This weekly round-up analytically summarizes the key stories related to the Supreme Court and High Court reported at Taxscan.in from August 31st, 2024, to September 6th, 2024.
The Supreme Court of India, during the hearing of contempt pleas against Sahara India, directed the conglomerate to present a plan outlining how it intends to deposit the outstanding amount into the Sahara-SEBI Refund Account by sale of properties, while denying the attachment attempts by the Directorate of Enforcement ( ED ). The Division Bench comprising Supreme Court Justices Sanjiv Khanna, MM Sundresh, and Bela M Trivedi presided over the matter, which was heard for nearly the entire day and scheduled for further hearing today. Significant arguments were made regarding the recovery of the remaining sum Sahara was ordered to deposit.
The Supreme Court of India, has declined to allow the retrospective effect to the 2022 amendment to Section 80DD of the Income Tax Act, which relates to policies such as the LIC ‘Jeevan Adhaar’. The amendment, introduced via the Finance Act 2022, allows for the benefit of annuity or lump sum payments to persons with disabilities not only upon the death of the policyholder but also upon the policyholder attaining the age of 60 years.
The Supreme Court of India held that application of the COVID-19 pandemic extension is available to delayed auction purchase deposits under the Insolvency and Bankruptcy Code ( IBC ).
The Supreme Court held that the COVID-19 pandemic and resultant lockdown qualified as a valid reason for extending the timeline, especially since the nationwide lockdown had halted many economic activities and restricted movements.
The Supreme Court bench of Justice Hima Kohli and Justice Ahsanuddin Amanullah noted that the IBC’s timelines, though stringent, are directory rather than mandatory, particularly in unprecedented situations like the pandemic. The Liquidator was also found to have acted within the provisions of the law by accommodating the delayed deposit.
The Bombay High Court has ruled that no appeal shall be allowed to the Deputy Commissioner or Commissioner under Section 406(8) of the Maharashtra Municipal Corporation Act (MMCA) without first depositing the disputed property tax.
The court quashed the impugned order dated February 22, 2024, and remanded the matter for reconsideration. The appellate authority was directed to dispose of the appeal in accordance with the law, ensuring that a personal hearing is granted, with notice provided at least five working days in advance. The petitioner was also granted the opportunity to file written submissions following the hearing, and any final order was required to be reasoned and detailed, addressing all of the petitioner’s submissions.
The Allahabad High Court has ruled that proceedings under Section 130 of the GST ( Goods and Services Tax ) Act, 2017 cannot be initiated solely on the basis of excess stock found during a survey.
Justice Piyush Agrawal of the Allahabad High Court after reviewing the case, agreed that the initiation of proceedings under Section 130 was inappropriate, reiterating that such proceedings should be reserved for more severe infractions and not for cases involving excess stock found during a survey. The court, allowing writ petition, quashed the impugned GST orders.
The Allahabad High Court has dismissed a petition challenging a ₹37 lakh GST demand under Section 129 of the GST ( Goods and Services Tax ) Act, related to goods valued at ₹31.5 lakh.
The court stated that the petitioner neither submitted any pleading, nor any material has been brought on record to show that the goods in question were accompanied with the relevant documents.
The Delhi High Court ruled that the petitioner is ineligible for the release of the gold bar due to their failure to respond to a timely Show Cause Notice (SCN) issued under Section 110(2) of the Customs Act, noting that the gold bars were seized on January 21, 2023, and the SCN was served via email on July 4, 2023, within the six-month period stipulated under Section 110(2) of the Customs Act.
The Madras High Court recently mandated a 25% pre-deposit from ECL for reconsideration after the petitioner failed to address show cause notices under the Goods and Services Tax ( GST ).
The court instructed that the impugned GST order to serve as an addendum to the previous show cause notices, and the petitioner must file a consolidated reply within 30 days. The respondent was directed to issue a final order within three months of receiving the reply. Should the petitioner fail to comply with these directives, the respondent may proceed as if the writ petition had been dismissed.
In a significant development, the Punjab and Haryana High Court has issued a stay on a contentious GST show cause notice ( SCN ) amounting to over ₹100 crores, issued to Abbott Healthcare Private Limited, a leading pharmaceutical manufacturer. The SCN, styled as DRC-01, was purportedly based on an audit conducted by the Comptroller and Auditor General of India ( CAG ). However, several procedural lapses were identified, prompting the company to challenge the notice through a writ petition.
The Karnataka High Court has dismissed an Income Tax appeal filed by the Principal Commissioner of Income Tax due to the tax effect being below the Rs.1 Crore threshold. However, the court left the door open for the appeal’s revival, acknowledging that the case could be reconsidered if it falls within the exceptions outlined in the Central Board of Direct Taxes ( CBDT ) Circular No.17/2019.
The High Court of Jharkhand has dismissed the petition challenging the provisions of the Central Goods and Services Tax (CGST) Act, 2017 in light of the 53rd GST Council Meeting’s recommendations. The court dismissed the writ petition filed by M/s Rewinder Techno Electricals, a partnership firm based in Dumka, Jharkhand challenging Section 16(4) and amendment to Rule 61(5) of the CGST Act, 2017, on grounds of ultra vires.
The Madras High Court recently issued a common order granting five Tamil Nadu businesses 45 days to restore their GST registrations, which were canceled due to delays in GSTR filing compliance.
The court directed the petitioners to file the necessary tax returns for the periods preceding the cancellation of their GST registrations. This filing was to include all tax dues, along with interest and late fees, to be completed within 45 days from the date of receiving the court’s order.
In a recent case of Bombay High Court it was ruled that deposition of penalty and interest is not required as a pre-condition in entertaining disputed local body tax appeals.
The division bench of Bombay High Court comprising Justice K.R. Shriram and Justice Jitendra Jain remarked that considering the issue before the court whether to challenge levy of cess, interest and penalty is to be deposited as precondition for entertaining appeal. The appellate authority shall dispose of the appeal in accordance with law by giving personal hearing.
The Calcutta High Court directed the Goods and Service Tax ( GST ) department to restore cancellation in absence of a dubious act. The GST registration was cancelled due to non-filing of GST returns.
The court viewed that the respondents should take a pragmatic view in the matter and permit the petitioner to carry on his business. A single bench of Justice Raja Basu Chowdhury set aside the order cancelling the registration of the petitioner subject to the condition that the petitioner files his returns for the entire period of default and pays requisite amount of tax and interest and fine and penalty.
In a recent case before Bombay High Court the impugned notice of Income tax department canceling trust registration application was set aside as the notice regarding the decision was sent to an incorrect email address.
After granting the petitioner an opportunity of being heard, an appropriate order in accordance with law will be passed against the petitioner. All contention of the parties on the pending applications were kept open.
The Calcutta High Court quashed the attachment order passed by Goods and Service Tax ( GST ) Department. It was found that the assessee failed to file GST Appeal due to Illness. The appellate authority is directed to hear out and dispose of the appeal on merits, preferably within a period of 8 weeks from date of communication of the order.
The Punjab & Haryana High Court in a recent case deleted the Arm’s Length Price ( ALP ) in absence of justification in comparables used during ALP determination. It was held that Revenue Department must establish compelling reasons for taking departure from the comparables selected by him in previous assessment years if he opts so, while carrying out transfer pricing adjustment to the international transactions of the assessee, Osram India.
The Calcutta High Court held that Section 271(1)(c) of Income Tax Act, 1961 is not attractable when assessee fully disclosed particulars in returns filed and dismissed the petition.
The division bench of Chief Justice T.S Sivagnanam and Justice Hiranmay Bhattacharyya dismissed the appeal and the substantial question of law is answered against the revenue.
In a recent ruling, the Madras High Court condoned the delay in filing GSTR-3B by the petitioner, referencing the amendment to Section 62(2) of the Goods and Services Tax ( GST ) Act. Consequently, the court withdrew the assessment order issued under Section 62(1).
The Madras High Court has directed the swift disposal of a rectification application after the GST department failed to consider in the disputed GST order that imposed an interest rate of 14.5% on the petitioner.
Justice Krishnan Ramasamy directed the petitioner to file a copy of the rectification application within 15 days from the date of receiving the court’s order. The respondent was directed to dispose of the rectification application within four weeks, providing the petitioner an opportunity for a personal hearing.
In a recent ruling, The Delhi High Court has set aside the cancellation of a GST registration, citing that the Show Cause Notice ( SCN ) failed to provide necessary details, as it merely quoted the statutory provision without providing specific reasons for the proposed cancellation, such as alleged fraud, misstatement, or suppression, and failed to indicate the possibility of retroactive cancellation of the petitioner’s Goods and Service Tax ( GST ) registration.
The Delhi High Court has ruled that the charging of short gross tax liability determined under Section 5(3) Direct Tax Vivad Se Vishwas Act ( DTVSV Act ) by the Commissioner of Income Tax ( Appeal ) (CIT(A)) is final and non-revisable, thereby quashing the rectification notice issued under Section 154 of the Income Tax Act, 1961.
The court examined Sections 4 and 5 of the DTVSV Act, which require the Designated Authority to determine the payable amount based on the declaration and issue a certificate. This determination is final and binding, prohibiting the reopening of the matter under the Income Tax Act or any other law. The court found that the petitioner had not made any incorrect declaration or suppressed material facts, so the finality under the DTVSV Act should stand. The court concluded that the rectification action under Section 154 was unsustainable and quashed the relevant notices and orders, directing the parties to proceed based on the DTVSV Act’s determination.
The Bombay High Court in a Writ Petition before it clarified that the Faceless Assessing Officer (FAO) and Jurisdictional Assessing Officer (JAO) cannot simultaneously exercise their independent powers to adjudicate the very same matter pertaining to the same Assessee.
The Division Bench of the Bombay High Court comprising Justice G.S. Kulkarni and Justice Somasekhar Sundaresan upheld the precedential value of Hexaware while emphasizing the ‘subordinate legislation’ of the Notification issued by the CBDT owing to its tabling in the Parliament prior to publishing.
The Delhi High Court has ruled that irregularities in the issuance of audit memos do not impact the validity of a Goods and Service Tax ( GST ) Show Cause Notice ( SCN ).
The court observed that while the audit memos included findings and payment demands, this did not invalidate the SCN. The Division Bench, comprising Justice Vibhu Bhakru and Justice Sachin Datta, concluded that the SCN could not be quashed solely based on the irregularities in issuing the audit memos. The SCN’s issuance, though based on audit findings, was deemed to be within statutory parameters.
The bench also noted that the SCN could not be set aside at the threshold stage. The petition was therefore disposed of, with the clarification that the petitioner remains entitled to contest the SCN as advised. The adjudicating authority is directed to consider the petitioner’s response to the SCN within three weeks and pass an appropriate order. All rights and contentions of the parties are reserved.
The Delhi High Court directed the company to apply for a refund after a Goods and Service Tax ( GST ) officer coerced its directors to deposit ₹22 lakhs from their personal accounts into the company’s credit, noting that the deposit challan explicitly stated the amount was deposited under protest and in the presence of the GST officer.
The bench, comprising Justice Vibhu Bhakru and Justice Sachin Datta, refrained from issuing any direct orders for a refund in these proceedings. However, the court clarified that the petitioners are entitled to apply for a refund according to the law, without waiting for the adjudication of the show Cause Notice. Accordingly, the writ petition was disposed of.
The Delhi High Court emphasized that the formation of an opinion based on necessary material is essential before a bank account can be provisionally attached under the Goods and Service Tax ( GST ) Act.
The bench dismissed the petition, noting that dismissal does not prevent the petitioner from offering other assets for provisional attachment instead of the bank accounts. The dismissal also does not affect the consideration of alternative arrangements by the concerned officer. All rights and contentions regarding the merits of the case remain reserved, and all pending applications are disposed of.
The Madras High Court condoned the delay of 5 days in filing the appeal before the Appellate Authority (AA) due to the petitioner’s unawareness of the Goods and Services Tax ( GST ) notice posted in the web portal.
The court directed the Appellate Authority to take the appeal on record and pass an appropriate order based on merits and in accordance with the law after providing sufficient opportunity. Thus, the petitioner’s writ petition was disposed of with no costs, and connected miscellaneous petitions were also closed.
The court condoned the delay in filing the appeal against the impugned assessment order, conditional upon the petitioner paying Rs. 25,000 to the respondent, and directed the petitioner to file the appeal before the concerned Appellate Authority within 30 days of receiving a copy of the order, including proof of payment. The Appellate Authority was instructed to consider the appeal on its merits, in accordance with the law, and to provide the petitioner with sufficient opportunity without enforcing the limitation period.
The Allahabad High Court has directed the GST Department to take immediate steps to renew the GST license of a petitioner who had cleared all pending dues along with the applicable interest.
The Himachal Pradesh High Court, stayed an Income Tax notice issued under Section 148 of the Income Tax Act, 1961, on the grounds of lack of jurisdiction by the Jurisdictional Officer.
The Allahabad High Court has granted bail to an accused in a massive ₹2645.29 crore GST scam on conditions considering nature of the offence, the punishment and the material available on record and non availability of any device by using which fake firms are said to be created.
The court set several conditions, including that Batra must not tamper with evidence, pressure witnesses, or engage in similar criminal activities. He is also required to surrender his passport and not leave the country without the court’s permission. Any breach of these conditions could result in the cancellation of his bail. It was clearly stated that the conditions outlined apply solely to the bail decision and shall not influence the trial court’s final judgment on the matter.
The court was of the observation that there was a failure to draft the assessment order in the draft, and thus it was clearly in violation of the mandate provided under Section 144 C, and the final assessment order passed after that is null or void.
The bench further observed that it was imperative on the part of the Assessing Office (AO) to frame an order in draft before issuing a final assessment order. The bench, comprising Justice Yashwant Varma and Justice Ravinder Dudeja, allowed the writ petitions and quashed the impugned final assessment orders.
In a recent ruling, the Delhi High Court dismissed a writ petition against Non-Banking Financial Company (NBFC) and directed the petitioner to approach DRT under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002.
The court viewed that the respondents were obliged to dispose of the petitioner’s application for revocation of the cancellation of registration which has been kept pending for more than two years now.
A single bench of Justice Raja Basu Chowdhury directed the respondents to dispose of the petitioner’s application for revocation of cancellation as expeditiously as possible, preferably within a period of 4 weeks from date of communication of the order upon giving an opportunity of hearing to the petitioner.
The Bombay High Court quashed the reassessment proceedings initiated against Aashish Niranjan Shah for the assessment year ( AY ) 2013-14 as there was no failure to disclose material facts.
The Bombay High Court also directed that reassessment proceedings must adhere to the strict requirements of the law, particularly when initiated after the statutory period.
The Calcutta High Court in a recent case stayed the assessment order passed under section 148 of the Income Tax Act, 1961 due to jurisdictional error.
The Calcutta High Court dismissed the appeal on finding that the Income Tax Appellate Tribunal ( ITAT ) correctly re-examined the correctness of factual findings in order passed under section 153 of the Income Tax Act,1961.
It was found by the court that the tribunal, not stopping with that, proceeded to consider the merits of the matter and recorded its reasons on facts as to why the CIT(A) was justified in allowing the assessee’s appeal.
In a recent ruling, the Bombay High Court quashed the reassessment proceedings initiated against The Saraswat Co-operative Bank Ltd.,for the non-application of mind to both facts and law by the Principal Commissioner of Income Tax ( PCIT ) in granting Sanction.
The court noted that under Section 147 of the Income Tax Act, reassessment after four years can only be initiated if there is a failure on the part of the taxpayer to fully and truly disclose material facts.
The Delhi High Court, in relief to Samsung India held that foreign exchange ( forex ) loss arising from trading activities should be treated as an operational loss and not as a non-operational matter.
The High Court upheld the tribunal’s decision by stating that since the forex loss was directly associated with trading items from international transactions, it should rightfully be categorised as an operational expense.
A 73-day delay in filing GST appeal by the assessee was condoned by the Madras High Court appearing genuine. The court considered the submission of the assessee that he was unaware of the proceedings initiated as the notices were sent to the former consultant.
The bench of Justice Krishnan Ramasamy found that the assessee’s failure to file the appeal on time was due to genuine reasons. The delay was attributed to the notices being sent to a former consultant rather than the petitioner. Satisfied with the explanations provided, the court decided to condone the 73-day delay.
The Division Bench High Court upheld the ruling of the Income Tax Appellate Tribunal ( ITAT ), which noted that Global Logic India was a debt-free company. As there was no evidence that borrowed funds were being utilized for delayed receivables, the deferral of payment was incidental to the sale transaction and did not constitute a separate international transaction.
Furthermore, it was highlighted that Global Logic did not charge interest from unrelated third parties for similar delays, reinforcing that no adjustment for notional interest was warranted in this case.
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