition filed by Prathipati Sarath, challenging an order passed by the Additional Chief Metropolitan Magistrate. The petitioner alleged diversion of public funds amounting to 45.37 crores, but the court found no evidence to support this claim. Sri B. Adinarayana Rao, senior counsel representing the Respondent/A.1, argued that there was no contractual relationship with the government, thereby refuting charges under various sections of the IPC. The court upheld the magistrate’s order, emphasizing the lack of evidence and dismissed the criminal revision case, with Smt. Y.L. Shivakalpana Reddy representing the petitioner and Sri B. Adinarayana Rao representing the Respondent/A.1.
Despite allegations of diversion of public funds and fraudulent practices, the Andhra Pradesh High Court found no substantiating evidence and dismissed a revision petition filed by Prathipati Sarath. The court upheld the order passed by the Additional Chief Metropolitan Magistrate, highlighting the absence of a contractual relationship with the government and refuting charges under several sections of the IPC. Sri B. Adinarayana Rao, senior counsel for the Respondent/A.1, argued against the validity of the charges, leading to the dismissal of the criminal revision case. Smt. Y.L. Shivakalpana Reddy appeared for the petitioner, while Sri B. Adinarayana Rao represented the Respondent/A.1 in the proceedings.
The Madras High Court recently ruled that hostels, providing accommodation to female students and working women, are exempt from Goods and Services Tax (GST) under Entry Nos. 12 and 14 of Notification No. 12/2017-Central Tax (Rate) dated June 28, 2017. In a consolidated decision, the court addressed several writ petitions and Writ Miscellaneous Petitions (WMP) with similar facts, circumstances, and issues. Representing the petitioners, including Thai Mookambikaa Ladies Hostel, Ms. Aparna Nandakumar argued that their operations qualify as ‘residential dwelling’ under the exemption notification, thus exempting them from GST. The court emphasized that the burden of proof lies on the petitioners to demonstrate their eligibility for exemption, clarifying that GST on hostel accommodation depends on the residential nature of the end-use by the occupants, not the property’s nature or the service provider’s business.
Despite the Tamil Nadu Authority for Advance Ruling (TN AAR) comparing hostel premises to hotel premises, the Madras High Court set aside the AAR ruling, stressing that GST imposition on hostel accommodation should be considered from the perspective of the service recipient, not the provider. The court highlighted that GST is collected from the recipient and deposited with the government by the provider, and exemption depends on the residential nature of the end-use, rather than the property’s nature or the service provider’s business. Consequently, the court ruled in favor of the petitioners, exempting hostels from GST, and allowed all writ petitions without imposing any costs.
The Madras High Court recently quashed the cancellation order of Goods and Services Tax Identification Number (GSTIN) registration due to non-filing of GSTR 3B returns for six months, as there were no tax dues pending against the petitioner. The petitioner, a registered entity under GST laws, received a show cause notice threatening cancellation of their registration for non-filing of returns. Despite promptly filing their returns upon receiving the notice and revocation of the suspension of registration, a fresh cancellation order was issued later. The petitioner’s appeal against this order was rejected on procedural grounds, prompting the challenge before the High Court.
The petitioner’s counsel argued that the subsequent cancellation order was unsustainable as it was based solely on limitations, despite no outstanding tax dues against the petitioner. Senior standing counsel Sai Srujan Tayi, representing the respondents, acknowledged the notice and highlighted the procedural aspect regarding the filing deadline for the appeal. The court, considering the facts and merits of the case, directed the appellate authority to review the appeal within a month, providing the petitioner with a reasonable opportunity. Consequently, the Madras High Court quashed the cancellation order and remanded the matter for further consideration, disposing of the writ petition with no costs imposed.
The Madras High Court recently disposed of a writ petition filed by the petitioner concerning a bank attachment notice issued by the income tax department. The petitioner contested the notice dated 18.01.2024, which followed an assessment order dated 29.12.2019, alleging fraudulent linkage of their PAN to a specific SBI account.
Dr. B. Ramaswamy, senior standing counsel for the respondents, countered by stating that there is no basis for intervention, as there is a pending statutory appeal. After examining the documents, the High Court observed that the assessment order was issued on 29.12.2019, and the petitioner subsequently appealed to the fifth respondent, with the appeal still pending. Considering the existence of the statutory appeal, the court directed the petitioner to approach the appellate authority for any interim relief and disposed of the appeal accordingly, instructing the appellate authority to expedite the disposal of the appeal.
The Madras High Court recently ruled that the Joint Commissioner of GST & Central Excise lacks jurisdiction to proceed until the Sabka Vishwas Discharge Certificate is revoked by the Designated Committee. Justice Mohammed Shafeeq emphasized that under the Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019 (SVLDRS), only the Designated Committee has the authority to revoke or cancel a Discharge Certificate based on false particulars. The case involved a partnership firm that participated in the SVLDRS, received a Discharge Certificate, and subsequently faced adjudication proceedings. The court set aside the adjudicating authority’s order, highlighting the limited jurisdiction of the adjudicating authority and the exclusive authority of the Designated Committee to revoke or cancel Discharge Certificates.
In a recent ruling, the Madras High Court instructed a taxpayer-petitioner to submit consolidated grievances regarding refund adjustments by the Income Tax Department to the Jurisdictional Assessing Officer (JAO). The petitioner, facing a prolonged dispute over a refund totaling Rs. 8,64,604/-, highlighted concerns about adjustments made without prior intimations or demand notices. The court directed the petitioner to file a consolidated grievance petition before the JAO within 15 days, addressing adjustments not only for the assessment year 2009-2010 but also for other relevant years. The JAO must review the petition, provide a fair opportunity for the petitioner’s representation, and issue a detailed order within two months, ensuring due consideration and resolution of grievances.
A Single Bench of the Calcutta High Court recently restored an appeal to the Goods and Services Tax (GST) appellate authority, condoning the delay in its presentation. The petitioner, dissatisfied with the rejection of their appeal due to exceeding the four-month limitation period, approached the High Court seeking relief.
The Court clarified that the Appellate Authority retains discretion to consider appeals filed within one month after the limitation period, citing Section 5 of the Limitation Act, 1963. Justice Hiranmay Bhattacharyya criticised the restrictive interpretation of the Impugned Order and ruled in favour of the petitioner, emphasising the petitioner’s medical condition as a valid reason for the delay. Consequently, the appeal was restored to the file of the appellate authority.
In a recent ruling, the Madras High Court dismissed a writ petition challenging legal proceedings initiated by the Income Tax Department against the petitioner for alleged non-filing of Income Tax Returns and delay in tax payment. The petitioner sought compounding of the offence under Section 276B of the Income Tax Act, submitting an application which remained unaddressed. The court noted that the application had indeed been considered, but the petitioner failed to comply with the prescribed deadline for payment of compounding fees, leading to rejection of the application. As a result, the court dismissed the Criminal Original Petition while granting the petitioner liberty to present their case before the trial court.
The Delhi High Court modified a retrospective cancellation order of Goods and Service Tax (GST) registration for M/S Supreme Enterprises. The petitioner challenged the order, citing lack of notice or opportunity to object to the retrospective cancellation. Despite multiple applications for cancellation, the Show Cause Notice lacked specificity and failed to inform the petitioner about the retrospective cancellation. Justices Sanjeev Sachdeva and Ravinder Dudeja found the notice and order insufficient in detailing reasons for retrospective cancellation. Consequently, the court modified the order, stating that the registration shall be treated as cancelled from the date the petitioner closed business activities, i.e., 26.07.2022, and directed necessary compliances under Section 29 of the Central Goods and Services Tax Act, 2017.
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