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 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.
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. Rs. 2645.2 Crore in PAN – India level. Considering the magnitude of offence, the court refused to grant bail.
The bench of Justice Samit Gopal observed that “Looking to the nature of the case, the gravity of offence, the fact that the present matter relates to an economic offence, the law laid down by the Apex Court in such matters, the magnitude of offence, the modus as adopted to swindle money from the Government exchequer and the fact that custodial interrogation may be required for further investigation in the matter which is a well organised crime to go to its root and thus this Court does not find it a fit case for grant of anticipatory bail.”
The state submitted that “while placing paragraph 12 & 15 of the counter affidavit it is submitted that the investigation till date has shown that there is a gang in which several persons are involved in this nexus and have together claimed Input Tax Credit of Rs. 26,452,895,600/- (Rupees Two Thousand Six Hundred Forty Five Crore Twenty Eight Lakh Ninety Five Thousand and Six Hundred) which has caused a loss to the revenue to the said extent.”
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.
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 Calcutta High Court ruled that tea saplings 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.”
The Allahabad High Court has sharply criticised the Goods and Services Tax ( GST ) Department for the inconsistent approach towards the Unutilised Input Tax Credit ( ITC ) refund claims of the petitioner, Samsung India Electronics. The petitioner is a company engaged in the export of Information Technology design and software development services pertaining to mobile devices to its overseas holding company, namely, M/s Samsung Electronics Company Limited, Korea in terms of prevalent service agreement dated January 1, 2019.
M.P. Devnath, counsel appearing on behalf of the Petitioner submitted that, “The Department has adopted an inconsistent approach in dealing with the refund applications of the Petitioner, despite the fact that each of the refund applications arise out of the same set of facts and circumstances, which is grossly incorrect in law.”
Additional Chief Standing Counsel appearing on behalf of the respondents has made the following submissions: The principle of res judicata does not apply in matters of taxation and merely because refund claims have been sanctioned previously, does not mean that the refund claims for subsequent periods will also be sanctioned.
The Bench observed that, “Taxation serves as the cornerstone of governmental revenue, facilitating the provision of public services and infrastructure. Essential to his system is consistency, ensuring that similar factual and legal circumstances are met with uniform treatment. Inconsistencies can erode public trust, undermine compliance, and ultimately compromise the integrity of the tax system. Consistency in taxation entails the application of standardized rules and principles to taxpayers confronting analogous factual and legal circumstances.”
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.
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.”
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 the 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 the case of M/S Acer India Pvt Ltd, the Supreme Court of India upheld that Tax deduction at source ( TDS ) does not apply to income from payment received by distributors from customers. The two-judge bench dismissed the Special Leave petition( SLP ) which arose out of impugned final judgment and order passed by the High Court of Karnataka.
The issue was related to the liability to deduct tax at source under Section 194-H of the Income Tax Act, 1961 on the amount which, as per the Revenue, is a commission payable to an agent by the assessees under the franchise/ distributorship agreement between the assessees and the franchisees/distributors. As per the assessees, neither are they paying a commission or brokerage to the franchisees/distributors nor are the franchisees/distributors their agents. The High Courts of Delhi and Calcutta have held that the assessees were liable to deduct tax at source under Section 194-H of the Act, whereas the High Courts of Rajasthan, Karnataka and Bombay have held that Section 194-H of the Act is not attracted to the circumstances under consideration.
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 effect. 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 Supreme Court of India has directed the accused to proceed with further trial in a Prevention of Money Laundering Act, 2002 (PMLA) case linked to a false declaration under the Income Declaration Scheme (IDS), involving a fraud amounting to Rs. 8.26 crore. Satyendar Kumar Jain, a Minister in the Government of National Capital Territory of Delhi, and others were named in an FIR for offences under the Indian Penal Code (IPC) and the Prevention of Corruption Act (PC Act).
The investigation uncovered that Satyendar Kumar Jain utilised accommodation entries in various companies to conceal his involvement, receiving a total of Rs. 4.81 crore during 2015-16 from Kolkata-based entry operators. Additionally, Ankush Jain aided Satyendar Kumar Jain by submitting a false declaration under the IDS, 2016. The court reiterated that money laundering offenses under Section 3 of the PMLA encompass a range of activities related to dealing with the proceeds of crime, stressing that any property considered “Proceeds of Crime” under Section 2(1)(u) of the Act must meet specific criteria.
The Supreme Court of India upheld the Customs, Excise & Service Tax Appellate Tribunal (CESTAT)’s order and penalties, affirming that the import of camera stabilizers different from those mentioned in the bill of entry constitutes misdeclaration. M/s Global Technologies and Research, the appellant assessee, contested the judgment and order passed by CESTAT, highlighting inconsistencies in the assessment. The adjudicating authority had valued the imported goods at a significantly higher rate than the declared value, resulting in the imposition of penalties and recovery of differential customs duty.
Despite arguments challenging the definitions of ‘identical’ and ‘similar’ goods under the Customs Valuation Rules, the Court upheld the CESTAT’s decision, emphasizing the officer’s statement regarding the differences in hardware and software functions between the disputed goods and earlier versions. The Court concluded that the penalties imposed were justified, dismissing the appeal without costs.
The Supreme Court of India upheld the Madhya Pradesh High Court’s decision to dismiss the writ petition filed by the assessee against the order of the commercial tax officer determining tax liability. The court ruled that the tax dues of the company had been settled pursuant to the direction of the Board for Industrial and Financial Reconstruction (BIFR) under the Sick Industrial Companies (Special Provisions) Act, 1985. The appeal stemmed from Niket Udyog Ltd’s writ petitions challenging the tax liability determined under various tax acts.
The court concluded that, given the representation of the Government of Madhya Pradesh in the BIFR order indicating settlement of dues by the company, there was no further basis for consideration in the appeals. Mr. Gaurav Agarwal, Senior Counsel, represented the appellant, while Ms. Mrinal Ekar Majumdar, counsel, appeared for the respondent-State.
The Supreme Court of India dismissed the special leave petition filed against Apple India Private Limited, affirming that warranty claims are allowable when made in accordance with provisions and guidelines. The petition arose from a final judgment by the Karnataka High Court concerning the disallowance of warranty provisions claimed by the assessee company, engaged in trading Apple products in India.
Despite the company’s explanations, the Court noted a delay of 225 days in filing the special leave petition and found the explanation for condonation of delay unsatisfactory. Considering similar matters previously dismissed and the lack of merit, the Court dismissed the special leave petition on both grounds of delay and merits.
In the case of M/S Acer India Pvt Ltd, the Supreme Court of India upheld that Tax deduction at source ( TDS ) does not apply to income from payment received by distributors from customers. The two-judge bench dismissed the Special Leave petition( SLP ) which arose out of impugned final judgment and order passed by the High Court of Karnataka.
The issue was related to the liability to deduct tax at source under Section 194-H of the Income Tax Act, 1961 on the amount which, as per the Revenue, is a commission payable to an agent by the assessees under the franchise/ distributorship agreement between the assessees and the franchisees/distributors. As per the assessees, neither are they paying a commission or brokerage to the franchisees/distributors nor are the franchisees/distributors their agents. The High Courts of Delhi and Calcutta have held that the assessees were liable to deduct tax at source under Section 194-H of the Act, whereas the High Courts of Rajasthan, Karnataka and Mumbai have held that Section 194-H of the Act is not attracted to the circumstances under consideration.
The Delhi High Court addressed the issue of interest payable along with refunds under the Delhi Value Added Tax (DVAT) Act, 2004, noting that refunds had been processed without including interest. Represented by Mr. Mohit Gautam, the petitioner, M/S Vimal Electrical Pvt Ltd, sought a refund for the tax period from January 1, 2017, to March 31, 2017. Respondents, represented by Mr. Rajeev Aggarwal and Ms. Samridhi Vats, admitted to processing and sanctioning the refund without interest.
Justices Sanjeev Sachdeva and Ravinder Dudeja directed the respondents to pass an order considering the payment of interest under section 42 of the DVAT Act. The bench instructed that if interest was payable, it should be paid to the petitioner within four weeks; otherwise, a speaking order justifying the decision should be communicated within the same period. The Court further stated that the petitioner could pursue additional legal remedies if dissatisfied with the order.
The Delhi High Court upheld the rejection of an application for Waiver of Pre Deposit under section 129 E of the Customs Act, 1962, as the appellant failed to deposit the required amount. The case involved G & S International, which challenged an order passed by the Customs, Excise & Service Tax Appellate Tribunal (CESTAT). The appellants were accused of fraudulent exports and were issued Show Cause Notices (SCNs), which were adjudicated upon. The CESTAT ordered the appellants to deposit specified amounts within a given timeframe, but they failed to comply.
The High Court concluded that failure to comply with Section 129E led to the logical consequence of appeal rejection. The discretion provided in the proviso to Section 129E was considered, but the Court found no undue hardship in this case. Consequently, the Court upheld CESTAT’s decision to dismiss the appeal due to non-compliance with the deposit order.
The Kerala High Court granted interim exemption to the mother of a child suffering from Spinal Muscular Atrophy (SMA) from payment of Integrated Goods and Services Tax (IGST) on imported medicine for the rare disease. The petitioner, the child’s mother, filed a writ petition citing provisions in Article 279A(4) of the Constitution of India, which allow the Goods and Services Tax (GST) Council to recommend goods and services exempted from GST.
Referring to the minutes of the 26th GST Council meeting and Circular No. 09/2014-Customs, the petitioner sought exemption for Risdiplam (brand name Evrysdi), a medicine priced at Rs. 6.07 lakh per bottle including 12% GST.
Justice Gopinath P, in a Single Bench, ruled that the Finance Minister could consider exemptions for life-threatening diseases, and the petitioner’s case qualified for such exemption. Consequently, the petitioner was allowed to purchase Risdiplam without GST payment from the concerned respondent, who could issue a bill of supply under the Central Goods & Services Tax Act / State Goods & Services Tax Act.
The Madras High Court declared the continuation of proceedings leading to an assessment order invalid once an ASMT-12 order, signifying no further action, is issued. The petitioner, operating in cash logistics and GST-registered, received an ASMT-10 notice citing return discrepancies for the 2017-2018 assessment year. After the petitioner responded, an ASMT-12 order concluded the proceedings, satisfied with the petitioner’s explanation.
Upon review, Justice Senthilkumar Ramamoorthy found the assessment order confirming the same demand for the same period but with additional interest and penalty. The judge concluded that continuing proceedings after the ASMT-12 order issuance was unsustainable.
The Kerala High Court has directed the Income-tax authority to halt recovery proceedings until the disposal of the stay petition against the Income Tax Assessment Order. The petitioner, represented by R Jaikrishna, Narayani Harikrishnan, C S Arun Shankar, and Anish P, is M/S P Kandankutty and Sons Sea Queen Hotel. They appealed the assessment order under the Income Tax Act, 1961, along with a stay petition and an application for condonation of delay.
The petitioner’s sole request is to defer any recovery pending a decision on the appeal and stay applications. Justice Gopinath P, in disposing of the writ petition, instructed the 2nd respondent to consider and issue orders on the stay petition and application for condonation of delay within one month from the receipt of a certified copy of the judgment, providing an opportunity of hearing to the petitioner. Recovery pursuant to the assessment order will remain suspended until orders are passed on the stay petition and application for condonation of delay. Smt Reshmita Ramachandran appeared for the respondent.
A Single Bench of the Kerala High Court ruled that promoters receiving occupancy certificates after the enactment of the Kerala Real Estate (Regulation & Development) Act, 2016 (K-RERA Act) must register their projects under Section 3 of the Act. The case involved M/s. IFCI Infrastructure Development Limited as the appellant/respondent, represented by Vinod Madhavan, Biju Varghese Erumala, and Saniya C V, and the Kerala Real Estate Regulatory Authority (K-RERA) along with several allottees as respondents/complainants, represented by M P Shameem Ahamed and Akhil Philip Manithottiyil. The debate centered on the legality of K-RERA’s registration directive and the promoter’s rights over the project. The petitioner argued that since the K-RERA Rules came into force after the completion of the project, registration was impossible. However, the allottees’ counsel cited a Supreme Court decision affirming the retroactive nature of the K-RERA Act.
Justice A Badharudeen upheld K-RERA’s order, citing the Act’s retrospective applicability and the promoter’s obligation to register the project. The verdict establishes a precedent for timely registration of ongoing real estate projects under the K-RERA Act, aiming to protect consumers’ interests. The appellant/promoter was directed to register the project within one week from the date of the order.
The Delhi High Court, in a significant ruling, stated that Enforcement Directorate (ED) summons cannot be invalidated solely because specific documents needed for the investigation were not listed. The petitioner, represented by a Senior Advocate, contested the ED’s investigation under various sections, including the Prevention of Money Laundering Act, 2002 (PMLA), following a search and seizure at the petitioner’s Bengaluru premises. The petitioner argued that an audit report deemed unreliable by the National Company Law Tribunal should nullify any proceedings arising from it.
Justice Anoop Kumar Mendiratta noted that ED summons couldn’t be quashed solely due to unspecified documents, highlighting the PMLA’s procedure regarding identification of proceeds of crime.
The Jammu and Kashmir and Ladakh High Court ruled that charges under the Prevention of Money Laundering Act, 2002 (PMLA) do not apply if the investigation into the underlying predicate offence is halted. The case involved allegations of bank loan fraud totaling approximately Rs. 200 crores, with a consortium of banks as victims. An ECIR was registered based on this FIR, initiating PMLA investigations.
Justice Sanjay Dhar noted that if the investigation into the predicate scheduled offences is stayed, proceedings related to money laundering would also be affected, as the PMLA offences stem from the predicate offences. The court emphasised that PMLA offences are standalone but originate from scheduled offences, and if the scheduled offences cease to exist, proceedings under the PMLA cannot continue against the accused.
The Madras High Court delivered a significant ruling stating that Assessing Officers (AO) are not bound by the strict rules of the Evidence Act during assessment proceedings under the Income Tax Act, 1961. The challenge to Assessment Orders primarily revolved around the failure of Assessing Officers to consider a Supreme Court decision regarding the transmission of seized documents in cases where the AO is the same for both the searched person and a third party.
The petitioner argued that the initiation of proceedings under Section 153C of the Income Tax Act was time-barred and raised concerns about the violation of natural justice by not allowing cross-examination of key individuals. However, Justice C Saravanan noted that assessment proceedings are quasi-judicial and do not adhere to the same evidentiary standards as judicial proceedings. Therefore, provisions of the Evidence Act, particularly those relating to computer printouts, are not applicable in this context.
A Single Bench of the Madras High Court observed that availing a lower input tax credit (ITC) than the amount reflected in the auto-populated GSTR 2A Return constitutes a lack of application of mind. The petitioner, engaged in the supply of bricks, blocks, tiles, and ceramic goods, claimed ignorance due to being uneducated and computer illiterate. The petitioner’s counsel highlighted discrepancies between claimed ITC in the GSTR 3B return and the auto-populated GSTR 2A return.
Justice Senthilkumar Ramamoorthy noted that the discrepancy in ITC amounts indicated a lack of application of mind. Additionally, the petitioner’s remittance of sums towards CGST and SGST was considered in the context of interest liability for belated filing of returns. The court ordered interference with the impugned order based on these considerations.
In a recent decision, the Madras High Court clarified that the sole criterion for initiating prosecution under Section 276CC of the Income Tax Act, 1961 is wilful failure to furnish returns. The case involved the petitioner’s failure to file returns for Assessment Year 2014-2015 despite earning substantial income, leading to the issuance of a show cause notice for potential prosecution.
The petitioner argued against prosecution, citing delays in the issuance of notice under Section 148 and pending appeals. The Special Public Prosecutor for income tax emphasized the petitioner’s wilful non-filing of returns as per Section 139(1) and the purpose of the notice under Section 148.
Justice N Anand Venkatesh observed that the statutory presumption under Section 278E operates upon wilful failure to furnish returns, regardless of other considerations. The court reiterated that the existence of a culpable mental state suffices for prosecution under Section 276CC.
The Gujarat High Court granted bail to an accused involved in a Goods and Services Tax (GST) scam amounting to Rs. 1466 crores. The accused had been in custody since October 12, 2023. The bail application was filed under Section 439 of the Code of Criminal Procedure, 1973, for regular bail.
The court directed the applicant to surrender their passport, refrain from leaving Gujarat without prior permission, mark their presence before the Directorate General of GST Intelligence once a month, and provide their current address to the Investigating Officer and the Court. Breach of these conditions would result in appropriate action by the Sessions Judge concerned. The court also clarified that its observations at this stage should not influence the trial court’s decision during the trial.
The Andhra Pradesh High Court considered a criminal revision petition filed by the State of Andhra Pradesh challenging a Magistrate’s order denying police custody for the son of a TDP leader in an Rs. 8 crores GST-ITC scam. The prosecution argued for the necessity of police custody to further interrogate the accused, alleging involvement in fraudulent activities such as creating shell companies and diverting government funds.
Justice T. Mallikarjuna Rao found no illegality in the Magistrate’s decision and upheld the dismissal of the petition for police custody, noting the completeness of the investigation conducted by the Directorate General of Goods and Services Tax Intelligence. The court also highlighted the difficulty in appreciating the contention regarding diversion of government funds given the lack of dispute over the investigation report.
A Division Bench of the Delhi High Court ruled that the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has the authority to reject Customs Appeals for failure to comply with the pre-deposit condition for filing appeals. The appellants/exporters challenged a CESTAT Final Order dismissing their appeals due to non-compliance with the pre-deposit order.
The court observed that while Section 129E of the Customs Act, 1962 grants discretion to dispense with the deposit in cases of hardship, the right to appeal becomes vested upon fulfilling conditions, including the pre-deposit requirement. The proviso to Section 129E allows the Tribunal to waive the deposit obligation in cases of undue hardship. The court concluded that there was no error in the CESTAT’s orders and upheld the dismissal of the appeals for non-compliance with the deposit order, in accordance with the provisions of the Customs Act, 1962.
The Gujarat High Court granted bail to an accused in a case involving the issuance of GST invoices without supplying goods to buyers. The applicant, a proprietor of M/s. Remgold International, was falsely implicated, according to the counsel. The applicant, a reputed businessman, had no connection with the alleged offense and cooperated fully with investigators. The counsel argued that the applicant had no involvement with the bogus firms mentioned in the production report.
While the complainant argued that the allegations against the applicant were proven, the court observed that the seriousness of the offense alone cannot deprive the accused of their right to bail, citing precedent. Therefore, the court granted bail to the applicant on executing a personal bond of Rs. 15,000 with one surety of the same amount to the satisfaction of the trial court, subject to certain conditions.
The Rajasthan High Court ordered the reconsideration of an application under Section 10(23C)(vi) of the Income Tax Act, 1961, stating that the mere generation of surplus from year to year cannot be the sole reason for rejection. The petitioner, a charitable trust engaged in educational purposes, applied for exemption under the mentioned section. Despite providing satisfactory responses to queries from the respondents, the application was rejected on the grounds that the surplus generated was not incidental to educational purposes. However, the court cited a circular from the Ministry of Finance clarifying that surplus generation alone cannot justify rejection. Therefore, the court set aside the impugned order and directed the respondents to reconsider the application in accordance with the law and the circular.
The Madras High Court ruled that the Tax Recovery Officer under the Income Tax Act, 1961, does not have the authority to declare a sale made in favor of a third party as void. The case involved a dispute where the fourth respondent defaulted in tax payment, and the Income Tax authorities issued demand notices. A sale agreement between the petitioner and the fourth respondent was disputed, with the fourth respondent claiming it was a forged document.
The petitioner argued that the sale was binding and challenged the authority of the Tax Recovery Officer to declare it void. The Income Tax Department contended that the sale was void ab initio under Rule 16(1) of the II Schedule of the Income Tax Act. However, the court cited precedent and ruled that the Tax Recovery Officer’s jurisdiction does not extend to declaring sales void, and the petitioner should seek recourse through a civil suit to establish property rights.
The Allahabad High Court ruled that inputs under the Central Goods and Service Tax Act, 2017 (CGST Act) are meant for day-to-day business operations and are not required to be capitalized in the books of accounts. The petitioner sought a refund of unutilized Input Tax Credit (ITC) paid on various inputs and input services.
The petitioner argued that they followed a capitalization method based on the use of goods and treated them as inputs, not capital goods. The court observed that inputs are for daily operations and should not be capitalized, unlike capital goods.
The court criticized the arbitrary withholding of refund claims and emphasized the importance of consistency in assessments when facts remain the same across assessment periods.
The Gujarat High Court upheld the order granting bail to a co-accused in a Rs. 700 crores GST scam case involving a tax amount of 35 crores. The state filed a petition to quash the bail order, arguing that the court granting bail did not consider relevant factors and failed to address objections filed by the complainant. However, the court noted that the co-accused had already been granted bail by a Coordinate Bench of the same court, and that order remained unchallenged. As there were no supervening circumstances affecting fair trial, the court found no grounds to interfere with the bail order.
The Bombay High Court quashed re-assessment proceedings initiated against Castrol India, a lubricant manufacturing company, under the Income Tax Act. The court ruled that the re-assessment was based on a change of opinion by the Assessing Officer (AO) rather than fresh and tangible material. The court emphasized that the belief for re-assessment must be based on new information not available during the original assessment. The court also noted that the reassessment cannot be initiated solely on the basis of a change of opinion by the AO, as per the precedent set by the Supreme Court.
The Delhi High Court directed the Goods and Service Tax (GST) department to cancel the GST registration of a deceased proprietor retrospectively from the date of his death, rather than from the commencement of GST implementation in July 2017. The court ruled that retrospective cancellation must be based on objective criteria and not solely on non-filing of returns. The petitioner, the legal heir of the deceased proprietor, argued against retrospective cancellation, stating that the business ceased operations after the proprietor’s demise. The court modified the cancellation order to be effective from the date of the proprietor’s death, March 14, 2018, to avoid adverse implications for customers’ input tax credit. However, the respondents retain the right to recover any due tax, penalty, or interest according to the law.
The Kerala High Court directed the Income-tax authority to suspend recovery proceedings until the disposal of the stay petition against the Income Tax Assessment Order. Koothery Narayanan Vijayan, the petitioner, sought relief to have the stay petition considered and decided by the 4th respondent.
Justice Gopinath P disposed of the petition, instructing the 4th respondent to hear the petitioner and decide on the stay petition and the issue of condonation of delay. Recovery proceedings on the assessed amount were ordered to be halted until a decision is made on the stay petition. G Krishnakumar, Agnet Jarard, and Vinay John A J represented the petitioner.
The Kerala High Court suspended Income Tax recovery proceedings until the final decision of the stay petition filed by M/S Giant Properties India Pvt Ltd. Justice Gopinath P directed the 2nd respondent to consider and decide on the stay petition after hearing the petitioner. The court ordered that recovery of any amounts due under the assessment order be suspended pending the decision on the stay petition.
In a recent judgment, the Kerala High Court directed the Income Tax Appellate Tribunal (ITAT) to consider appeals after condoning the delay in filing them. The petitioner, represented by several counsel, challenged orders imposing penalties under the Income Tax Act, 1961. They filed a series of appeals along with delay and stay petitions. The relief sought was to suspend enforcement of the amounts demanded pending consideration of these petitions by the 1st Appellate Authority.
Justice Gopinath P disposed of the writ petition, directing the 3rd respondent to consider and decide on the delay and stay petitions within six weeks. The Court emphasized that the Appellate Authority should decide on stay petitions’ merits only if it condones the appeal filing delay. Recovery proceedings for the demanded amounts were to remain suspended until the mentioned orders were passed.
In a case before the Madras High Court, a petitioner challenged a Goods and Services Tax (GST) assessment order disallowing Input Tax Credit (ITC) due to a mismatch in GSTIN mentioned on invoices. The petitioner explained that the supplier erroneously mentioned another entity’s GSTIN. Despite the explanation, the tax authority confirmed the proposal to impose tax, interest, and penalty.
The court observed that documents indicated a genuine purchase by the petitioner and that the GSTIN mismatch was due to the supplier’s error. The court quashed the assessment order and remanded the matter to the assessing officer. The officer was directed to provide the petitioner with a reasonable opportunity, including a personal hearing, and issue a fresh assessment order within two months. The petitioner was also given the option to rectify the error through appropriate means.
The Delhi High Court upheld the suspension of a Customs Broker Licence (CBL) after it was discovered that the licensee allowed third parties to use the licence for fraudulent imports in exchange for monthly remuneration. Sriaanshu Logistics, the appellant, challenged the suspension order, which was later converted into a revocation of licence. The appellant admitted to subletting the licence to third parties and allowing them to use the digital signature of the G Card holder for uploading data.
The court held that such actions breached trust and violated Customs Broker Licensing Regulations. The appellant’s admission of misconduct warranted the sanction imposed. The appellant was represented by Ms. Reena Rawat and Ms. Jyotika Sharma, while the respondent was represented by Mr. Harpreet Singh, SSC, along with Ms. Suhani Mathur and Mr. Jatin Kumar Gaur.
The Kerala High Court’s single bench quashed an order rejecting a rectification application filed by M/S Premier Exports International under Section 154 of the Income Tax Act, 1961.
The court found that the tax department failed to dispose of the rectification application within the specified time under Section 154(7) of the Act and overlooked a circular issued by the Central Board of Direct Taxes (CBDT).
The petitioner’s counsel argued that applications filed within the stipulated time must be considered on merits, even if not disposed of within the specified time frame, as per the CBDT circular. The Standing Counsel representing the revenue department agreed to consider the matter in light of the circular.
In light of the submissions, Justice Gopinath P quashed the order and directed the respondent to reconsider the application, taking into account the provisions of the circular. Adv S Arun Raj represented the petitioner, while Cyriac Tom appeared for the respondent revenue.
The Kerala High Court directed the Income Tax Appellate authority to condone a delay of 141 days in filing an Income Tax appeal, as the delay occurred due to a mistake in filing the appeal manually instead of online. The petitioner, Aluva Co-Operative Agricultural and Rural Development Bank Ltd, filed an appeal before the Commissioner of Income Tax (Appeals) manually on 18.4.2016, unaware that online filing was mandatory since 1.3.2016. Upon realizing the error, they filed an online appeal on 3.11.2016 along with an application for condonation of delay. However, the application was dismissed by the 3rd respondent. The petitioner argued that the mistake was genuine and sought condonation of delay, citing relevant Supreme Court judgments. The Income Tax Department contended that since no appeal was filed before the competent authority, there was no delay to condone. Justice Gopinath P observed that the mistake of filing manually instead of online constituted sufficient cause for condonation of delay, given that the online filing requirement was introduced after the manual filing. The court quashed the order and directed the 3rd respondent to consider the appeal filed within time and dispose of it accordingly under the law.
The division bench of the Kerala High Court set aside a reopening assessment made under the Income Tax Act, 1961, in response to an intracourt appeal arising from a judgment of the Single Judge. The appellant, Cherupurath Mohammed Jeens, challenged the assessment order for the assessment year 2013–2014 after it was reopened under Section 148 of the Income Tax Act. The appellant argued that the assessment was barred by limitation, citing the proviso to Section 149 of the Income Tax Act, which was not considered by the Single Judge. The division bench, comprising Justice A Muhamed Mustaque and Justice Shoba Annamma Eapen, found that the issue relating to limitation had not been addressed in the assessment order. Consequently, the court set aside the assessment order for the assessment year 2013–2014 for reconsideration after hearing the petitioner. The writ appeal was disposed of accordingly.
The Delhi High Court set aside the retrospective cancellation of Goods and Service Tax (GST) registration and upheld the cancellation from the date of issuance of the show cause notice. Singla Enterprises challenged the retrospective cancellation of its GST registration, arguing that the proper officer rejected the revocation application without considering the reply of the assessee. The petitioner, a proprietorship firm engaged in trading and retailing, received a show cause notice citing reasons for cancellation related to invoice issues without supplying goods/services and mismatches in the year 2018-19. However, the notice did not specify the retrospective cancellation. The impugned order lacked reasons for cancellation and showed nil demand against the petitioner. Despite the petitioner’s detailed reply, the proper officer failed to consider it.
The court modified the order, treating the registration as cancelled from the date of the show cause notice issuance, considering the petitioner’s cessation of business activities. Mr. Rakesh Kumar, Mr. P.K. Gambhir, and Mr. Akul Mangla appeared for the petitioner, while Mr. Rajiv Aggarwal, Ms. Samridhi Vats, Mr. Anurag Ojha, Mr. Subham Kumar, and Mr. Vipul Kumar represented the respondent.
Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
