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 March 20 to March 26, 2023.
In a major decision, the Supreme Court of India ruled that the Constitutional Bench Ruling that allows Circumstantial Evidence does not dilute the requirement of Proof Beyond Reasonable Doubt under the Prevention of Corruption Act, 1988. The Court further went on to observe that when reliance is placed on circumstantial evidence to prove the demand for gratification, the prosecution must establish each circumstance from which the prosecution wants the Court to draw a conclusion of guilt.
The Supreme Court(SC) has held that benefits under section 4A of the Central Excise Act, 1944 applicable only to retail sales. The Division Bench of Justice Krishna Murari and Justice Sudhanshu Dhulia has observed that the mere affixation of MRP does not make goods eligible to find refuge under Section 4(A) of the Act, and what is required along with such affixation is a mandate of law that directs the seller to affix such MRP.
The Supreme Court (SC) has held that rejecting the value at which goods were sold by treating assessee as related person under section 4(4)(c) of the Central Excise Act, 1944 in absence of proper test is erroneous. A Coram comprisJustice S. Ravindra Bhat, Justice Dipankar Datta observed that it could not have concluded that such a relationship, as is contemplated by Section 4(4)(c) could have been inferred, without applying the proper test. The SC concluded that the revenue’s decision in rejecting the value at which the goods were sold, by treating the assessee as a related person, was erroneous. The court further set aside the impugned order and allowed the appeal.
In the instant case before Calcutta High Court, presided by the bench of Justices T.S. Sivagnanam and Hiranmay Bhattacharyya directed the Principal Chief Commissioner of Customs to appoint another officer of same rank to hear the suspension of license of the respondent of the writ petition (Custom Broker). The bench has provided 30 days to comply with the order of the single bench. Added that the respondent/writ petitioner has already filed a separate writ petition asserting that the order suspending the customs broker licence beyond the time period specified by the regulation is invalid and that the licence should be resumed, so the direction extending the time limit will not harm them in any way.
In the matter of Input Tax Credit (ITC) Reversal and Disallowance, the Madras High Court directed the GST Department to reassess in the light of Supreme Court (SC) Decision. The Court commented that while some of these directions have been complied with in the present cases, learned counsel concur on the position that there are other conditions that have been set out under Circular No.5 of 2021 dated 24.02.2021 that yet remain to be complied and hence, the impugned assessments are to be re-done in light of Circular No.5 of 2021.
In a recent decision the Madras High Court directed the petitioner to approach Appellate Authority by way of statutory appeals in the matter of Revocation of Input Tax Credit (ITC). The Court of Dr Justice Anita Sumanth observed that “There is no justification, let alone acceptable justification for the delay in the institution of the present Writ Petitions on 07.03.2023. However and seeing as Amrita Dinanakaran, Government Advocate, who accepts notice for the respondent does not seriously object to the alternate relief that is sought for and is proposed to be granted by this Court, liberty is granted to the petitioner to approach the appellate authority by way of statutory appeals within a period of three (3) weeks from today.”
In a major ruling the Telangana High Court observed that the observations in the release of Provisional Attachment of Bank Accounts should not influence GST Proceedings. The Coram comprising of Chief Justice Ujjal Bhuyan and Justice N Tukaramji, observed that “Needless to say, observations made by the Commissioner of Ranga Reddy GST Commissionerate while passing the order was in the context of examining the objection raised by the petitioner to provisional attachment of bank accounts under Section 83 of the CGST Act and certainly those would not influence the assessment proceedings that may be initiated against the petitioner, which will be done in accordance with law.”
The Telangana High Court ordered the provisional release of Bank account in the matter of GST refund sanction amount. The Coram comprising of Chief Justice Ujjal Bhuyan and Justice N Tukaramji observed that “The refund sanction amount, as noticed above, is Rs.27.54 crores. Petitioners shall make a deposit of Rs.28.00 crores in a nationalised bank by way of fixed deposit.”
The Authorities acting as quasi judiciary authority by invoking the power under statute are expected to act judiciously, but they are not expected to work as money generating authority.” The Division Bench of Acting Chief Justice T. Amarnath Goud and Justice Arindam Lodh observed that orders werepassed by the authorities in an arbitrary manner, which was driving taxpayers to file appeals by depositing 50% ofthe disputed taxes. The Court also ruled that a taxpayer or dealer cannot be made to suffer as a result of the taxauthorities lax approach and that the officers must be more vigilant and tax-friendly.
The Bombay High Court ( HC ) has held that CIDCO can decide the Technical Qualification of the Bidder based on the opinion of Maharashtra State Electricity Transmission Company Ltd. ( MSETCL ).
The Court held that it cannot sit as an Appellate Authority over the decision of the respondents/CIDCO. The evaluating committee consists of experts. They are the best judge to consider compliance with technical and financial conditions.
The Madras High Court quashed an assessment order on the ground that there was no proposal in pre-assessment notice for levy of interest or penalty. The Bench of Dr. Justice Anita Sumanth observed that “Admittedly, there was no proposal in the preassessment notice either for levy of interest or penalty. To this extent the impugned order has travelled beyond the scope of the show cause notice.”
In a recent decision, the Delhi High Court observed that the Income Tax Officer cannot By-Pass the decision of the Supreme Court in ‘Engineering Analysis’ by a Review Petition filed by the Revenue Department. The Bench observed that as long as the judgment of the Supreme Court in Engineering Analysis (2021) is in force, the concerned income tax authority could not have sidestepped the judgment on the ground that the revenue department has filed a review petition against the said judgment.
“It is not a healthy practice to keep the investigation pending till eternity and keep the sword handing over the heads of the petitioners” The Court of Justice Virender Singh observed that “When there is no evidence to show that any device, mobile phone, or server having MT-5 software belongs to the petitioners, when the seizure of the server manifestly violets the procedure prescribed by law, when the procedure to retrieve data from the server is not in conformity with the law and creates doubt, when the data provided for analysis is itself unreliable, then all reports based upon such data, which has been heavily relied upon by the prosecution are liable to be rejected at the threshold especially when the prosecution has nothing to say against an allegation of bias, arbitrariness, hi handedness and also against the conduct of the investigators.”
In a recent judgement, the Bombay High Court(HC) allowed a refund of IGST paid on the import of Capital Goods under the Export Promotion Capital Goods Scheme (EPCG Scheme). Further held that the refund shall be processed and paid together with interest, if any, within four weeks of Petitioner reversing the entries of availing of the subject credit and debiting the said amount from the credit ledger.
The Andhra Pradesh High Court has held that the department or Proper Officer has no power under section 70 of the Goods and Service Tax Act, 2017 to summon of Party to stop all GST Payments A two-member bench comprising Justices Durga Prasad Rao & Justice V. Gopala Krishna Rao observed that the impugned notice was issued under Section 70 (1) of the GST Act but not in the exercise of powers conferred under Section 83 of the GST Act and further held such a direction as beyond the jurisdiction of the 3rd respondent.
In a recent judgement, the Madhya Pradesh High Court (HC) refuses to cancel bail under the Excise Act, 1915 in absence of supervening circumstances. It was observed that for cancelling bail once granted, the Court must consider whether any supervening circumstances have arisen or the conduct of the accused post grant of bail demonstrates that it is no longer conducive to a fair trial to permit him to retain his freedom by enjoying the concession of bail during the trial.
In a recent judgement, the Madhya Pradesh High Court(HC) Petition under section 11(6) of the Arbitration and Conciliation Act, 1996 is not maintainable when there was agreement on procedure for appointing an arbitrator. A Coram comprising Justice Vivek Rusia observed that since the applicant and respondents had agreed to the agreement on a procedure to be followed for appointing an arbitrator or arbitrators and if the aforesaid procedure fails only then the applicant can approach the Court by way of a petition under Section 11(6), therefore, the applicant is required to exhaust the remedy available under the aforesaid SAROD Arbitration Rules for affordable redressal of dispute. The petition was dismissed.
The Madras High Court upheld penalty on the ground of non-compliance of Statutory GST requirements. The Court of Justice M Sundar, observed that “This writ Court deems it appropriate to leave it at that and say that interference is refused but it is made clear that it cannot be put against the writ petitioner that there is ‘suppression of facts to evade tax’ within the meaning of Section 74(1) and it is only a case of tax not being paid within the meaning of Section 73(1).”
The Delhi High Court ( HC ) has held that immediate re-blocking of the Goods and Service Tax ( GST ) Input Tax Credit ( ITC ) ledger after 1 year is prima facie overreach of Rule 86A(2) ) of the Central Goods and Services Tax Rules, 2017 A two-bench member comprising Justice Vibhu Bakhru and Justice Amit Mahajan observed that the same would amount to overreaching the provisions of Rule 86A(2) of the Central Goods and Services Tax Rules, 2017.
In a major decision, the Supreme Court of India ruled that the Constitutional Bench Ruling that allows Circumstantial Evidence does not dilute the requirement of Proof Beyond Reasonable Doubt under the Prevention of Corruption Act, 1988 The Court further went on to observe that when reliance is placed on circumstantial evidence to prove the demand for gratification, the prosecution must establish each and every circumstance from which the prosecution wants the Court to draw a conclusion of guilt.
The Allahabad High Court upheld the conviction of an Income Tax Officer and observed that Income Tax Returns are not proof of Source of Income in a Corruption Case. The accused-appellant in the present matter is Om Prakash Vimal, who was an Income Tax Officer. The Court of Justice Dinesh Kumar Singh observed that “ Once the accused-appellant accepted the bribe amount and he kept it in the drawer of the office table, which was of the accused-appellant, the recovery from the drawer of the office table of the accused-appellant, is recovery from the accused-appellant himself.”
Rejecting the claim of Maharashtra Industrial Development Corporation (MIDC), on recovery of tax the Bombay High Court observed that a pending writ petition cannot possibly be a clog on the title. The Bench further observed that the argument has no appeal because if there is a tax payable on the transaction that the Petitioner proposes, and we note that the Petitioner is proposing to take a larger property within MIDC itself, then undoubtedly that tax would have to be paid depending on where the incidence of tax falls.
The Gauhati High Court quashed zimma petition on the ground of absence of proof that the seized areca nuts will not be used for human consumption. The Bench of Justice Mitali Thakuria, observed that “I find that interference of this Court is necessary. Accordingly, the said order of Zimma petition is set aside and quashed, with a direction to the respondent to collect report from the SP regards to genuineness of claim that the seized areca nuts will not be used for human consumption and after verification of relevant documents etc, the SP will submit a report before the Trial Court.”
The Bombay High Court dismissed a writ petition directing to avail statutory appeal and observed that an Adjudicating Officer has jurisdiction to decide whether a particular activity attracts service tax. The Finance Act 1994 provided complete machinery to challenge the order of the assessment in appeals, the last one being before the Supreme Court. Further, even assuming that the first appeal would lie in this court and not the Supreme court, this is not a case where writ jurisdiction needs to be entertained when the petitioner has a remedy of a substantive appeal.
The Madras High Court quashed assessment order for violation to take due process where Authority proposes to take adverse view in the matter of Reversal of Input Tax Credit (ITC). The Court of Dr Justice Anita Sumanth observed that “In this case, admittedly, there has been no opportunity granted to the petitioner prior to the passing of impugned order and this is a fatal flaw. Order dated 20.01.2023 is set aside.”
In a recent judgement, the Calcutta High Court (HC) has held thata notice under 148 of the Income Tax Act, 1961 issued to a non-existing company despite having knowledge about its amalgamation is not valid. A Coram comprising of Md. Nizamuddin, Justice observed that “the impugned notice dated July 27, 2022, is not tenable in the eye of law and all further steps under the said impugned notice also are not tenable in the eye of law.”
In a recent judgement, the Bombay High Court (HC) has held that an application to Sabka Vishwas (Legacy Dispute Resolution) SVLDR Scheme under the arrears category is allowable even if tax is paid since it covers interest and penalty. It was observed that in the facts of the case, the show cause notice demanding the interest amount was issued to Petitioner under Section 75 of the Finance Act, 1994 and which related to the service tax dues, which have admittedly been paid by Petitioner. Just because the Petitioner has paid the principal amount, it cannot be said that when a show cause notice has been issued for interest on the said amount, the Petitioner is not entitled to make a declaration under SVLDRS. The interest relates to the service tax amount and the SVLDR Scheme covers not only tax but also interest, and penalty.
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