SUPREME COURT
This weekly round-up analytically summarizes the key stories related to the Supreme Court and High Court reported at Taxscan.in from August 11th, 2024, to August 16th, 2024
In reaffirming the landmark decision, the Supreme Court of India has ruled that the imposition of mining taxes by state legislatures will apply retrospectively from April 1, 2005. This ruling, delivered on August 14, 2024, by a bench headed by Chief Justice Dr. Dhananjaya Y Chandrachud, stems from the case Mineral Area Development Authority vs. Steel Authority of India Ltd.
The Supreme Court ruling is a decisive moment in Indian fiscal policy, reaffirming the authority of state legislatures to impose taxes within their constitutional mandate.
HIGH COURTS
The Gujarat High Court has ruled that the Geomembrane used for waterproof lining fabrics is subject to a 12% GST rate, rather than the previously applied 18%. The court has instructed the GST department to refund the excess 6% paid by the petitioner.
The Bench of Justices Bhargav D. Karia and Niral R. Mehta reviewed the case M/s.CTM Technical Textiles Ltd. v. Union of India, noting that previous judgments had classified similar products as textiles under Chapter 59 rather than plastics. The court concluded that the Geomembrane, a textile product, should indeed be classified under HSN Code 59111000 and be subject to the 12% GST rate. Consequently, the high court directed the GST authorities to apply the 12% GST rate from November 15, 2017, and to refund the excess GST paid by the petitioner. The petitioner is entitled to a refund without interest. It ruled absolutely in favour of the petitioner.
Madras High Court ruled that the authorities must provide an opportunity to offer reply and hearing before issuing a GST ( Goods and Services Tax ) assessment order. The court viewed that the order was passed without complying with the principles of natural justice.
The court held that the contested order was passed without following the due process of law and thus violated the principles of natural justice. It was deemed necessary to grant the petitioner a fair opportunity to present their case on merits and in accordance with the law on terms. The matter was remitted back to the The Deputy Commercial Tax Office for fresh consideration on 10% pre-deposit condition.
The Madras High Court ruled that the Assessing Officer ( AO ) cannot rectify the order issued by the Settlement Commission. The rectification under Section 154 of Income tax Act, 1961 cannot be invoked for the settlement proceedings.
The judgment explained that the Settlement Commission operates like an arbitration process, distinct from regular assessments and procedures outlined in Chapter XIV of the Income Tax Act. This chapter includes Section 154, but the Settlement Commission’s procedures are governed by Chapter XIX-A, which does not incorporate Section 154 for rectification.
Delhi High Court the right of assessee to challenge reassessment was upheld allowing the writ petition of the petitioner.The petitioner, Banyan Real Estate Funds Mauritius filed a writ petition. A reassessment was proposed to the non resident foreign company ( petitioner ) along with payment of over INR 1,00,000/ for acquisition of shares.
The Madras High Court directed for reconsideration of the matter where a demand order was issued under Section 74 of the GST ( Goods and Services Tax) Act passed without providing opportunity for hearing. It imposed a pre-deposit of 15% of the penalty for quashing the GST order.
The High Court set aside the order dated April 18, 2023, and remanded the matter for fresh consideration under specific conditions. The petitioner was required to pay ₹18,922 (15% of the penalty) to the GST department within two weeks for quashing the impugned order. It also directed to lift the attachment of the bank account.
The Madras High Court has granted a 30-day period for filing a statutory appeal under the GST (Goods and Services Tax) Act, following the failure of the petitioner’s Chartered Accountant ( CA ) to file the appeal on time.
This decision pertains to a case where B.G. Shirke Construction had contested a demand for availment of ineligible Input Tax Credit ( ITC ) issued without complying principles of natural justice.
The Calcutta High Court concerning a case upheld the order of the Income Tax Appellate Tribunal ( ITAT ) which deleted the addition made under section 68 of the Income Tax Act, 1961 on establishment of the source of income.
The Coram of Chief Justice T.S Sivagnanam and Justice Hiranmay Bhattacharyya found no questions of law for consideration in this appeal and thus dismissed the appeal.
The court found that CIT(A) felt in error in doing so for adopting the highest gross profit that too which was for the assessment year 2016-17.
The Court held that the overall gross profit as offered by the assessee at 9.64% was just and proper and does not call for any enhancement. While allowing the appeal , the bench set aside the orders of Tribunal and the CIT(A) and the Assessing Officer. Further determined the gross profit of the assessee is determined at 9.64% for the assessment year under consideration.
Calcutta High court allowed the Income Tax Appeal on condition of paying one lakh to Bar Association as the assessee prayed for one opportunity for hearing.
The Income Tax Appellate Tribunal ( ITAT ) passed order since none appeared for the assessee and the matter was dealt with on the available documents.
The Madras High Court viewed that no order can be passed without providing sufficient opportunity to the assessee. It set aside the GST ( Goods and Services Tax ) demand order and the attachment order on 10% pre-deposit. Justice Krishan Ramasamy noted that all notices were only available under “Additional Notices/Orders,” which the assessee may not have accessed. The lack of opportunity for the assessee to defend their case constituted a clear violation of the principles of natural justice. The court deemed the impugned order and the attachment order void.
the Calcutta High Court upheld the decision of Income Tax Appellate Tribunal ( Tribunal ) that the assessee can apply for registration under section 80g(5)(iii) of the Income Tax Act, 1961 after the commencement of activity. The revenue filed a petition under Section 260A of the Income Tax Act, 1961 ( the Act ) is challenging the order dated 13th September, 2023 passed by the Income Tax Appellate Tribunal in favour of respondent assessee, West Bengal Welfare Society.
The Madras High Court directed the Customs Department to process the amendment application of the Mahindra & Mahindra Ltd for 3 Bills of Entry.
The bench of Justice Krishnan Ramasamy ordered the customs department to dispose of the applications, within three weeks of receiving a copy of the court’s order. The court also directed that the department must provide company with a personal hearing opportunity before rejecting any application.
The Calcutta High Court recently in a case affirmed the Customs, Excise and Service Tax Appellate Tribunal’s ( CESTAT ) dismissal of lower authority’s rejection of CENVAT duty remission under rule 21 of the Central Excise Rules, 2002, noting that the evidence against the assessee to have given such a rejection was weak.
Sarvopari Impex Private Limited, the assessee, filed for remission of duty under Rule 21 of the Central Excise Rules, 2002, following a fire incident at their factory. The fire, reportedly caused by an electrical short circuit, destroyed a substantial amount of raw materials, plant, and machinery.
The Calcutta High Court refused to condone a delay of 1923 days in the absence of sufficient explanation. The bench viewed that there may be cases where there is sheer negligence on the lower-level officials’ part. The court found that there was no reason as to why the appeal was filed with such an inordinate delay of 1923 days. The order passed by the Tribunal is dated 7.9.2019 and the certified copy was received by the Income Tax Department on 12.10.2018 and the appeal was presented on 16.5.2024.
The single bench consisting of Justice Rajiv Shakdher held that the unamended Section 2(m) of the Entertainment Tax Act does not include sponsorship of fashion shows and sporting events, making it taxable under Section 6. The bench thus held that the Entertainment Tax Act does not contain a mechanism for assessing and collecting tax on sponsorships due to the absence of a specific charging provision.
The Madras High Court, in a matter where ITC ( Input tax credit ) was denied due to the supplier’s non filing of GST ( Goods and Services Tax ) Returns and non-payment of taxes, has directed to avail statutory remedy.
While disposing the petition, the high court noted that the assessee still has the opportunity to pursue the statutory remedy within the prescribed limitation period and thus directed to avail the same.
The Madras High Court, in its recent ruling has clarified that GST ( Goods and Services Tax ) recovery proceedings under Section 78 must be initiated by the Principal Commissioner or commissioner and not by a state tax officer.
Justice Senthilkumar Ramamoorthy found that the recovery action was undertaken by a State Tax Officer, contrary to the requirement that it should be initiated by the Principal Commissioner or Commissioner.
The Calcutta High Court dismissed the writ petition which challenge the order passed under section 148 of the Income Tax Act, 1961 on non-compliance of formalities of taking approval of specified authority under section 151(ii) of the Act.
It was observed that the revenue cannot dispute the fact that identical issue was decided against the Department in the case of Siemens Financial Services[P] Ltd. vs. Deputy Commissioner of Income-tax.
Calcutta High Court dismissed the petition as the issue of bogus loss on sale of share doesn’t arise from Income Tax Appellate Tribunal ( ITAT ) order which was challenged in the writ petition.
The division bench of Chief Justice T S Sivagnanam and Justice Hiranmay Bhattacharyya found that the question of law suggested by the revenue in the appeal do not arise out of the order passed by the Tribunal. Therefore, the Court held that the appeal cannot be entertained on the question of law as suggested by the revenue and dismissed the same.
The Calcutta High Court dismissed the appeal filed by the Income Tax Department challenging a ruling by the Income Tax Appellate Tribunal ( ITAT ).
The court deemed the appeal infructuous due to the respondent company’s liquidation and the approval of its resolution plan by the National Company Law Tribunal ( NCLT ).
The division bench of Chief Justice T.S Sivagnanam and Justice Hiranmay Bhattacharyya deemed the appeal infructuous and dismissed it without any order as to costs in light of the NCLT’s approval of the resolution plan.
The Madras High Court has ruled that the GST ( Goods and Services Tax ) order exceeded the boundaries of the Show Cause Notice ( SCN ) previously issued.
The Court has instructed that the order be treated as an SCN and has mandated a 10% pre-deposit for reconsideration of the matter.
High Court Of Calcutta,ruling it not maintainable as it did not directly challenge the appellate order. The court refused interim relief due to the tribunal’s non-constitution and advised the petitioner to seek remedies through statutory channels once the tribunal is formed.
The court stated that even though the petitioner’s counsel cited India Tyre & Rubber Company and Jai Venktesh Concast to show stays on recovery proceedings, those cases involved conditions like partial payment, which are not applicable here.The cited cases involved interim relief while examining rights, but they do not support indefinitely deferring recovery proceedings until the tribunal is formed.
The Delhi High Court modified the Goods and Service Tax (GST) registration cancellation, citing the absence of a reasoned decision. While the Proper Officer has the authority to cancel a taxpayer’s registration, including retroactively, such action must be based on reasonable grounds. The court further found that the retroactive cancellation in this case was neither justified nor in accordance with the principles of natural justice.
The division bench, consisting of Justice Vibhu Bakhru and Justice Sachin Datta, ruled that the cancellation order would take effect from November 13, 2023, the date of the SCN, rather than the original date of July 1, 2017. The court clarified that this decision does not prevent the authorities from taking further action against the petitioner for any statutory violations, provided it is done in accordance with the law. The petition was disposed of on these terms.
The Delhi High Court quashed assessment order, stating that no notice under Section 148 can be issued if four to six years have passed since the relevant assessment. The court addressed the assessment order issued under Section 148A (d) and the subsequent reassessment notice under Section 148. The bench held that the re-opening of the assessment was unsustainable due to the limitations set by the pre-amendment version of Section 149(1)(b) of the Finance Act, 1994.
The Division Bench, comprising Justice Yashwanth Varma and Justice Ravinder Dudeja, granted the writ petition and quashed the notice under Section 148A (d) dated April 29, 2024, along with the corresponding Section 148 notice.
The Telangana High Court has ruled that Goods and Services Tax (GST) does not apply to construction services provided to the Maldives government when both the supplier and recipient are outside India.
Justices Sujoy Paul and Namavarapu Rajeshwar Rao observed that “In the peculiar facts of this case, since the supply of service and location of recipient and supplier is outside India, the question of levy and collection of tax in the teeth of Section 9 of the CGST Act or Section 5 of IGST Act does not arise.”
The Calcutta High Court upheld the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) decision, confirming that the respondent-assessee was not liable for service tax on mining services before June 1, 2007. The Court agreed that the services were improperly categorized and the extended limitation period was not applicable due to a lack of evidence for intentional tax evasion. The revenue appellant’s appeal was dismissed.
A coram comprising Chief Justice T.S. Sivagnanam and Justice Hiranmay Bhattacharyya dismissed the appeal filed by the revenue appellant, finding no reason to overturn the tribunal’s decision as the respondent-assessee was correctly granted relief.
The Delhi High Court has set aside a GST demand of ₹2, 33, 46,912, crores, citing the non-receipt of a Show Cause Notice (SCN) and the inaccessibility of the GST portal following the director’s death and subsequent closure of the business.
The bench directed that the petitioner may submit a response to the SCN within two weeks from the date of this order. The Adjudicating Authority is instructed to review any reply submitted and issue a reasoned order, providing the petitioner with an opportunity to be heard. The present petition has thus been disposed of.
The Calcutta High Court,upheld the Tribunal’s decision on Minimum Alternate Tax ( MAT ) credit and provisions for doubtful debts, concluding that there were no significant errors in the assessment made by the lower authorities.
The court considered the legal aspect of the issues raised by the revenue appellant including the excess set-off of MAT credit and the impact of pending appeals on the finality of MAT credit computation. It was noted that a notice was issued by the Principal Commissioner of Income Tax, Asansol ( PCIT ) under Section 263 addressing the excess set-off of MAT credit.
The Calcutta HC in a recent case upheld the Income Tax Appellate Tribunal’s ( ITAT ) decision to delete Income tax addition made under section 69 of the Income Tax Act 1961 ( ITA ) due to lack of direct evidence against the assessee.
The division bench of TS Sivagnanam and Justice Hiranmay Bhattacharya noted that the Tribunal had re-evaluated the evidence and concluded that the seized documents did not definitively implicate Salarpuria Properties Pvt. Ltd, and that the reference in the cash entries of Sri Dayanand Pai could denote any entity within the group.
The court noted that although no e-way bill was produced during the initial inspection, it was provided before the seizure order was finalised. As the authorities found no discrepancies in the e-way bill, the detention of the goods was deemed unwarranted.
The Allahabad High Court held that if the proper e-way bill is presented before the issuance of a seizure order, any discrepancies are resolved, rendering the detention of goods unwarranted. Justice Piyush Agrawalstated that “Once E-way bill was produced before the seizure order could be passed, it would not be said that any contravention of the provision of the Act have been made by the petitioner.” The court’s statement clarified that goods cannot be detained if the e-way bill is submitted prior to the GST authorities passing the seizure order.
The Madras High Court has set aside a GST order due to the failure of the authorities to provide the petitioner with a reasonable opportunity to establish the genuineness of the C-Forms submitted.
The Court directed the GST department to reconsider the matter, allowing the petitioner to submit a detailed reply along with the relevant documents concerning the C-Forms.
The bench of Justice Senthilkumar Ramamoorthy determined that the matter required reconsideration. It set aside the order and remanded the case back to the tax authorities for a fresh evaluation. The Court directed the petitioner to submit a reply, along with all relevant documents concerning the C-Forms, within fifteen days from the receipt of the order. Furthermore, the department was directed to issue a fresh order within three months of receiving the petitioner’s reply, after ensuring that the petitioner is given a reasonable opportunity, including a personal hearing.
The Karnataka High Court has ruled that the Settlement Commission, by accepting explanations “in the spirit of settlement,” cannot be faulted or subjected to interference within the limited scope of judicial review.
The Single Bench of Justice S. Sunil Dutt Yadav, in his observation, noted that the Settlement Commission had acknowledged the declaration made under Rule 8 of the Income Tax Settlement Commission (Procedure) Rules and accepted the assertion regarding cash gifts. It was noted by the Karnataka High Court that, “Conclusion of the Settlement Commission by accepting the explanation ‘in the spirit of settlement’ cannot be faulted calling for interference in exercise of the limited jurisdiction.”
The Kerala High Court in a significant judgement has found that the assessee failed to check the Goods and Service Tax ( GST ) portal to check the uploaded order of cancellation of GST Registration and thus remained challenged.
The court quashed the assessment orders and remanded the matter back on condition of remitting Rs. 10 lakhs towards the GST liabilities.
The Calcutta High Court recently in a case reaffirmed Income Tax Appellate Tribunal ( ITAT ) deletion of addition made on Income Tax under section 68 of the Income Tax Act 1961. Consequently, the appeal contesting the ITAT’s decision was dismissed.
The bench of Justice T S Sivagnanam and Justice Hiranmay Bhattacharya observed that the share subscriber company was a holding company of the assessee company, and that both the companies had common directors, and also that the share subscribing/ holding company was interested in the business of the assessee. It was noted that the nature of business activity was examined by the ITAT, who observed that the assessee company had completed multiple pieces of land in the State of UP for developing a project in phases.
The High Court of Calcutta disposed of the appeal on the grounds of the monetary limit, as stipulated by the Central Board of Direct Taxes (CBDT) Circular. The Court concluded that the amount involved did not meet the threshold required for the Department to appeal to this Court.
A coram comprising Chief Justice T.S. Sivagnanam and Justice Hiranmay Bhattacharyya disposed of the appeal on the grounds of monetary limit. Consequently, the substantial questions of law remain unresolved.
The Madras High Court set aside the penalty of 300% citing that the GST department did not consider the same High Court ruling that Section 27(4) Tamil Nadu Value Added Tax ( TNVAT ) cannot be invoked for belated filing of returns.
The bench of Justice Senthilkumar Ramamoorthy upheld the tax component but found that the imposition of a 300% penalty was unjustified due to the department’s failure to consider the binding precedent.
The Bombay High Court recently ruled that contributions to a public welfare fund, if linked to the assessee’s business or resulting in benefits to the business, should be eligible for deduction under Section 37 of the Income Tax Act. This decision arose from a case involving contributions of Tata Engineering & Locomotive to its workers’ union under a settlement agreement.
The High Court Division Bench upheld the lower authorities’ findings that these payments were linked to the company’s business and brought benefits to it. It dismissed the Revenue’s appeal, affirming that the nature and character of these expenditures did not fall under Section 37(1) or attract Section 40A(9) of the Income Tax Act due to their commercial nexus with the business operations of the assessee.
In a recent case before the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ), Bangalore, the Kerala State Electricity Board Ltd filed an appeal against an impugned order passed by Commissioner of Customs, charges for supervision of installation and field efficiency test paid to overseas suppliers were excluded from the value of post- importation charges.
A Division Bench of the Bombay High Court has directed re-credit of Rs. 8.15 Lakhs debited from the Cash/Credit ledger of the petitioner as a letter by Petitioner’s Chartered Accountant (CA) was not accepted by the office of the State Tax Officer, leading to gross violation of natural justice.
The Gauhati High Court directed the department to release Interest on delayed refund under section 11BB of Excise Act to GAIL ( India Ltd ).
Justice Devashish Baruah directed the respondent authorities and, more particularly, the Assistant Commissioner, Central GST Division Dibrugarh to verify the amount of interest on the delayed refund of the dues of the petitioners and thereupon release the said amount within two months.
The Bombay High Court has quashed the entire process undertaken by the Jurisdictional Assessing Officer (AO) under Section 148A outside the faceless mechanism, noting that the scheme notified by the Central Government does not exclude the application of Section 148A. The High Court emphasised that the procedures outlined in Section 148A are inextricably linked to Section 148.
The Gauhati High Court has held that section 9 (2) (g) of Delhi Value Added tax ( VAT ) Act ,2004 cannot be Invoke to deny Input Tax Credit ( ITC ) to a bonafide purchaser. It was views that a purchasing dealer cannot be punished for the act of the selling dealer in case the selling dealer had failed to deposit the tax collected by it.
The division bench of Chief Justice Vijay Bishnoi and Justice Suman Shyam has observed that the Department is precluded from invoking Section 9(2)(g) of the DVAT to deny ITC to a purchasing dealer who has bona fide entered into a purchase transaction with a registered selling dealer who has issued a tax invoice reflecting the TIN number.
The Delhi High Court ruled that the settlement consideration should be categorised as “capital gains” rather than “profits in lieu of salary.”
Justices Yashwant Varma and Ravinder Dudeja observed that the Tribunal’s error lay in overlooking the distinction between a “perquisite” and “profits in lieu of salary,” delineated separately under Section 17 of the Income Tax Act, 1961. Section 17(3) specifically addresses “profits in lieu of salary,” pertaining to compensation received upon termination of employment or modification of service terms. The Tribunal’s oversight was significant as the employment had ceased before any legal action was initiated before the Company Law Board ( CLB ).
The Calcutta High Court in a recent case held that High Court Rulings stayed by the Supreme Court cannot be used as a precedent to base decisions as long as the Supreme Court hasn’t delivered its final verdict on the matter.
The bench of Justice TS Sivagnanam and Justice Hiranmay Bhattacharya observed that when similar appeal came up before the Court on earlier occasion, the Court set aside the order of the Tribunal and remanded the matter back to be kept pending, and only to be taken up for decision after the judgment is rendered by the Supreme Court.
The Calcutta High Court in a recent ruling gave the appellant a final opportunity to substantiate their case of non-cooperation in assessment proceedings under the Income Tax Act 1961 ( ITA ) before the Assessing Officer ( AO ).
The division bench observed that the reasons set out by the assessee for the non appearance seemed to be not wholly false and nor there is any material to show that the assessee has willfully not proceeded to appear before the Appellate authority/ Tribunal. The bench also pointed out that in any event, what is required to be considered is whether appropriate tax has been computed and levied upon execution of the factual position.
The High Court Of Calcutta, upholding the Income Tax Appellate Tribunal’s ( ITAT ) decision that deemed dividends under Section 2(22)(e) of the Income Tax Act,1961 can only be taxed in the hands of shareholders. The court found no new evidence or arguments to overturn this established interpretation.
The division bench of Chief Justice T.S Sivagnanam and Justice Hiranmay Bhattacharyya noted that the revenue petitioner did not provide any new evidence or arguments to overturn the decisions. Therefore, the court upheld the ITAT’s ruling and dismissed the appeal.
The High Court of Calcutta dismissed the revenue petitioner’s appeal challenging the Income Tax Appellate Tribunal’s( ITAT ) decision for assessment year(AY) 2020-21. The Court upheld the ITAT’s ruling, noting it correctly applied Central Board of Direct Taxes ( CBDT ) Circulars on timely filing for tax exemptions, finding no significant legal errors.
The Calcutta High court dismissed the appeal as it lacked a substantial question of law. The Court found that the addition was made under section 68 of the Income Tax Act, 1961 as the Assessing Officer ( AO ) failed to verify the genuineness of the transaction.
The court found that the Assessing Officer has not paid any independent enquiry to verify the genuineness of the transaction in spite of the assessee having furnished all details and documents before the Assessing Officer. The chief Justice T S Sivagnanam and Justice Hiranmay Bhattacharya dismissed the appeal as the matter is fully factual and no substantial question of law arises for consideration.
Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
