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 January 22 to January 28, 2023.
A two-judge bench of the Supreme Court has recently struck down the condition to deposit 70 Lakh Rupees, in bail granted to an accused allegedly involved in a GST scam of around 7 Crore Rupees. The bench of Supreme Court Justices Krishna Murari and B V Nagarathna observed that, “it cannot be presumed that the appellant is under a legal liability to pay the said amount.”The Supreme Court Bench held that the condition directing the appellant to deposit a sum of Rs. 70 Lakhs is not liable to be sustained and set aside the condition, leaving the other bail conditions intact, as per the facts and circumstances of the case.
The Supreme Court of India has upheld the order by the National Company Law Appellate Tribunal (NCLAT), in a major setback to Google LLC, in the Competition Commission of India (CCI) case about abusing the Android Platform and the dominant position in the market. The Competition Commission of India (CCI) had imposed a penalty of Rs. 936.44 crores on Google for abusing its dominant position with respect to its Play Store policies, apart from issuing a cease-and-desist order. The Commission also directed Google to modify its conduct within a defined timeline.
The two- judge Supreme Court bench of Justice M R Shah and Justice C.T. Ravikumar observed recently in a special leave petition filed by the State Of Punjab, Quashing section 130 of the Central Goods and Service Act, 2017 notices by High court through writ petition was inappropriate. The allegation in the present special leave petition was exercise of powers under Article 226 of the Constitution of India; the High Court entertained the writ petition against the show cause notice and set aside the show cause notice under Section 130 of the Central Goods and Service Act, 2017.
The Division Bench of the Supreme Court of Justice M.R. Shah and Justice Krishna Murari in a recent ruling has denied the trade tax exemption to “spun line crown cork” holding that the product manufactured on the use of modern advanced technology would not come under the purview of Manufacture. The goods manufactured on “diversification” must be a “different”, “distinct” and a “separate” good in nature. In the present case, the goods manufactured in use of advanced and/or modern technology, cannot be said to be a different commercial activity at all.
The Division Bench of the Supreme Court comprising Justice Sanjiv Khanna and Justice M.M.Sundresh has held that the special audit under Section 142(2A) of the Income Tax Act 1961 could be conducted by relying on earlier or fresh notice. The bench held that “If the assessing officer desires special audit under Section 142(2A) of the 1961 Act, he can either rely upon the earlier notice or issue a fresh notice. In case the assessing officer relies upon the earlier notice, it will be so indicated and communicated to the 2 appellant-assessee. In either case, hearing as per law will be given. Thereafter an order under Section 142(2A) of the 1961 Act if passed, will be communicated to the appellant-assessee, who will be at liberty to challenge the order in accordance with law.”
The Supreme Court of India has recently dismissed a petition seeking mandating Income Tax Returns (ITRs) for purchase of cars for personal use and introduction of cess levy on purchase of a second car. The two-judge bench of the Chief Justice Dr Dhananjaya Y Chandrachud and Justice Pamidighantam Sri Narasimha, upon hearing the counsel, disposed of the petition, holding that “The issues which are raised in the petition under Article 32 of the Constitution of India in the present case pertain to the policy domain. Hence, we are not inclined to entertain the Petition.”
A Division Bench of the Rajasthan High Court recently set aside the orders passed against the assessee, both in adjudication and appellate stages and observed that the violation of natural justice in adjudication stage cannot be cured by substantial compliance of natural justice in appellate stage. The petitioner had claimed refund of accumulated input tax credit on account of export of goods under a letter of undertaking. The matter was thus remanded back to the adjudicating authority and the rejection of the refund claim of accumulated input tax credit was set aside.
A division bench of the Delhi High Court has held that the payment of tax and penalty to release the detained goods shall not be treated as “admission” on the part of the assessee and the same cannot be the sole reason to uphold the GST liability. Justice Vibhu Bakhru and Justice Amit Mahajan was considering a petition by Ram Prakash Chauhan where though there has been no mismatch in the quantity of the goods found in the vehicle and the invoice produced, the GST department detained the vehicle on the ground that the goods were not accompanied by an E-Way Bill. However, in order to release the vehicle, the assessee paid tax, interest and penalty.
A Division Bench of the Delhi High Court has recently directed the Income Tax department to reconsider the taxability of the investment made by the private equity firm Blackstone Capital Partners in Agile Electric Sub-Assembly. The disputed facts as to applicability of Section 139 and 115A were also directed to be reconsidered, along with other disputed facts, by the Bench of Justice Rajiv Shakdher and Justice Tara Vitasta Ganju, while remanding the matter to the file of the AO. Disposing the petition, the Division Bench noted, “the Assessing Officer (AO) should have applied his mind as to whether the investment in shares of Agile by the petitioner was a capital account transaction, given the fact that there is no allegation of round-tripping.”
The Division bench of the Bombay High Court held that failure to update Income Tax Portal could not cause any prejudice to the assessee and quashed the assessment proceedings. The bench of the Dhiraj Singh Thakur and Kamal Khata quashes the order made by the respondents on 29th September, 2022 and held that “A fresh order be passed, after the Petitioner is granted an opportunity to upload its response to the show cause notice dated 22nd September, 2022, for which the requisite portal may be made available to the Petitioner. An opportunity of being heard may also be provided to the Petitioner.”
A Division Bench of the Delhi High Court recently directed to return the amount taken in possession by GST Officers with interest, noting that the GST Officers cannot take possession of cash found during search, under Goods and Services Tax Act, 2017.
The Division Bench of Justices Vibhu Bakhru and Amit Mahajan also directed to release the Bank guarantee furnished for the release of currency immediately.
A Single Bench of the Kerala High Court has recently held that carrying of gold in pocket without proper documents is sufficient to suspect Goods and Services Tax (GST) evasion. It was observed by the Bench of Justice Gopinath P that, “The contention of the learned counsel appearing for the petitioners that the 2nd petitioner had forgotten to hand over about 100 gms of gold, which was being carried in his pocket, cannot be accepted.”
In a very recent decision the Calcutta High Court observed that additional directors of a company appointed under Section 161 (1) of the Companies Act, 2013 are equally liable for the company’s affairs, just as regular directors of the company. “Additional directors are on equal footing, in terms of, of power, rights, duties, and responsibilities, as other directors are. The responsibility of an Additional Director being the same as that of a director (but [different] from an independent director) they remain responsible, as the statute provides for the same,” the judgment stated.
The Calcutta High Court stayed order passed under Section 148A(d) of the Income Tax Act, 1961 on the ground of non-filing of affidavits-in-opposition. The Coram consisting of Justice TS Sivagnanam and Justice Hiranmay Bhattacharyya, observed that “We are inclined to grant an interim order sought for by the appellants. Accordingly, the order passed by the assessing officer under Section 148A(d) of the Income Tax Act, 1961 dated 29th July, 2022 / 28th July,2022 and the consequential notice issued under Section 148 of the Act dated 29th July, 2022 / 28th July, 2022 shall remain stayed till the writ petitions are heard and disposed of.”
The High Court (HC) of Calcutta held that advisory services did not amount to Fee for Technical Service (FTS) as per Indo-US Treaty and are not taxable in India. The revenue under Section 260A of the Income Tax Act, 1961 challenged the order dated 19th February 2020 passed by the Income Tax Appellate Tribunal Kolkata, ‘C’ Bench, Kolkata in ITA No.1276/Kol/2018 for the Assessment Year 2010- 11. A Coram comprising of Justice T S Sivagnanam and Justice Hiranmay Bhattacharyya observed that the assessee is rendering only advisory service and it cannot be treated as included services under Article 12(4)(b) and held that the contention of the assessee about the binding nature of the ruling of the AAR has become academic.
The Jharkhand High Court upheld the conviction of Former Minister Anosh Ekka under Section 4 of the Prevention of Money Laundering Act, 2002 (PMLA). The appeal is preferred against the Judgment of conviction and sentence passed by the Special judge,whereby and where under, the appellant has been held guilty for the offence under Section 4 of the Prevention of Money Laundering Act, 2002 (PMLA). The Court lashed at the appellant and observed that these are species of crime that strike at the financial foundation of the State and the convict does not deserve any clemency so that the deterrent effect of punishment is not completely diluted. Accordingly, the order of confiscation of crime proceeds is also affirmed.
A Single Bench of the Allahabad High Court, in a major relief to the assessee, M/s Yash Kothari Public Charitable Trust, has held that offline filing of Goods and Services Tax (GST) appeal shall be permitted if no other method was notified by the commissioner. Observing that, “The Appellate Authority is there to adjudicate the matter, which is before it under the provisions of the Act, and it cannot stop any aggrieved person from approaching the forum through filing the appeal restricting his right”, the Single Bench of Justice Rohit Ranjan Agarwal held that, “the taxing authorities cannot stop any assessee from claiming his statutory right, as provided under this Act in the garb of technicality.”
A Division Bench of the Delhi High Court observed that avoidance applications under Insolvency and Bankruptcy Code (IBC) can be heard for approval of Resolution Plan, thereby granting relief to Tata Steel BSL Limited. The Bench comprising Chief Justice Satish Chandra Sharma and Justice Subramonium Prasad observed that “CIRP and avoidance applications, are, by their very nature, a separate set of proceedings wherein, the former, being objective in nature, is time bound whereas the latter requires a proper discovery of suspect transactions that are to be avoided by the Adjudicating Authority.”
A Single Bench of the Madras High Court has recently referred a bunch of writ petitions challenging cancellation of Goods and Services Tax (GST) registrations to a Division Bench of the same court. Since, there were two contradictory views expressed by two Judges of the Madras High Court, the High Court Justice Abdul Quddhose, for Judicial Discipline and Propriety, referred the matter to a Division Bench of the High Court. Acknowledging the nature of the matter deserving an expeditious disposal, the Registry was directed to immediately place this matter before the Acting Chief Justice of the Court for getting suitable orders for posting the writ petitions before the appropriate Division Bench nominated by the ACJ for an early hearing.
The Tripura High Court (HC) in a recent ruling quashed the service tax demand of Jurisdiction as the contractual works to the railway was within Assam. Justice Arindam Lodh set aside the impugned demand since a non-speaking order has been passed without dealing with the exemption clauses. Further held that the respondents shall consider the explanation in the light of the exemption notification No.25/2012 and then pass a speaking order after allowing a personal hearing.
The division bench of Justices Sonia Gokhani and Sandeep N. Bhatt of Gujarat High Court (HC) quashed the re-assessment order and the final notice on the grounds of breach of natural justice principles. The bench noted that despite the officer in question having been informed that the petitioner had requested the issuance of Form “F” through the Rajasthan Authority, he had chosen not to accommodate the petitioner and neither had he been given the chance to submit Form “F” nor been given the opportunity to be heard.
The Calcutta High Court (HC) allowed the revision application under section 264 of the Income Tax Act,1961 to rectify the mistake of offering exempted income to tax by an old lady. A single-member bench consisting of Justice Md. Nizamuddin Held that “a mere typographical error committed by the assessee cannot cost them payment of excess tax as collected by the Revenue. Certainly, the denial for repayment of such excess collection would amount to great injustice to the Assessee.“
The Orissa High Court (HC) while quashing the VAT assessment held that the suppression of purchases and Sales cannot be based on ‘Eye Estimation’ of Stock. Justice M S Raman held that the court was not satisfied with the Department which has been able to show the materials based on which it could conclude that there has been suppression of purchase and sales leading to enhancement of the taxable turnover of the Petitioner-dealer.
The High Court (HC) of Rajasthan held that the refund of accumulated ITC cannot be denied to the exporter without granting an opportunity of being heard as per the provision of Rule 92(3) of the CGST Rules. It was submitted by the petitioner that as per provisions of Section 54(3) of the CGST Act and Rule 92 of the CGST Rules, the refund could not have been rejected by the authority without providing the opportunity of hearing as it envisage issuance of notice in Form GST RFD-08 requiring the applicant to furnish a reply in Form GST RFD-09. A Coram comprising Justice Arun Bhansali and Justice Ashok Kumar Jain observed that the provisions of Rule 92(3) of the CGST Rules, emphasize that the refund shall not be rejected without giving the applicant an opportunity of being heard.
A Division Bench of the Calcutta High Court has recently quashed the transfer of jurisdiction from the Assistant Commissioner of Income Tax / Deputy Commissioner of Income Tax, Circle 13(1), Kolkata to Deputy Commissioner of Income Tax, Central Circle 1, Kanpur, done without giving assessee the opportunity of fair hearing. The Bench of Justice T S Sivagnanam and Justice Hiranmay Bhattacharya observed that, “we find that no such reasons have been recorded by the authority for dispensing with the opportunity of personal hearing as no show cause notice was issued to the assessee prior to order of transfer.”
The Calcutta High Court has recently condoned the delay in filing of first appeal on grounds of medical illness. It was also observed by the court that, “it is not a case that deliberately the appellant had presented the appeal beyond the condonable period.” The appeal was resultantly allowed, quashing the order passed without considering the medical illness of the appellant, Kajal Dutta, while remanding the matter to the appellate authority, with condonation of the delay in filing the appeal.
In an interim relief to MyTeam11, the Rajasthan High Court has stayed the show cause notice issued by the Directorate General of GST Intelligence ( DGGI ) last month. The Company challenged the show cause notice served to them under Section 74(1) of the Central Goods & Services Tax, 2017 alleging that “MyTeam11 has avoided tax by undertaking activities in the form of betting and misclassified their supply as service instead of actionable claims which are goods.” Online gaming companies have been under Taxscan for a few years. Last year, the GST department also served a similar notice worth ₹21,000 crore to GamesKraft Technologies in 2022.
The Delhi High Court has quashed the provisional attachment order by the Enforcement Directorate (ED) and held that it can only investigate the offence of money laundering in terms of Prevention of Money Laundering Act, 2002 and not assume that a dependent criminal offence has been committed in relation to the same. The court quashed the provisional attachment order, which related to allegations of manipulation of share prices and inducement for the purposes of allotting preferential shares.
In a significant ruling, a division bench of the Gujarat High Court has held that since the assessee does not have ill-intent to evade GST as the e-way bill expired during the transit. In a significant ruling, a division bench of the Gujarat High Court has held that since the assessee does not have ill-intent to evade GST as the e-way bill expired during the transit.
The Calcutta High Court has recently quashed the cancellation of registration for non-mentioning of reply to SCN in a system generated order, while directing the assessee, Monirul Islam, to pay the entire tax due along with interests and other charges within 10 days for restoration of the canceled Goods and Services Tax (GST) Registration. The Division Bench of Justices T S Sivagnanam and Hiranmay Bhattacharya observed, “In any event, whether it is an order passed by an authority in the physical form or an auto generated order, there should be application of mind.”
A Division Bench of the Calcutta High Court recently remanded a Goods and Services Tax (GST) matter to the adjudicating authority to reconsider the denied Input Tax Credit (ITC) claim of the appellant on grounds of canceled GST registration of the other end dealer. The Court opined that, “one more opportunity should be granted by the adjudicating authority and decision should be taken on merits after considering the documents that may be placed by the appellant before the authority”, quashing the impugned order denying the Input Tax Credit Claim.
In response to issues with the e-filing of the GST ITC-01 Form to transfer from the composition scheme to the conventional taxpayer Scheme, the Jharkhand High Court bench of Acting Chief Justice Aparesh Kumar Singh and Justice Deepak Roshan ordered the Department to take the extension into consideration.The bench observed that the petitioner should approach the Commissioner, State Taxes with a request for extension of time limit for submission of Form GST ITC-01, which may be considered in accordance with law.
Gujarat High Court bench of Justice Sonia Gokhani and Justice Sandeep N. Bhatt directed the department to refund the Central Sales Tax to Indian Oil Corporation.
The division bench ordered the respondents to process the petitioner’s refund application and award the return of the tax amount that had been dutifully received from the petitioner and submitted by the seller.
A Division Bench of the Patna High Court has recently quashed the ex-parte Goods and Services Tax (GST) assessment order passed against the petitioner in violation of the natural justice principles. Observing the ex parte nature of the order, passed in violation of natural justice principles, without giving the assessee an opportunity to be heard, without assigning sufficient reasons about the determination of the tax amount due and payable by the assessee, the High Court Bench of Chief Justice Sanjay Karol and Justice Partha Sarthy set aside the impugned order.
Jharkhand High Court (HC) chaired by Acting Chief Justice Aparesh Kumar Singh and Deepak Roshan quashed and set aside the Show cause notice, summary of show cause notice in FORM GST DRC01 and also the summary of order in FORM GST DRC-07. The HC court observed that in the instant case purported show cause notice has been issued but at the cost of repetition, the same was issued in a format without striking out irrelevant particulars which is not the intent of the legislature. Thus, the bench holds that the foundation of the proceeding in the instant case suffers from material irregularity and hence not sustainable being contrary to Section 73 (1) of the JGST Act.
A Division Bench of the Bombay High Court has recently set aside the undue denial of reward money to Jayashree Chandrakant Dhavre, the wife of Late Chandrakant Shivaram Dhavre, who in a major aid to the department had provided specific information to the office of the Marine and Preventive Wing of the Mumbai Commissionerate of Customs which led to seizure of smuggled goods. “Once the deponent has accepted that reward at the interim stage was paid to Chandrakant and that the Petitioner has established that she is the legal heir of Chandrakant, then withholding the final reward is entirely arbitrary”, the Court observed and directed the the Respondents to treat the claim of the Petitioner’s husband – Chandrakant as eligible for the grant of final reward in respect of the concerned case and process the Petitioner’s claim as his legal heir.
A Madras High Court Single Bench has recently allowed the submission of manual application of a time barred Goods and Services Tax (GST) Input Tax Credit (ITC) claim of the assessee,Tvl. Ramana Textiles Private Limited. The bench of Justice K Kumaresh Babu further directed the third respondent, The Assistant Commissioner (CT)/ (ST), Aruppukkottai Assessment Circle to consider the request of the petitioner and pass appropriate orders on merits and in accordance with law within a period of eight (8) weeks thereafter.
The Rajasthan High Court dismissed the refund application and observed that Central Excise Act and Rules do not Contemplate Extension of Time beyond the period of limitation. The Coram consisting of Justice Rajendra Prakash Soni and Justice Sandeep Mehta observed that “The Central Excise Act and the rules framed thereunder, do not contemplate extension of time beyond the period of limitation for entertaining applications for refund of duty and interest rebate claims, which have to be submitted within a period of one year as stipulated under Section 11-B of the Central Excise Act.”
A Single Bench of the Madras High Court stayed the auction of property by the Income Tax Department on the sole ground that the appeal was filed beyond the prescribed time. The Bench of Justice Abdul Quddhose held that “An interim protection will have to be granted in favour of the petitioner by directing the respondents to keep the auction in abeyance for a limited period on condition that the petitioner deposits 30% of the demand amount for each of the Assessment Years viz Assessment years 2009-10, 2010-11 and 2011- 12, within a period of one week from the date of receipt of a copy of this order.”
As a relief to Steel Authority of India Limited ( SAIL ), the Orissa High Court (HC) quashed the +
sales tax proceedings as the department could not prove inter-state sales even after 35 Years. While allowing the petition, the Court held that “nearly 35 years have already elapsed since the year 1988-89 and these proceedings cannot interminably carry on. ”Further, the impugned order of the Tribunal and the corresponding orders of the First Appellate Authority and the AO was set aside.
A Single bench of Kerala High Court while disposing a writ petition has allowed the payment of motor vehicle tax in instalments. A Single Bench of Justice Gopinath P granted relief to the petition as the court had in other writ petitions, granted the relief of equated monthly instalments for clearing the arrears of motor vehicles tax.
A Single Bench of the Kerala High Court, recently held that the extension granted to the time limit of passing demand order under the Central Goods and Services Tax (CGST) Act and State Goods and Services Tax (SGST) Act are applicable to issue of Show Cause Notice (SCN) also. The Kerala High Court Bench of Justice Gopinath P observed that, “the show cause notice can also be issued with reference to the date 30.09.2023 and not with reference to any other date” and dismissed the writ petition.
The single bench of the Allahabad high court in a revision petition filed before it held that four percent Value Added Tax is applicable to supply of Pat Pre-Form of plastic bottles to dealers. After considering the both contentions of the parties then single bench Justice Rohit Ranjan Agarwal dismissed the revision petition and held that bottles which are manufactured by the assessee in part pre-form of plastic bottles are actually the bottles which find place in Entry No.174 of Schedule II Part C.
The Delhi High Court ruled that Customs AAR is valid despite on-going investigation by the Directorate of Revenue Intelligence (DRI). The Bench comprising noted that “any preliminary exercise done by an officer of customs, to consider whether any question for consideration arises, would not preclude the CAAR from giving its advance ruling on that question.”
The High Court (HC) of Madras set aside the order demanding a penalty since the expiry of the E-way bill does not create scope for evasion and there is revenue loss. It was held by the Court that mere delivery of the goods at a place other than those mentioned in the documents would not render the transaction as an evasion or abetment of evasion. The impugned proceedings dated 02.12.2022 was set aside by the court with a directive that the writ petitioner shall pay a penalty of Rs.5,000/- (Rupees Five Thousand only).
The Bombay High Court has recently quashed a show cause notice-cum-demand order issued on 12 October 2009, holding that the same cannot be carried forward after such an inordinate delay. The Division Bench of Justices Abhay Ahuja and Nitin Jamdar observed that respondents had delayed the transfer of proceedings from Delhi to Mumbai without any satisfactory explanation for this delay.
The Telangana High Court has recently issued notice to the State Government of Telangana and the authorities responsible for its tax system, asking for an explanation as to why they have not been filling the tax tribunals with the necessary judges. Despite the implementation of the GST regime five years ago, new tribunals under the GST Act, the GSTATs have not yet been formed. In the past, tribunals were established under the VAT Act, but since GST tribunals have not been created and all related cases are being shifted to high courts, contributing to the overburdened judiciary.
The Delhi High Court has recently set aside a notice issued to the assessee, M/s Rajat Finvest, in lieu of alleged unaccounted income in its books in the guise of bogus Long Term Capital Gains and held that the said transaction cannot be said to be “bogus” when the shares traded are on stock-exchange after Securities Transaction Taxes (STT) were paid and the money was received through banking channels.
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