This weekly round-up analytically summarizes the key stories related to the Supreme Court and High Court reported at Taxscan.in from July 13, 2024 to July 19, 2024.
SUPREME COURT
The Supreme Court is to examine the Income tax TDS applicability on judicial pay allowances under the Second National Judicial Pay Commission.
Based on the indication provided that he would have the issue examined in the Revenue Department of the Ministry of Finance by Mr N Venkataraman, Additional Solicitor General, the bench of Justices CJI DY Chandrachud and Justices JB Pardiwala and Manoj Misra will examine the case in detail on August 5, 2024.
In a recent case, the Supreme Court recently held that chewing tobacco packed in High-Density Polyethylene ( HDPE ) bags could not be considered as retail product for imposing excise duty under Central Excise Act, 1944.
The two judge bench of Justices AS Oka and Pankaj Mithal upheld the decision of the Central Excise Appellate Tribunal which observed that chewing tobacco in HDPEs qualified as wholesale packages as they were sold only to intermediaries like distributors and dealers under Standards of Weight & Measures (Packaged Commodity) Rules, 1977 (Rules of 1977).
HIGH COURTS
The two member bench of the Uttarakhand High Court was set to consider whether the Joint Commissioner can serve as a GST Appellate Authority.
The division bench of Justice Ritu Bahri and Justice Rakesh Thapliyal held that, keeping in view the provision under Section 107(6) of the GST Act, the order dated 17.05.2024, passed by the Single Judge, was being modified; the assessee will deposit 25% of the amount demanded from him by the proper officer as per the order dated 13.05.2024, and thereafter, upon depositing the said amount, the vehicle and the goods can be released. Accordingly, the appeal was disposed of.
The Karnataka High Court has remanded a Service Tax matter, involving services provided to the government, for the submission of additional documents.
the bench consisting of Justice Sunil Dutt Yadav held that the order at Annexure-A was set aside, and the matter is disposed of, relegating it to the respondent to continue proceedings after affording an opportunity, taking note of the assessee’s request as observed.
The Bombay High Court has ruled that investment allowance is applicable to exchange rate fluctuations.
The bench, comprising Justice G. S. Kulkarni and Justice Somasekhar Sundaresan, relied on the Supreme Court decision in Commissioner of Income-Tax vs. Ambika Mills Ltd., which established that investment allowance due to exchange rate fluctuation is allowable.
The Madras High Court set aside the order of Rs. 25,000 GST ( Goods and Services Tax ) demand met with Rs. 1.36 crore penalty for generating E-way bill indicating ‘Nil’ Value. The matter was remanded for reconsideration to the concerned GST authorities.
The court examined the GST order. It was noted that the penalty was based on the assessee generating E-way bills indicating nil value. Justice Senthilkumar Ramamoorthy observed that the assessee had provided records of E-way bills, showing an aggregate value of Rs. 6,81,55,597 during the relevant period, justifying a remand for reconsideration. Consequently, the order was set aside. The GST officers were directed to provide a reasonable opportunity for the petitioner, including a personal hearing, and issue a fresh order within three months of receiving the petitioner’s reply.
The Madras High Court has set aside a GST order that incorrectly stated the petitioner had not replied to a Show Cause Notice ( SCN ), despite evidence of a reply. The court observed that the reply of the assessee to SCN was not considered by the GST department while issuing the GST order.
The bench of Justice C. Saravanan stated that “A reading of the impugned order indicates that though the petitioner has replied to the show cause notice in DRC 01 dated 04.12.2023 in SCN No. 04/2023-GST/SUPDT, which was received on 27.02.2024, same has not been considered by the respondent while passing the impugned order dated 15.03.2024.”
The Madras High Court, in a manner involving wrong entry while filing Form GST DRC 3B for the assessment year 2017-18 under TNGST Act ( Tamil Nadu Goods and Services Tax Act) observed that the court is concerned with the decision making process and not the correctness of the decision. The bench of Justice C. Saravanan stated as “This Court is not really concerned with the correctness of the decision in the impugned order. However, the Court is only concerned with the decision making process.”
In a matter where GST ( Goods and Services Tax ) personal hearing notice was unnoticed for 3 times, the Madras High Court granted an opportunity to contest on 10% pre-deposit from the Electronic Cash Register ( ECR ).
Considering the submissions, the bench of Justice C. Saravanan of the Madras High Court view that the assessee may be given partial relief by quashing the impugned GST order and remitting the case back to the respondent to pass fresh orders subject to the assessee depositing 10% of disputed tax to the credit of the respondent from its Electronic Cash Register.
The Patna High Court observed that the taxpayer cannot be deprived of benefit due to Non-Constitution of GST Appellate Tribunal. The court stayed the recovery proceedings. The bench of Chief Justice K. Vinod Chandran and Justice Partha Sarthy, in its conditions stated that “The petitioner cannot be deprived of the benefit, due to non- constitution of the Tribunal by the respondents themselves. The recovery of balance amount, and any steps that may have been taken in this regard will thus be deemed to be stayed.”
In a recent ruling, the Orissa High Court permitted to rectify the error that occurred in GST Returns -1 from B2C to B2B. The court found that the petitioner noticed the error after the opposite part held up the legitimate running bill amount of the Petitioner by informing it about the above error on 1st August 2022.
Relying in M/s. SUN DYE CHEM v. The Assistant Commissioner ST, the division bench comprising Justice Dr. B R Sarangi and Justice G Satapathy permitted the Petitioner to resubmit the corrected Form-GSTR-1 from B2C to B2B for the aforementioned periods 2020-21 and 2021-22 and to enable the Petitioner to do so a direction is issued to the Opposite Parties to receive it manually.
The Karnataka High Court has quashed the Income Tax reassessment notice issued to non-existing entities. The court held that the authorities may examine contentions raised on merits after approval of the scheme of amalgamation and assessment orders have already been passed.
The single bench of Justice S. Sunil Dutt Yadav has observed that the notice under Section 148A(b) of the Act was issued on February 28, 2024, with respect to the assessment year 2020–21. The scheme of amalgamation has fixed the appointed date as April 1, 2019, and the entity to which the notice is issued is deemed not to be in existence.
In a recent case, the Orissa High Court quashed the order passed under section 74 of the Orissa Goods and Service Tax ( OGST ) Act,2017 without providing an opportunity of hearing.
The division bench comprising Justice Dr. B R Sarangi and Justice G Satapathy observed that the State Tax officer while passing the orders dated 02.11.2023 has not been given opportunity of hearing to the assessee, the said orders cannot be sustained in the eye of law.
A Division Bench of Delhi High Court direced the Goods and Services Tax ( GST ) Authority to re-adjudicate the Show Cause Notice ( SCN ) issued by the authority before the GST Portal Redesign.
The Division bench comprising Justice Vibhu Bakhru and Justice Sachin Datta in view of the above stated facts allowed the present petition and also set aside the impugned order. The matter has also been remanded to the concerned authority to adjudicate fresh SCN.
The Karnataka High Court has restored the GST registration of the petitioner, provided they file their returns starting from January 2023.
The single bench of Justice Sunil Dutt Yadav observed that, in light of the contentions and reasons provided for not participating in the proceedings and the lapse in not filing the GST returns, the order dated 31.01.2023 at Annexure-‘B’ is set aside and the petitioner’s registration is revived, subject to the condition that the petitioner files the returns from 31.01.2023 till date and clears all dues within four weeks from the receipt of the certified copy of the order; additionally, with the validity of Annexure-‘B’ decided, the order of confirmation passed by the Appellate Authority at Annexure-‘A’ is to be ignored and does not require adjudication.
In a recent ruling, the Karnataka High Court has directed a re-adjudication to examine documents not previously furnished to prove the genuineness of a Government contract in the hospitalisation case of a GST taxpayer.
The bench of Justice Sunil Dutt Yadav held that the order at Annexure-‘B’ dated 25.08.2023 was set aside. The matter was remitted for fresh consideration. The petitioner was permitted to produce documents supporting his contention that work was executed for Government entities. Upon production of such documents for the relevant years in question, the respondent Authority was permitted to pass appropriate orders after considering the documents and taking note of the contentions raised regarding the liability aspect.
The Kerala High Court has held that the South Indian Bank is entitled to the deduction envisaged under Section 36(1)(viii) of the Income Tax Act in respect of the long-term finance provided by it for the construction and purchase of houses in India for residential purposes.
The division bench of Justice A.K. Jayasankaran Nambiar and Justice Syam Kumar V.M. has observed that National HousingBank was not entitled to the benefits of the unamended Section 36(1) (viii) of the Income tax legislation, on the ground that it was not engaged directly in the long term financing for construction or purchase of houses in India for residential purpose. The amendment was therefore deemed necessary to extend the said benefit even to the National Housing Bank.
The Bombay High Court ordered the customs department to refund Rs.35 lakh to an Indian-origin US citizen for a seized gold chain with diamond pendant he claimed to have purchased in 1989 (evidenced by an invoice), quashing the confiscation proceedings.
The High Court bench comprising Justices Jitendra Jain and K.R. Shriram delved into the applicability of the exemption under the relevant rule to the specific jewelry considering the diamond pendant. The court considered the government circulars submitted by the petitioner, which clarified that used jewelry could be included within the meaning of “personal effects” for tourists under Appendix E. The court also evaluated the unsigned invoice (presented as proof of purchase) and the petitioner wearing the chain against the customs department’s suspicion of selling intent.
The Bombay High Court ruled that the Jurisdictional Assessing Officer (JAO) loses authority to issue reassessment notices under Section 148A(b) and take subsequent actions under Section 148A(d) and Section 148 of the Income Tax Act outside the framework of faceless assessment.
The Division Bench of Justices G. S. Kulkarni and Somasekhar Sundaresan observed that the JAO lacked the mandate to issue reassessment notices due to the implementation of the faceless scheme under Section 151A of the Income Tax Act, as notified by the Central Government on March 29, 2022.
The GST ( Goods and Services Tax ) order estimating outward supply at 110% of purchase value by invoking GST Rule 30 was remanded by the Madras High Court. The court set aside and remanded for reconsideration on 10% pre-deposit.
The bench of Justice Senthilkumar Ramamoorthy reviewed the GST order and noted that the GST proposal was confirmed due to the non-receipt of objections from the taxpayer. It was also noted that the assessing officer estimated the outward supply value at 110% of the purchase value by invoking Rule 30 of the CGST Rules, 2017.
The Madras High Court found that the reply provided to the Show Cause Notice (SCN) of GST (Goods and Services Tax) is inadequate and does not explain itself. Thus, the court allowed the assessee to contest the GST order on 10% pre-deposit.
The bench of Justice Senthilkumar Ramamoothy observed that “The above reply is terse and cannot be construed as self explanatory. It is, however, noticeable that such reply does not find mention in the impugned order.”
The Delhi High Court has set aside the cancellation of Olive Traders’ GST registration, emphasising the necessity of a fair hearing and proper opportunity to respond to a Show Cause Notice (SCN). The decision highlights critical procedural lapses by the GST authorities.
The division bench comprising Justice Vibhu Bakhru and Justice Sachin Datta noted that Olive Traders’ case had not been considered on its merits due to these procedural deficiencies. Recognising the need for a fair process, the court set aside the cancellation order and allowed Olive Traders another opportunity to respond to the SCN.
The Delhi High Court of Delhi has overturned the cancellation of GST registration for M/S. Rajdhani Trading Co., citing a violation of natural justice. The court’s ruling emphasises the importance of procedural fairness, particularly the requirement for a clear personal hearing process.
The division bench comprising Justice Vibhu Bakhru and Justice Sachin Datta set aside the impugned order and directed that the petitioner’s registration be restored forthwith.
The Delhi High Court has dismissed the income tax appeal challenging transfer pricing adjustments amounting to Rs. 1.99 crore made by the Tax Authorities on Samsung India’s royalty payments to its parent company, Samsung Korea.
The bench of Justices Yashwant Varma and Purushaindra Kumar Kaurav observed that there was no material placed on the record to show that the manufacture and sale of the aforenoted goods by STI was dependent on directives issued by Samsung Korea or even that STI was contractually obliged to manufacture goods on behalf of Samsung Korea.
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