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 Madras High Court directed the Commissioner of Customs to release the confiscated Digital Multifunction Equipment due to Non-payment of Enhanced Customs Duty. The court held that the goods can be released on payment of customs duty.
A single bench of Justice Krishnan Ramasamy directed the respondents to consider the plea of the petitioners to release the goods by way of provisional release on the condition that, the petitioner shall pay/deposit the enhanced duty amount. On receipt of such enhanced duty amount paid by the petitioners, the goods in question shall be released within three (3) week
The Supreme Court has granted a stay on the Delhi High Court’s decision concerning the Income Tax exemption for Capital Gains in the Blackstone Capital case. The High Court had ruled that Capital Gains tax is not liable to income tax.
A Division Bench comprising Justice Manmohan and Justice Manmeet Pritam Singh Arora observed that the revenue authorities cannot dispute the TRC issued by the foreign tax jurisdiction. They emphasised that the TRC serves as sufficient evidence for claiming treaty eligibility, residence status, and legal ownership. Consequently, the court held that no taxable income has evaded assessment in this particular case.
This reaffirms the earlier stance of the Delhi High Court Division Bench, reiterating the significance of the TRC as a valid and conclusive document in establishing treaty benefits and dismissing any claims of undisclosed income liable for taxation in the current scenario.
The Supreme Court has affirmed that any debt claimed as a ‘financial debt’ under Section 5(8) of the IBC must demonstrate the essential element of disbursing funds against the consideration for the time value of money in its origin.
The three judge bench comprising of Chief Justice Dhananjay Chandrachud, Justice J.B. Pardiwala and Justice Manoj Misra determined that the debts in question took the form of a third-party security, purportedly provided by JIL to secure the loans, advances, and facilities acquired by JAL from the Said Lenders. The Court concluded that such a form of âdebtâ does not fall within the scope of the term âfinancial debtâ as defined in Section 5(8) of the IBC. Consequently, the Said Lenders, acting as mortgagees, do not qualify as âfinancial creditorsâ of JIL. Therefore, the Court ruled that the fundamental element of disbursal, specifically against the consideration for the time value of money, must be evident in the origin of any debt claimed as a âfinancial debtâ before it can be recognized as such under Section 5(8) of the IBC.
The Madras High Court dismissed proceedings related to the escapement of income due to the existence of a document wherein the Income Tax Officer (ITO) acknowledged the filing of a reply to the income tax notice.
A Single Bench of Justice Senthil Kumar Ramamoorthy observed that âThe documents on record include the reply dated 01.06.2022 of the petitioner to notice dated 23.05.2022. The said reply also bears acknowledgment dated 01.06.2022 of the relevant Income Tax Office. A subsequent reply dated 02.06.2022 is also on record and, likewise, the said reply also bears acknowledgment dated 02.06.2022 of the relevant office.â
The Supreme Court dismissed the assessee’s request to reopen assessment proceedings against her. The three-member bench of the Supreme Court emphasized that the tribunal possessed the appropriate authority to address such issues and saw no justification for the courts to intervene in the matter.
The two-member bench of the Supreme Court, comprising Justice Abhay S Okha and Justice Ujjal Bhuyan, dismissed the assesseeâs contentions for reopening of assessment proceedings by pointing out that the assessee could approach the tribunal itself for dealing with such matters. The bench observed that the Tribunal shall consider such an application appropriately as per the law. With these directions, the bench dismissed the appeal of the assessee. The Supreme Court allowed the application seeking exemption from filing a certified copy, and the delay was condoned.
M/s. JSW Steel Ltd., the taxpayer, brought in 98,450 metric tons of Goonyella C Coking Coal for unloading at Marmagao Port. The shipment arrived on April 14, 2017, and the provisional assessment for clearance was processed with Bill of Entry No. 9375854 dated April 20, 2017. Clearance was granted upon the payment of duty amounting to Rs. 9,32,79,393/-.
The two judge bench comprising of Justice B.V. Nagarthana and Justice Sanjay Karol
Held that held that the bill of entry for the entire quantity on 20th April, 2017 had been issued by the assessee within the prescribed time limit. It had also paid the entire duty for 98450 metric tons of Goonyella C Coking Coal, even though, 1,341 metric tons had not landed in Marmagao but had landed in Jaigad and as soon as the amendments to the IGM were approved by the Appellant on 14th March, 2018, again the filed the bill of entry on the very same day in respect of 1,341 metric tons. The bench had further observed that the assessee had demonstrated its bona fide intent . The bench also pointed out that the assessee had taken efforts to get the IGM amended and no sooner the the IGM was amended, the bill of entry in respect thereof was filed on the same day within time. The bench observed that this shows the assesseeâs eagerness to be on the follow the assessment requirements.
The Supreme Court, in its provisional ruling, excused the delay by the Revenue in submitting a Special Leave Petition. The petition contested an order in favor of the assessee, which questioned the contractual and revenue-sharing arrangements made by the assessee and had been contested by the Commissioner of Sales.
CESTAT had held that the demand of service tax is not sustainable against the appellants. The two member bench also noted that wherein the âexempted serviceâ was expanded to include âan activity which is not a service as defined under Section 65B (44) of the Finance Act, 1994â w.e.f. 01.04.2016, for which reversal of CENVAT credit is required.
The two judge bench consisted of Justice B.V. Nagarthna and Justice Sanjay Karol the SC in its interim order condoned the delay and issued notice to the assessee regarding the same.
A Three-Judge Bench of the Supreme Court, consisting of Chief Justice DY Chandrachud, Justice JB Pardiwala, and Justice Manoj Misra, opted to schedule a batch of 93 appeals for a hearing after three weeks. The matter pertains to the TDS liability of Catholic Nuns and Missionaries.
The Supreme Court stayed the Madras High Court judgment which had ruled that salaries received by missionaries and nuns of Catholic Church are liable to be subjected to Tax Deduction at Source ( TDS ) under Section 192 of the Income Tax Income Tax Act. The bench of Justice Ashok Bhushan and K M Joseph ordered to maintain âstatus quo as on todayâ while issuing notice in the petition filed by Institute of Franciscan Missionaries of Mary.
A two-member bench of the Supreme Court has rejected the Special Leave Petition seeking the exemption of liability for the Directors of Seville Products Ltd. The bench determined that the proposals to impose penalties and liability were distinct and could be considered separately.
The two judge bench of the Supreme Court consisting of Justice Pamidhigantam Sri Narasinha and Justice Aravind Kumar held that although the show cause notices were issued to various noticees, the proposal to impose penalties/liability were separate and severable. Discharge of liability of one of the noticees either by making payment without a contest, or by settlement before the Settlement Commission would not absolve the other noticees from their liability.
The Supreme Court of India issued notice to file counter affidavit in the matter regarding service tax demand on Konkan Railways.
The SLP arose out of the impugned final judgment and order dated 22-06-2023 in STA No. 87709/2019 passed by the Custom Excise Service Tax Appellate Tribunal, West Zonal Bench at Mumbai.A Two Judge Bench comprising Justice BV Nagarathna and Justice Manoj Misra observed that âDelay condoned. Issue notice to the respondent. Mr. Abhishek Vikas, Adv. for the respondent accepts notice. Four weeksâ time is granted to file counter-affidavit.â
The Supreme Court rejected a special leave petition (SLP) in a case related to the decision on excluding the reimbursement of service tax from the aggregate of amounts mentioned in clauses (a) and (b) of Section 44BB (2) of the Income Tax Act, 1961.
The SLP arose out of the impugned final judgment and order dated 02-11-2022 in ITA No. 18/2021 passed by the High Court of Uttarakhand at Nainital.A Two-Judge Bench comprising Justice BV Nagarathna and Justice Manoj Misra observed that âFollowing the order of this Court in SLP (C) Dy. No.36391/2023 dated 30.10.2023 [Commissioner of Income Tax vs. M/s Vantage International Management Company], this Special Leave Petition is also dismissed, as we are not inclined to interfere in the matterâ.
The Delhi High Court affirmed the prohibition on the export of non-basmati rice due to non-payment of export duty and failure to comply with the specified conditions in the notification.
A perusal of the notification, therefore, shows that the notification was brought in to impose an immediate ban on the export of Basmati rice and the permission to export basmati rice was only in certain circumstances. A perusal of the amendment shows that the time by which the details of the consignment had to be entered into the system was mentioned. A separate category was also introduced whereunder if the customs duty is paid before 21:57:01 hours on 20.07.2023, then the consignment could be permitted for export.
Justice Subramonium Prasad observed that the Petitioner has not filed any verifiable evidence of the date and time of stamping of these 11,000 MT of rice having entered the Customs station before 20.07.2023. The Petitioner only has valid shipping bills, vessel call number (VCN) and the customs rotation number. The Court dismissed the Writ Petition.
The Delhi High Court affirmed the decision of the Income Tax Appellate Tribunal (ITAT) and ruled that the Assessing Officer (AO) has no jurisdiction when investigating the issuance of high premium shares, rejecting the authority of the Principal Commissioner of Income Tax (PCIT) in this matter.
A division bench comprising Justice Rajiv Shakdher and Justice Girish Kathpalia observed that an enquiry was, indeed, made by the AO with regard to the subject shares being issued at a high premium. This was not a case of no enquiry. The Court held that PCIT had committed an error in exercising the powers under Section 263 of the Act.
The Delhi High Court has invalidated the cancellation of Goods and Service Tax (GST) Registration without providing any specified reason.
In terms of Section 29(2) of the Central Goods and Services Tax Act, 2017, the proper officer may cancel the GST registration of a person from such date including any retrospective date, as he may deem fit if the circumstances set out in the said sub-section are satisfied. The registration cannot be cancelled with retrospective effect mechanically. It can be cancelled only if the proper officer deems it fit to do so. Such satisfaction cannot be subjective but must be based on some objective criteria. Merely, because a taxpayer has not filed the returns for some period does not mean that the taxpayerâs registration is required to be cancelled with a retrospective date also covering the period when the returns were filed and the taxpayer was compliant.
A division bench comprising Justice Sanjeev Sachdeva and Justice Ravinder Dudeja observed that a taxpayerâs registration can be cancelled with retrospective effect only where such consequences are intended and warranted.
A division bench of Justice Rajiv Shakdher and Justice Girish Kathpalia held that In the course of assessment proceedings, the Assessing Officer noticed that the respondent/assessee had claimed deductions under Section 80IC of the Act to the tune of Rs.7,88,63,013/- about Assessment Year 2011-12 and Rs.10,40,36,033/- about Assessment Year 201213.
As regards the deduction under Section 80IC of the Act claimed by the respondent/assessee for the Assessment Year 2012-13, the Assessing Officer reiterated the above-mentioned reasoning of the previous year i.e., Assessment Year 2011-12 and held that the respondent/assessee had not carried out any printing or binding of books in the eligible undertaking at Rudrapur, so the deduction of Rs.10,36,64,265/- claimed by the respondent/assessee in this regard was liable to be disallowed.
The Delhi High Court nullified the Show Cause Notice (SCN) issued for the cancellation of Goods and Service Tax (GST) registration, citing the absence of a specified reason.
The bench comprising of Justice Sanjeev Sachdeva And Justice Ravinder Dudeja that even the letter dated 12.06.2023 does not give any clarity as to the allegation of availing of fraudulent input tax credit by the petitioner. However held that it is open to the respondent to take further action following law inter alia, cancellation of registration with retrospective effect. However, the same would be by law and under a proper Show Cause Notice and an opportunity of hearing is given to the petitioner.
The Delhi High Court, while examining the tax implications and characterizing compulsorily convertible debentures under the India-Mauritius Double Taxation Avoidance Agreement, concluded the appeal in light of the pending Special Leave Petition before the Supreme Court.
In This case respondent/assessee and an entity named, Vatika Pvt. Ltd.had invested in Compulsorily Convertible Debentures ( CCDs ) issued by another entity named, SH. Tech Park Developers Pvt. Ltd. The respondent/assessee transferred the CCDs issued to it to Vatika. respondent/assessee claimed that the gains arising from transfer of CCDs were in the nature of capital gains and, therefore, not taxable in view of the provisions of Article 13 of the IndiaMauritius Double Taxation Avoidance Agreement. However, the Assessing Officer treats the gains as interest, placing reliance upon Section 2(28A) of the Income Tax Act, 1961 and Article 11 of the India-Mauritius DTAA. This was the view of the AAR, which was overruled by this court. Aggrieved by the order the revenue filed appeal The court during the proceedings observed that appellant/revenue has preferred a Special Leave Petition, which has been converted into a Civil Appeal
After analyzing the facts and arguments of both parties, a division bench of Justice Rajiv Shakdher and Justice Girish Kathpalia disposed of the appeal due to the Special Leave Petition pending before the supreme court.
The penalty order under the Kerala Value Added Tax Act, 2003 (KVAT Act) for non-disclosure of accurate information was affirmed by the Kerala High Court.
The provision to pay tax at compounded rate is only in lieu of the obligation to pay tax under Section 6 of the Act. The payment of tax at compounded rate, is only an optional method which assessee may adopt for the purposes of his convenience in making the payment of tax.
The petitioner had not filed Form No.49 declaring the details of ongoing projects as prescribed under Rule 24B, therefore, he has not been granted permission to pay tax at compounded rate. The payment of tax and penalty is of his own without any permission. The petitioner/assessee has not made true and correct disclosure, and there has been a pattern of untrue and incorrect returns for all the quarters for the year 2013-14 suppressing substantial volume of taxable contract receipts evading the tax.
A single bench of Justice Dinesh Kumar Singh held that âThe petitionerâs appeal against the assessment order is already pending and therefore, if the petitioner files appeal within a period of 15 days against the impugned penalty order, the appellate authority should consider the appeal on merits, without going into the question of limitation in accordance with law.â
The Delhi High Court has ruled that the Commissioner of Income Tax (Appeals) (CIT(A)) does not have the authority to prolong the deadline for filing an audit report under section 142(2C) of the Income Tax Act, 1961.
It was viewed that the initial exercise of the power has been explicated as one that is not administrative, the CIT(A) could not have extended the time based on the recommendation of the AO. However, the enunciation of this legal principle does not derogate from our observation above that since the discretionary power was vested in the AO (which was non-delegable), it could not have been exercised by the CIT, irrespective of the nature of the power.
A division bench comprising Justice Rajiv Shakdher and Justice Girish Kathpalia answered the questions of law against the appellant/revenue and in favour of the respondent/assessee.
The Delhi High Court determined that the inclusion under section 69 of the Income Tax Act, 1961 lacks validity in the absence of incriminating evidence and affirmed the decision of the Income Tax Appellate Tribunal (ITAT).
A division bench comprising Justice Rajiv Shakdher And Justice Girish Kathpalia observed that in the absence of incriminating material, the addition under section 69 of the act is not valid. The Court upheld the view of the Tribunal and closed the appeal.
The Delhi High Court noted the applicability of Section 41(1) of the Income Tax Act, 1961 in the context of the remission of liability and affirmed the decision of the Income Tax Appellate Tribunal (ITAT).
It was found that since the lender was a private limited company, it was perhaps open to the appellant/assessee i.e., the borrower, to produce the erstwhile directors to establish the genuineness of the loan agreement. None of these steps were taken by the appellant/assessee.
A division bench comprising Justice Rajiv Shakdher and Justice Girish Kathpalia observed that âthe initial onus was not discharged by the appellant/assessee. Besides this, the argument advanced that since there was remission of liability Section 41(1) of the Act would apply and not the provisions of Section 68 of the Act, as rightly held by the Tribunal, is an untenable submission.â
The Bombay High Court held that the assessee did not suffer any prejudice when they “clearly understood” the meaning and significance of the income tax notice issued over 30 years ago.
A Division Bench comprising Justices Jitendra Jain and Justice GS Kulkarni observed that âIf the party has taken up a particular position not only at the early stage of the proceedings but even before the appellate forums, it is not open to a party to appropriate and reprobate and resile from such position.When a question of fact namely whether a prejudice was at all caused, was not raised before the forums below, the parties were estopped from urging it before the appellate forum. Even otherwise and considering the well settled position in law, even a legal right which may accrue to a party can be waived. Such party would be later on estopped / precluded from raising any question on a breach of a right which stood waived.â
Madras High Court observed that Section 248 of Income Tax Act, 1961 is inapplicable to Declaration and distribution of dividend by company to its shareholders.
A Single Bench of Justice SenthilKumar Ramamoorthy observed that âOn examining Section 248 of the Income Tax Act, it is evident that it applies to a case where the tax deducted on payments made under Section 195 of the Income Tax Act to a non-resident, other than by way of interest, is required to be borne by the person by whom the income is payable (i.e. the person making the payment) as per contract or arrangement between the parties and the person making the deduction claims that tax was not payable.â
Jammu and Kashmir High Court has held that the delivery note cannot be used as a delivery challan under Goods and Service Tax (GST).
While dismissing the petition the Court held that there is a distinction between delivery note and delivery challan. A delivery note is a mere document that accompanies a shipment of goods which would have an impact on inventory levels since it decreases delivery stock. But delivery challan is issued while making delivery of goods to the buyer as per Rule 55 read with Rule 138A of the CGST Rules, 2017. The delivery note is neither mandatory nor a prescribed document for transportation. The delivery note is not a substitute for delivery Challan. Therefore, the proceedings against the Petitioner are valid.
Madras High Court quashed an order directing reversal of input tax credit ( ITC ) as the show cause notice ( SCN ) was received on the date of hearing.
The petitioner had been directed to reverse ITC of a substantial value. Such action had been taken pursuant to a show cause notice dated 09.10.2023, which the petitioner asserts was received on the date of hearing.A Single Bench of Justice Senthil Kumar Ramamoorthy observed that âThese facts reveal that a reasonable opportunity was not provided to the petitioner to submit necessary documents and provide an explanation to the respondent.
The Madras High Court dismissed proceedings related to income escapement upon finding a document acknowledging the Income Tax Officer’s receipt of the reply to the income tax notice.
A Single Bench of Justice Senthil Kumar Ramamoorthy observed that âThe documents on record include the reply dated 01.06.2022 of the petitioner to notice dated 23.05.2022. The said reply also bears acknowledgment dated 01.06.2022 of the relevant Income Tax Office. A subsequent reply dated 02.06.2022 is also on record and, likewise, the said reply also bears acknowledgment dated 02.06.2022 of the relevant office.â
The Delhi High Court directed the cancellation of the Goods and Service Tax ( GST ) registration of the petitioner from the date on which the return was filed.
The court observed the cancellation was solely due to non-filing for six months, challenging that this couldnât justify retrospective cancellation. The petitioner wasnât given a chance to contest it. The court directed cancellation from the date of return filing.
Delhi High Court has held that an order passed invoking section 263 of the Income Tax Act, 1961 without satisfying twin condition is invalid. The conditions included that the order of the AO should be erroneous and prejudicial to the interest of the revenue.
A division bench comprising Justice Rajiv Shakdher and Justice Girish Kathpalia viewed that for invoking powers under Section 263 of the Act, twin conditions have to be satisfied i.e., the order of the AO should be erroneous and prejudicial to the interest of the revenue. In view of the statement made by Dr Shashwat Bajpai, the other condition is not fulfilled. The court held that the appeal is disposed of, based on the statement made by Dr Shashwat Bajpai which shall bind the respondent/assessee.
The Delhi High Court quashed the reassessment order passed under Section 148 of the Income Tax Act, 1961, by assessing officers, highlighting a lack of independent application of mind.
The bench determined that reassessment proceedings were triggered without the AO applying his own mind and articulating reasons for believing that the available material indicated that the income chargeable to tax had escaped assessment. After analyzing the facts and arguments, a division bench of Justice Satish Rajiv Shakdher and Justice Girish Kathpalia quashed the reassessment order, emphasizing the lack of independent application of mind by the assessing officers.
Delhi High Court allowed the revenue to approach the court on failure of proceeding under Black Money ( Undisclosed Foreign Income and Assets ) and Imposition of Tax Act, 2015.
A division bench comprising Justice Rajiv Shakdher and Justice Girish Kathpalia held that âThe registry will dispatch a copy of the order to the respondent/assessee via all modes, including email. The appellant/revenue will also ensure that a copy of this order is served on the respondent/assessee.â
The Special Court while allowing the bail application held that the applicant is not a habitual offender and does not impose any flight risk. It was further noted that the offence is Rs. 38,81,443/- above the bailable offence of Rs. 5 Cr and the entities who supplied the alleged transactions are still active and filing returns on the GST portal.
The court held that since the offence has a punishment of 5 years, the offence falls under Section 41A of CrPC, but since no notice under Section 41A was issued, the bail application of the applicant was allowed subject to conditions.
Kerala High Court has held that a person who participated in an auction sale can always participate in re auction after the cancellation of the auction.
Justice Devan Ramachandran closed the writ petition observing that in the afore mentioned circumstances, the Court once granted the liberty to 1st respondent to call the highest bidder and the petitioner and negotiate between them to obtain the highest value. The resultant report will be produced before the Court for finalising this issue.â
The Delhi High Court held that payment received from the sale/supply of software is not royalty under Article 12(3) of the India-Singapore Double Taxation Avoidance Agreement ( DTAA ).
The bench observed that the Tribunal had ruled correctly in favor of the respondent/assessee and concluded that the amount could not be treated as royalty within the meaning of Article 12(3) of the India-Singapore DTAA, the bench observed.A division bench of Justice Rajiv Shakdher and Justice Girish Kathpalia held that payment received from the sale/supply of software is not royalty under Article 12(3) of the India-Singapore DTAA.
The Kerala High Court made it clear that it prefers not to engage in parallel jurisdiction with the appellate authority to grant the interim order requested by the petitionerâs counsel.
The bench of Justice Dinesh Kumar stated that âThis Court would not like to exercise parallel jurisdiction with the appellate authority for granting an interim order as prayed for by the learned counsel for the petitioner.â Further stated that âthe present writ petition is disposed of with direction to the 3rd respondent to consider and pass appropriate orders, in accordance with law, on the stay petition, Ext.P3, expeditiously, preferably within a period of two months.â
Patna High Court upheld the classification of Korai with Wheat Bran and held that it is taxable at 4%.The counsel for the appellant argued that the goods dealt with by him, that is âKoraiâ is exempted as cattle feed and hence, there can be no levy of tax on the exempted goods.
A Division Bench comprising Chief Justice K. Vinod Chandran and Justice Rajiv Roy observed that âThere is nothing to show that âKoraiâ was sold as a cattle feed. As to âKoraiâ being not equivalent to Wheat Bran, since it is a processed item which is obtained as a byproduct it is taxable as an unspecified residuary item at the rate of 8%.â
Delhi High Court directed the processing of refunds amounting to Rs 8,35,184 claimed under the Delhi Value Added Tax Act within a period of two weeks. The writ petition was filed by Ases Security Pvt Ltd, seeking direction to refund an amount of Rs. 8,35,184 allegedly due to the petitioner along with interest.
After analyzing the facts and arguments, a division bench of Justice Sanjeev Sachdeva and Justice Ravinder Dudeja directed the respondents to process the refund within two weeks. Rajesh Mahna, Mr. Ramanand Roy, Mr. Mayank Kouts, and Mr. Shiva Narang, Advocates appeared for the petitioner, while Rajeev Aggarwal, Advocate, appeared for the respondent.
Delhi High Court, in quashing the contested notices and orders, directed the income tax officers to commence new reassessment proceedings against the assessee, adhering to the prescribed legal procedures.
The bench comprising of Rajiv Shakhder and Tara Vitasta Ganju held that considering the aforementioned circumstances, the contested notices and orders in each of the mentioned writ petitions are invalidated on the basis that they lack approval from the specified authority, as stipulated in Section 151(ii) of the Income Tax Act. It was also added that âThe direction is issued with the caveat that the revenue will have liberty to take steps, if deemed necessary, albeit as per law. the rights and contentions of both the sides will remain open, in the event the revenue triggers reassessment proceedings.â
The Madras High Court observed that the relevant date for computation of period of limitation for filing refund application under Section 54 of the Central Goods and Service Tax Act, 2017 (CGST Act) is the date of receipt of payment in convertible foreign exchange.
A Single Bench of Justice Senthil Kumar Ramamoorthy observed that âThe relevant date is the date of receipt of payment in convertible foreign exchange, as per Explanation (2) to sub-section (14) of Section 54. Even as regards FIRCs issued in April 2018, if the benefit of the above notification is extended to the petitioner, the refund application dated 04.09.2020 would be within the two year period, which is to be computed from the relevant date, as per sub-section (1) of Section 54 of the CGST Act.â
The Kerala High Court has nullified penalties imposed under the Kerala Value Added Tax ( KVAT ) Act, asserting that resellers of machines did not deliberately misclassify them but adhered to the same classification as the original seller.
Dinesh Kumar Singh in a single hedge verdict held that the HSN Code corresponds precisely to Entry 69(22)(c)(i) of the Third Schedule to the KVAT Act. Therefore, the court concluded that the petitioners cannot be accused of intentionally misclassifying the machines to evade the accurate or higher tax rate of 13.5%.
The courtâs decision highlighted that the importer-seller had classified the machines as âDigital Multifunctional Devicesâ with HSN Code 8443 3100 during import, adhering to the Customs Act, 1962, and the Customs Tariff Act, 1975.
Calcutta High Court held that although the authorities acknowledged the appellantsâ response to the pre-show cause notice, they failed to address the contentions presented by the appellants, thereby quashing the GST Show Cause Notice ( SCN ) against Coca Cola bottling partner Diamond Beverages for alleged improper utilization of Input Tax Credit ( ITC ).
The Division Bench of Justice T. S. Sivagnanam and Justice Hiranmay Bhattacharyya allowed both the appeal and writ petition, remanding the matter to the Respondent at the stage of the Impugned pre-SCN and setting aside the Impugned Show Cause Notice.
The court observed that while the appellantsâ submissions in response to the Impugned pre-SCN were seemingly considered, a closer examination revealed that the authority failed to address these contentions in the Impugned SCN. This led to the conclusion that the SCN was issued without proper consideration. Highlighting that the SCN lacked due consideration, investigation at the supplierâs end and inquiry into the response to the Impugned pre-SCN, the court directed the Respondent to conduct a thorough inquiry, gather necessary information, provide an opportunity for further submissions, allow a personal hearing, and then decide whether to issue the Impugned SCN under Section 73(1) of the CGST Act
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