This weekly roundup analytically summarizes the key stories related to the Supreme Court and High Court reported at Taxscan.in from September 28th, 2024, to October 4th, 2024.
The Supreme Court has pronounced the landmark Safari Retreats judgment today (October 3, 2024) on denial of Goods and Services Tax Input Tax Credit (GST ITC) on Construction of Immovable Property.
Therefore, taxpayers paying GST on lease rentals were held entitled to claim ITC on inputs used in the construction of such properties by the High Court of Orissa, which is now in challenge before the Supreme Court with the judgement pending for pronouncement tomorrow by the Apex Court Bench of Justices Abhay S Oka and Sanjay Karol.
In a significant relief for the Income Tax Department, the Supreme Court has ruled that the Taxation and Other Laws (Relaxation & Amendment of Certain Provisions) Act, 2020 (TOLA) is applicable to the Income Tax Act beyond the previously specified date.
He also indicated that the directions established in the Ashish Agarwal case will be applicable to all 90,000 reassessment notices. Additionally, it was clarified that notices issued under Section 148 of the new regime are considered time-barred and have been annulled by the court.
In a significant judgement, the Supreme Court today allowed the Revenue Department’s appeal in the Safari Retreats Pvt Ltd case, reaffirming the department’s stance on the contentious issue of blocking Goods and Services Tax ( GST ) Input Tax Credit ( ITC ) for construction of immovable property intended for leasing.
While it upholds the government’s authority to restrict ITC in certain scenarios, it also opens avenues for taxpayers to argue the classification of their assets under “plant and machinery” based on specific facts.
The Supreme Court, on Thursday, October 3, ruled that if the construction of a building is necessary for providing services such as renting or leasing, it may qualify as an exception under the “plant” provision in Section 17(5)(d) of the Central Goods and Services Tax ( CGST ) Act. This section typically disallows Input Tax Credit ( ITC ) on construction materials used for immovable property (except for plant or machinery).
The High Court also held that Section 17(5)(d) should be interpreted in alignment with the GST law’s purpose of avoiding the cascading effect of taxes. It was held that the section was intended to apply to properties built for sale, not for rental purposes. Applying the provision in cases of rental properties, the court observed, would undermine the principle of tax neutrality.
The Karnataka High Court quashed a reassessment notice issued to Massood Gulam by the Income Tax Officer ( ITO ), due to non-compliance with the statutory requirement of providing a minimum of seven days for the taxpayer to furnish a reply under Section 148A(b) of the Income Tax Act.
In summary, the Karnataka HC set aside the reassessment notice and all related proceedings against Massood Gulam. However, the court granted the Income Tax Department the liberty to reissue a notice, ensuring adherence to proper legal procedures.
In a recent ruling, the Madras High Court set aside an assessment order. The court found that the non-response to the Show Cause Notice under Goods and Services Tax ( GST ) was on the genuine impression that they could not respond due to registration being cancelled.
The High Court, thus set aside the impugned order and remitted the matter back to the department for reconsideration.
In a recent ruling, the Patna High Court granted anticipatory bail to an individual who caused GST loss to the state of Rs. 51,936 as the entire GST amount was deposited in cash by the petitioner. The state initiated criminal proceedings against the individual.
In light of the facts and circumstances of the case, the Patna High Court bench, consisting of Justice Prabhat Kumar Singh, allowed anticipatory bail. The petitioner was directed by the High Court to surrender or be arrested within six weeks, and upon doing so, shall be released on bail upon furnishing a bond of Rs. 10,000 with two sureties of the same amount each, to the satisfaction of the Judicial Magistrate, 1st Class, Darbhanga, in Bahadurpur P.S. Case No. 195 of 2021, subject to the conditions outlined in Section 438(2) of the Criminal Procedure Code, 1973. The fact that the petitioner has no former criminal record played a crucial role in granting bail to the petitioner by the High Court.
In a recent case on the issue of validity of additional evidence against addition made under section 68 of the Income Tax Act, 1961, the Kerala High Court posted the matter for disposal on October 21 of this year.
The petitioner also raised the question that whether the Appellate Tribunal was right in confirming the assessment of the cash seized as unexplained income under Section 69A of the Income Tax Act instead of under Section 56 as income from other sources?
The Gauhati High Court, in a recent case has held that the explanation inserted to Section 14A of the Income Tax Act, 1961 vide Finance Act, 2022 is applicable prospectively.
In view of the Memorandum Explaining the Provisions in the Finance Bill, 2022 and various decisions rendered by the different High Courts, the Chief Justice Mr. Vijay Bishnoi and Justice N. Unni Krishnan Nair held that the Explanation inserted to Section 14A vide Finance Act, 2022 is applicable prospectively.
In a recent ruling, the Madras High Court ordered the issuance of separate Goods and Services Tax ( GST ) liability notices on two-wheeler seat misclassification for six assessment years. The decision was made to allow the petitioner to avail of Amnesty Scheme 2024.
Therefore, the court set aside the impugned show cause notice that covered multiple assessment years and directed the respondent to issue separate show cause notices for each year within two weeks. The petitioner’s writ petition was disposed of with the direction that no costs were to be imposed and the court would review the compliance of its orders on October 16, 2024.
The Karnataka High Court ( HC ) observed that the Final Assessment order which is the subject matter of the issue should have been held off by the Disputed Resolution Panel ( DRP ) until the Rectification application was resolved.
It is further directed that on receipt of the order on the rectification application to be passed by respondent No.4 pursuant to the present order, respondent No.1 shall proceed further in accordance with law.
In a recent ruling, the Patna High Court granted a stay on Goods and Service Tax ( GST ) recovery dues due to an ongoing proposal to reduce the appeal deposits from 20% to 10%.
The court ordered a stay on the recovery of the tax dues, provided the petitioner deposits 10% of the tax dues within one month. The matter was posted for a further hearing on 19th November 2024.
In a recent ruling, the Patna High Court dismissed the petition challenging Goods and Service Tax (GST) registration cancellation due to failure to avail alternate remedies within the stipulated time.
The court noted that the petitioner did not dispute receiving the show-cause notice or the fact that his GST registration was canceled due to non-filing of returns for six consecutive months. Therefore, the writ petition of the petitioner was dismissed.
In a recent ruling, the Patna High Court granted 30 days to file the unfiled Goods and Services Tax ( GST ) returns to cancel GST registration revocation.
Therefore, the court set aside the impugned order and directed the assessing officer to revoke the cancellation. The petitioner was given 30 days from the revocation date to file all pending returns. The court clarified that if the petitioner failed to file the returns within this period, the cancellation of registration would stand valid again. Thus, the petitioner’s writ petition was allowed.
In a recent ruling of Delhi High Court it cleared that the Taxation and Other Laws [ TOLA ( Relaxation and Amendment of Certain Provisions ) Act, 2020 ] authorisation only enables the competent authority to take action within the extended time period regulated by Section 148 and 149, of Income Tax Act and does not amend the structure for approval.
The division bench comprising Justice Yashwant Varma and Justice Ravinder Dudeja observed that even if the reassessment was proposed to be initiated with the aid of TOLA after the expiry of 4 years from the end of the relevant AY. Therefore the court allowed the assessee’s petition and quashed the issued notices.
In a recent ruling, the Patna High Court set aside the Goods and Service (GST) demand order passed without mentioning the date that made the limitation to appeal indeterminable.
The court directed the Assessing Officer to schedule a personal hearing within two weeks of the petitioner’s appearance and complete the assessment within one month of the hearing. The petitioner’s writ petition was disposed of accordingly.
In a recent case, the Orissa High Court has held that Goods and Service Tax ( GST ) is not applicable on electricity transmission and distribution charges. The writ petition is adjourned sine die awaiting adjudication by the Supreme Court on the Special Leave Petition pending in said Court, inter alia, against Torrent Power Limited.
The court held that impugned show cause notice dated 25th September, 2023 and followed by demand order dated 13th June, 2024 will remain stayed. The writ petition is adjourned sine die awaiting adjudication by the Supreme Court on the Special Leave Petition pending in said Court, inter alia, against Torrent Power Limited.
In a ruling in favour of Volvo Groups, the Bombay High Court held that non-filing of declaration & input-output ratio is not a pre-condition for claiming rebate on excise of exported goods. It was clarified that just because the verification of input-output ratio was not submitted before the export of goods, it does not mean that the same cannot be verified post export of goods.
Further held that rebate claim of Petitioner is required to be examined on merits and if found eligible can certainly be considered under Rule 18 of the Central Excise Rules, added the Bench. The Bench quashed the order and directed that the rebate shall be given upon petitioner tallying the details of chassis purchased with details of chassis exported with the buses.
The Madras High Court has set aside two GST demand orders issued for the same financial year 2017-2018 on pre-deposit condition.
The Court directed the petitioner to pay 10% of the disputed tax within four weeks, and the respondent was instructed to re-do the assessment after receiving the petitioner’s objections and conducting a personal hearing. The fresh order is to be passed after giving the petitioner a clear 14-day notice for the hearing.
In a recent case, the Calcutta High Court directed the Commissioner of Central Goods and Service Tax ( CGST ) to file affidavit to decide on validity of Circular issued by Central Board of Indirect Taxes and Customs ( CBIC ).
Since the appellant has already deposited the amount required therefore, the form GST DRC-03 and the said amount has not been reversed by the department till date, the same shall be retained as deposit in lieu of payment of cash as towards the pre deposit and the Court will take a decision on the substantial questions of law which have been raised.
In the case of Aditya Birla Global Trading, the Orissa High Court dismissed the petition on imposition of fine for the late presentation of Bill of Entry under bill of EntryRegulation , 2018. The court dismissed the petition on the availability of statutory remedy.
Goods and held that “ we do not want to be drawn to answer the dispute” “Petitioner must find statutory remedy. We further observe, in event petitioner take steps to obtain such remedy within 15 days from date, the proper authority will deal with its grievance.”, the court held.
In a significant ruling, a Division Bench of the Delhi High Court held that payments related to credit cards issued by foreign branches of banks are not subject to tax in India. The central issue revolved around the taxation of credit card commissions related to cards issued by foreign branches but used within India.
It was observed that, “Undisputedly the credit cards had been issued by the foreign branches of the respondent. It was in the aforesaid backdrop that the Tribunal noted that the charges are received by the foreign branch for providing and extending a credit line to the account holder outside India. It has further been noted that the amount payable by those card holders would clearly be a debt incurred outside India.” The Delhi High Court confirmed that income generated from such activities remains outside the purview of Indian taxation unless explicitly sourced or attributed to operations within India.
In a recent ruling, the Delhi High Court held that an assessment order issued in the name of a non-existent entity, following an amalgamation, cannot be cured under Section 292B of the Income Tax Act, 1961. The case involved writ petitions where the petitioners challenged the validity of assessment and reassessment actions taken against entities that had ceased to exist following a merger. Despite notifying the tax authorities of the merger, the assessment orders and notices were still issued in the name of the amalgamating entity, rather than the amalgamated one.
In conclusion, the division bench of Justice Yashwanth Varma and Justice Ravinder Dudeja quashed the impugned assessment and reassessment orders, affirming that the proceedings initiated against a non-existent entity could not be sustained under the provisions of the Income Tax Act.
The Andhra Pradesh High Court in a significant case held that when the assessee files an appeal against an order of assessment under Central Goods and Services Tax ( CGST ) Act,2017, the enforcement actions that have been taken, such as property attachment and garnishment notices, should not continue.
The Division Bench of Justices R Raghunandan Rao and Harinath. N observed that the assessee has preferred an appeal and has paid 10% of the disputed tax, as required under Section 107 of the CGST Act, no further tax can be recovered from the assessee, in pursuance of the order of assessment under appeal. While allowing the appeal, the bench set aside the order of attachment and Garnishee notice.
The Delhi High Court has remanded a GST matter for fresh consideration after a show cause notice (SCN) was issued due to an under declaration of output tax and a mismatch between GSTR-01 and GSTR-09, setting aside an order passed under Section 73 of the Central Goods and Service Tax ( CGST) and Delhi Goods and Service Tax Acts ( DGST) for the financial year 2018-19, dated April 13, 2024, which the petitioner challenged on the grounds of a technical glitch that led to a substantial tax demand.
As a result, the impugned order was set aside, and the matter was remanded. The court also cancelled the hearing scheduled for October 3, 2024, and disposed of the petition and all pending applications.
In a significant ruling, the Delhi High Court held that the petitioner was not absolved of their obligation to pay tax, interest, or penalties, nor are they exempted from the consequences of statutory non- compliance, even after the cancellation of their Goods and Service Tax (GST) registration.
The petition has been disposed of in these terms, and the pending application has also been resolved.
In a recent ruling, the Madras High Court remanded the matter concerning Goods and Services Tax (GST) demand interest for belated filing under GSTR-3B due to lack of proper notice.
The writ petition of the petitioner was allowed with no costs, and the connected Writ Miscellaneous Petitions were closed.
The Madras High Court recently ruled that ‘Business Auxiliary Services’ and ‘Engineering Consultation Services’ qualify as ‘Input Services’ under the CENVAT Credit Rules, thereby making them eligible for CENVAT credit.
The High Court found no fault in the approach of the Tribunal and upheld its decision. Consequently, the High Court dismissed the appeal, ruling in favour of the assessee and against the Revenue. The court also noted that there were no costs to be imposed.
The High Court of Bombay in a recent matter quashed a show-cause notice and impugned order in a matter regarding disputed Customs Tariff Classification of Goods citing the lack of consideration of documents already made available to the Commissioner of Customs Imports, Acc, Mumbai – III.
In light of the observations, the Bombay High Court remanded the matter back to the Commissioner of Customs Imports, Acc, Mumbai – III for fresh consideration of the matter.
The Himachal Pradesh High Court in a recent judgment prima facie observed that Goods and Services Tax (GST) cannot be levied on the supply of electricity by an electricity provider without the levy of any charges.
The High Court Bench constituted by Chief Justice Mamidanna Satya Ratna Sri Ramachandra Rao and Justice Satyen Vaidya prima facie observed that the contentions raised by the Petitioner that the supply of free electricity is in lieu of “compensation” for distress and not “consideration”, and may provide grounds for disqualifying the same from the imposition of GST. The High Court, while deferring the judgment in the matter, executed an interim stay on all proceedings as per the Demand Order.
In a recent ruling, the Madras High Court remanded the Goods and Services Tax ( GST ) assessment matter due to an error in Input Tax Credit ( ITC ) figures and inconsistent amounts in the final order by GST Authorities.
Therefore, the court set aside the impugned assessment order dated 30.06.2023 and directed that it be treated as a show-cause notice. The court directed the petitioner to submit the relevant documents before the respondent. The petitioner’s writ petition was allowed.
The Allahabad High Court recently annulled the seizure memo of a consignment of areca nuts issued under the Customs Act, 1962. The court ruled that the memo lacked proper justification and the required “reason to believe,” a mandatory prerequisite for such actions.
Accordingly, the impugned seizure memo is set aside, and as a result, the bank guarantee is discharged. The bond furnished by the petitioner for the provisional release of the seized goods shall be released within three months from the date of receipt of this order.
n a recent ruling, the Madras High Court remanded the Goods and Service Tax (GST) assessment matter on pre-deposit condition due to the accountant’s failure to appear in the GST adjudication proceedings
Failure to comply with this condition would automatically revive the earlier assessment order. The writ petition of the petitioner was allowed.
The Delhi High Court quashed an income tax notice after finding that the Joint Commissioner of Income Tax (JCIT) approval for notices issued 3-4 years post-assessment was non-compliant with Section 151 of the Income Tax Act, 1961.
Ultimately, the court found the reassessment actions initiated by the respondents to be invalid. The impugned notices, based on the JCIT’s approval, were quashed. Accordingly, the writ petitions were allowed, and the notices issued under Section 148 of the Income Tax Act on March 31, 2024, were quashed. However, this ruling does not preclude the respondents from pursuing any further actions permitted by law.
The Delhi High Court quashed orders under Rule 86A of the CGST Rules, 2017, blocking Input Tax Credit ( ITC ) beyond the credit available in the Electronic Credit Ledger ( ECrL ), noting that it creates an artificial negative balance and reduces working capital.
The court highlighted that the power under Rule 86A is a drastic measure without a requirement for prior notice, intended to immediately block the usage of ITC if the Commissioner believes it has been fraudulently availed or is ineligible, distinguishing it from the process of availing ITC itself.
In a recent case, the Gauhati High Court set aside the order passed in violation of natural justice principle. The Court observed that show cause notice under Central Goods and Service Tax Act, 2017 issued on wrong address.
The Court set aside the impugned order and quashed on the ground that the same has been passed in violation to the Principles of Natural Justice. AK Jain appeared on behalf of the petitioner and Mr. SC Keyal appeared on behalf of the respondent Nos.1 and 2.
The Delhi High Court in the case of Meenu Gupta vs Assistant Commissioner of Income Tax dealt with the validity of reassessment proceedings under Section 148 of the Income Tax Act initiated against a deceased assessee, Sh. Vipin Gupta, affirming that reassessment proceedings initiated against a deceased person are unsustainable in law. The writ petition was filed by his wife and legal heir, challenging the issuance of notices under Section 148-A(b) and Section 148 of the Income Tax Act, 1961.
In this case, the Court noted that the legal heir had already informed the department about the death of Sh. Vipin Gupta, yet the department proceeded with the reassessment. The Court, comprising Justice Ravinder Dudeja and Justice Yashwanth Varma, held that the notices under Section 148-A(b), the order under Section 148-A(d), and the subsequent notice under Section 148 were invalid as they were issued to a deceased person. The notices were thus set aside, affirming that reassessment proceedings initiated against a deceased person are unsustainable in law.
In a recent ruling, the Delhi High Court has permitted the submission of relevant documents within one week to prove the functioning of the principal place of business amid the cancellation of GST registration.
The court directed the respondents to consider the documents and pass an appropriate order after giving the petitioner an opportunity to be heard. With these directions, the petition was disposed of, and any pending applications were also closed.
The High Court of Delhi held that the cancellation of Goods and Services Tax ( GST ) registration cannot be applied retrospectively if the Show Cause Notice ( SCN ) does not clearly specify the reasons for such action. The court directed that the cancellation of the petitioner’s GST registration be effective from the date of suspension i.e., May 24, 2022, instead of the retrospective date of September 11, 2017, as initially ordered by the tax authorities.
The decision highlights the importance of providing clear and specific reasons in an SCN before any adverse action, such as the cancellation of GST registration, can be taken against a taxpayer.
The Delhi High Court has invalidated a Show Cause Notice ( SCN ) issued to a deceased taxpayer under the Central Goods and Services Tax ( CGST ) Act, 2017. The court ruled that the SCN, addressed to the late Mr. Surender Kumar Gupta, a sole proprietor, was legally untenable because it was not served on the legal representative or the person continuing the business after his death, as mandated by Section 93 of the CGST Act.
The judgment highlighted the legal requirement that tax authorities must follow the proper procedure when issuing notices in cases involving deceased or non-existent taxpayers. It stressed the importance of serving notices on legal heirs or successors, ensuring compliance with the provisions of Section 93 of the CGST Act.
In the case of Alapatt Jewellers, the Kerala High Court has held that depreciation can only be set off against ‘profits or gains’ and not against ‘income from any other sources’.The court dismissed the writ petition and upheld the order.
The single bench of Justice Gopinath P. has observed that even if the depreciation allowance under Section 32 of the Income Tax 1961 Act, which was carried forward in terms of sub-section (2) of Section 32, is deemed to be a business loss for the purposes of Sections 71 and 72, it can be set off only against profits or gains of any business or profession and it cannot be set off against income from any other sources.
In a significant ruling, Delhi High Court sets aside an income tax notice due to the failure to involve the legal heirs of the deceased in the proceedings, emphasizing that issuing notices in the name of the deceased was inherently flawed and invalid.
The division bench comprising Justice Ravinder Dudeja and Justice Yashwanth Varma ruled that the notices dated 26.05.2022 and 30.07.2022, issued in the deceased’s name, were fundamentally flawed and invalid. Consequently, the reassessment proceedings based on these notices were quashed, and the notices were set aside.
The Delhi High Court has set aside a show cause notice (SCN) alleging wrongful availment of Input Tax Credit (ITC) under Section 73 of the Central Goods and Service Tax Act and has granted a two-week extension for submitting supporting documents. The adjudicating authority was directed to pass a new order after providing the petitioner with an opportunity to be heard.
Consequently, the division bench of Justice Vibhu Bakhru and Justice Sachin Datta set aside the impugned order and granted the petitioner two weeks to submit all relevant documents supporting their claim to the ITC. The adjudicating authority was directed to pass a new order after providing the petitioner with an opportunity to be heard. The petition was disposed of in line with these directions.
The Madras High Court has quashed a Goods and Services Tax ( GST ) assessment order issued prematurely by GST authorities that is 10 days expiration of the time limit for filing reply, citing a breach of statutory timelines and the principles of natural justice.
Thus, the High Court set aside the GST assessment order, declaring it invalid due to its premature issuance and non-compliance principles of natural justice. The matter was remanded back to the tax authorities for fresh consideration.
The Madras High Court has granted the petitioner an opportunity to substantiate the defence concerning a mismatch in Input Tax Credit ( ITC ) between GSTR-3B and GSTR-2A for the 2017-18 financial year on 10% pre-deposit.
The court directed the petitioner to deposit 10% of the disputed tax amount within four weeks. Upon compliance, the petitioner was directed to submit relevant documents.
The GST dept was instructed to issue fresh notice to the petitioner and afford opportunity of personal hearing and pass final orders within three months thereafter.
The Madras High Court has set aside a demand order after discovering that 41% of the disputed GST ( Goods and Services Tax) amount was recovered and issued a demand order without granting the petitioner an opportunity for a hearing.
The petitioner was directed to submit a fresh reply or objection, along with any necessary documents, within two weeks of receiving the court’s order. The GST department was instructed to issue a 14-day notice for a personal hearing and to pass appropriate orders on merits, as quickly as possible. With these directions, the writ petition was disposed of.
In a recent ruling, the Madras High Court directed to issue fresh orders on matters where two Goods and Services Tax ( GST ) notices were issued by the different GST officers for the same Assessment year leading to non-reply to one Show Cause Notice ( SCN ).
The Court also took note of a letter dated 12.02.2024 from the Assessment Officer, State Tax Department, which confirmed the withdrawal of the demand challenged in W.P.No.3051 of 2024. As the demand had been withdrawn, the Court dismissed this writ petition as infructuous. Regarding W.P.No.3053 of 2024, the Court directed that a fresh order be issued, allowing the petitioner a fair opportunity to submit a reply and attend a personal hearing before any further proceedings are initiated.
The Madras High Court has ruled that the work involving ‘powder coating’ of yokes, links, and tubes constitutes a works contract and is therefore liable for Value Added Tax ( VAT ).
Consequently, the assessee is liable to pay VAT, concurring the decision of Commercial Tax Department’s and reversing the VAT tribunal’s ruling. Thus, the petition was ruled in favour of the petitioner – department, reaffirming the applicability of VAT to the powder coating operations conducted by the respondent-assessee.
The Madras High Court has quashed the Goods and Services Tax ( GST ) recovery proceedings and GST orders initiated against a deceased individual, Ramasamy Singaravelan. The court ruled that the GST assessment orders and notices are void-ab initio.
The court set aside the impugned orders and the recovery proceedings. It remitted the matter back to the GST authorities for fresh consideration, allowing the petitioner to file replies to the notices within four weeks.
In a ruling, the Himachal Pradesh High Court held that the insolvency proceedings initiated under the Insolvency and Bankruptcy Code ( IBC ), 2016 and proceedings under Negotiable Instruments Act can be proceed simultaneously.
The single bench of Justice Sandeep Sharma concluded that both proceedings under section 138 and under the IBC could proceed simultaneously. While allowing the criminal proceedings to be continued the court rejected the contention of the accused and the accused was held liable for cheque dishonour despite the continuance of insolvency proceedings.
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