This weekly round-up analytically summarizes the key tax judgments of the Supreme Court and all High Courts reported at Taxscan.in during the previous week from January 20 to January 26, 2024 of 2024.
The Supreme Court declared its intention to initiate hearings on April 30, 2024, for the cross-appeals filed by Google and the Competition Commission of India ( CCI ) in relation to the antitrust case.
The legal battle stems from the CCI’s imposition of a ₹1,337.76-crore fine on Google in October 2022, citing antitrust violations associated with its Android mobile operating system. The regulatory body emphasised fair access for all market players and highlighted concerns about Google’s dominance in online search restricting entry for competing applications. The NCLAT’s partial confirmation of the CCI’s ruling in March 2023 prompted both parties to appeal certain aspects, setting the stage for the upcoming hearings in the Supreme Court.
The Supreme Court clarified that Income Tax Returns (ITRs) lacking a regular balance sheet and profit and loss account may be considered defective but are not necessarily invalid. The ruling, issued by the bench comprising Justice B.V. Nagarathna and Justice Ujjal Bhuyan, overturned the Kerala High Court’s previous decision and upheld the order of the Income Tax Appellate Tribunal (ITAT).
The bench emphasised that unless the assessing officer exercises its discretion, considering the returns as defective cannot be justified. Importantly, throughout the three assessment years, the assessing officer did not declare any of the returns as defective.
The Supreme Court of India directed to hear the parties in a matter related to the extended period of limitation to the Central Excise Department for the recovery of dues and receiving penalty.
A Two-Judge Bench comprising Justice BV Nagarathna and Justice Sanjay Karol observed that “In the circumstances, that portion of the order of the High Court declining to raise the substantial questions of law as sought for by the appellant-Revenue herein is setaside and the High Court is now requested to hear the parties by raising the substantial questions of law on the issue of extended period of limitation as well as on the issue of imposition of penalty. The High Court shall now consider the aforesaid aspect of the matter(s) on its own merits and dispose of the appeals filed by the appellant herein in accordance with law.”
The Supreme Court of India dismissed the special leave petition (SLP) filed by the Income Tax Department as the tax effect less than rupees ten lakhs.
A Two-Judge Bench comprising Justice Abhay S Oka and Justice Ujjal Bhuyan observed that “Considering this factual aspect, we decline to entertain this petition. Accordingly, the Special Leave Petition is dismissed. However, the question of law is kept open. Pending application, if any, also stands disposed.”
The Jharkhand High Court quashed the orders on the ground that the disposal of revision application by the Additional Commissioner in undue haste.
A Division Bench comprising Justices Rongon Mukhopadhyay and Deepak Roshan observed that “It would be evident that Additional Commissioner of Commercial Taxes has acted in undue haste in disposing of the revision applications. It is trite law that if an authority acts in undue haste, malice in law is to be presumed and his action is deemed to be mala fide.”
The Delhi High Court set aside the Central Information Commission ( CIC ) order to provide right to information ( RTI ) on tax exemption allowed to PM CARES Fund.
A Single Bench of Justice Subramonium Prasad observed that “In the present case, the question which arose was whether Section 138(2) of the Income Tax Act which also contains a non-obstante clause would override Section 22 of the RTI Act or not. In view of the fact that Section 138(1)(b) of the Income Tax Act mandates that information relating to an assessee can only be supplied subject to the satisfaction of Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, as the case may be, it can be said that Section 138(2) of the Income Tax Act would prevail over Section 22 of the RTI Act.”
The Madras High Court rejected appeals filed by Indian startups contesting Google’s app billing policy, marking a notable development in the ongoing legal dispute. Despite the dismissal, the court has issued a directive to Google, instructing it to refrain from removing the mobile applications of these startups for a specific period of three weeks.
The court underscored the comprehensive nature of remedies available under the Competition Act, surpassing those accessible through a civil court. This underlines the suggestion that challenges to the CCI’s orders should be directed to the National Company Law Appellate Tribunal, reflecting the intricacies of competition law.
The Kerala High Court held that “Once there is no tax liability on the petitioner for which the petitioner’s properties could be attached, there is no justification for keeping the attachment on the properties.”
A Single bench of Justice Dinesh Kumar noted the respondents’ stance that there is no existing attachment order on the petitioner’s properties, allowing the petitioner the freedom to manage their properties as they see fit. Given the respondents’ explicit position in their statement, there is no basis for further proceedings in this writ petition. It was made clear that there is no attachment on the properties of the petitioner and consequently, disposed of the writ petition.
In a major relief to Oxfam India, the Delhi High Court stayed income tax department’s order cancelling tax exemption.
A Division Bench of Justices Yashwant Varma and Purushaindra Kumar Kaurav observed that “In view of the aforesaid, we find that a substantial jurisdictional question which merits consideration stands raised. We also bear in mind the need to adopt a uniform and consistent approach insofar as interim orders are concerned. This since an identical challenge has been duly entertained by a coordinate Bench of this Court and interim protection accorded. The Court also bears in mind that pleadings in W.P.(C) 11270/2023 already stand completed and thus the issue can be decided finally on a short date.”
The Allahabad High Court quashed penalty under Section 129(3) of the Uttar Pradesh Goods and Services Tax Act, 2017 ( UPGST Act ) as the error committed was technical nature and without any intention to evade tax.
A Single Bench of Justice Shekhar B. Saraf observed that “In the present case, the facts are quite similar to one in M/s Citykart Retail Pvt. Ltd.’s case ( supra ) and I see no reason why this Court should take a different view of the matter, as the invoice itself contained the details of the truck and the error committed by the petitioner was of a technical nature only and without any intention to evade tax. Once this fact has been substantiated, there was no requirement to levy penalty under Section 129(3) of the Act.”
The Madras High Court Single Bench of Justice Senthilkumar Ramamoorthy recently quashed the Goods and Services Tax ( GST ) Show Cause Notice ( SCN ) on the entire Input Tax Credit ( ITC ) balance for reversal in ignorance of Certificate by CA for trade payables for the State of Tamil Nadu.
Upon careful consideration, the Madras High Court observed that the assessing authority had not applied its mind before drawing conclusions. It was observed that, “The assessing authority has clearly not applied its mind before drawing the conclusions extracted above.”
A Madras High Court Single Bench recently ruled that gift vouchers and gift cards qualify as actionable claims, and Goods and Services Tax ( GST ) is applicable on the date of redemption under Section 12(4)(b) of the Central Goods and Services Tax ( CGST ) Act.
The Bench also held, “ On the other hand, if there is no supply ie. no transfer within in the meaning of Section 7(1-A) of the respective GST Enactments read with Sl.No.1( c) to the II Schedule to the respective GST Enactments, time of supply will get postponed to the actual time of redemption of the “voucher” to a future date of sale of merchandise or such goods when such Gift Voucher/Card is presented by the customer at the Counter of the petitioner. The petitioner will be liable to tax on the date of redemption under Section 12(4)(b) of the respective GST Enactments.”
The Madras High Court observed that there is no limitation filing application for compounding of offence contrary to Section 279(2) of the Income Tax Act, 1961.
A Single Bench of Justice C Saravanan observed that “There cannot be any restriction/limitation for filing application for compounding of offence contrary to Section 279(2) of the Income Tax Act, 1961. There is also no useful purpose in prosecuting an assessee who may otherwise deserve to compound the offence. This is also not a case where the petitioner has been convicted of the offence in E.O.C.C.Nos.193 and 194 of 2018 and had filed the applications for compounding of the offence thereafter under Section 279(2) of the Income Tax Act, 1961.”
The Madras High Court observed that the penalty under Section 271E of the Income Tax Act, 1961 cannot be levied on repayment of loan in the absence of cash transaction.
A Single Bench of Justice Krishnan Ramaswamy observed that “This Court, prima facie is of the view that the entire penalty proceedings passed under Section 271-E of the Act is liable to be set aside. Accordingly, this Court directs the Appellate Authority concerned to to take the petitioner’s Appeal on file without insisting upon any pre-deposit and consider the issues that were discussed by this Court in this order and thereafter, shall dispose the appeal in accordance with law, within a period of eight (8) weeks from the date of receipt of a copy of this order.”
A Single Bench of the Kerala High Court has dismissed a constitutional challenge against Section 16(4) of the Goods and Services Tax Act ( GST Act ) as withdrawn. The petitioner is granted the liberty to approach the statutory authority to avail the benefit of the extended time limit for filing a statutory appeal.
The Single Bench of Justice Dinesh Kumar Singh held that, “Considering the above submission of the learned Counsel for the petitioner, the present writ petition is dismissed as withdrawn with liberty as prayed above.”
A Single Bench of the Kerala High Court observed that there can be no invocation of writ jurisdiction to extend limitation for making payment on failure to comply provisions of Subka Vishwas (Legacy Dispute Resolution) Scheme.
A Bench of Justice Dinesh Kumar Singh observed that “Once the petitioner failed to comply with the provisions of the scheme, which is a complete code in itself, this court would not like to extend the limitation for making the payment under the scheme in exercise of its jurisdiction under Article 226 of the Constitution of India.” “I am of the view that the petitioner’s contention that he could notice the SVLDRS-3 only on the website of the CBIC on or around 15.6.2020, and thereafter, he tried to make the payment but he failed for ‘technical glitches’ is not convincing. The petitioner’s allegation that there were ‘technical glitches’ is not supported by any cogent and credible evidence. The petitioner ought to have made the payment within 30 days from 19.02.2020 or till the extended time, which he failed to do so” the Court noted.
the Jharkhand High Court observed that the determination of value of excisable goods for assessment falls within exclusive jurisdiction of the Supreme Court of India under Section 35L of the Central Excise Act, 1944.
A Division Bench comprising Justice Rongon Mukhopadhyay and Justice Deepak Roshan observed that “We are having no hesitation in holding both these appeals as not maintainable and the same would lie before the Hon’ble Apex Court under Section 35L of the Central Excise Act, inasmuch as, the jurisdiction of the High Court in such matters are specifically excluded under Section 35G and it falls within the exclusive jurisdiction of the Apex Court under Section 35L of the Central Excise Act.”
The Delhi High Court observed that mere non-payment of returns for some period not reason to cancel GST registration with retrospective date.
A Division Bench comprising Justice Sanjeev Sachdev and Justice Ravinder Dudeja observed that “Records clearly demonstrates that petitioner had submitted an application seeking cancellation of the GST registration on 06.05.2019 and thereafter, vide order dated 09.07.2022, the registration of the petitioner had been cancelled. Once the registration stood cancelled, there was no cause for the petitioner to file any returns. Accordingly, the cancellation of the registration on the ground that petitioner has failed to file returns is not sustainable. Further, we note that the cancellation of registration has been done with retrospective effect.”
The Himachal Pradesh High Court observed that the departments of the State including Excise and Revenue do not have priority over secured creditors debt.
A Division Bench comprising Justices Tarlok Singh Chauhan and Satyen Vaidya observed that “Therefore, once the petitioner is a secured creditor and has moreover created the first charge over the property, then obviously, it has the first right to realise its dues and this question is no longer res integra in view of the authoritative pronouncement of the Hon’ble Supreme Court in Punjab National Bank Vs. Union of India & Ors.”
The Calcutta High Court upheld the order passed under Section 148A(d) of the Income Tax Act, 1961 as the decision made was on basis of the material available on record.
A Division Bench of Chief Justice TS Sivagnanam and Justice Supratim Bhattacharya observed that “The stipulation under Clause (d) has been complied with by the assessing officer who has taken a decision, on the basis of the material available on record including the reply/replies given by the assessee and found that the case of the assessee for the assessment year under question namely 2016-2017 is a fit case to issue notice under Section 148 of the Income Tax Act and prior approval of the specified authority has also been obtained. Thus, the provision of the Section 148A of the Income Tax Act has been scrupulously followed by the assessing officer and there is no error in the decision-making process of this court to interfere.”
The Kerala High Court quashed an assessment order passed under the Income Tax Act, 1961 as there was violation of the natural justice principles.
A Single Bench of Justice Dinesh Kumar Singh observed that “I am in agreement with the learned counsel for the petitioner that in the absence of date mentioned for submission of the response to the show cause notice dated 23.2.2023, the petitioner had bona fide believed that the petitioner’s request for adjournment to 17.3.2023 to give response to the show cause notice dated 23.2.2023 was accepted. However, before 17.3.2023, the impugned order, Ext.P6, has been passed on 14.3.2023, and therefore, I am of the considered view that there was violation of the principles of natural justice.”
The Kerala High Court quashed the Income Tax Assessment order which was passed without following the natural justice principle.
The court made clear that, if the petitioner does not deposit 10% of the assessed tax in the five assessment orders or fails to appear before the 2nd respondent on 18.01.2024, no further opportunity shall be granted to the petitioner and the demand as per the assessment orders shall be in force for the realisation of the tax assessed.
The Kerala High Court observed that there is no provision in the Income Tax Act, 1961 to extend limitation of thirty days for filing objection against the draft assessment order.
A Sigle Bench of Justice Dinesh Kumar Singh observed that “I do not find any ground to interfere with the impugned assessment orders as there is no provision in the Income Tax Act to extend the limitation of thirty days for filing objection against the draft assessment order.”
In a recent decision the Delhi High Court observed that the cancellation of GST registration by the proper officer must be based on an objective criterion.
A Division Bench comprising Justices Sanjeev Sachdeva and Ravinder Dudeja observed that “In terms of Section 29(2) of the Central Goods and Services Tax Act, 2017, the proper officer may cancel the GST registration of a person from such date including any retrospective date, as he may deem fit if the circumstances set out in the said sub-section are satisfied.”
The Delhi High Court set aside the order of cancellation as there was non-mentioning in the show cause notice ( SCN ) that GST registration is liable to be cancelled from retrospective date.
A Division Bench of Justices Ravinder Dudeja and Sanjeev Sachdeva observed that “The show cause notice does not even state that the registration is liable to be cancelled from a retrospective date. The petition is allowed. The impugned show cause notice dated 07.04.2022, order of cancellation dated 13.07.2022 and the order in appeal dated 29.12.2023 are accordingly set aside. GST registration of the petitioner is restored, subject to petitioner filing requisite returns upto date.”
The Delhi High Court observed that GST registration cannot be cancelled with retrospective effect mechanically.
A Division Bench comprising Justices Sanjeev Sachdeva and Ravinder Dudeja observed that “In terms of Section 29(2) of the Central Goods and Services Tax Act, 2017, the proper officer may cancel the GST registration of a person from such date including any retrospective date, as he may deem fit if the circumstances set out in the said sub-section are satisfied. Registration cannot be cancelled with retrospective effect mechanically. It can be cancelled only if the proper officer deems it fit to do so. Such satisfaction cannot be subjective but must be based on some objective criteria.”
The Madhya Pradesh High Court has declared the reassessment notice issued under Section 148 of the Income Tax Act, 1961, to a deceased individual as ‘Null and Void’. However, the court has given the department the liberty to initiate proceedings against the petitioner or legal heir of the deceased if deemed necessary.
The bench of Justice S. A. Dharmadhikari and Justice Devanaryan Mishra decided that the notice issued in the name of the deceased, Kamal Kumar Saxena, is unenforceable in the eyes of the law. “This requirement of issuing notice to a correct person and not to a dead person is not a merely a procedural requirement but is a condition precedent to the impugned notice being valid in law”. This was observed by the Mumbai HC in the case of Balkrishna Gupta Vs. Asstt. CIT, 2019.
The Delhi High Court ( HC ) directed the Director General of Foreign Trade ( DGFT ) to issue an export obligation discharge certificate based on the direction of the policy relaxation committee.
The petition is disposed of, directing the Director General of Foreign Trade to implement the directions of the Policy Relaxation Committee issued in its meeting dated 05.12.2023, preferably within three months from today. A division bench comprising Justice Sanjeev Sachdeva and Justice Ravinder Dudeja observed that the petitioner shall furnish such documents and clarifications as may be called for by the Director General of Foreign Trade from time to time. Once the order of the Director General of Foreign Trade is passed, the customs authorities shall expeditiously process the case of the petitioner. The right of the petitioner to avail of further remedy in case aggrieved by any further action of the respondents is reserved
The Kerala High Court allowed refund of input tax credit ( ITC ) accumulated on account of payment of higher rate of tax on input supplies received for bottling of LPG.
A Single Bench of Justice Dinesh Kumar Singh observed that “The present writ petitions
are allowed and the petitioner is held to be entitled for refund of the credit accumulated on account of payment of higher rate of tax, i.e. @ 18%, on input supplies received by him for bottling of LPG for domestic supply, when the rate of tax is only @ 5%.”
The Punjab and Haryana High Court issued notice in the matter regarding the extension of time limit to pass demand order under Section 73(10) for wrongful availment of input tax credit (ITC) under the Central Goods and Service Tax Act, 2017 (CGST Act).
A Division Bench comprising Justices GS Sandhawalia and Lapita Banerji observed that “It is accordingly, submitted that the show cause notices dated 27.12.2023 now issued would be time barred and thus, he has distinguished the earlier set of cases wherein stay was not granted. Notice of motion. Mr. Saurabh Kapoor, Addl.A.G. Punjab accepts notice on behalf of respondents No.1, 3 & 4 and prays for time to file reply. To come up for service of respondents No.2, 5 & 6 by way of dasti process for 25.01.2024. In the meantime, proceedings may carry on but the final order may not be passed.”
The Kerala High Court quashed the order of the GST Commissioner rejecting claim for interest on tax amount ordered to be refunded.
A Single Bench of Justice Dinesh Kumar Singh observed that “In view of the above, Ext.P5 order rejecting petitioner’s claim for interest on the tax amount ordered to be refunded is quashed and the respondents are directed to calculate the interest on the amount, which was refunded/credited to the petitioner’s cash credit ledger, as directed above, and disburse the same within a period of two months from today.”
The Kerala High Court directed to file income tax returns (ITR) as the acceptance and payment of loan in cash in violation of Section 12AA of the Income Tax Act, 1961.
A Single Bench of Justice Dinesh Kumar Singh observed that “Considering the aforesaid fact that the petitioner’s alleged acceptance of Rs. 1,87,69,000/- in cash and repayment of the same was in clear violation of Section 12AA and the assessing authority has been of the opinion that prima facie the said amount was an income of the petitioner which had escaped assessment from payment of the tax.”
The Telangana High Court has held that administrative circular will not operate as a fetter on the commissioner of Income Tax and remanded the matter to be afresh. The Court allowed the operation of bank accounts as an interim measure.
Justice P Sam Koshy and Justice N Tukaramji held that due to the potential impact on students’ academic careers, and to prevent hindrance in participating in examinations if the petitioner’s bank account remains frozen, it is urged that, as an interim measure, the respondents should allow the petitioner to operate the bank account solely for the purpose of paying the examination fees for students from whom fees have already been collected. This directive is hereby granted. Regarding the interim application, the authority is expected to make a decision on its merits promptly, preferably before January 31, 2024
The Kerala High Court directed to extend the benefit of order to all applicants in the matter concerning the upgradation of pay scale of Income Tax Inspectors and Income Tax Officers.
A Division Bench of Justice A. Muhamed Mustaque and Justice Shoba Annamma Eapen observed that “Having considered the facts and circumstances, we are of the view that since the issue has been concluded, the Union Government shall extend the benefit of its order dated 22.9.2023 to all applicants. However, nothing prevents the Union Government from constituting an Anomaly Committee to verify the individual cases if so warranted. The entire process in this regard shall be completed within a period of three months.”
The Kerala High Court directed to approach the appropriate authority in the matter concerning the passing of order under Section 271AAC (1) of the Income Tax Act, 1961.
A Single Bench of Justice Dinesh Kumar Singh observed that “Admittedly, there is statutory appeal provided under the provisions of the Income Tax Act against the impugned order passed by the assessing authority. This Court has already dismissed W.P.(C) No. 2136 of 2023 impugning the assessment order for the same assessment year and, therefore, there is no ground to entertain this writ petition. In view thereof, this writ petition is disposed of with liberty to the petitioner to approach the appropriate authority against the impugned order, if he so advised.”
Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
