This weekly round-up analytically summarizes the key stories related to the Supreme Court and High Court reported at Taxscan.in from June 22, 2024 to June 28, 2024.
SUPREME COURT
The Supreme Court issued a notice to the Directorate of Enforcement ( ED ) Neeraj Singal’s plea, the former Managing Director of Bhushan Steel Limited. Singal is challenging his arrest and dismissal of his bail by the Delhi High Court.
A single judge Bench of Justice Vikas Mahajan pointed out that the ‘ground of arrest’ presented to Singal at the time of his arrest comprised three pages and was signed by two independent witnesses, thereby lending it credibility.
HIGH COURTS
The Madras High Court, set aside the unreasoned GST ( Goods and Services Tax ) order issued confirming the tax liability in mismatch between Table 8A data of GSTR 9 and GSTR 2A, granting relief to Ford India.
The bench of Justice Senthilkumar Ramamoorthy observed that the GST proposal was confirmed without any reasoning. Thus, ruled that the impugned order cannot be sustained.
The Madras High Court has directed the Income Tax Department to treat an assessment order as a show cause notice ( SCN ) due to the department’s failure to provide the assessee with access to seized documents. The court also imposed a cost on the assessee for not requesting these documents earlier
The bench of Justice Senthilkumar Ramamoorthy observed that the show cause notice called upon the petitioner to explain why an addition of Rs.3,75,91,225/- should not be made concerning transactions totaling Rs.3,81,56,488/- with M/s.J.M.Jain Group during the assessment year 2021-2022.
In a recent ruling, the Madras High Court ruled that Court interference is needed on GST ( Goods and Services Tax ) orders which raises liabilities not addressed in the SCN ( Show Cause Notice ).
A single bench of Justice Senthilkumar Ramamoorthy noted that the confirmed GST proposal related to excess transitional credit claimed by the petitioner, an issue not raised in the show cause notice. This discrepancy warranted interference.
The Madras High Court has directed that a previously issued GST (Goods and Services Tax) order be treated as a Show Cause Notice ( SCN ) after it was found that the order raised a liability not mentioned in the original SCN.
A single bench of Justice Senthilkumar Rammaoorthy accepted the petitioner’s contention that defect no.2 was not covered in the original show cause notice, rendering the impugned order unsustainable in that regard.
The Madras High Court mandated that a personal hearing opportunity be granted concerning the 15% pre-deposit condition. This decision followed the court’s observation that the GST ( Goods and Services Tax ) department had sent the personal hearing notice via registered post. The court nullified the previous order, citing the absence of a hearing before the order was issued.
Single bench of Justice Senthilkumar Ramamoorthy also stated that it is apparent that the tax proposal was confirmed without the petitioner being heard, imposing liability under Section 74 of the applicable GST enactments. In the interest of justice, an opportunity should be provided to the petitioner under certain conditions.
In a recent ruling, the Madras High Court ordered the GST ( Goods and Services Tax ) appellate authority to reconsider the appeals despite the delay of 19 days due to the director’s illness. The court noted that sufficient medical documents supporting the claim were submitted.
The bench of Justice Senthilkumar Ramamoorthy observed that “On examining the order of the appellate authority, it is evident that the period of delay is only 19 days. The petitioner has placed on record a medical certificate issued by the Lakeside Medical Centre and Hospital.”
The Madras High Court has directed the Commissioner of Income Tax (Appeals) to grant 45 days’ time to the petitioner to obtain and furnish documents from a closed bank account under Black Money (Undisclosed Foreign Income and Assets) and imposition of Income Tax Act, 2015.
The bench of Justice Senthilkumar Ramamoorthy observed that the relief requested by the petitioner to be reasonable. The petitioner sought 45 days’ time to provide all documents called for by the first respondent. It was stated that the petitioner’s son had travelled to Singapore to obtain the statement from the DBS Bank and that this process was taking up time because the bank account was closed a long time ago. The reason set out by the petitioner appeared to be reasonable.
In a recent case, the Andhra Pradesh High Court has quashed the prosecution proceedings launched against the assessee for belatedly depositing tax deducted at source ( TDS ). The Court found that the assessee paid the tax along with late payment interest.
The single bench of Justice Venkata Jyothirmai Pratapa has observed that CIT conveniently ignored the material placed by the assessee to establish that there was a reasonable cause for their failure to remit the amount within a stipulated time. Since the assessee has paid the tax along with late payment interest, there are no tenable grounds to continue the proceedings against the petitioners in all three cases, and hence, the proceedings are liable to be quashed.
The Madras High Court set aside the Goods and Services Tax ( GST ) demand order, and the matter is remanded to the respondent for reconsideration, subject to 10% pre-Deposit condition. The order was challenged on the ground of a breach of the principles of natural justice.
Justice Senthilkumar Ramamoorthy observed that “in view of the assertion that the taxpayer could not participate in proceedings on account of being unaware of the same, the interest of justice warrants that the petitioner be provided an opportunity by putting the petitioner on terms.
The Madras High Court has set aside a Goods and Services Tax (GST) order due to defects in supplier declarations and tax rates. The court has remanded the order for reconsideration by the concerned authorities.
The bench of Justice Senthilkumar Ramamoorthy set aside the impugned order only insofar as it pertained to defect no.1 and defect no.8. The matter was remanded for re-consideration, with the respondent directed to issue a fresh order on these two defects after providing a reasonable opportunity to the petitioner, including a personal hearing.
In a recent ruling, the Rajasthan High Court, while remanding the matter has observed that the grounds of anti-dating can be raised in the income tax appellate proceedings.
The bench of Justices Manindra Mohan Shrivatsava and Bhuwan Goyal observed that “The allegation of anti-dating can be examined in appeal proceedings and it cannot be said that these grounds cannot be taken up in appeal.”
In a recent ruling, the Madras High Court set aside the GST (Goods and Services Tax) demand order due to lack of hearing opportunity on a pre-deposit condition as petitioner failed to participate in the proceedings due to unaware of notices issued.
The bench of Justice Senthilkumar Ramamoorthy observed that the tax proposal, which focused on the disparity between the petitioner’s GSTR 3B return and GSTR 1 statement, was confirmed due to the petitioner’s lack of response to the show cause notice. The petitioner contended that the failure to participate in the proceedings was due to being unaware of them.
The Rajasthan High Court granted relief to the Chartered Accountant associates by ordering the immediate release of documents impounded by the Income Tax Department after six-years.
When the case was heard by the Justices Mannuri Laxman and Manindra Mohan Shrivatsava, the petitioner’s counsel asserted that no proceedings are currently pending and that all assessments were completed long ago.
The Himachal Pradesh High Court has quashed the Water Cess on Hydropower Electricity Generation Rule, 2023, ruling it to be ultra vires to the Constitution
The division bench of Justice Tarlok Singh Chauhan and Justice Satyen Vaidya observed that the Sections 10 and 15 of the Himachal Pradesh Water Cess on Hydropower Electricity Generation Act, 2023, as have been made applicable to the existing projects, are also declared to be ultra vires the Constitution and are accordingly quashed and set aside.
The Telangana High Court Set aside there assessment notice issued under section 148 of the Income Tax Act,1961 without following the modified procedure under Finance Act, 2021.
The division bench of Justice Sujoy Paul and Justice Namavarapu Rajeshwar Rao held that the impugned Show Cause notices and consequential orders passed in writ petitions are set aside.
A Division Bench of the Delhi High Court limited cancellation of the Goods and Services Tax Registration of the taxpayer from date of Issuance of the Show Cause Notice due to improper retrospective cancellation of the registration.
The Bench of Justice Sanjeev Sachdeva and Justice Ravinder Dudeja observed that both the Petitioner and the Respondent want cancellation of GST Registration for different reasons. On the basis of above mentioned facts, the order dated 04.10.2019 shall be modified to the limited extent so that the registration shall stand canceled from 19.09.2019 which is the date when SCN seeking cancellation of GST registration was issued.
The Madras High Court set aside an order concerning a GST dispute due to a mismatch between input tax credit ( ITC ) claims and the records. The court emphasised the importance of adhering to principles of natural justice and granted a conditional remand, providing the petitioner with an opportunity to justify the ITC availed of on merits.
The bench of Justice Senthilkumar Ramamoorthy set aside the impugned order on the condition that the petitioner remits 10% of the disputed demand towards tax and cess within two weeks from the date of receipt of a copy of this order.
In a recent case, the Kerala High Court directed to keep income tax recovery proceedings in abeyance unconditionally. The Court found that the income tax department issued a direction to remit 30% tax as a condition for a stay petition.
A division bench of Dr Justice A K Jayasankaran Nambiar & Justice Syam Kumar V M viewed that, since the Single Judge had relegated the appellant to the alternate remedy before the statutory authority, it was incumbent upon him to protect the appellant from recovery proceedings pending disposal of the stay petition by the Appellate Authority.
The two-member bench of the Himachal Pradesh High Court has set aside the demand for Income Tax amounting to Rs. 2.73 crores, as the company’s account properly reflects the transaction.”
The division bench, consisting of Justice Vivek Singh Thakkur and Justice Sandeep Sharma, quashed and set aside the order dated 13.04.2023 and the notice dated 13.04.2023. The matter was remanded to the concerned authority for a fresh decision, with instructions to consider both the reply and supplementary reply along with accompanying documents. They are directed to issue a speaking and reasoned order after providing an opportunity for a personal hearing to the petitioner, if requested. The order shall be communicated to the petitioner immediately thereafter. Accordingly, Petition was disposed of.
The Madras High Court imposed a token penalty of Rs. 10,000 for wrongful availment of Input Tax Credit ( ITC ) which was not eligible to be availed, but could have resulted in wrong utilisation. The court found no wilful misstatement or suppression of facts or fraud.
The bench of Justice S. Saravanan observed that sustaining the penalty under Section 74(1) and 74(5) of the CGST Act is unsustainable
The Gauhati High Court listed the matter of challenge on condonation of delay under section 119(2)(b) of the Income Tax Act, 1961 for filing Form 10-IC on July 17. The Court directed to obtain instruction regarding the condonation power of Income Tax Authority to admit any application or claim for any exemption, deduction, refund or any other relief after the expiry of the period specified taking into consideration the hardship faced by the assessee.
A single-member bench of Justice Soumitra Saikia let the Income Tax Department obtain instructions on the matter and listed the matter again after 3 (three) weeks. The Court listed the matter again on 17th July, 2024.
The Kerala High Court has held that the methodology in determining total turnover prescribed under Kerala Value Added Tax ( KVAT )Rules cannot be followed in absence of documents showing actual land value.
The division bench of Justice A.K. Jayasankaran Nambiar and Justice Syam Kumar V. M. has observed that in the absence of any document produced by the petitioner to show the actual land value included in the contract receipts, the methodology can be adopted by the Appellate Tribunal to determine the taxable turnover of the petitioner assessees for the assessment years 2008–09 and 2009–10, respectively.
In a recent ruling, the Madras High Court rejected the request of petitioner to cross examine the Customs Auditors with regards to the reclassification of its products into ‘Areca Nuts Split’. The court also granted fresh appeal opportunity before the appellate authority i.e CESTAT.
The bench of Justice Senthilkumar Ramamoorthy observed that “After referring to judgments of the Hon’ble Supreme Court and this Court to the effect that the right of cross-examination is not an absolute requirement .”
The Madras High Court has ordered the Income Tax Department to expedite and dispose of an appeal that has been pending for 4 years before the Commissioner of Income Tax (Appeals) [CIT(A)]. The petitioner, who sought the lifting of attachments on four bank accounts, had their plea deferred as the case is already under the jurisdiction of the CIT(A).
The bench of Justice Senthilkumar Ramamoorthy noted that the statutory appeal against the assessment order is still pending before the Commissioner of Income Tax (Appeals), and there is no evidence to suggest that the petitioner filed a stay application with the appellate authority.
The Punjab and Haryana High Court has held that Enforcement Directorate ( ED ) can launch prosecution by filing a complaint for violation of Section 3 and Section 4 of Prevention of Money Laundering Act, 2002 ( PMLA ) based on the predicate offence.
The Court comprising Justice Anoop Chitkara the held that Enforcement Directorate was well within the scope of PMLA, 2002 to launch prosecution by filing a complaint for violation of Sections 3 and 4 of PMLA based on the predicate offense under Section 472 and 473 IPC.
The High Court of Orissa directed the recalculation on the issue of Income calculation made under Section 44-AE of the Income Tax Act, 1961 for Awarding compensation. The court held that the amount of compensation is to be accordingly recalculated. The annual income of the deceased is to be reassessed at Rs.1,76,496/- taking into account the average income of the previous three years.
Justice R K Pattanaik observed that as per the calculation of income under Section 44-AE of the Income Tax Act, the net total taxable income for such business involving carriage vehicles shall be calculated at the rate of Rs.7,500/- a month or part thereof during which the assessees own the carriage of the goods in the previous year.
In a recent ruling the Patna High Court has dismissed the petition regarding a Chartered Accountant ( CA ) firm’s non-empanelment due to non-compliance with Notice Inviting Tender ( NIT ) conditions.
The division bench comprising Justice K. Vinod Chandran, and Justice Harish Kumar noticed even the original NIT contained the stipulation that the branch office should have been working for the last 5 years, so the date of submission of tender was not relevant. Accordingly, no reason to entertain the writ petition and dismiss the same
The Patna High Court has remanded the case concerning the denial of increased material, wage costs, and Goods and Service Tax ( GST ) claims back to the Chief General Manager, Bihar Urban Infrastructure Development Corporation Ltd., Patna. ( BUIDCo ) for reconsideration.
The single member bench of Justice A. Abhishek Reddy observed that the impugned order dated 16.11.2019 was set aside and the matter was remanded back to the Chief General Manager, BUIDCo. For considering the representation dated 27.06.2019. With the above directions, the present Writ Petition stands disposed of.
In a recent and significant ruling, the Madras High Court observed that the Personal Hearing under Section 75(4) of GST Act ( Goods and Services Tax ), 2017 is mandatory not only when requested but also should be given to the proposed adverse orders.
The words of the Single bench of Justice Senthilkumar Ramamoorthy states as follows “Under sub-section (4) of Section 75 of applicable GST enactments, a personal hearing is mandatory not only when requested for but when an order adverse to the tax payer is proposed to be issued. In all these cases, the tax proposals were confirmed without the petitioner being provided a personal hearing.”
The Rajasthan High Court ruled that voluntary disclosure misreporting of GST ( Goods and Services Tax ) Input Tax Credit ( ITC ) during scrutiny negated the basis for misreporting under the Section 270A(9) of the GST Act, 2017. It quashed the order passed by the assessing authority rejecting application under Section 270AA and the order passed by the revisional authority rejecting revision petition.
The bench of Justice Arun Bansali and Justice Shubha Mehta observed that “though several notices were issued under Section 142 of the Act, during the course of scrutiny proceedings and as many as ten issues were raised, on which the authority could not make any additions, the aspect of merging GST Input Credit with expenses was not pointed out/detected and the same was only pointed out voluntarily by the petitioner and, therefore, apparently sub-Clauses (a) and (c) of Section 270A (9) of the Act are not attracted.
The Rajasthan High Court has dismissed a writ petition, upholding the use of information gleaned from the ‘insight portal’ of the Income Tax Department as grounds for reopening income tax assessments under Section 148 of the Income Tax ( IT ) Act, 1961.
The Division Bench of Justice Vijay Bishnoy and Justice Nupur Bhati held that as long as the show-cause notice adequately explains the source of the information ( i.e., ‘insight portal’ ) and the justification for reassessment, the ITO has fulfilled its obligations under Section 148A
In a recent case, the Kerala High Court has found that a mistake by the Dealer occurred in uploading stock inventory along with returns under Rule 22 (1) of Kerala Value Added Tax ( KVAT ) Rules, 2005 allowed the dealer to correct a copy of the stock inventory uploaded along with returns.
The single bench of Justice Gopinath P. has observed that the mistake on the part of the petitioner-dealer was that she uploaded the stock inventory as of May 28, 2015, instead of the stock inventory as of March 31, 2015. The bench directed the department to permit the petitioner to correct the copy of stock inventory (closing stock) as of March 31, 2015, which was filed along with the annual returns submitted by the petitioner for the years 2014–15.
The Madras High Court set aside the VAT ( Value Added Tax ) assessment order, imposing a condition of 10% pre-deposit. The court’s decision came as it noted that rejecting the revision request exposed the hasty nature of the VAT order issued by the officers.
The bench of Justice C. Saravanan observed that “…rejecting the request of the petitioner for revision of the assessment made on 28.09.2022 reveals that the order has been passed in undue haste. The dispute pertains to the Assessment Years 2014-2015 and 2015-2016 and the amount involved are huge. For the Assessment Year 2014-2015, the tax amount is Rs.91,46,490/- and the amount of tax involved for the Assessment Year 2015-2016 is Rs.68,98,819/-.”
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