Supreme Court and High Court Weekly Round-Up

This weekly round-up analytically summarises the key stories related to the Supreme Court and High Court reported at Taxscan.in during the previous week from February 12 to February 18, 2023. Fake ITC GST Claim: Delhi HC Grants Bail on Personal Bond-SHUBHAM KHANDELWAL vs STATE OF NCT OF DELHI-2023 TAXSCAN (HC) 304 The Delhi High Court (HC) chaired by Justice Amit Sharma granted bail to the petitioner who claimed fake Input Tax Credit (ITC) under Goods and Services Tax (GST) on personal bond of Rs. 1,00,000 along with two sureties. The count observed that as per the status report, there are no prior criminal antecedents of the present applicant and no useful purpose will be served by keeping the applicant in judicial custody any further. Negligible Delay in filing: Calcutta HC condones Delay in Filing GST Appeal-Sikha Debnath vs The Assistant Commissioner of State Tax-2023 TAXSCAN (HC) 306 The Calcutta High Court has recently condoned the delay in filing a Goods and Services Tax (GST) Appeal by the petitioner-Sikha Debnath, as only a negligible delay has been observed in the matter. The Single Bench of Justice Bibek Chaudhuri at Calcutta High Court also clarified that the court had not gone into the merits of the matter and the Appellate Authority is at liberty to decide the factual and legal issues involved in the appeal independently without being influenced in any way by the order passed, allowing the appeal for statistical purposes. Debarment of Haj Group Operator without due Consideration of ITR and CA Certificate is Arbitrary: Delhi HC-KAMAL NATH vs PRINCIPAL COMMISSIONER OF INCOME TAX-2023 TAXSCAN (HC) 310 The Delhi High Court bench of Justice Yashwant Varma ruled that the debarment of Haj Group Operator without considering the Income Tax Returns rectified and the CA certificate is arbitrary. Also the bench directed to reimburse the security deposit forfeited. It was concluded that the petitioner would not be disqualified if it applied to enlist as an HGO in the future due to the unsustainable order of blacklisting. Moreover, the additional punishment of forfeiture of security deposit also clearly appears to be disproportionate and arbitrary. Calcutta HC rejects Petition to change Tariff Head from CET to GST to Avail Lower Rates-Mega Flex Plastics Ltd. & Anr vs The Union of India & Ors.- 2023 TAXSCAN (HC) 307 The Calcutta High Court (HC) bench of Justice Md.Nizamuddin rejected the writ petition to change the tariff heading from Central Excise Tax (CET) to Goods and Services Tax (GST) to Central Excise Tax (CET) to avail lower rates. The bench held that the classification of the Tariff heading cannot be changed simply because the width of the polypropylene strips is less than 5mm, the rate of duty on the exact same product under the same heading has increased since the implementation of the GST Act, and you want to take advantage of the lower rate of Tariff. GST: Delhi HC Quashes Unsigned Show Cause Notice and Order-MARG ERP LIMITED THROUGH ITS AUTH vs COMMISSIONER OF DELHI GOODS AND SERVICE TAX-2023 TAXSCAN (HC) 303 Delhi High Court (HC) presided over Justice Vibhu Bharkru and Justice Amit Mahajan quashed the unsigned show cause notice and assessment orders. The Court decided to provide the petitioner a chance to respond to the show cause notifications that were issued within two weeks of the order’s date. Also told to give everyone another chance to be heard. Madras HC stays GST proceedings during pendency of Proceedings under IBC-Tvl. ITNL-KMB (J.V.) vs The Deputy Commissioner of (ST)-2023 TAXSCAN (HC) 305 Madras High Court (HC) presided over by Justice Abdul Quddhosh stayed the Goods and Service Tax (GST) proceedings during the pendency of proceedings under the Insolvency and Bankruptcy Code (IBC), 2016. The court quashed the assessment orders on grounds that natural justice principles are violated. The bench finally concluded to quash the assessment proceedings and directed to start fresh proceedings. Also as the orders are quashed, the consequential recovery notice is also quashed. Bombay HC upholds Order Reprimanding Chartered Accountant for Misconduct of Soliciting Votes during ICAI Election-Institute of Chartered Accountant of India vs Shri Nitin D. Desai - 2023 TAXSCAN (HC) 315 The Bombay High Court (HC) chaired by Justice Valmiki SA Menezes and Justice Dhiraj Singh Thakur upheld the order of reprimand serves as the end of justice and will be proportionate to the acts of misconduct of which the respondent has been held guilty. The judges noted that the council had acted within the bounds of the law in light of section 21 of the CA Act. Moreover, it conducted the investigation in accordance with the principles of natural justice; both the complainant and the respondent had a chance to present their cases and cross-examine one another GST: Madras HC allows to file Additional reply to SCN issued u/s 174 of CGST Act-M/s.P.K.Japee & Co. Represented by its Partner Yog Varun Japee vs Deputy Commissioner of GST & Central Excise- 2023 TAXSCAN (HC) 311 The Madras High Court has allowed the assessee to file an additional reply to the Show Cause Notice (SCN) issued under section 174 of the Central Goods and Service Tax Act, 2017. The Court directed the petitioner to submit an additional reply to the impugned show cause notice dated 28.04.2022, within a period of two weeks from the date of receipt of a copy of this order. On receipt of the additional reply from the petitioner, within the stipulated time, the respondents shall pass final orders after giving due consideration to the earlier reply dated 11.05.2022 as well as the additional reply, after affording a fair hearing to the petitioner including granting them the right of personal hearing within a period of two months thereafter. Refund u/s 42(1) of DVAT Act can’t be allowed on Failure of OHA to pass order in prescribed time: Delhi HC-M/S JUTLA & CO vs COMMISSIONER OF VAT & ANR- 2023 TAXSCAN (HC) 313 In a recent judgement, the Delhi High Court (HC) has held that refund under section 42(1) of the Delhi Value Added Tax Act, 2004 (DVAT Act ) can’t be allowed on the failure of the Objection Hearing Authority (OHA) to pass an order in the prescribed time. A two-member bench comprising Justice Vibhu Bakhru and Justice Amit Mahajan observed that the prayer of the petitioner for the refund of the amount of ₹14,12,185/- along with interest cannot be acceded to at this stage. Further directed the concerned OHA to pass an appropriate order, in compliance with the order dated 17.09.2021 passed by the Tribunal, as expeditiously as possible. GST Refund Application can’t be rejected on Limitation since Period from 01.03.2020 to 28.02.2022 was Excluded: Delhi HC-MEGICON IMPEX PVT LTD vs COMMISSIONER OF CENTRAL GOODS AND SERVICES TAX DELHI WEST & ORS-2023 TAXSCAN (HC) 317 The Delhi High Court ( HC ) has held that the application for a refund under section 54 of the Central Goods and Services Tax Act, 2017 (CGST) can’t be rejected on the ground of expiry of limitation since the period from 01.03.2020 to 28.02.2022 was excluded. While analysing the said notification, a two-member bench comprising Justice Vibhu Bakhru and Justice Amit Mahajan viewed that the impugned orders cannot be sustained as the benefit of the relaxation in the period of limitation has not been accorded to the petitioner. The Court directed the respondents to process the petitioner’s application for a refund under law. Delhi HC refuse to allow Duty Drawback against Pre-deposit u/s 129E of Customs Act-COLOUR COTTEX PVT LTD vs COMMISSIONER OF CUSTOMS- 2023 TAXSCAN (HC) 319 The Delhi High Court (HC) in its recent judgement refused to allow duty drawback against pre-deposit under section 129E of the Customs Act, 1962. The Court granted liberty to the petitioner to utilise the funds received for complying with its obligation to make a pre-deposit to maintain an appeal before the CESTAT. Writ Petition related to reversal of Input Tax Credit in absence of Final Order amounts to Premature and not maintainable: Madras HC-Geethanjali Vs Assistant Commissioner of CGST & CE -2023 TAXSCAN (HC) 320 In a recent judgement, the Madras High Court (HC) dismissed the writ petition related to the reversal of Input Tax credit in absence of final order since it amounts to a Premature petition. Further held that “the respondent if they conclude that the reply is acceptable to them, they shall drop any further proceedings against the petitioner, but if they decide otherwise, the respondent shall follow the due procedure established under the law for taking further action against the petitioner.” Rejection of GST refund u/s 77(1) of CGST, cannot be claimed on fresh application: Jharkhand HC-M/s Gajraj Vahan Private Limited vs The State of Jharkhand and others- 2023 TAXSCAN (HC) 316 A Single Bench of Jharkhand High Court held that rejection of GST refund under Section 77(1) of CGST Act 2017, could not be claimed on fresh application. A Single Bench of Chief Justice Deepak Roshan no fresh application can be made on the face of rejection observing that, as per the amended Rule 89 (1A) of CGST Rules, 2017 and Circular dated 25.09.2021, the limitation period for seeking refund would be two years from the date of the instant notification i.e. 24.09.2021. However, in the face of rejection order, petitioner cannot make a fresh application, though the instant amendment and the notification beneficially applies to his case also. Non-Scheduled Passenger Services do not include providing Air Transport Services to Public at large on Payment of published tariff: Delhi HC-EAST INDIA HOTELS LTD vs COMMISSIONER OF CUSTOMS-2023 TAXSCAN (HC) 318 The Delhi High Court in a recent ruling held that non-scheduled passenger services do not include providing air transport services to the public at large on payment of published tariff. The Bench comprising Justice Vibhu Bakhru and Justice Amit Mahajan observed that “We are not in agreement with the Tribunal that the provision of non-scheduled (passenger) services as defined under clause (b) of explanation to Condition no.104 of the Notification, entails providing air transport services to public at large on payment of published tariff; we agree with the conclusion that the appellant has not complied with the Condition no.104 of the Notification.” Notice for Revocation of Customer Broker licence issued beyond Period of Ninety days from the Offence Report is not valid: Delhi HC-HIM LOGISTICS PVT. LTD. Vs COMMISSIONERSTOMS- 2023 TAXSCAN (HC) 322 The Delhi High Court (HC) has held that notice for revocation of a Customer Broker licence issued beyond the period of ninety days from the offence report is not valid. A two-member bench comprising Justice Vibhu Bakhru and Justice Amit Mahajan observed that the proceedings for revocation of the petitioner’s licence were commenced beyond the period of ninety days from the date of the Offence Report. No Evidence to prove Voluntary Participation of Assessee Company to have Advertised its Product without Permission: Calcutta HC dismisses Petition-The Kolkata Municipal Corporation vs Larsen & Toubro Ltd-2023 TAXSCAN (HC) 321 The High Court (HC) of Calcutta dismissed the petition as no evidence to prove the voluntary participation of assessee company to have advertised its product without permission. It was held that the specific role of the respondent company is indistinct and incomprehensible as to whether it has been directly instrumental in advertising its product or legally entrusted any other agency to advertise its product on its behalf and cannot be held responsible under Section 202(1)/204 of the Calcutta Municipal Act. The appeal was dismissed. To Read the full text of the Order CLICK HERE Gross delay in Adjudicating SCN seeking Payment of Service Tax on Freight difference: SC confirms Order of Bombay HC quashing SCN-UNION OF INDIA & ORS. vs ATA FREIGHT LINE (I) PVT LTD-2023 TAXSCAN (SC) 123 The Supreme Court of India confirmed order of the Bombay High Court quashing Show Cause Notice (SCN) due to gross delay in adjudication of Show Cause Notice seeking payment of service tax on freight difference. The Revenue filed a Special Leave Petition (SLP)before the Supreme Court. The Coram comprising Justice Krishna Murari and Justice Ahsanuddin Amanullah, after hearing the parties at length, dismissed the SLP holding that there is no good ground to interfere with the judgement of the Bombay High Court. Discharge Certificate in form SVLDRS-4 not issued under Scheme of Sabka Vishwas: Calcutta HC quashes Penalty-M/s. Millenium Construction and Ors. vs Designated Committee- 2023 TAXSCAN (HC) 328 The Calcutta High Court ( HC ) Chaired Justice Bibek Chaudhuri by quashing the penalty imposed on the petitioner and also directed to repay the amount. Also further ordered to issue the discharge certificate in form SVLDRS-4 to the petitioner under the scheme of Sabkha Vishwas (Legacy Dispute Resolution) Scheme, 2019. The bench observed that for the failure of the bank in sending the money electronically by RTGS on 30th June, 2020, the petitioners cannot be held liable. Failure of AO to follow directions given by HC While issuing Notice u/s 148 Reopening Assessment invalidates Order, No Penalty: Bombay HC-The Sahebrao Deshmukh Co-op. Bank Ltd vs The Assistant Commissioner of Income Tax - 2023 TAXSCAN (HC) 326 The Bombay High Court (HC) in a significant judgement has held that the failure of the Assessing Officer(AO) to follow directions given by the HC while issuing notice under section 148 of the Income Tax Act, 1961 to reopen the assessment invalidates the order and order demanding penalty and tax not valid. While allowing the petition the Court set aside the impugned orders and remanded the matter back to the Assessing Officer, who shall provide the Petitioner with the satisfaction note of the Principal Commissioner of Income Tax. Supreme Court remands matter to AO regarding Exemption of Newspaper’s Income utilised for Charity-PR. COMMISSIONER OF INCOME TAX vs SERVANTS OF PEOPLE SOCIETY CITATION: 2023 TAXSCAN (SC) 125 The Supreme Court of India remanded matters to the Assessing Officer (AO) regarding exemption of Newspaper’s Income utilised for charity. The division bench of Justice S. Ravindra Bhat and Justice Dipankar Datta has relied on the decision of CIT v. Ahmedabad Urban Development Authority and remitted the matter to the AO for fresh consideration of the nature of receipts in the hands of the assessee, which is engaged, inter alia, in publishing a newspaper, and to render fresh findings on the issue of whether the assessee is a charitable trust, entitled to exemption of its income under Section 11. Indian citizen working as Travel Agent in Dubai need to Deposit pre-deposit u/s 29E of Customs Act for further proceedings: Gujarat HC - AZIZ FAKIRMOHAMED SUMBHANIYA vs UNION OF INDIA- 2023 TAXSCAN (HC) 314 The Division Bench of Gujarat High court has held that the Indian citizen working as travel agent in Dubai needs to deposit pre-deposit under Section 29E of customs Act for further proceedings. The Division Bench of Justice Sonia Gokani and Justice Gita Gopi observed that, “With regard to non-availment of opportunity for want of necessary pre-deposit required under section 29E of the Customs Act, the appellate authority could not adjudicate on merits. Therefore, we are of the opinion that the balance needs to be struck by allowing the petitioner to approach the appellate authority by furnishing the amount of pre deposits of the requisite amount. Resultantly, without making any interference with the OIO, all the petitioners are permitted to approach the appellate authority.” Jharkhand HC Refuse to grant pre-arrest bail on an offence under Prevention of Corruption Act - Akash Agarwal @ Akash Aggarwal vs Union of India through CBI-2023 TAXSCAN (HC) 309 Jharkhand High Court refused to grant pre-arrest bail on an offence under prevention of corruption Act 1988. Anil Kumar Additional Solicitor General of India for respondent submits that, petitioner worked as authorised representative of five assessee companies given by the accused. The Applicant conspired with other accused persons which subsequently resulted in huge relief in tax liability/penalties to the assessee companies. Notice issued u/s 148 of Income Tax Act towards a Non-Existent Company is not valid: Bombay HC-CLSA India Private Limited vs The Deputy Commissioner of Income-tax- 2023 TAXSCAN (HC) 324 The Bombay High Court (HC) in its recent judgement has held that notice issued under section 148 of the Income Tax Act, 1961 towards a non-existent Company is not valid. A two-member bench comprising Justice Dhiraj Singh Thakur and Justice Kamal Khataf viewed that the PAN in the name of the non-existent entity had remained active does not create an exception in favour of the revenue to dilute in any manner the principles enunciate. While allowing the Writ petition the Court set aside the impugned notice and penalty notice. Filing of Income Tax Return of Company being Director but failure to file individual ITR: Mumbai Sessions Court confirms conviction u/s 276CC of Income Tax Act- Hema Chetan Shah vs Government of India- 2023 TAXSCAN (HC) 325 The Mumbai Sessions Court confirmed conviction under Section 276CC of the Income Tax Act, 1961 on the ground that there was filing of the Income Tax Returns (ITR) of a company being a director but failure to file the individual ITR. The Court observed that “It is also rightly inferred that, when the accused himself states for receipt of documents in xerox form and still failed to comply with the notice it was incumbent upon the accused to have cleared the cloud of suspicion.” No TDS Liability on Payments Received: Karnataka HC grants relief to IBM Philippines-THE DIRECTOR OF INCOME-TAX vs IBM INDIA PRIVATE LIMITED NO.12-2023 TAXSCAN (HC) 329 The bench of Justice P. S. Dinesh Kumar and T.G. Shivashankare Gowde granted relief to the IBM Philippines. It was decided that the payments received by IBM Philippines shall not be liable for Tax Deduction at Source (TDS) under Section 195 of the Income Tax Act, 1961. The bench observed that, as far as the IBM Philippines is concerned, it works like a sub-contractor under IBM India. It earns profit by rendering service to P&G India. It does not provide any technical service to the assessee. Further, IBM Philippines does not have a permanent establishment (PE) in India. Therefore, the income in the hands of IBM Philippines from the assessee is a business income. Start from 15 Calcutta HC Directs Motor Vehicle Taxing Officer to consider Tax Exemption application within Four Week-Sankos Tea Garden vs State of West Bengal - 2023 TAXSCAN (HC) 312 The Single bench of Calcutta High court recently directed the Motor vehicle taxing officer to consider tax exemption applications within four weeks. Justice Bibek Chaudhuri allowed the appeal filed by the petitioner and “directed to give an opportunity to the petitioner of hearing on the question of exemption of tax in relation to the application filed by the petitioner” Transporting own Machinery from One place to Another for Execution of Particular Work not Liable to GST: Calcutta HC directs to serve SCN for Conformation of Penalty-DRB Infrastructure Pvt. Ltd. & Anr vs State of West Bengal-2023 TAXSCAN (HC) 323 A single Bench of Calcutta High Court has directed to serve show cause notice for confirmation of penalty finding that transporting own machinery from one place to another for execution of particular work would not be liable to Goods and Service Tax. A single Bench of, Justice Bibek Chaudhuri disposed the writ petition holding that, “In view of such submission and considering the fact that the learned Advocate for the respondents has served a copy of the show cause notice to the learned Advocate for the petitioners, the petitioners are directed to submit a reply to the adjudicating authority within 3 days from this date and the adjudicating authority thereupon shall adjudicate as to whether that petitioner is liable to pay any penalty or not after giving opportunity to the petitioners or their authorised representative of hearing within a fortnight thereafter.” Income Tax Notice Against Dead Person is Invalid: Bombay HC Quashes Proceedings-Prakash Tatoba Toraskar vs The Income-tax Officer- 2023 TAXSCAN (HC) 327 The Bombay High Court has quashed a re-assessment notice under section 148 of the Income Tax Act, 1961 issued against a dead person. The bench of Justice Dhiraj Singh Thakur and Kamal Khata observed that “initial notice under Section 148 was in the name of the deceased and so was the subsequent communication dated 20 May 2022 purporting to be a notice in terms of Section 148A(b), it is settled law that notice issued under Section 148 of the Act against a dead person would be invalid unless the legal representatives submit to the jurisdiction of the Assessing Officer without raising any objection” Money Laundering Case-Territorial Jurisdiction cannot be decided in Writ Petition: SC-RANA AYYUB vs DIRECTORATE OF ENFORCEMENT- 2023 TAXSCAN (SC) 126 The division Bench of the Supreme Court has dismissed a writ petition related to money laundering case holding that the territorial jurisdiction could not be decided in writ petition.The Division Bench of Justice V. Ramasubramanian and Justice J.B. Pardiwala dismissed the writ petition observing that, “territorial jurisdiction cannot be decided in a writ petition, especially when there is a serious factual dispute about the place/places of commission of the offence. Mere Change of Opinion does not provide Jurisdiction to AO to Initiate Proceeding u/s 147: Bombay HC-Konark Life Spaces vs Assistant Commissioner of Income-2023 TAXSCAN (HC) 334 The Bombay High Court observed that mere change of opinion does not provide jurisdiction to the Assessing Officer (AO) to initiate proceedings under Section 147 of the Income Tax Act, 1961. Upholding the precedent, the Court observed that “There cannot be any failure to disclose fully and truly, if there was no such document as such. This, in our opinion, is nothing but a change of opinion, which does not satisfy the jurisdictional foundation under Section 147 of the Act.” No Tangible Material for AO to have ‘reason to believe’ for Escapement of Income: Bombay HC quashes Re-Assessment Notice-ABBOTT INDIA LIMITED vs The Assistant Commissioner of Income- 2023 TAXSCAN (HC) 336 The Bombay High Court quashed re assessment notice on the ground that there was no tangible material for the Assessing Officer (AO) to have ‘reason to believe’ for escapement of income. Quashing the re assessment notice the Bench comprising Justice Kamal Khatta and Justice Dhiraj Singh Thakur, noted that “It is clear that the assessing officer had not at all discussed as to what was the material which was not disclosed by the assessee fully and truly, which was otherwise necessary for assessment. There would be no tangible material or basis for the assessing officer to have ‘reason to believe’ that income for the said assessment year 2008-09 had escaped assessment. Notice issues for Re-Open Assessment, ITA should avail 10 days time to assessee for file reply: Guahati HC-SHARDA LUNKAR D/O LATE BHANWARLAL BHURA vs THE UNION OF INDIA AND 3 ORS REPRESENTED BY THE SECRETARY TO THE GOVERNMENT OF INDIA-2023 TAXSCAN (HC) 330 The Gauhati High Court has directed the Income Tax Authorities to provide ten days time for filing reply of notice issued for Re-open Assessment. The single bench of the Justice Michael Zothankhuma dismiss the writ petition and held that “petitioner has been given only 2 (two) days time to file a reply to the show cause notice dated 25.03.2022, view of that the respondents should give the petitioner a further 10 (ten) days time, for filing reply to the show cause notice” Re-Assessment Notice on Non-Existing Company is not Tenable in Eye of Law: Calcutta HC-Pranesh Dealmark Pvt. Ltd. vs Union of India & ors.-2023 TAXSCAN (HC) 333 The Calcutta High Court recently held that the re assessment notice on a non-existing company is not tenable in the eye of law. “Considering the submission of the parties, I am of the view that the impugned notice and the subsequent proceeding thereof is not tenable in the eye of law and all further steps pursuant to the said impugned notice also are not tenable in the eye of law”, The Court said. Permission under Development Agreement for Construction, not Transfer under Income Tax Act: Bombay HC quashes Re-Assessment Notice-Late Bharat Jayantilal Patel vs Deputy Commissioner of Income Tax Counsel - 2023 TAXSCAN (HC) 335 A Division Bench of the Bombay High comprising Justice Kamal Khata and Justice Dhiraj Singh Thakur quashed re assessment notice on the ground that permission under Development Agreement was given only for construction and that it does not amount to transfer under Income Tax Act. “If that is so, then there would be neither any tangible material nor any reason for the assessing officer to believe that ‘any income chargeable to tax had escaped assessment’ and the action of the assessing officer, therefore, would be without jurisdiction”, the Bench said. Bombay HC rules CBDT Circular disallowing Expenses associated with Doctor Freebies, not applicable to AY 2008-09- In a major ruling the Bombay High Court ruled that Central Board of Direct Taxes (CBDT) Circular disallowing Expenses associated with Doctor Freebies, not applicable to Assessment Year 2008-09. The Bench comprising Justice Kamal Khata and Justice Dhiraj Singh Thakur observed that “The Circular No.5/2012 referred to the position of the regulations of 2002 after its amendment in the year 2009 and, therefore, neither the circular nor regulation 6.8 incorporated w.e.f. 10 December 2009 would be applicable to the instant case pertaining to assessment year 2008-09.” Cancelling of GST Registration without considering Assessee’s Response to SCN not valid: Delhi HC-M/S. RAKESH ENTERPRISES vs THE PRINCIPAL COMMISSIONER CENTRAL GOODS AND SERVICES TAX & ORS-2023 TAXSCAN (HC) 341 The Delhi High Courtin its recent judgement has held that cancelling GST Registration without considering Assessee's Response to Show Cause Notice (SCN)is not valid. A two-member bench comprising Justice VibhuBakhru and Justice Amit Mahajan observed that the impugned order dated 28.12.2020, cancelling the petitioner’s registration is unsustainable as it does not consider the petitioner’s response to the Show Cause Notice. Delhi HC quashes Order Penalising Fraudulent Export for not issuing SCN-M/S SUN AVIATION PVT. LTD vs COMMISSIONER OF CUSTOMS- 2023 TAXSCAN (HC) 342 In a significant case, the Delhi High Court (HC) quashed the order penalising the fraudulent export for not issuing Show Cause Notice(SCN). Since there is no material to indicate that the Show Cause Notice was sent by speed post with acknowledgement due or had been served by any of the modes as specified under Section 153(1) of the Customs Act, the Court held that the impugned order imposing a penalty on the petitioner is not valid and set aside. GST: No Tangible reason to Doubt Particulars, Refund u/s 54 of CGST allowable, says Delhi HC-M/S MAHAJAN FABRICS PVT. LTD vs COMMISSIONER-2023 TAXSCAN (HC) 339 The Delhi High Court ( HC ) has held that refund under section 54 of the Central Goods and Services Tax Act, 2017(CGST) is allowable when there is no tangible reason to doubt the particulars. A two-member bench comprising Justice Vibhu Bakhru and Justice Amit Mahajan observed that the petitioner had filed its return disclosing all necessary details for claiming the refund. The review order dated 15.03.2020 to file an appeal against the Order-in-Original is founded on an erroneous finding. VAT: No Penalty If Attempt to Evade Tax Not Proved: Punjab & Haryana HC-Punjab Wool Syndicate vs State of Punjab and another-2023 TAXSCAN (HC) 340 The High Court of Punjab and Haryana, in a VAT case, recently held that the penalty can’t be imposed if an attempt to evade tax is not proved. The Coram comprising Ms. Justice Ritu Bahri mrs. Justice Manisha Batra observed that in the present case, the driver had produced the documents at I.C.C. and subsequently at the time of checking, he showed all the invoices. There was no attempt to evade tax. Hence, VAT appeal is allowed and no case for imposition of penalty is made out under Section 51(7)(c) of the Punjab VAT Act, 2005. Remand back of matter to AO to calculate Disputed Tax and not Fresh Adjudication: Bombay HC quashes action of PCIT-Agarwal Industrial Corporations Limited vs Union of India- 2023 TAXSCAN (HC) 338 In a recent ruling the Bombay High Court quashed the action of the Principal Commissioner of Income Tax ( PCIT ) as the remand back of the matter to the Assessing Officer (AO) was to calculate disputed tax and not fresh adjudication. The Coram consisting of Justice Abhay Ahuja and Justice Dhiraj Singh Thakur, observed that “Designated authority had only to calculate the disputed tax by giving effect to the orders of the FAQ No.7 would, in our opinion, be applicable if it was a case of remand by an appellate authority to the Assessing Officer, where a reasonable opportunity of being heard was not given by the Assessing Officer to the assessee or the Appellate Authority wanted the Assessing Officer to carry out a fresh examination of the issue with a specific direction.” True and Full Disclosure regarding Valuation of Equity Shares: Bombay HC quashes Re-Assessment Notice-Suminter Organic and Fair Trade Cotton Ginning Mill Pvt. Ltd. vs Deputy Commissioner of Income tax-2023 TAXSCAN (HC) 337 The Bombay High Court quashed re assessment notice as there was true and full disclosure regarding valuation of equity shares. The Bench comprising Justice Kamal Khata and Justice Dhiraj Singh Thakur, observed that “We have no hesitation that there was no failure on the part of the assessee to disclose fully and truly the material facts, nor there was any tangible material with the A.O. which would have otherwise justified the reopening of the assessment by issuing the notice impugned.” Notice issued Without satisfy Condition Precedent u/s 147 of IT ACT is invalid :Bombay HC quashes proceedings-B.U. Bhandari Autolines Pvt. Ltd vs The Assistant Commissioner of Income Tax - 2023 TAXSCAN (HC) 331 The division bench of the Bombay high court in a writ petition filed before it quashed the reopening assessment proceedings and held that Notice issued without satisfied condition precedent under section 147 of income tax act 1961 is invalid.Further the bench observed that the assessing officer did not explain the reason on what basis and material he came to the conclusion that M/s Magnum Tradex Pvt. Ltd., was indeed a shell entity. Contravention of general directions issued by Court where Notice u/s 148 for Reopening Assessment: Bombay HC remands matter-The Sahebrao Deshmukh Co-op. Bank Ltd. vs The Assistant Commissioner of Income Tax- 2023 TAXSCAN (HC) 344 The Bombay High Court remanded back matter to the Assessing Officer (AO) as there was contravention of general directions issued by Court where notice under Section 148 of the Income Tax Act for reopening assessment. “This arbitrary act of the Assessing Officer is also contrary to the specific directions of this Court contained in para 8(d) in Tata Capital Financial Services Limited v. Assistant Commissioner of Income Tax, Circle 1(3)(1) and others, wherein Assessing Officers have been directed to give a personal hearing to assesses with a minimum seven working days advance notice of such personal hearing” the Court noted. Reassessment of Non-resident Company Vedanta Resources: Orissa HC quashes proceedings due to Lack of Jurisdiction-Vedanta Resources Ltd. vs The Asst. Commissioner of Income Tax - 2023 TAXSCAN (HC) 346 The Orissa High Court (HC) presided by Chief Justice Dr. S. Muralidhar and the Justice M.S. Raman quashed the reassessment proceedings of a non-resident company Vedanta Resources Limited (VRL) and notices issued due to lack of jurisdiction. The Court, therefore, concluded that the impugned notices were issued by O.P. No.1 without jurisdiction and, therefore, are unsustainable in law. Also, the impugned notices and all other proceedings were quashed. However, the authorities can proceed further in accordance with law. Failure to follow Rule 7AA of 2001 invalidates the order: SC upholds order of CESTAT-COMMISSIONER OF CENTRAL EXCISE AHMEDABAD vs M/S. MAHENDRA FABRICS THROUGH ITS MANAGING DIRECTOR-2023 TAXSCAN (SC) 124 The Supreme Court of India (SC) upheld the order of CESTAT which quashes the order passed by the commissioner which failed to follow Rule 7AA of Central Excise Rules 2001 instead of Rule 1994. Justice S. Ravindra Bhat and Justice Dipankar Datta observed that neither the show cause notice nor the order in original had advertised the change and proceeded instead as if Rule 7AA was still in existence, which was a clear error. The Court held the order of CESTAT as Correct and dismissed the appeal. Unaware of RBI Portal to make Pre-Deposit u/s 35F of CEA: Jharkhand HC Grants Relief to Unregistered Dealer-M/s Mukesh Kumar Singh vs The Commissioner (Appeals)-2023 TAXSCAN (HC) 296 The unregistered dealer who failed to pay service tax and also the pre-deposit required by section 35F of the Central Excise Act of 1944 received relief from the division bench consisting of Acting Chief Justice Aparesh Kumar Singh and Justice Deepak Roshan. After hearing both sides, the bench set aside the impugned order passed by the GST Commissioner (Appeals) and also directed the petitioner to remit the mandatory pre-deposit within 4 weeks. No reason to invoke Article 226: Calcutta HC dismisses WP against GST AAAR-Mega Flex Plastics Ltd. & Anr vs The Union of India & Ors.-2023 TAXSCAN (HC) 307 The Calcutta High Court (HC) bench of Justice Md. Nizamuddin dismissed the writ petition against the Goods and Services Tax (GST) Appellate Authority for Advance Ruling (AAR) on ground that there is no reason to invoke the Article 226 of Constitution of India. The court, acting within its competence under Article 226 of the Indian Constitution was reluctant to grant the petitioner’s request to modify the classification of the Tariff Heading in order to benefit from a cheaper tariff rate under the GST regime. Madras HC orders to release Vehicle Detained u/s 129 of GST on Payment of Penalty-M/s.Kramski Stamping and Molding India Private Ltd vs The State Tax Officer-2023 TAXSCAN (HC) 343 In a significant case, the Madras High Court (HC) ordered to release of a Vehicle Detained under section 129 of the Goods and Services Tax Act, 2017 (GST) on payment of penalty. The Court directed the respondent to consider the petitioner’s application as and when it is filed seeking for provisional release of the conveyance on payment of the penalty amount of Rs.1,00,000/- as per the provisions of Section 129(6) of the G.S.T. Act, 2017. Tax Effect below Monetary Limit prescribed by CBDT and absence of Audit Objection: Jharkhand HC dismisses Appeal holding not Maintainable-The Principal Commissioner of Income Tax vs M/s Urmila RCP Projects Pvt. Ltd-2023 TAXSCAN (HC) 345 The Jharkhand High Court dismissed an appeal filed by the Revenue holding not maintainable on the ground that the tax effect below the monetary limit prescribed by Central Board of Direct Taxes (CBDT) and absence of audit objection. The Bench comprising observed that “Thus, it is crystal clear that on the one hand the tax effect in the instant case is much below the monetary limit as enumerated in Circular No. 3/2018 read with Circular No. 17 of 2019 and on the other hand none of the exception clause much less the audit objection is involved in this case and as such, we are having no hesitation in dismissing this appeal on the question of maintainability itself. Technical glitches in GST Portal: Madras HC directs to file Fresh Application for release of Blocked Funds-Lucas TVS Limited vs Superintendent of GST and Central Excise -2023 TAXSCAN (HC) 362 The Madras High Court directed the petitioner, M/s. Lucas TVS Limited, to file a fresh application for release of blocked funds as there were technical glitches in the GST Portal. The Court also directed the petitioner to submit a fresh representation to the second respondent stating their grievances that have been raised in the affidavit filed in support of this writ petition, within a period of one week from the date of receipt of a copy of the order. Failure to satisfy conditions u/s 147 and Non- Application of mind: Bombay HC quashes Reassessment notice-Punia Capital Pvt. Ltd. vs The Assistant Commissioner of Income Tax- 2023 TAXSCAN (HC) 361 The Bombay High Court quashed the reassessment notice on the ground of failure to satisfy conditions under Section 147 of the Income Tax Act, 1961 and non-application of mind. “No scrutiny assessment had been made and that the only requirement was to initiate proceedings under Section 147 on the basis of ‘reason to believe’ goes to prove that the assessing officer had reopened the assessment only on the basis of ‘reason to believe’ and not a failure to disclose material facts fully and truly, on which too the assessing officer ought to have been satisfied as matter pertained to reopening beyond the period of four years”, the Court said. Bombay HC orders re consideration on classification of ACP under CETA-Prime Bond Industries vs The Commissioner of Sales Tax -2023 TAXSCAN (HC) 364 The Bombay High Court ordered reconsideration on classification of Aluminium Composite Panels (ACP) under Central Excise Tariff Act, 1985 (CETA). The Bench comprising Justices Dhiraj Singh Thakur and Abhay Ahuja directed the Tribunal to pass a fresh order after considering and dealing with all the factual submissions made on behalf of the Appellants as well as the Respondent Revenue and particularly a finding on whether or not the aluminium composite panel as used in the context of the business of the Appellants would simply be aluminium plates or strips of a thickness exceeding 0.2 mm or aluminium plates, rods, profiles, tubes and the like, prepared for use in structures or parts of structures. All questions and contentions are left open. Mere Appearance of staff of person in Judicial Custody should not be taken as appearance by Assessee himself in absence of Valid Notice: Orissa HC-Principal Commissioner of Income Tax vs Narayan Kumar Khaitan- 2023 TAXSCAN (HC) 363 The Bench observed that “PCIT should be conscious that once information was received that a person to whom notice has to be served is in judicial custody, then an appropriate order should be passed requiring service of notice. With the PCIT having failed to do so, it was not open to the Department to contend the mere appearance of a staff of such a person in judicial custody before the PCIT should be taken to be the appearance by the Notice/Assessee himself.” Re-Assessment Against Non-Existent Company Not Valid despite Active PAN: Bombay HC-CLSA India Private Limited Vs The Deputy Commissioner of Income-tax Case Number: WRIT PETITION NO. 2462 OF 2022 Date of Judgement: 10th FEBRUARY 2023. CITATION: 2023 TAXSCAN (HC) 359 The Bombay High Court has recently in a writ petition filed before it held that Re-assessment against non-existent company was not valid despite active Permanent Account Number.The division bench of Justice Dhiraj Singh Thakur and Kamal Khata Allowed the writ petition and deleted the penalty imposed upon the assessee company . Gauhati HC Orders to Expedite TDS Refund Process to Scheduled Tribe Officer-CHYAWAN PRAKASH MEENA S/O- SH ROOP CHAND MEEENA vs THE UNION OF INDIA AND 3 ORS-2023 TAXSCAN (HC) 358 The Gauhati High Court (HC) presided by Justice Soumitra Saikia ordered the Commissioner of Income Tax (TDS) and concerned Income Tax Officer (ITO) to expedite the Tax Deduction Source (TDS) refund process to the Scheduled Tribe Officer within 3 weeks. The bench further observed that any member of a Scheduled Tribe as defined in Clause (25) of Article 366 of the Constitution, residing in any of the areas prescribed under Section 10(26), is exempted from payment of income tax. Delhi HC Quashes Service Tax Proceedings Against Emaar-PRINCIPAL COMMISSIONER vs M/S EMAAR MGF LAND LTD- 2023 TAXSCAN (HC) 356 The Division Bench of Delhi High Court has quashed the service Tax proceedings against Emaar MGF land limited. The Division Bench of Justice Vibhu Bakhru and Justice Amit Mahajan dismissed the petition and upheld the decision of the tribunal observing that, “In the given facts, the provision to Section 73(1) of the Act could not be applied. The respondent had filed its return of service tax on the basis that its services were taxable as ‘Works Contract’ Services. It had availed the Cenvat Credit to the extent of ₹2,44,48,095/- and had paid the balance amount in cash in discharge of the liability, which was computed on the aforesaid basis. There is no allegation that the respondent had concealed that it was carrying on the activity of construction and selling residential flats.” Bombay HC quashes Re-Assessment Notice citing jurisdictional errors by AO-Tahnee Heights CHS Ltd. vs Income Tax Officer-2023 TAXSCAN (HC) 353 The Bombay High Court quashed re assessment notice citing jurisdictional errors by the Assessing Officer (AO). The Bench comprising Justice Kamal Khata and Justice Dhiraj Singh Thakur observed that “Even in the present case there appears to be no tangible material with the A.O. as can be seen from the reasons recorded and that the reference was made only to the records of the assessment. It thus appears that between the date of the order of assessment and the date of the issuance of notice, nothing new had happened.” Polypropylene Leno Bags made from Plastic Granules cannot be treated as Textile Articles: Calcutta HC Upholds AAAR Order-Mega Flex Plastics Ltd. & Anr vs The Union of India & Ors-2023 TAXSCAN (HC) 307 The Calcutta High Court upheld the order of the Appellate Authority for Advance Ruling (AAAR) Order and held that Polypropylene (PP) Leno Bags made from Plastic Granules cannot be treated as Textile Articles. The Court concluded by stating that simply on the ground that width of the polypropylene strips is less than 5mm and that the rate of duty on the very same product under the same heading after the introduction of GST Act is higher and just for availing the lower rate of Tariff, it cannot be allowed to change the classification of Tariff heading. “Feigning Ignorance of Law by Authorities Only Increases Burden of Courts”: Bombay HC Quashes Re-Assessment-Deepak Marda vs The Income Tax Officer- 2023 TAXSCAN (HC) 357 Quashing a re-assessment notice the Bombay High Court observed that “Feigning Ignorance of Law by Authorities only increases Burden of Courts”. “It is an imperative duty of the authorities to be updated with the law and to apply it to the case at hand before taking decisions and passing orders. Feigning ignorance of law by authorities only increases the burden of the Courts” the Bench commented No Service Tax on Telecom Towers Erected at Site and Affixed to Earth: Bombay HC Quashes Demand of Ineligible Cenvat Credit against Tata Teleservices-The Commissioner of Service Tax vs M/s Tata Teleservices -2023 TAXSCAN (HC) 351 In a significant case, the Bombay High court quashed the demand of ineligible Cenvat credit against Tata teleservices and held that no service tax on telecom towers erected at the site and affixed to earth. The division bench of Justice Dhiraj Singh Thakur and Abhay Ahuja dismissed the writ petition and determined that “The affidavit filed on behalf of the Revenue did not elicit any distinguishing feature. Counsel for the Revenue has also not brought any material on record to demonstrate that the decision dated 2nd April 2018 in CEXA 6 of 2017 has been a subject matter of any further challenge. Disciplinary Proceedings can’t be Initiated Merely on Suspicion: Allahabad HC quashes Proceedings against VAT Commissioner- In a significant judgement, the Allahabad High Court (HC) quashed the proceedings against VAT Commissioner and held that disciplinary proceedings can’t be initiated merely on suspicion. While allowing the appeal, the Court held that “the respondents ought not to have been given liberty to proceed with the disciplinary proceedings against the appellant and to post her anywhere considering the facts that the disciplinary proceedings are pending against her.” The disciplinary proceedings which are pending against the petitioner were set-aside. No Personal Hearing granted u/s 75 (4) of GST Act: Madras HC quashes Order on Gross Violation of Natural Justice Principles-Sendhil Kumar vs State Tax Officer Counsel for Appellant: Mr. N. Murali Counsel for Respondent: Ms. Amirtha Dinakaran CITATION: 2023 TAXSCAN (HC) 352 The Madras High Court quashed the order on gross violation of natural justice principles as no personal hearing was granted under Section 75 (4) of Goods and Services Tax (GST) Act. The Court of Justice Abdul Quddhose observed that “therefore, necessarily the impugned assessment order has to be quashed on the ground of violation of the principles of natural justice as no personal hearing has been granted to the petitioner as contemplated under Section 75(4) of the GST Act, 2017 and remanded back to the respondent for fresh consideration on merits and in accordance with law. Failure to give the opportunity to Assessee Invalidates the Assessment Order: Madras HC-M/s.PHA India Pvt. Ltd. vs The Assessment Commissioner (ST)-2023 TAXSCAN (HC) 350 In a recent judgement, the Madras High Court ( HC ) held that failure to allow the assessee invalidates the assessment order. Justice Abdul Quddhose quashed the impugned Assessment Orders and remanded the matter back to the first respondent for fresh consideration. Further directed “the first respondent to pass final orders on merits and by law in respect of the contentions raised by the petitioner including the limitation issue, after furnishing a copy of the Show Cause Notices to the petitioner to enable them to submit a detailed reply, after adhering to the principles of natural justice including the limitation issue and also by granting the petitioner a right of personal hearing within a period of three months.” VAT and Sales Tax Dues have no Priority over Dues of Secure Creditors who Exercise Powers under the SARFAESI Act: Gujarat HC-ODHAVJIBHAI MOHANBHAI GADHIYA vs STATE OF GUJARAT-2023 TAXSCAN (HC) 349 The Gujarat High Court ( HC ) has held that Value Added Tax ( VAT ) and sales tax dues have no Priority over dues of Secure Creditors who exercise powers under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 ( SARFAESI ). A two-member bench consisting of Justice N V Anjaria and Justice Bhargav D Karia observed that respondent No.10 Axis Bank had held an auction in the exercise of powers derived from the provisions of the SARFAESI Act to sell the property mortgaged with it, to recover its dues. Notice under Section 13(2) was issued, possession was taken and the auction by the law was conducted. Non-Response to Notice due to Negligence of Chartered Accountant/ Income Tax Practitioner: Madras HC directs Re-Adjudication-Suyambulingam Suresh Vs Income Tax Officer-2023 TAXSCAN (HC) 348 The Madras High court has recently directed to the Income tax authority for Re-adjudicate the assessee’s matter when it was caused by the negligence of Income tax Practitioner. The single bench of Justice Abdul Quddhose after considering the contentions of the both parties Observed that, several opportunities were granted to the petitioner by way of the notices issued under sections 142(1) and 143(2) of the Income Tax Act 1961, notices were received in the Email address of the Chartered Accountant or the Income Tax Practitioner engaged by him for filing the revised return of income. Entertainment Tax on Cinema Tickets: Telangana HC directs State to form Committee to Study Issues of Exhibitors and Distributors-Surendra associates vs the entertainment tax officer-2023 TAXSCAN (HC) 347 The Single bench of Hyderabad High court has recently directed the state to form a committee to study the issues of exhibitors and directors in the field of entertainment tax on cinema tickets .The bench further set-aside the order passed by the Andhra Pradesh Government before bifurcation and ordered the both state governments to constitute committee Study Issues of Exhibitors and Distributors. Delhi HC Stays order u/s 148A(d) and Consequential Notice as AO committed Error in Law in Framing Initial Assessment-KUMKUM KOHLI vs ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE 28-1 & ANR.2023 TAXSCAN (HC) 332 The Division Bench of Delhi High Court has stayed order under Section 148A(d) and consequential notice finding that the Assessing Officer had committed error in law in framing initial assessment. “We have taken note of the fact that the expression “any audit objection” was introduced only by Finance Act, 2022 albeit w.e.f. 01.04.2022. Prior to the said amendment, the expression which was obtained in Explanation 1(ii) appended to Section 148 of the Act advertised to the “Comptroller and Auditor General of India”. 10. We are, prima facie, also of the view that if the AO, according to the respondents/revenue, had committed an error in law.” Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates