Supreme Court and High Courts Weekly Round-Up

This weekly round-up analytically summarizes the key stories related to the Supreme Court and High Court reported at Taxscan.in during the previous week from March 21^st to March 27th, 2022.

M/s. Asean Cableship Pte. Ltd. vs The Commissioner of Customs – 2022 TAXSCAN (SC) 126

The Supreme Court has held that disputes concerning exemption claims and rates of duty are different and upholds the Jurisdiction of the High Court in entertaining an appeal against the CESTAT order. The two-judge bench of Justice M.R Shah and Justice B. V. Nagarathna by dismissing the Special Leave Petition has held that “the principal question/issue is the exemption claimed under Section 87 of the Act.   Whether the assessee is entitled to exemption as claimed or not, such an   issue cannot be said to be an   issue relating, amongst other things, to the determination of any question having relation to the rate of duty.   The submission on behalf of the petitioner that the duty will be NIL and if not, which is the case of the Customs Department, it will be the applicable rate of duty and therefore, such a dispute can be said to be in relation to the rate of duty, has no substance. The dispute with respect to the exemption claimed and the dispute with regard to the rate of duty is different, distinct, and mutually exclusive.  We are of the firm opinion that the dispute concerning an exemption cannot be equated with a dispute in relation to the rate of duty. Therefore, with respect to such an issue, against the order passed by the CESTAT, the appeal would be maintainable before the High Court under Section 130 of the Act”.

STATE OF KARNATAKA AND ANR. ETC. vs STATE OF MEGHALAYA AND ANR. ETC. ETC.

A two-judge bench of the Supreme Court has upheld the validity of the Lotteries Act enacted by the Karanataka and Kerala States by holding that ‘lotteries’ is a species of gambling activity and hence lotteries are within the ambit of ‘betting and gambling’ as appearing in Entry 34 List II.

M/S NEW NALBANDH TRADERS vs STATE OF GUJARAT & 2 other(s) – 2022 TAXSCAN (HC) 216

A division bench of the Gujarat High Court comprising J B Pardiwala and Justice Nisha M Thakore held that the input tax credit cannot be blocked by invoking section 86A of the Central GST Act, 2017 without assigning any reasons. While allowing a writ petition, the division bench observed that since the facility to furnish GSTR – 2 and GSTR – 3 Forms is also not available and there is no system allowing the matching of ITC, the GST department shall allow the input tax credit to traders provisionally on the basis of invoices.

Precious Trade Link Private Limited & Anr. vs Assistant Commissioner of State Tax under Bureau of Investigation – 2022 TAXSCAN (HC) 217

The Calcutta High Court bench has quashed a detention order passed by the Goods and Service Tax Department (GST) on the ground that the opportunity of hearing was not accorded to the assessee which would amount to the violation of natural justice principles.

L.Ponnammal vs Union of India, rep. by its Secretary, Department of Investment and Public Asset Management, Ministry of Finance – 2022 TAXSCAN (HC) 218

The Madras High Court on Monday dismissed a writ petition challenging the amendments brought in by the Finance Act 2021 and the subsequent amendments made in the LIC Act 1956 which provided for the disinvestment of the Life Insurance Corporation. The Court noted that the amendments were brought in after the Finance Bill was classified as a money bill under Article 110 of the constitution. The court held that the challenge was made to the amendments by way of Article 110 of the constitution without challenging the certificate issued by the Speaker of the House. Further, the procedure for certifying the Finance Bill as a money bill has been duly complied with and therefore there is no constitutional illegality.

ERICSSON INDIA PRIVATE LIMITED vs ASSISTANT COMMISSIONER OF INCOME TAX, NEW DELHI & ANR. – 2022 TAXSCAN (HC) 219

In a major relief to Ericsson India Private Limited, the Delhi High Court has directed the income tax department to release a refund of approx. Rs. 349 crores, held that a transaction, being revenue neutral does not affect the interests of the revenue. The Court further noted that the upshot of the aforesaid discussion is that the estimation made by the AO that because there is a likelihood of the petitioner–assessee having to bear a tax liability of Rs. 500 crores in AY 2018-19, and, therefore, the refund sought of Rs. 349,41,45,020/- ought to be denied, is not founded on rational and cogent grounds.

COMMISSIONER OF CENTRAL EXCISE HYDERABAD-I vs M/S ARADHANA FOODS AND JUICES PVT. LTD. – 2022 TAXSCAN (SC) 127

A two-judge bench of the Supreme Court will consider the issue of whether the product `Nimbooz’ can be classified under the item `Lemonade’ Or `Fruit Pulp Or Fruit Juice Based Drinks.’

MAYUR BATRA vs ASSISSTANT COMMISSIONER OF INCOME TAX CIRCLE 61(1) & ANR. – 2022 TAXSCAN (HC) 220

The Delhi High Court has ruled that a penalty order passed by the income-tax authority under Section 271(1)(c) of the Income Tax Act, 1961 without considering the objections filed by the assessee is violative of the principles of natural justice.

M/s Narsingh Ispat Limited through its Director Sri Ajay Kumar Singh vs Union of India – 2022 TAXSCAN (HC) 221

The Jharkhand High Court, while hearing a plea challenging the demand notices for interest on late filing of GSTR-3B, has quashed the orders for the reason that the department has not followed the principles of natural justice. Quashing the orders, the bench held that “We are thus satisfied that the Respondents have failed to follow the procedure prescribed in law before issuing Summary of the Order in Form GST DRC-07 holding the petitioner liable to pay interest under section 50(1) of the Act due to late filing of GSTR-3B and not depositing the due interest on its own. As such, writ petition succeeds only on the point of failure to follow the principles of natural justice and the procedure prescribed in law.”

M/s. A.J. Finance Pvt. Ltd. Vs Income Tax Officer, Ward No.8(1), Kolkata & Ors – 2022 TAXSCAN (HC) 223

While quashing an order for revision under section 263 of the Income Tax Act, 1961, ground of failure to consider the objections raised by the assessee, the Calcutta High Court has directed the income tax department to re-consider the issue and pass a speaking order within 12 weeks.

MILAP SCRAP TRADERS THROUGH PRO. HARSHADBHAI MANUBHAI PATEL vs STATE/ COMMERCIAL TAX OFFICER – 2022 TAXSCAN (HC) 225

A division bench of the Gujarat High Court has directed the GST department to withdraw the negative block of the electronic credit ledger at the earliest. The two-judge bench comprising Justice J B Pardiwala and Justice Nisha M Thakore observed that “we need not delve much into the facts of this litigation as the principal issue involved in the present writ application is no longer res integra in view of the recent pronouncement of this Court in the case of Samay Alloys India Pvt. Ltd. vs. State of Gujarat.”

SREEJITH K. vs STATE OF GUJARAT – 2022 TAXSCAN (HC) 226

A division bench of the Gujarat High Court has ordered the GST department to release the goods considering the fact that the amount of tax and penalty has been already remitted with the department.

Jai Venktesh Concast Pvt. Ltd. & Anr vs The Assistant Commissioner of State Tax, Durgapur Charge & Ors. – 2022 TAXSCAN (HC) 228

The Calcutta High Court has directed the GST department to cancel the blockage of Credit Ledger as the order for the same expired after one year. “Considering the submission of the parties, this writ petition is disposed of by holding that the aforesaid impugned order dated 24th November, 2020 as appears on page 12 of the writ petition has ceased to have any effect and has no force in the eye of law. It is clarified that this order is only confining to the aforesaid impugned order and will have no impact on any other relevant proceedings. The respondent concerned shall pass the effective order for unblocking of electronic credit ledger in question within seven days from date,” the Court said.

Subhatosh Majumdar vs Union of India & Ors. – 2022 TAXSCAN (HC) 227

The Calcutta High Court, while quashing a non-speaking order passed by the income tax department under section 143 of the Income Tax Act, 1961 and directed the Assessing Officer re-consider the matter and pass a speaking order within 12 weeks.

Shweta Kedia vs Income Tax Officer – 2022 TAXSCAN (HC) 229

The Rajasthan High Court has held that the subordinate legislature cannot be permitted to amend the provisions of the parent Act. The division bench presided by Honorable Mr. Justice Pankaj Bhandari and Honorable Mr. Justice Anoop Kumar Dhand while allowing the writ petition has held that “we are in full agreement with the judgment passed by the Co-ordinate Bench of this Court in the case of Sudesh Taneja (Supra). We see no reason to take a different view. In the result, we find that the notices impugned in the respective petitions are held to be invalid and bad in law and the same are quashed and set aside”.

UDAYA SOUNDS PULLEPPADY vs THE PRINCIPAL COMMISSIONER OF INCOME TAX CENTRAL REVENUE BUILDING – 2022 TAXSCAN (HC) 231

The Kerala High Court has held that the filing of a Special Leave Petition, being recourse by the assessee to the provisions of the Constitution, cannot be treated as “proceedings under the Income Tax Act, 1961.” Holding that recourse by the assessee to the provisions of the Constitution by filing a special leave petition before the Supreme Court cannot be regarded as ‘a proceeding under this Act, the bench held that “The word proceeding is a term of wide importance and it includes the original proceedings as well as the appellate proceedings as it is trite law that an appeal is a continuation of the original proceedings (see the decision in State of Tamil Nadu and Others v. S. Subramaniam [(1996) 7 SCC 509]. In the context in which the word ‘proceedings’ appear in section 132(8), it can be held to be used in a very comprehensive sense to include even revisional proceedings, provided the same is invoked under the statutory provisions of the Income Tax Act. Thus an assessment proceeding, appellate proceeding, and even revisional proceeding are all “proceedings under this Act.”

M/s.MNS Enterprises vs The Additional Director General Directorate of GST Intelligence – 2022 TAXSCAN (HC) 232

The Madras High Court has held that the amount lying in the electronic liability register can be utilized for discharging tax liability against the future supplies. Justice C Saravanan held that the amount lying in the Electronic Liability Register of the petitioner can be refunded only the manner in the law. It cannot be ordered to be refunded.