This weekly round-up analytically summarises the key stories related to the Supreme Court and High Court reported at Taxscan.in during the previous week from September 12 to September 18, 2022.
The Gauhati High Court has, in a revision petition under Sections 401/397 of the Code of Criminal Procedure, directed to release seized betel nuts in the custody of the police officials, they being goods of perishable quality.
The Delhi High Court held that Section 206AA of the Income Tax Act, 1961 cannot be invoked when tax deducted according to beneficial provisions of Double Tax Avoidance Agreement (DTAA). The Bench consisting of Justice Manmohan and Justice Manmeet Pritam Singh Arora, agreed with the view of the Tribunal that the issues of law sought to be raised in the present appeal are squarely covered by the judgment of the Delhi High Court in Danisco India (P.) Ltd. vs. Union of India wherein it was held that “the provisions made in the DTAAs will prevail over the general provisions contained in the Act to the extent they are beneficial to the assessee. In this context, it would be worthwhile to observe that the DTAAs entered into between India and the other relevant countries in the present context provide for scope of taxation and/or a rate of taxation.”
The Delhi High Court confirms the permission granted by ITAT treating the subsidy allowed as a capital receipt as per the New Industrial Policy and Other Concession Scheme from the state of Jammu & Kashmir. It was observed that the subsidy received by the assessee under the “New Industrial Policy and Other Concessions Scheme” from the State of Jammu & Kashmir was to be treated as a ‘capital receipt’ and was wrongly reported as a revenue receipt instead of a capital receipt in the return of income.
In a plea challenging the Constitutional Validity Of Goa Cess On Fluid Milk (Control) Act, 2000, the Supreme Court has issued a notice to the State Government. A Bench comprising Justices M.R. Shah and Krishna Murari issued notice in the petition only to the extent that it assails the relevant provisions of the 2000 Act and the competence of the State legislature to enact it and observed that “being a dispute with respect to the constitutional validity of the relevant provisions of the Goa Cess on Fluid Milk (Control) Act, 2000, only on that ground alone and the issue is with respect to legislative competence, issue notice returnable on 15.11.2022.”
While considering a petition challenging an endorsement by GST department rejecting the already sanctioned GST refund not released due to technical glitches on the GST portal, the Andhra Pradesh High Court has directed the department to re-consider the claim and pay interest if the assessee is eligible.
The Bombay High Court held that the refund of sales tax can’t be rejected merely on non-covering of C form under the assessment and upheld the order accepting C forms during the Appellate stage. The bench consists of Justice Dhiraj Singh Thakur and Justice Abhay Ahuja, who observed that the Appellate Authority has the power to consider a claim made by an assessee which was not before the assessing officer has held the Tribunal discretion as correct. The appeal filed by the department was dismissed.The Bombay High Court held that the refund of sales tax can’t be rejected merely on non-covering of C form under the assessment and upheld the order accepting C forms during the Appellate stage.
The Madras high court has, while considering a series of writ petitions with regard to the common question of release of goods under section 129 of the GST Act, held that a transporter can seek release of conveyance alone, and not goods under the GST Act. The court said that the entitlement to seek release under the section has been carefully and consciously sculpted to only the owner of the goods or to his agent, and not to a transporter.
In a major relief to M/s Patanjali Ayurved Ltd, the Uttarakhand High Court has directed the central excise department to adjust the amount of interest paid under protest, prior to issuance of show cause shall be considered as pre-deposit while disposing of his application for a waiver under ‘Sabka Vikas (Legacy Dispute Resolution) Scheme, 2019’ which was issued under Section 24 of the Finance Act.
The Calcutta High Court held that the discrepancy in the e-way bill which is a question of fact and for that Writ Jurisdiction cannot be invoked. It was observed that the question of fact about registration of the “Teak Sawn Timber” not tallying with the declaration made in the E-way bill and invoices can’t exercise through a writ petition. Md. Nizamuddin, Justice while dismissing the writ petition, held that it cannot act as a fact-finding and verification authority over transporting the goods in question and ordered the petitioner to appeal before under Section 107 of the Act if he is not satisfied with the reasons given for detention of the goods in question and the order passed under Section 129(1) of the Act.
The Jammu & Kashmir High Court has held that the GST registration cannot be granted or renewed considering the fact that the said premise is under dispute between the co-owners. Disposing the petition, the Court held that unless a person is permitted to run the business in accordance with law and legitimately attains a turnover of more than rupees twenty lakh, he cannot be registered under the GST Act. The turnover must be from a business, which is legitimately run by the supplier.
The Madras High Court, in a significant ruling, held that the audit objection cannot be a “reason to believe” that income has escaped assessment for the purpose of re-opening of assessment under section 147 of the Income Tax Act, 1961. The Court, holding the assessment bad in law, observed that “the reasons proceed on the basis that the methodology for computation is erroneous which premise, as noticed earlier, does not appear to be correct as the financials disclose the availability of depreciation. In such circumstances, the assumption of jurisdiction under Section 147 is held to be bad in law.”
The Calcutta High Court has held that GST registration cancellation would adversely affect the recovery of taxes and orders to revoke suspension of registration. A Coram consisting of Justice T.S. Sivagnanam and Justice Prasenjit Biswas viewed that suspension of a license of a dealer will be counter-productive and would work against the interest of the revenue. “If the registration of a dealer is cancelled, the dealer cannot carry on its business in the sense that no invoice can be raised by the dealer. This would ultimately impact the recovery of taxes.”
In a significant ruling relating to confiscation under the Central GST Act, the Karnataka High Court has held that the power of confiscation under the Act can be invoked in extra-ordinary circumstances. The ruling was delivered by Justice N.S. Sanjay Gowda while considering a writ petition by M/s Rajeev Traders wherein the petitioners were aggrieved by the order for confiscation. Seven trucks of the petitioner were intercepted while they were in transit and transporting Areca nuts.
In a significant ruling, the Allahabad High Court has imposed a cost of Rs. 50,000 on the GST department for the provisional attachment without quoting tangible material in violation of section 83 of the Central Goods and Services Tax Act, 2017. Imposing a cost of Rs. 50,000 on the department, the Court held that “the exercise of unguided discretion cannot be permissible because it will leave citizens and their legitimate business activities to the peril of arbitrary power. There must be a valid formation of the opinion that a provisional attachment is necessary for the purpose of protecting the interest of the government revenue.
The Calcutta High Court has held that the order under section 148A(d) of the Income Tax Act, 1961 is invalid if the same is issued after three years of relevant assessment year and the amount escaped from tax is below Rs. 50 lakhs. Quashing the order, Justice Md. Nizamuddin held that “Considering the submission of the parties and admitted factual and legal position which appears on perusal of the impugned order dated 27th April, 2022, I am of the considered view that the aforesaid impugned order is bad and not sustainable in law and is liable to be quashed for the reason that the impugned notice under Section 148A(b) under the newly amended Act was issued after expiry of three years from the end of relevant assessment year and the alleged escapement of income is below Rs. 50 lakh.”
The Bombay High Court has held that procedure of recovery u/s 179 against directors not to be resorted to casually and for convenience. The Division Bench consisting of Justice Dhiraj Singh Thakur and Abhay Ahuja observed that “the procedure adopted was clearly violative of the principles of natural justice and without affording to the petitioner, an opportunity of being heard on the question, as to why the principle of ‘lifting the corporate veil’ be not applied in the case of CMPL to justify the recovery of the tax dues from the directors.
A division bench of the Bombay High Court has held that an importer of the goods cannot be treated as an “owner” of the goods for the purpose of provisional release of goods under section 110A of the Customs Act. Dismissing the plea of the importer, the Court held that “In our opinion, in view of the specific and clear mandate of Section 110A, goods could have been permitted to be released only in favour of an owner and since the Respondent had failed to prove ownership over the goods in question, asheld by the adjudicating authority inasmuch as no evidence had been submitted to prove such ownership, which finding of fact has not been unsettled by the Tribunal, except to the extent that the Respondent has been held to be the owner by an erroneous legal interpretative process of the provisions of the Act.”
A division bench of the Jharkhand High Court has held that the GST refund claims are not allowable if the same are not supported by documentary evidence under the provisions of the Central Goods and Services Tax Act, 2017. Confirming the order denying refund, the Court held that “From the appellate order it also transpires that the Appellate Authority has duly considered the circular No.37/11/2018-GST dated 15.3.2018 which is related to a refund claim on account of export of goods without payment of tax and held that the same is possible only on verification of invoices. At the cost of repetition, since the petitioner fails to substantiate its claim of refund by giving documentary evidence either before the assessment proceeding or before the appellate authority; his claim for refund has been rejected. Even before this Court, the petitioner failed to do so.”
While dismissing an application for anticipatory bail by an accused for a GST scam, the Punjab and Haryana High Court has held that custodial interrogation can be allowed if the charges against the accused are of cheating and the amount involved is massive.
A division bench of the Bombay High Court has held that the charges of clandestine removal cannot be confirmed on the basis of statement of a few transporters under the provisions of Central Excise Act, 1944. “Even the clearance/sale of fabric and duty payment thereupon is not under dispute. There are no evidence that job work charges paid by the Appellant to the job workers flowed back to them. True it is that even if some of the buyers of the fabrics could not be found, it cannot lead to the conclusion that the Appellant did not sell the fabrics to such parties. The Tribunal has found that majority of job workers, i.e. 5 job workers out of 6 investigated, have accepted the job work manufacturing of the fabrics from the Yarn supplied by the Appellant and that no evidence has been adduced to the effect that the Respondent-Company had clandestinely removed the yarn from their factory for sale by evading central excise duty. On these factual findings, the Tribunal has dismissed the Appeal,” the Court said.
The Gujarat High Court, while considering a bail application by an accused involving a GST scam of Rs. 37.95 crore, has granted bail subject to deposition of Rs. 10 lakhs to the Government in six equal installments. Referring to a ruling in the case of P. Chidambaram Vs. Directorate of Enforcement, the Court released the applicant on bail with acondition that “the applicant shall deposit Rs.10 lacs before the Office of the respondent no. 2 i.e Assistant Commissioner of State Tax, Unit-5, 11th Floor, B-Block, Multi-storied Building, Lal Darwaja, Ahmedabad within a period of 6 months in equal six installments. The department is directed to accept the amount. It is clarified that, if the applicant fails to deposit the amount as aforesaid or missed any installment, the bail granted shall stands automatically cancelled. The applicant is directed to file undertaking to this effect before the court concerned and this court within 15 days from his release.”
In an assessee-friendly ruling where the payment of GST was made to the railway instead of the GST department, the Bombay High Court has asked the department to take a sympathetical view while imposing penalty and interest finding that the payment was made under a bonafide belief.
In a significant move, the Supreme Court has admitted the appeal filed by the GST department against the order of the Odisha High Court wherein the High Court held that input tax credit is available in respect of GST paid while constructing the immovable property intending to let out for rent.
Support our journalism by subscribing to TaxscanAdFree. Follow us on Telegram for quick updates.
