This weekly round-up analytically summarises the key stories of the Supreme Court & High Court cases reported at taxscan.in, from March 30th, 2024 to April 5th, 2024.
SUPREME COURT
The Supreme Court of India condoned delay in a matter related to the challenge on interest under section 42(1) of the Delhi Value Added Tax ( DVAT ) Act, 2004, pertaining to withholding of Value Added Tax ( VAT ) refund. The delay was condoned in a Special Leave Petition ( SLP ) arising from a final judgment dated 21-09-2023 in WP(C) No. 2491/2023 by the Delhi High Court. The High Court ruled that objections regarding the impugned default notices of tax & interest should be raised through a statutory appeal under Section 74 of the DVAT Act. A Two-Judge Bench of the Supreme Court, comprising Justices Pamidighantam Sri Narasimha and Prasanna Bhalachandra Varale, granted leave after condoning the delay, concluding the hearing and reserving judgment.
HIGH COURTS
A division Bench of the Delhi High Court overturned the retrospective cancellation of GST registration due to the absence of specific details in the show cause notice ( SCN ), such as the name or designation of the officer or the place where the assessee should appear. The petitioner challenged the SCN dated 10.11.2023, which suspended their GST registration, citing Section 29(2)(e) regarding registration obtained through fraudulent means.
The petitioner had initially applied for cancellation of GST registration on 23.02.2023, and subsequently received a show cause notice on 27.02.2023 seeking information. However, a show cause notice dated 10.11.2023, issued after a nine-month gap, sought cancellation of registration without specifying the officer’s name or designation or the place for appearance.
The court, comprising Justices Sanjeev Sachdeva and Ravinder Dudeja, set aside the order rejecting the petitioner’s application and cancelled the GST registration from 23.02.2023, the date of the initial application. The petitioner must comply with Section 29 of the Central Goods and Services Tax Act, 2017, and provide the required details accordingly.
The Bombay High Court invalidated an improper Show Cause Notice ( SCN ) issued to employees of Maersk Line India, demanding a hefty penalty of Rs. 3731 Cr, presuming their involvement in transactions made by the company. Justices Sanjeev Sachdeva and Ravinder Dudeja observed that targeting employees with such notices, without specifying their involvement, lacked jurisdiction and was unjust.
The court found it disproportionate to demand such a substantial sum from the employees, especially when it pertained to the company’s liability. The ruling emphasised that the remarks made solely concern the SCN directed at the employees and do not extend to other parties involved. Consequently, the court allowed all four petitions challenging similar notices.
The Delhi High Court directed the matter back to the GST Commissioner for reconsideration of delay condonation, noting that the date of filing is considered the date of initial online filing. The petitioner contested the dismissal of their appeal against the original order dated 04.05.2023, claiming it was time-barred. The appeal, filed on 02.09.2023, was deemed to have a delay of only one month, falling within the Commissioner’s power to condone.
Justices Sanjeev Sachdeva and Ravinder Dudeja overturned the previous ruling, stating that the Commissioner should have considered the delay condonation application and remitted the matter accordingly.
The Delhi High Court ruled that GST registration is deemed cancelled from the date of application for cancellation. The petitioner contested an order dated 03.01.2024 rejecting their application for cancellation of GST registration, citing non-attendance at a personal hearing and failure to reply to queries.
However, the court, comprising Justices Ravinder Dudeja and Sanjeev Sachdeva, found the order lacking in details and reasons, thus setting it aside. Consequently, the petitioner’s application for cancellation was allowed, and their GST registration is deemed cancelled from the date of application, i.e., 21.11.2023.
The Karnataka High Court dismissed the Prevention of Money Laundering Act ( PMLA ) case against Razorpay concerning commissions earned from an illegal business. The complaint alleged negligence on the part of the accused payment gateway, Razorpay, for allowing transactions without due diligence.
However, Justice Hemand Chandangoudar observed that there was no evidence to suggest Razorpay had knowledge of funds derived from criminal activity or knowingly assisted in concealing illicit proceeds. The court concluded that the complaint did not satisfy essential elements to constitute the alleged offences, deeming the continuation of criminal proceedings as an abuse of the legal process.
The Gujarat High Court highlighted the necessity for lender banks to provide audit reports to borrowers before classifying accounts as fraud, ensuring the borrower’s representation. The petitioners argued that the account of their company was declared fraudulently without adhering to principles of natural justice.
Justice Sangeeta K Vishen emphasized that the lenders failed to follow the principles of natural justice by not providing the audit reports to the borrowers for representation. Consequently, the decision of the respondent banks declaring the account as fraud was quashed, and the matter was remitted for the completion of proceedings after providing the necessary documents and allowing the petitioners to submit representations.
The Madras High Court ruled that an order referring to Section 144(C)(1) of the Income Tax Act, 1961 should be construed as a draft assessment order, even if the term “draft assessment” is not explicitly mentioned. The petitioner had filed revised returns, leading to a variation in income, prompting the Assessing Officer to refer the matter to the Transfer Pricing Officer ( TPO ). Despite the TPO’s report, the final assessment order was passed directly without issuing a draft assessment order. The petitioner argued that this violated the mandatory procedure under Section 144(C).
However, the court held that the order should be considered a draft assessment order as per the provisions of Section 144(C), even if it lacked explicit labelling. Therefore, the court rejected the petitioner’s contention and upheld the order.
The Delhi High Court emphasised that the arbitrary rejection of entries from the books of account by a pick-and-choose method is unjustifiable. The case involved the respondent-assessee filing its income tax return for AY 2014-15, with subsequent notices issued under relevant sections of the Income Tax Act.
The Income Tax Appellate Tribunal partly allowed the respondent’s appeal, remitting the issue of unaccounted profits back to the AO for further investigation. The revenue’s counsel argued that the expenses claimed lacked substantiation and were inflated to reduce taxable income. Conversely, the respondent’s counsel contended that the AO’s additions were speculative and unsupported by evidence.
The division bench of justices stressed that such arbitrary rejection methods jeopardise the accuracy and transparency of income computation, emphasising the need for justified and comprehensive assessment procedures.
The Delhi High Court ruled that the period specified under Section 153(3) of the Income Tax Act, 1961 should be calculated from the receipt date of the order from the Income Tax Appellate Tribunal ( ITAT ). Despite the ITAT’s order on 20 December 2018 remitting the matter back to the Assessing Officer (AO) and Transfer Pricing Officer ( TPO ) for re-adjudication, the final assessment order was passed on 13 February 2023, surpassing the prescribed time limit.
The court observed that the period under Section 153(3) should commence from the date of receipt of the ITAT order. Consequently, the impugned order dated 13 February 2023 was quashed, and the respondents were directed to recalculate the refund payable to the petitioner along with statutory interest, considering the annulled adjustments made against a perceived outstanding demand for certain assessment years.
The Madras High Court deemed an assessment order issued beyond the time limit under Section 144C(13) of the Income Tax Act, 1961 as unsustainable. The petitioner filed objections against the draft assessment order before the Dispute Resolution Panel ( DRP ), which confirmed the addition. The DRP’s directions, received by the petitioner on 16.06.2022, were uploaded on the ITBA portal on 17.06.2022. However, the final assessment order was issued on 25.03.2023, surpassing the time limit.
The court noted that the assessment proceedings were barred by limitation, rendering the assessment order invalid. Therefore, it deemed the assessment order unsustainable based on statutory provisions and judicial interpretations.
The Punjab and Haryana High Court ruled that a stay on an FIR does not prevent the Enforcement Directorate ( ED ) from registering an Enforcement Case Information Report ( ECIR ) for a Prevention of Money Laundering Act, 2002 ( PMLA ) offence. The petitioners, Sikandar Singh and Vikas Chhoker, were accused in complaints alleging fraud in a construction project. They argued that since the basic order on the complaint was set aside, the FIRs should be nullified, and no PMLA offence remains.
However, the court noted that other FIRs were pending, suggesting potential proceeds of crime, and concluded that the matter requires investigation before any final determination can be made.
The Orissa High Court restored an application for registration under Section 12AB of the Income Tax Act, 1961, as the application was filed in the wrong section code in Form-10A. The petitioner’s Senior Counsel argued that the application was mistakenly filed with the wrong section code for the Assessment Year 2022-23, resulting in its rejection.
The court noted that despite the petitioner’s explanation furnished digitally, the rejection lacked proper reasoning, violating principles of natural justice. Therefore, the court set aside the order and directed reconsideration of the application by the Commissioner of Income Tax ( Exemption ), Hyderabad, with a mandate to provide a reasonable opportunity of hearing to the assessee.
The Bombay High Court upheld the Income Tax Appellate Tribunal’s ( ITAT ) order directing a remand to the Transfer Pricing Officer ( TPO ), emphasising that comparisons must be made between equals. The case involved international transactions exceeding Rs.15 crores. The TPO determined an adjustment of Rs.3,59,81,523/-.
The Assessing Officer made additions based on this determination. The Commissioner of Income Tax (Appeal) partly allowed the appeal, which was further contested before the ITAT. The ITAT partially allowed the appeal, remanding the matter to the TPO for fresh adjudication. The TPO was instructed to reconsider factors such as capacity underutilization. The ITAT also highlighted the need to reassess comparables objected to by the assessee.
The High Court concurred with the ITAT’s finding that comparisons should be made between equals, noting that a business starting in a particular year cannot be equated with those operating for many years. The Court agreed that despite lower sales in the initial year, the expenses incurred were comparable to the subsequent year when sales increased significantly, indicating business stabilisation.
The Madras High Court advised the petitioner, a contractor working under the PWD Department of the Government of Tamil Nadu, to approach the appellate authority regarding the imposition of service tax and penalty without proper issuance of a Show Cause Notice or opportunity for hearing.
The bench granted the petitioner liberty to file a statutory appeal within four weeks and instructed the Appellate Authority to consider the appeal expeditiously, taking previous orders into account. No costs were imposed, and all related miscellaneous petitions were closed.
The Kerala High Court stayed Income Tax recovery proceedings and directed the Commissioner of Income Tax Appeal (CIT (A)) to pass necessary orders on the condonation application and stay petition. The petitioner sought a copy of the assessment order for the assessment year 2018-19 under the Income Tax Act, 1961. The petitioner filed an appeal before the CIT (A) along with applications for condonation of delay and stay.
The court directed the CIT (A) to consider and pass orders on the condonation of delay petition and stay application after affording an opportunity of hearing to the petitioner. Until such orders are passed, any recovery proceedings based on the assessment order shall remain suspended. The CIT (A) is instructed to decide on the application for stay only if the delay in filing the appeal is condoned.
The Delhi High Court set aside an order rejecting a GST appeal due to technical glitches on the GST portal, noting that the petitioner had submitted the required digital data online. M/S Reva Giant Implex LLP sought a refund of Rs 8,37,487, but only a partial refund was granted by the Assistant Commissioner. The petitioner filed an appeal, which was rejected as time-barred, despite claiming to have filed it electronically within the deadline.
The court found no evidence to doubt the petitioner’s claim that the original order was submitted online with the appeal. The matter was remitted to the Appellate Authority for reconsideration on its merits.
The Kerala High Court dismissed a writ petition concerning an online income tax appeal and stay petition filed beyond the statutory time limit for the assessment year 2020-21. The petitioner appealed and sought a stay before the CIT(A), but the Income Tax Department argued that the stay petition should have been filed before the Jurisdictional Commissioner of Income Tax (Appeals) due to the Faceless Assessment Scheme. The petitioner’s counsel argued that the stay petition was filed correctly.
The court directed the CIT(A) to consider and pass orders on the stay petition after hearing the petitioner and deferred recovery of assessed amounts until a decision is made. However, the CIT(A) must first decide on the merits of the stay petition and whether to condone the delay in filing the online appeal. The writ petition was disposed of accordingly.
The Kerala High Court stated that delay or non-cooperation in proceedings before the Commissioner of Income Tax (Appeals) is not relevant for the Income Tax Appellate Tribunal’s consideration of a delay condonation application. The petitioner challenged a stay application filed in the appeal, citing grounds of delay.
The court noted that the delay or non-cooperation before the first appellate authority is not pertinent to the Tribunal’s consideration of delay condonation. The bench allowed the writ petition, quashing the true copy of the order passed by CIT (A), and condoned the delay of 156 days in filing. The case will be considered and disposed of on its merits after affording both parties an opportunity to be heard.
The Madras High Court held that the mere pendency of appellate proceedings does not prevent the initiation of prosecution proceedings under Section 276CC of the Income Tax Act, 1961. Vinayagam Sabarisanthanakrishnan filed a petition to quash proceedings against him for failing to file income tax returns for Assessment Year 2014-2015. The respondent initiated prosecution under Section 276CC after the petitioner failed to file returns despite a show cause notice. The petitioner argued that the delay was due to ill health and appealed against the assessment order, pending before the appellate authority. The Special Public Prosecutor argued that the petitioner’s non-filing was wilful. The Court ruled that pendency of appellate proceedings does not bar prosecution and refused to interfere, directing the lower court to complete the proceedings within three months.
The Kerala High Court directed the Income Tax authority to halt recovery proceedings until the stay petition against the Income Tax Assessment Order is decided. Baiju Lekshmanan, the petitioner, appealed against the assessment order and applied for a stay. The Income Tax Department noted a delay in filing the appeal.
A single bench, led by Justice Gopinath P, disposed of the writ petition by instructing the 2nd respondent to decide on the stay petition and delay condonation after hearing the petitioner. Recovery proceedings were to be suspended until then. The 2nd respondent was to consider the stay petition’s merits only if they decided to condone the appeal filing delay.
The Kerala High Court directed Alka Ventures Private Limited to deposit Rs. 2 crore as advance tax to maintain their appeal against the assessment order. The petitioner, engaged in real estate business, did not file a return of income for the assessment year 2016-17. An assessment order was issued under Section 147 r/w Section 144 and Section 144B of the Income Tax Act, assessing the petitioner at a higher rate of tax due to unexplained investments. Despite a previous writ petition challenging the assessment order being dismissed, the petitioner filed an appeal under the Faceless Appeal Scheme, 2021. The petitioner argued for exemption from advance tax payment citing Section 249 of the Income Tax Act, as subsequent years had loss returns accepted under Section 143(1). However, considering the substantial demand in the assessment order, the court directed the appeal to be heard on the condition that the petitioner deposits Rs. 12 crores against the demands.
The Bombay High Court upheld the Maharashtra Government’s authority to levy stamp duty on Delivery Orders (DO). The petitions challenged this imposition, claiming it infringed on the Union’s exclusive legislative competence regarding import and export across customs frontiers. The petitioner argued that DOs are redundant as goods are compulsorily unloaded for clearance, making them unnecessary. However, the court ruled that the state’s action falls within its legislative competence and does not encroach upon the Union’s domain.
The Kerala High Court remanded a GST case for re-adjudication after finding that the attachment of the petitioner’s bank account was done without considering their contention. The petitioner challenged a recovery notice for arrears of tax, claiming they had already paid for certain assessment years. The court, upon allowing the appeal, directed the State Tax Officer to reconsider the petitioner’s representation and issue fresh orders.
The Andhra Pradesh High Court directed the Municipal Corporation to refrain from taking coercive actions regarding a representation on waiver of interest on property tax arrears. The petitioner’s grievance stemmed from the non-consideration of their representation for the waiver of a penal amount. The court noted that the petitioner is entitled to a waiver by virtue of government orders and directed the Corporation to adjudicate on the matter along with the petitioner’s representation within four weeks from the receipt of the application made by the petitioner pursuant to the relevant government order.
The Delhi High Court directed the authorities to decide on the application for cancellation of Goods and Service Tax (GST) registration within two weeks, as mandated timelines were not adhered to. M/s Perfect Trader had filed the application for cancellation, but it remained pending beyond the stipulated 30-day period. The Court’s directive came in response to a petition filed by the petitioner, represented by Mr. Pranay Jain and Mr. Karan Singh, while the respondents were represented by Mr. Rajeev Aggarwal and Ms. Samridh Vats.
The Kerala High Court directed the consideration of a rectification application to rectify factual mistakes in an adjudication order within two months. M/S Bright Communications, the appellant, sought permission to rectify certain factual mistakes apparent in the adjudication order to reduce the total liability confirmed against them. The division bench comprising Dr. Justice A.K. Jayasankaran Nambiar and Justice Syam Kumar V.M. allowed the appeal, setting aside the Single Judge’s judgment to enable the Assistant Commissioner to consider the rectification application, waiving the period of limitation for consideration. Sri. Jose Jacob appeared for the appellant, and Smt. Preetha S. Nair appeared for the respondents.
The Delhi High Court directed the Competent Authority to dispose of the petition against provisional attachment under the CGST Act within two weeks. M/S Brijbihari Concast Pvt Ltd challenged the provisional attachment of their bank account under Section 83 of the CGST Act. Despite objections filed by the petitioner, the attachment was not disposed of. The court directed the Competent Authority to decide on the objections within two weeks and provide an opportunity for a personal hearing to the petitioner. The division bench comprising Justice Sanjeev Sachdeva and Justice Ravinder Dudeja disposed of the petition, allowing the petitioner to seek further remedies if aggrieved by any further order passed.
The Delhi High Court directed the adjudicating authority to dispose of the petition against the denial of Customs refund promptly, without considering the request to reassess the bill of entry. M/s Technology Next sought a refund of excess duty paid, but the Assessing Authority neither reassessed the bill nor issued a speaking order. Despite an appeal being allowed, the matter remained pending. The court directed the authority to expedite proceedings within six weeks and provide a personal hearing to the petitioner. The division bench comprising Justice Sanjeev Sachdeva and Justice Ravinder Dudeja disposed of the petition, allowing further remedies if the petitioner remains aggrieved.
The Delhi High Court dismissed charges of clandestine removal and under-valuation against KI, emphasising the need for tangible evidence rather than assumptions and presumptions. The Commissioner of Central Excise imposed a duty demand of Rs. 4,18,29,655, alleging clandestine removal and undervaluation of goods. The appeal was allowed by the Central Excise Service Tax Appellate Tribunal ( CESTAT ), prompting the Revenue to appeal under Section 35(G) of the Central Excise Act, 1944.
The Division Bench, comprising Justices Ravinder Dudeja and Yashwant Varma, emphasised the importance of concrete evidence, stating that charges cannot be sustained on assumptions alone. The decision prioritised justice and required the burden of proof to be met satisfactorily by the accusing party. The Court noted the absence of direct evidence linking the respondents to the alleged offences, emphasising the necessity of tangible evidence rather than assumptions.
The Madras High Court ruled that interest on late filing of GST Returns ( GSTR-3B ) is not applicable if GST is duly paid through Form GST PMT-06 on time. In the case involving Eicher Motors Limited, the court observed that GSTR-3B filing is not mandatory for GST payments, differing from other court judgments. Despite facing challenges in transitioning CENVAT credit to GST due to portal glitches, Eicher Motors ensured timely payment of GST dues into the Electronic Cash Ledger.
The court emphasized that tax payment via GST PMT-06 before the due date suffices, regardless of GSTR-3B filing. It ruled that interest only applies to amounts deposited after the due date. The court directed the cancellation of the petitioner’s GST registration from 11.12.2020, not retrospectively, quashing the recovery notice issued by the tax authorities.
The Delhi High Court instructed the Customs authorities to promptly decide on the petitioner’s request for the release or provisional release of seized goods. The petitioner claimed that despite multiple requests, the goods were not released. The respondents countered, stating the petitioner failed to appear after being summoned five times. The petitioner disputed receiving any summons and expressed willingness to appear before the authorities. The Division Bench directed the Competent Authority to decide on the request within ten days and instructed the petitioner and their counsel to appear before the Directorate General of Revenue Intelligence on 06.03.2024 at 03:00 PM.
The Delhi High Court upheld the Trial Court’s decision to frame charges against the petitioners in a case involving the seizure of containers containing contraband goods by the Directorate of Revenue Intelligence (DRI). The prosecution alleged that the petitioners were involved based on disclosure statements made by co-accused individuals. The first petitioner, a director of M/s Abetar Healthcare Pvt. Ltd., was accused of conspiring to import contraband goods into India. The second petitioner’s premises yielded documents related to M/s Goodlife Global, and WhatsApp conversations indicated involvement in discussing the consignment. Justice Navin Chawla affirmed the Trial Court’s decision, stating that charges were rightly framed against the petitioners based on the circumstances presented.
The Delhi High Court deemed the adjustment of a disputed tax demand against available refunds, without considering the application under Section 220(6) of the Income Tax Act, 1961, as arbitrary. The petitioner challenged the adjustment, stating that their rectification application for Assessment Year 2018-2019 had not been considered, and their stay application under Section 220(6) had not been addressed. The respondents argued that they were justified in making the adjustments, as the petitioner had not been declared as an “assessee in default.”
The Court observed that the respondents’ actions were arbitrary and unfair, as they had not considered the petitioner’s application under Section 220(6) before making the adjustments. They further noted that the respondents’ assumption about the application’s requirements was misconceived and untenable in law.
The Madras High Court directed the customs department to provisionally release areca nuts imported from Sri Lanka, seized under fraud suspicions. Vishwa Enterprise imported areca nuts from Sri Lanka but faced seizure despite complying with Indo-Sri Lanka Free Trade Agreement rules. The petitioner provided a certificate of origin and verification, but the goods weren’t released. The court noted the validity of the documents and lack of evidence linking the petitioner to fraud allegations. Hence, it ordered the provisional release of goods with certain safeguards: the petitioner must provide an indemnity bond covering 100% of duty payable if entitlement is disproved and a bank guarantee for 10% of duty from a nationalized bank, renewable annually until assessment conclusion. Upon compliance, the customs department must release the goods within one week.
The Madras High Court quashed a GST Assessment Order where authorities mistakenly debited Input Tax Credit (ITC) from the Electronic Credit Ledger (ECL) despite reversal in subsequent returns. The petitioner had erroneously claimed ITC for a car purchase but rectified it in the GSTR-3B return. However, the assessment order debited additional amounts from the ECL. The petitioner’s counsel highlighted the ITC reversal in the GSTR-3B return. The Government Advocate admitted the error.
After examining documents, the Court concluded the order was erroneous and remanded the matter for reconsideration. The petitioner was given two weeks to respond to the Show Cause Notice and provide relevant documents. The assessing officer was instructed to issue a fresh assessment order within two months of receiving the petitioner’s reply.
The Kerala High Court stayed recovery proceedings under an Income Tax Act assessment order until the final decision on the Cooperative Society’s application for stay against the ITAT order. Chirayinkeezhu Service Co-Operative Bank Ltd, the petitioner, faced an assessment order for the 2017-18 assessment year, with the appeal dismissed by the first Appellate Authority. The petitioner filed an appeal and a stay application before the ITAT, seeking to halt recovery of assessed amounts pending consideration of the delay petition and stay petition.
Justice Gopinath P directed the ITAT to decide on the stay and delay petitions within three months. Pending the outcome, any recovery proceedings against the petitioner were to be halted. Arjun Raghavan, T R Harikumar, and Pooja Pankaj represented the petitioner, while P G Jayashankar and Sri P G Jaya Shankar appeared for the respondent.
The Kerala High Court directed consideration of a stay petition against the denial of exemption under section 10(23C)(VI) of the Income Tax Act. The petitioner, Centre for Management Development, sought exemption but was denied due to delayed audit reports. Although the petitioner filed appeals for one assessment year, it hadn’t for others. The court instructed the respondent to promptly decide on the delay condonation application. It also allowed the petitioner to file appeals for other assessment years along with delay condonation and stay petitions. If the petitioner deposits 20% of the assessed amount and files the appeals, recovery will be halted until their disposal. Nitish Sathesh Shenoy and Sherry Samuel Oommen represented the petitioner, while Sri Jose Joseph appeared for the respondents.
The Kerala High Court directed the CBDT to consider an application filed under Section 119(2)(b) of the Income Tax Act, 1961. The petitioner, Kerala State Co-operative Employee Pension Board, sought exemption from income tax on interest income, but it was denied due to filing returns late. C A Jojo and Swathy S represented the petitioner, while Sri Jose Joseph appeared for the respondent. The petitioner administers the Kerala Cooperative Societies Employees Financing Pension Scheme 1994. Their income, exempt under Section 10(23AAA), comprises interest from cooperative employees’ pension contributions. Despite filing appeals, the petitioner awaits a refund of Rs. 12,15,204. The court instructed the CBDT to expedite its decision on the application within two months, while directing the respondent to promptly decide on the appeals.
The Kerala High Court’s single bench dismissed Jinny Jaison’s writ petition challenging the assessment order under the Kerala Value Added Tax Act ( KVAT Act ), citing the availability of statutory remedy. Jaison, a jewellery business owner, participated in a gold ornaments auction conducted by M/s. Manappuram Finance Ltd. Upon issuance of a notice under Section 25(1) of the KVAT Act alleging unaccounted sales and purchases, an assessment order was completed on 30.07.2016. Jaison appealed to the Deputy Commissioner, then to the Tribunal, which remanded the matter for a fresh assessment order. Meanwhile, the State Goods and Services Tax Department initiated proceedings against the seller, leading to notices issued to Jaison for input tax demands. Despite replies, an order was passed by the 2nd respondent demanding input tax on differential turnover. Justice Dinesh Kumar Singh concluded that Jaison has an alternative remedy under Section 55 of the KVAT Act to appeal before the appellate authority. Therefore, the court dismissed the writ petition, allowing Jaison to approach the appellate authority. Santhosh P Abraham and M Raj Mohan represented the petitioner, while Smt Jasmin M M appeared for the respondent.
In a recent ruling, the Calcutta High Court division bench held that pharma companies are entitled to claim cenvat credit on service tax paid to commission agents for sales promotion. M/S. Himadri Speciality Chemical Limited, engaged in manufacturing various products, availed input credit of service tax against commission paid to service providers acting as commission agents. The Department contested this, arguing that commission agents’ role couldn’t be considered an input service. However, the court relied on precedent and noted that commission paid was included in the assessable value of goods, justifying the credit availed by the respondent. Justices T.S. Sivagnanam and Supratim Bhattacharya made this determination, highlighting the precedent’s persuasive value.
The Bombay High Court quashed an order under the Income Tax Act, 1961, emphasising that revenue officers are bound by appellate authorities’ decisions. M/s. OM Siddhakala Associates challenged an order rejecting their application under Section 264 of the Act. The court cited precedent, stating that revenue officers must adhere to appellate authorities’ rulings. Justices K R Shriram & Dr Neela Gokhale directed Respondent No. 3 to reconsider the matter in accordance with the ITAT’s decision.
The Kerala High Court directed to stay proceedings under the Income Tax Act, 1961 until the final order of appeal is passed. Pallathukadavil Ibrahimkutty Abdul Kabeer, the petitioner, had filed an appeal against a revision order under the Income Tax Act. After the Principal Commissioner of Income Tax set aside the assessment order and directed a de-novo assessment, the petitioner appealed. The court ordered that further proceedings be kept in abeyance until the appeal’s final orders are issued. Harisankar V Menon, Meera V Menon, R Sreejith, K Krishna, Achyuth Menon, Parvathy Menon, and Padmanathan K V appeared for the petitioner, while Sri Jose Joseph appeared for the respondent.
The Kerala High Court dismissed an appeal against an assessment order under the Central Goods and Service Tax Act ( CGST Act ), 2017, citing the availability of statutory remedy. Sunil Kumar K, the petitioner, challenged the assessment order but instead of approaching the Appellate Authority under Section 107 of the GST Act, he invoked public law remedy under Article 226 of the Constitution of India. The court found this approach inappropriate and dismissed the writ petition. Bobby John and S Ajayghosh Kumar appeared for the petitioner, while Thomas Mathew Nellimoottil and Reshmita Ramachandran appeared for the respondent.
The Delhi High Court upheld an Income Tax Demand Order issued under Section 148(A)(D) of the Income Tax Act, 1961, against an individual for depositing Rs. 53.55 lakh in a bank account. The petitioner, claiming to be an agriculturist, argued against the order, stating that no reply could be filed due to lack of show cause notice service, thus violating natural justice. However, the court found that the notice was duly served, and the requirement of natural justice was fulfilled. The bench held that there was no reason to entertain the writ petition and upheld the order but left it open for the petitioner to take appropriate recourse in accordance with the law.
The Madras High Court invalidated a GST Assessment order citing discrepancies between GSTR-3B and GSTR 2A/2B, with the petitioner Subh Sri Agencies contesting the order. Despite the petitioner’s explanation regarding Input Tax Credit claims on customs duty, the tax demand was upheld. However, the court, acknowledging the petitioner’s plea and emphasizing fairness, quashed the order conditionally, requiring the petitioner to remit 10% of the disputed tax demand within two weeks. Additionally, the petitioner was granted the opportunity to provide necessary documents related to the Input Tax Credit claim, with the respondent directed to issue a fresh order within two months after verification.
The Madras High Court directed the Income Tax Officer ( ITO ) to grant access to the Income Tax Portal to Subramanian & Co, allowing them to upload necessary documents after their Chartered Accountant failed to inform them about income tax notices sent via email. The petitioner contested assessment orders for the assessment years 2018-2019 and 2019-2020, claiming unawareness of notices issued through the accountant-managed email. While the respondents argued the availability of an appeal, the Court, recognizing the petitioner’s lack of notice, remitted the issue for fresh adjudication. The respondents were instructed to open the portal for document upload within two weeks, followed by the completion of the reassessment within the same period. Consequently, the writ petitions were disposed of without any incurred costs, and connected miscellaneous petitions were closed.
The Madras High Court has granted relief to an agricultural society for filing Income Tax Returns ( ITR ) beyond the due date, citing delays in receiving the audit report and the impact of the COVID-19 pandemic. The Court addressed two writ petitions challenging the rejection of an application under Section 119(2)(b) of the Income Tax Act, 1961. The petitioner, an Agricultural Co-operative Credit Society, highlighted the mandatory statutory audit requirement under the Tamil Nadu Co-operative Societies Act, 1983. Despite completing the audit for the financial year 2018-2019 by September 30, 2019, the report was received only in December 2019, leading to a delay in filing the ITR until June 30, 2020. The Court, acknowledging the genuine hardships faced by the society, condoned the delay, citing precedents where similar leniency was shown. Consequently, the writ petitions were allowed, and the orders rejecting the application were quashed.
The Madras High Court recently voided an income tax assessment order issued amidst objections filed before the dispute resolution panel. Emphasizing that assessment orders shouldn’t be issued during panel proceedings, the court highlighted the case of a petitioner who filed objections after receiving a notice under Section 143(2) of the Income Tax Act. Despite objections filed, a draft assessment order was issued. The petitioner’s failure to inform the National Faceless Assessment Centre led to an impugned assessment order. However, the court noted the petitioner’s objections filed before the Dispute Resolution Panel and directed the assessing officer to await the panel’s decision before issuing a fresh assessment order.
The Delhi High Court Division Bench has reinstated the Goods and Services Tax ( GST ) registration of the petitioner, a partnership firm engaged in various businesses, after quashing an assessment order and show cause notice. The court found that the cancellation of registration retrospectively lacked adequate reasoning and violated principles of natural justice. It noted that such cancellations should be based on objective criteria and intended consequences, not merely due to non-filing of returns. The bench highlighted that retrospective cancellation would have prevented the petitioner from receiving the show cause notice, rendering the process unfair. Consequently, the court directed the Proper Officer to re-adjudicate the matter, providing the petitioner with a fair opportunity for a personal hearing.
The Bombay High Court ruled in favour of Gautam Hospitality Private Limited, declaring them eligible for benefits under the Sabka Vishwas ( Legacy Dispute Resolution ) Scheme. The petitioner’s eligibility was contested due to alleged non-quantification of their tax liability before the scheme’s cut-off date. However, the court found that the liability was indeed quantified based on documentary evidence provided by the petitioner. Declarations made on December 15, 2017, and March 26, 2019, admitted to the service tax liability, satisfying the scheme’s criteria. Justices G. S. Kulkarni and Firdosh P. Pooniwalla allowed the petitioner’s Writ Petition, quashing the Show Cause Notices issued by the revenue department and directing reconsideration of the petitioner’s application within six weeks.
The Delhi High Court Division Bench ruled that a photocopy of an agreement to sell cannot be used as a valid ground for adding to the assessee’s income. The case originated from an alleged agreement regarding land purchase. Despite the Assessing Officer’s reliance on the photocopy, the tribunal found the addition unsustainable. The High Court highlighted the lack of original documentation and the absence of supporting evidence. Considering the precedent that photocopies hold little evidentiary value, the court dismissed the revenue’s appeal, affirming that a photocopy alone cannot justify income tax additions.
The Bombay High Court has nullified an assessment order issued by the Deputy Commissioner of State Tax, citing a serious breach of natural justice principles and denial of a fair personal hearing to Cowtown Software Design Pvt. Ltd. and its Associate General Manager, Milind Karnik. The petitioners argued that the order, issued on August 18, 2023, violated Section 75(4) of the Central Goods and Service Tax Act, 2017, as they were not given an opportunity for a personal hearing despite explicitly requesting one.
The court concurred, emphasising that denial of a fair personal hearing violates fundamental principles of natural justice. Citing relevant precedents, the bench comprising Justice G. S. Kulkarni and Justice Firdosh P. Pooniwalla ruled in favour of the petitioners, quashing the assessment order and directing the tax authorities to provide a fair personal hearing and reconsider the matter within four weeks.
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