This weekly round-up analytically summarizes the key stories related to the Supreme Court and High Court reported at Taxscan.in from August 3rd, 2024, to August 10th, 2024.
The anticipatory bail petition was filed following a summons notice issued by the PMLA Court. This background and Sahoo’s cooperation with the investigation played a significant role in the court’s decision to grant anticipatory bail, reinforcing the judicial precedent that curtails the arrest powers of the Directorate of Enforcement post-cognizance by the Special Court. The anticipatory bail ensures that Sahoo remains free while the investigation continues.
The Supreme Court ruled that the banks and NBFCs ( Non-Banking Financial Corporations ) are required to follow the restructuring process of the MSME as contemplated in the Notification dated 29th May, 2015 before the NPA ( Non- Performing Assets ) classification.
HIGH COURTS
The Calcutta High Court directed the Goods and Service Tax ( GST ) authority to restore the GST registration certificate on payment of default tax and filing of returns. Since, the appellants have filed the returns for the defaulted period, paid taxes along with interest and the court directed the authority to consider the same and restore the GST registration.
The court disposed of the appeal and the connected application as well as the writ petition.
The Calcutta High Court held that Goods and Services Tax ( GST ) Appellate Authority is competent to hear Appeal by condoning Delay beyond one month from prescribed period under section 107(4) of Central Goods and Service Tax ( CGST ) Act, 2017.
A single bench of Justice Raja Basu Chowdhury held that no useful purpose will be served by remanding the matter to the appellate authority to reconsider the application for condonation of delay. Since, the explanation provided by the petitioner appears to be sufficient, by condoning the delay,the Court directed the appellate authority to hear out and dispose of the appeal of merit after giving the petitioner an opportunity of hearing.
The Delhi High Court upheld the bail granted to Sanjeev Malhotra, a director of M/s Best Buildwell Private Limited, who was accused of filing fraudulent Goods and Services Tax ( GST ) input credit claims for non-existent firms. The court dismissed the petition filed by the Commissioner of Central Goods and Services Tax, South Delhi, seeking the cancellation of bail.
The Kerala Authority for Advance Ruling ( AAR ) has ruled that counter sale of Pani Puri, Bhel Puri, Masala Puri and other chaat items like Masala Chat, Sev Puri, Samosa Chaat, Vada Pav, Pav Bhaji and Punjabi Lassi attracts Goods and Services Tax ( GST ) at 5%, when sold without a brand name.
The Calcutta High Court observed that the prohibitory order under section 67(7) Goods and Services Tax ( GST ) Act, 2017 cannot be permitted to continue indefinitely. Since the assessee has not approached the respondents under Section 67(6) of the GST Act and as such, there is no reason for the Court to interfere at this stage save and except.
The Calcutta High Court in a recent case directed readjudication on assessment order passed under Central Goods And Services Tax ( CGST ) Act, 2017 without affording opportunity of hearing is invalid.
The division bench of Chief Justice T S Sivagnanam and Justice Hiranmay Bhattacharyya directed the Assessing Officer to take note of the reply given by the assessee dated 23rd March, 2023 and afford an opportunity of personal hearing in which the assessee shall afford an opportunity to place all documents and after considering the contentions, a fresh assessment order be drawn with adequate reasons and in accordance with law.
The Calcutta High Court directed the Goods and Service Tax ( GST ) authority to restore the GST registration certificate on payment of default tax and filing of returns. Since, the appellants have filed the returns for the defaulted period, paid taxes along with interest and the court directed the authority to consider the same and restore the GST registration.
The Calcutta High Court directed the principal commissioner of Income Tax ( PCIT ) to reconsider assessment as the notice of reassessment was not received to assessee either through email or speed post.
The authorized representative of the appellant shall be afforded an opportunity of personal hearing before a decision is taken.
An anticipatory bail was denied to gold smuggling suspect who alleged to be smuggled 1.9kg gold. The Patna high Court, considering the submissions of the Directorate of Revenue Intelligence ( DRI ) , refused to grant the bail.
Justice Satyavrat Verma of Patna High Court, considering the arguments of the DRI’s counsel, decided not to grant anticipatory bail to the petitioner, citing insufficient evidence and lack of documentation to support the petitioner’s claims of lawful business. Consequently, the petition for anticipatory bail was rejected.
The Joint Commissioner of Income Tax ( JCIT ) cannot transfer a case to the subordinate officer behind the back of the assessee. The Patna High Court ruled that the transfer shall take place only after granting the assessee an opportunity to be heard.
The bench composed of Chief Justice K. Vinod Chandran and Justice Partha Sarthy highlighted that Section 127 of the Income tax act mandates that the assessee must be given a reasonable opportunity to be heard before any transfer is executed. The present case showed that such an opportunity was not provided to the petitioner, as the transfer was carried out without proper notice, observed the bench. Thus, the Court found the assessment order to be invalid due to the improper transfer and lack of adherence to the principles of natural justice. The notice issued was deemed incorrect, and the Court set aside the assessment order.
The Patna High Court has ruled that alternate remedies available under the GST ( Goods and Services Act) or the amnesty scheme introduced by the government should be utilised effectively before seeking relief under Article 226 of Constitution of India.
Chief Justice K. Vinod Chandran and Justice Harish Kumar observed that “we find no reason to invoke the extraordinary jurisdiction under Article 226, especially since it is not a measure to be employed where there are alternate remedies available and the assessee has not been diligent in availing such alternate remedies within the stipulated time. The law favors the diligent and not the indolent.”
The Patna High Court ruled that the address change must be informed to the existing Jurisdictional Assessing Officer ( JAO ) through an application and to the new AO for proper PAN migration.
The bench, comprising Chief Justice K. Vinod Chandran and Justice Partha Sarthy, referred to the Department’s FAQ section. It noted that when changing your address from one state to another, it is crucial to migrate your PAN to the new Assessing Officer (AO).
The Patna High Court dismissed the petition against the bid disqualification notice citing the building bid evaluation by the income tax department is proper and justified. The court observed that the place of the petitioner was evaluated by the Building Hiring Committee through visits.
The Bombay High Court has invalidated a VAT show cause notice, which lacked specific details regarding the information or documents required for compliance under the Maharashtra Value Added Tax Act, 2002.
It was observed that, “We find the letter to be as bald and vague as the show cause notice. In the said letter, there is not even a reference to the documents that Petitioner had, alongwith its letter dated 6th January 2024 submitted. Respondent No.2, thereafter, proceeded to pass the impugned order dated 28th March 2024 under Section 23 of the MVAT Act. Respondent No.2 has passed order without dealing with any points and simply on the basis of best judgement under Section 23(2) of the MVAT Act. Emphasising that the Commissioner must first determine the necessity of additional documents to ensure return accuracy, the court concluded that the order and demand notice are to be invalidated due to failure to satisfy prerequisites for a best judgement assessment under Section 23(2) of the Maharashtra Value Added Tax Act.
The Punjab and Haryana High Court has held that the construction of public libraries falls under charitable function and is eligible for the exemption under Section 80G of the Income Tax Act,1961.
The division bench of Justice Sanjeev Prakash Sharma and Justice Sanjay Vashisth has observed that the ancillary work, which may be carried out by the society for the purpose of enhancing education, would also be treated as work done for charitable purposes. The court allowed writ petition in view that the writ petition was filed in the year 2006, and it would be a travesty of justice if the petitioner, the Society is relegated after about 18 years to avail the alternative remedy by filing an appeal before the ITAT.
The Calcutta High court directed the date GST department to restore Goods and Services Tax ( GST ) registration which was cancelled. It was directed that the registration can be restored on compliance of Conditions by assesee within Provided Time.
The court held that the respondents should take a pragmatic view in the matter and permitted the petitioner to carry on his business. The Court set aside the order cancelling the registration of the petitioner under the said Act, subject to the condition that the petitioner files his returns for the entire period of default and pays requisite amount of tax, interest, fine and penalty, if not already paid.
The Calcutta High court set aside the order cancelling Goods and Services Tax ( GST ) registration on filing of GST returns. It was found that since, the petitioner in such a case would not be able to carry on his business in the sense that no invoice can be raised by the petitioner and ultimately would impact recovery of tax.
The Calcutta High Court directed fresh adjudication on the matter of mismatch in annual return filed in GSTR -9 due to Unintentional error.
The division bench comprising Chief Justice T S Sivagnanam and Justice Hiranmay Bhattacharya M A viewed that two aspects have appealed to us to send back the matter to the adjudicating authority. First is with regard to the effect of GSTR-9. This being an annual return filed within the extended period oflimitation viz. , upto 7th February, 2020 on account of various notifications issued by the Government due to the Covid pandemic. Therefore, if the GSTR- 9, which was filed within time is not considered, the assessee’s rights would be greatly prejudiced. The second aspect, is the contention of the assessee that the entire matter is revenue neutral. Considering the peculiar facts and circumstances of the case making ,the Court remanded the matter back to the adjudicating authority viz. , the Assistant Commissioner to consider the submissions made by the assessee, afford an opportunity of personal hearing, examine the annual return filed in GSTR-9 and proceed to take a fresh decision on merits and in accordance with law.
The Rajasthan High Court observed that the challenge to the income tax notice issued under Section 153C of the Income Tax Act, 1961, was raised only after the assessment order was issued, and thus directed the petitioner to seek statutory remedies.
The high court decided not to exercise its discretion under Article 226 of the Constitution and dismissed the writ petition, advising the petitioner to use the statutory appeal remedy. However, the court allowed the petitioner to file an appeal within 30 days, with the stipulation that the appeal be considered on its merits without regard to the limitation period.
The Madras High Court has ruled that a faceless hearing under Section 144B(6)(8) of the Income Tax Act, 1961, must be granted if requested. This court set aside the assessment order that had disregarded the request for a video conferencing hearing.
The Rajasthan High Court has upheld a penalty imposed under Section 271(1)(c) of the Income Tax Act, confirming that the unexplained cash deposits were correctly added by the income tax department after considering the withdrawal benefits granted. Justice Shubha Mehta and Justice Avneesh Jhingan observed that “The addition of the cash deposits was made after deducting the withdrawal relying upon the material available with the department and after considering the explanation of the appellant.”
The Rajasthan High Court declined to exercise the jurisdiction under Article 226 of Constitution of India as the income tax reassessment notice under Section 148 was challenged only after the issuance of the order instead of its inception.
In a recent ruling, the Rajasthan High Court upheld the order of the Income Tax Appellate Tribunal ( ITAT ), observing that the income tax department failed to provide any contradictory evidence against the taxpayer’s proof of Long-Term Capital Gains ( LTCG ) from the sale of shares.
The Madras High Court highlighted the importance of filing a petition under Article 226 within a reasonable time period. The court dismissed the petition filed against GST ( Goods and Services Tax ) after a 5 year delay. A single bench of Justice Senthilkumar Ramamoorthy observed that “Although a period of limitation is not prescribed for the initiation of proceedings under Article 226 of the Constitution of India, it is needless to say that the petitioner is required to approach the Court within a reasonable time.”
The Bombay High Court has directed the Customs Department to refund Rs. 5 lakhs, upon application, to an importer, who was penalised for alleged mis-declaration of assessable value rather than for the import of prohibited goods. The case revolves around the petitioner, engaged in importing, manufacturing, and supplying medical equipment, including used hemolysis machines, since 2008.
The bench of Justice Shubha Mehta and Pankaj Bhandari determined that the appropriate authority in this case is the First Appellate Authority. They found no grounds to entertain the writ petition, as the objections raised could be addressed by the appellate authority.
The writ petition was dismissed, allowing the petitioner to pursue an alternative remedy of appeal. The court also directed that the period during which the petition was pending shall not count towards the limitation period for filing the appeal, and the appellate authority was instructed to expedite the decision in accordance with the law.
The Meghalaya High Court has ruled that seized goods by the customs cannot be destroyed during the pre-trial stage, directing a refund of Rs. 60 lakhs for 32,000 kg of betel nuts that were destroyed.
The Madras High Court held that Goods and Services Tax ( GST ) is not payable by an Assessee in the event that Invoice for payment has not been raised and amount has not been received by the Assessee. The Madras High Court upon perusal of the facts and circumstances of the case, placed reliance on a Circular issued by the Central Board of Indirect Taxes and Customs ( CBIC ) and set aside the impugned orders and remitted the case back to the Respondent State Tax Officer to re-examine the issues in light of the Circular.
Delhi High Court, the court set aside an order of CESTAT which imposed a penalty on appellant and allowed the appeal.
The division bench comprising Justice Yashwant Varma and Ravinder Dudeja, observed that CESTAT did not proceed in the matter with due caution. The bench also noted that the principal allegation was solely made against the importer with respect to misdeclaration. Further the violations of clauses (d), (e) or (m) of Regulation 11 of the CBLR, 2013 can’t be discerned in this case. Thus the order of CESTAT imposing penalty upon the appellant is erroneous.
The Punjab & Haryana High Court recently upheld the revisional order passed by the Principal Commissioner Income Tax ( PCIT ) under section 263 of the Income tax act as the assessment wrongly passed by the Assessing Officer ( AO ) under section 44ADA of the Act.
The Bench found that AO has given the benefit to the assessee considering the income in terms of Section 44AD. The Bench noted that the assessment had to be done under the head ‘income from other sources’ under section 115 BBE.
The Gauhati High Court observed that Notification No. 56/2023, issued on December 28, 2023, was issued without the GST ( Goods and Services Tax ) Council’s recommendation, and thus it does not withstand legal scrutiny and all subsequent actions cannot be sustainable.
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