This annual round-up analytically summarizes the key Direct and Indirect Tax Judgments of the Supreme Court and all High Courts of India reported at Taxscan.in during 2024.
In a recent case, the Delhi High Court found that the failure to dispatch Form GST REG 31 to the assessee violates the right to take appropriate remedy against GST cancellation. The court set aside the impugned show cause notice and Form GST REG 31. Rajkumar Singhal, the petitioner, argued that the Show Cause Notice lacked essential details, including the name and designation of the issuing officer, and failed to mention the grounds for cancellation clearly. Counsel for the petitioner also pointed out discrepancies in the signatures and attachments of the notice. Respondent No.3 was consequently removed from the case, and the court noted that the Form GST REG 31 had not been dispatched electronically as required by law. Justices Sanjeev Sachdeva and Ravinder Dudeja directed the respondents to issue a proper show cause notice if necessary, ensuring compliance with the law and providing the petitioner with an opportunity for a personal hearing.
The Delhi High Court ruled that bail under the Prevention of Money Laundering Act (PMLA) cannot be automatically granted solely for treatment at a specialized hospital. The petitioner, Ramesh Chandra, sought an extension of interim bail granted on medical grounds, citing his age and deteriorating health condition. The Court extended the interim bail until March 16, 2024, directing Chandra to surrender before the Superintendent Jail on that date. Additionally, the Superintendent Jail was instructed to ensure immediate medical attention for Chandra if his condition worsens, including referral to specialized government hospitals. Moreover, the court emphasised the need for continuous evaluation and proper medication for Chandra’s medical treatment, considering his declining cognitive abilities.
The Delhi High Court ruled that rejecting a claim of Input Tax Credit (ITC) solely on the basis of an unsatisfactory reply is invalid. Ethos Limited challenged an order proposing a demand against them, contending that their detailed reply to the Show Cause Notice was not considered. The Court observed that the officer did not properly evaluate the reply and merely deemed it unsatisfactory without adequate examination. Consequently, the Court remitted the matter to the Proper Officer for re-adjudication, emphasizing the need for a thorough review of the petitioner’s response.
The Delhi High Court overturned an order cancelling GST registration without providing sufficient reasons, emphasizing that such cancellations cannot be done mechanically. M/S 3 Shades Events challenged the retrospective cancellation of their registration, arguing that they were not given a fair opportunity to object. The Court observed flaws in the cancellation process and modified the order, stating that the registration shall now be treated as cancelled from a later date. However, the Respondents retain the right to take lawful steps for tax recovery, including retrospective cancellation of GST registration.
The Madras High Court, in response to a writ petition, clarified that without proper notification under Section 6 of the Central and State Goods and Services Tax Acts, there’s no cross empowerment for tax authorities to conduct inspections, searches, seizures, or arrests under GST laws. The petitioners challenged the proceedings of the State Authorities, arguing that in the absence of such notifications, the actions taken by the counterparts were without jurisdiction.
The court highlighted the need for consensus between the GST Council, State, and Central Governments to avoid confusion and multiple assessments. It emphasised that without cross-empowerment notifications, actions taken by authorities beyond their assigned jurisdiction are invalid, concluding that such proceedings initiated by the respondents were without jurisdiction.
In a recent Karnataka High Court decision, it was ruled that average income should be considered when variations are found in the claimant’s income tax returns (ITR). The case involved a petitioner seeking compensation for injuries sustained in a road accident. The Tribunal confirmed the liability of the insurer and awarded compensation. The petitioner argued that disability should be considered as whole-body functional disability and income assessed based on the 2018-2019 ITR. The Court, represented by Division Bench of Justice H.T. Narendra Prasad and Justice K.V. Arvind stated that averaging income over years is appropriate to ensure fair compensation, especially when income stability is uncertain.
In a recent Delhi High Court decision, it was observed that a mere variance in allowable deductions is not sufficient to believe that the assessee furnished inaccurate particulars of income. The case involved a banking company that filed its return of income, later revised, declaring total income and book profit. The Assessing Officer disallowed certain deductions, leading to a penalty notice under Section 271(1)(c) of the Income Tax Act.
The CIT(A) deleted the penalty, a decision upheld by the ITAT. The revenue argued that the failure to claim deductions initially amounted to inaccurate particulars. However, the Division Bench of Justices Dr. Neela Gokhale and K.R. Shriram held that the provisions of Section 271(1)(c) were not attracted, noting that the claimed deductions were linked to business profit and that the mere making of unsustainable claims does not constitute furnishing inaccurate particulars of income.
The Orissa High Court Division Bench upheld Hindustan Unilever Ltd’s (HUL) deduction of Tax at Source (TDS), dismissing the challenge by the works contractor of ‘Wheel, Surf Excel, and Domex’. The petitioner, Oriclean Pvt. Ltd., had a purchasing agreement with HUL for manufacturing and supplying products. HUL deducted TDS at 2% under section 194 (C) of the Income Tax Act from the petitioner’s sale invoices. The petitioner contended that their agreement was a contract for sale, not a works contract, and therefore not liable for TDS.
However, the court ruled that the agreement fell under ‘works contract’ as defined by Section 194C, and the petitioner failed to provide sufficient evidence to the contrary. Additionally, the petitioner had previously claimed amounts from HUL as ‘contractual receipts’ and did not dispute the TDS deductions earlier. Consequently, the court upheld HUL’s TDS deductions.
The Delhi High Court recently ruled that membership of an arbitral institution is not a prerequisite for invoking arbitration. The dispute between the parties arose over various issues, including non-payment of dues, failure to provide land free from encumbrances, and deduction of amounts from bills. After failed conciliation attempts, the petitioner sought arbitration under the Arbitration and Conciliation Act, 1996, proposing a three-member tribunal. The petitioner did not use the rules of the “Society for Affordable Redressal of Disputes (SAROD)” as it required primary membership. Justice Sachin Datta observed that arbitration agreements don’t obligate parties to join the arbitral institution. SAROD’s insistence on membership violated the agreement and triggered the court’s intervention to constitute the arbitral tribunal under Section 11(6)(c) of the Act.
The Bombay High Court directed the refund of tax inadvertently deposited by a Chartered Accountant to the old Goods and Services Tax Identification Number (GSTIN) of the petitioner. Despite the cancellation of the old registration, the petitioner’s CA filed returns and deposited tax under both old and new GSTINs. The petitioner sought a refund for the tax deposited under the cancelled registration. The High Court noted the inadvertent mistake and criticised the authorities’ hyper-technical approach in rejecting the appeal. Consequently, the court quashed the earlier orders and directed the refund of the erroneously deposited tax amounting to Rs. 1,22,220/- under the cancelled registration number, along with interest within four weeks.
In a significant ruling, the Punjab and Haryana High Court held that if a show cause notice (SCN) regarding GST registration is not decided within 30 days of the reply, the suspension of registration is deemed to be revoked. The petitioner’s counsel argued that despite the petitioner’s response, the authorities failed to decide within the stipulated period as per CGST/PGST Rules, 2017. The Division Bench of Justices Sajeev Prakash Sharma and Sudeepti Sharma noted the delay and ruled that the suspension of the petitioner’s registration, which had been in effect for almost four months, should be revoked. Consequently, the court ordered the suspension of the petitioner’s registration from 21.11.2023 to be revoked.
The Delhi High Court directed the petitioner to apply for a refund under Section 54 of the CGST Act, 2017 for GST paid, excluding the period between 19.01.2024 and the date of judgment for limitation. Pedersen Consultants India Pvt Ltd sought a refund of Input Tax Credit for the period 2019-2020, paid on invoices for which Respondent No. 3 also paid tax. The court ruled that the petitioner must file a refund application as per Section 54 of the Act within one week. The period from 19.01.2024 till the date of judgment was excluded for limitation purposes. The court directed the proper officer to consider the petitioner’s claim under Notification No. 13/2022 while processing the refund application.
The Delhi High Court overturned an order passed under Section 73 of the CGST Act, 2017, rejecting Mother Dairy Fruit And Vegetable Private Limited’s Input Tax Credit (ITC) claim without proper hearing opportunity. The court found that the order lacked consideration of the petitioner’s detailed reply to the Show Cause Notice. The Proper Officer’s opinion that the reply was unsatisfactory was deemed insufficient, prompting the court to remit the matter for re-adjudication and setting aside the order.
The Delhi High Court overturned an order by the Appellate Tribunal under the Prevention of Money Laundering Act (PMLA) 2002, for failure to address issues regarding the confirmation of a provisional attachment order. The court restored the appellant’s application for document supply to its original number on the Tribunal’s records. The appellant’s counsel argued that the Tribunal erroneously concluded that the appeal solely challenged the confirmation order, neglecting the appellant’s plea against the rejection of their application for document supply. The court held that the Tribunal overlooked the appellant’s challenge to both orders and set aside the Tribunal’s decision.
The Delhi High Court modified a GST cancellation order, specifying that the registration shall be considered canceled from the date the petitioner applied for cancellation, i.e., 01.10.2019. M/S Veetrag Traders challenged the order cancelling their GST registration retroactively from 01.07.2017. The court found the show cause notice and order lacking in details and reasons, rendering them unsustainable. The petitioner cited closure of business and challenges due to the COVID-19 pandemic as reasons for non-compliance. Justices Sanjeev Sachdeva and Ravinder Dudeja directed the registration to be canceled from the date of application and instructed the petitioner to fulfill necessary compliances under Section 29 of the Central Goods and Services Tax Act, 2017.
The Delhi High Court directed to continue proceedings until the final order on the validity of Rule 5A of Service Tax Rules, 1994. M/S Hardicon Ltd sought to quash a service tax audit initiation letter and a subsequent Show Cause Notice. The validity of Rule 5A is under challenge before a larger bench. The court allowed proceedings to continue but decreed that any final order passed won’t be implemented without court approval.
A Single Bench of the Madras High Court granted an interim stay on the GST demand concerning salary paid to seconded employees of the petitioner. The petitioner challenged a December 23, 2023 order classifying the entire salary amount as taxable under GST. The court noted that similar cases are being examined by other High Courts and granted the stay until the next hearing on April 8, 2024.
The Madras High Court quashed a DRC-07 order issued by GST officers without hearing the petitioner, arising from discrepancies in GSTR 3B and GSTR 2B. The court remanded the matter for reconsideration, granting the petitioner 15 days to reply to the show cause notice. The respondent was directed to provide a reasonable opportunity, including a personal hearing, before issuing a fresh order within two months. As a result, the bank attachment was lifted, and the writ petition was disposed of with no costs.
The Madras High Court quashed a DRC-07 order issued by GST Authorities despite the petitioner’s request to extend the reply time. The court observed that the authorities issued the order without considering the request, denying the petitioner a fair opportunity to contest the tax demand. Consequently, the court remanded the matters for reconsideration, granting the petitioner 15 days to submit a reply to the show cause notices. The respondent was directed to provide a reasonable opportunity, including a personal hearing, and issue fresh orders within two months. The writ petitions were disposed of with no costs, and connected miscellaneous petitions were closed accordingly.
The Delhi High Court ruled in favor of JSW Steel Limited, granting them access to Merchandise Exports from India Scheme (MEIS) benefits despite procedural errors in their shipping bills. Represented by Mr. Kumar Visalaksh and Mr. Udit Jain, JSW Steel filed a petition seeking relief due to discrepancies in processing their applications by the authorities. The court, citing precedents and directives for manual intervention for rectification, directed the authorities to rectify the errors, ensuring equitable access to benefits. The judgment, delivered by Justice Subramonium Prasad, emphasized fair treatment for exporters and allowed JSW Steel to avail MEIS benefits despite procedural errors, ensuring justice in trade regulations.
The Delhi High Court ruled that rejecting a refund application based solely on limitation grounds is unjustifiable, citing a CBIC Notification dated July 5, 2022. The judgment was made in response to a petition by Zenon Analytics Pvt. Ltd. The court, comprising Mr. Justice Sanjeev Sachdeva and Mr. Justice Ravinder Dudeja, set aside the orders rejecting the refund claims and directed their reconsideration by the Assessing Authority within four weeks. The decision emphasized adherence to the CBIC Notification, excluding specific periods from the limitation calculation for refund applications.
The Delhi High Court dismissed a petition by Jetibai Grandsons Services India Pvt Ltd against Union of India and others, ruling that refiling an identical petition after unconditional withdrawal of the previous one is unsustainable and barred by the principle of estoppel. The petitioner sought relief regarding the reversal of Input Tax Credit (ITC), but the court noted the withdrawal of a previous petition without liberty to file a fresh one, indicating an abuse of legal process. The court emphasized the principle of discouraging “bench hunting” tactics and ruled the present petition as not maintainable due to estoppel.
The Kerala High Court dismissed a writ petition filed by Anand Madhavan Nair Indiradevi challenging an order under the CGST/SGST Act. The appellant, engaged in telecommunication and courier services, sought relief against Ext.P5 order passed under Section 73 of the Act. The Division bench held that disputed facts cannot be adjudicated in a writ petition and directed the appellant to pursue the statutory remedy of appeal under Section 107 of the CGST/SGST Act. Harisankar V. Menon represented the appellant, while V.K. Shamsudheen appeared for the respondent.
The Kerala High Court set aside an Assessment order passed without following the Principles of Natural Justice. The division bench of Dr. A.K. Jayasankaran Nambiar and Dr. Kauser Edappagath ruled in favor of the appellant, Wadakkanchery Service Co-Operative Bank Ltd, a Co-operative Society providing credit facilities. Despite filing a reply to the show cause notice and requesting a personal hearing, the Income Tax Officer completed the assessment without considering the appellant’s response. The bench found a clear violation of principles of natural justice and quashed the assessment order. Harisankar V. Menon represented the appellant, while Jose Joseph appeared for the respondent.
The Kerala High Court dismissed a petition filed by a taxpayer who mistakenly claimed an IGST refund instead of CGST/SGST and failed to correct the error. The petitioner, a registered dealer under CGST Act and Kerala SGST Act, received a Show Cause Notice regarding excess input tax credit claimed. Despite arguing it was a bona fide mistake, the court cited statutory limitations and precedent, including a Karnataka High Court judgment, emphasizing the need for timely correction. Since the petitioner failed to submit an application within the prescribed time, the court lacked jurisdiction to amend the statute, leading to the dismissal of the petition.
The Kerala High Court overturned the condition requiring a 15% remittance of the total income tax demand for granting a stay, deeming it arbitrary. The appellant contested an assessment order through a writ petition and appealed to the Commissioner of Income Tax, seeking a stay of recovery proceedings. Although the Single Judge granted a stay, they mandated a 15% remittance. The Division Bench ruled the condition arbitrary and modified the judgment accordingly, allowing the appeal to proceed without the remittance requirement. All other directives in the judgment remained unchanged, and the writ appeal was concluded and disposed of.
The Kerala High Court has instructed the State Tax Officer to reassess the case after GST officers seized the taxpayer’s bank account, despite the taxpayer having settled GST arrears. The petitioner, an assessee under the CGST/SGST Act, challenged a recovery notice for tax arrears. Despite the petitioner’s representation that they had already paid the arrears for certain years, a prohibitory order was issued, leading to the bank account’s attachment. The Court set aside the prohibitory order and remanded the matter to the State Tax Officer for reconsideration. The State Tax Officer was directed to review the petitioner’s representation and issue fresh orders promptly, while the petitioner was instructed to appear before the officer. Any pending applications related to the writ petition were dismissed.
The Kerala High Court dismissed a delayed writ petition filed by a private limited company seeking the refund of demanded GST and penalty paid during the interception of jewellery. The petitioner’s consignment was intercepted due to lack of relevant documents, and tax and penalty were determined. The petitioner paid the demanded amount and appealed against the order, which was rejected due to delay. The petitioner approached the court in 2024 seeking various reliefs, including quashing the appellate order and directing adjudication of confiscated goods or refund of tax and penalty. However, Justice Dinesh Kumar Singh, presiding over a Single bench, deemed the belated writ petition lacking in substance and dismissed it, along with any pending interlocutory applications related to it.
A Division Bench of the Patna High Court has granted interim relief to a petitioner by staying an order issued by GST authorities based on a show cause notice invoking the extended period of limitation as per Notification No. 9/2023 – Central Tax, dated 31.03.2023. The bench observed that the assessment was carried out for the year 2017-18, and the limitation period of 3 years had already expired by the time of the notification. Therefore, the court stayed the order until the next hearing scheduled for 9th April 2024. The issue revolves around the validity of GST Demand Orders under Section 73(9) of the CGST Act in light of extended limitation periods specified in various notifications. The court raised concerns over the potential misuse of legislative provisions and the lack of discussion or recommendation regarding the extension of time limits in GST Council meetings.
The Delhi High Court dismissed a writ petition challenging the quashing of a charge memo against Commissioner of Income Tax, Pavan Ved, citing an inordinate delay of over ten years in issuing the memo and the potential prejudice caused to the officer. The petitioners, Union of India and another, sought to challenge the Tribunal’s order quashing the charge memo alleging wrongful decisions by Ved during his tenure. The court upheld the Tribunal’s decision, emphasizing the lack of justifiable reasons for the delay and highlighting the importance of protecting the independence of quasi-judicial authorities. The bench stressed the need for timely and justified disciplinary actions against government officials while adhering to the principles of natural justice.
The Delhi High Court upheld penalties imposed under Sections 112(a) and 112(b) of the Customs Act, 1962 on Rameshwar Tiwari for smuggling gold. Tiwari was intercepted at Kolkata airport carrying gold concealed in medicine sachets. Despite Tiwari’s claim of unawareness, the court found his involvement evident due to frequent travels and knowledge of the concealed gold. The court deemed the penalties justified, emphasizing the threat posed by smuggling to the country’s economy. It dismissed Tiwari’s petition challenging the penalties, upholding the Rs.10,00,000/- penalty imposed on him.
The Madras High Court quashed a DRC 07 Order in a GST assessment case where the petitioner mistakenly repeated the same invoice number in multiple e-way bills. Despite the petitioner’s explanation and submission of relevant documents, the impugned order failed to consider their response. Acknowledging the procedural lapse, the court remanded the matter for reconsideration by the assessing officer, granting the petitioner 15 days to submit a comprehensive reply. The assessing officer was directed to issue a fresh assessment order within 2 months after affording the petitioner a reasonable opportunity, including a personal hearing. The writ petitions were subsequently closed.
The Madras High Court nullified a GST assessment order due to the petitioner’s unintentional omission regarding the Reverse Charge Mechanism in their filings. Despite rectifying the error in subsequent returns, the petitioner challenged the assessment order, claiming lack of opportunity. Acknowledging the petitioner’s explanation, the court remanded the matter for reconsideration by the respondent, directing a fair opportunity, including a personal hearing, and issuance of a fresh order within two months. Any amounts appropriated under the impugned order would be subject to the outcome of the reconsideration. Consequently, the writ petition was disposed of with no costs awarded.
The Madras High Court ruled that proceedings cannot proceed before an Adjudicating Authority designated under a superseded notification issued under the Foreign Exchange Management Act, 1999 (FEMA). Despite the show cause notice being issued by the Special Director, the subsequent notification altered the designated Adjudicating Authority to the Additional Director. Thus, the court emphasized that the inquiry and adjudication proceedings must be conducted by the Adjudicating Authority as per the current notification in effect, not the one that has been superseded. Therefore, the court concluded that the proceedings cannot proceed before the person who was an Adjudicating Authority under the superseded notification.
The Kerala High Court dismissed a writ petition filed by Chandran Sarath, stating that there is no justification to entertain the petition when there is an equally effective remedy available before the Income Tax Appellate Tribunal (ITAT). Sarath, engaged in the cashew business, challenged the assessment for the assessment year 2015-16, conducted under the Income Tax Act, 1961. Despite filing an appeal before the Commissioner of Income Tax (Appeals), which was dismissed, Sarath pursued a second appeal before the ITAT. The court, represented by Harisankar V. Menon for the appellant and Jose Joseph for the respondent, concluded that the writ petition lacked merit due to the availability of the ITAT route.
The Kerala High Court dismissed a writ petition filed by Manjally Jewellery against an assessment order passed by the state tax officer under the Goods and Services Tax Act, 2017. The court cited the availability of an alternative remedy under the GST Act and noted that the petitioner’s reply to the show cause notice was not considered while passing the order. The Single Judge bench of Dinesh Kumar Singh held that such grievances should be addressed through the provisions of the GST Act rather than through a writ petition under Article 226 of the Constitution of India.
The Kerala High Court dismissed a review petition filed by the revenue against a judgment favoring Kallada Hotels, affirming that bar attached hotels and shops should pay a 5% turnover tax, as applicable to retail outlets run by the Beverages Corporation. The petitioner argued for a reduction from 10% to 5% in turnover tax for a wider period, citing a Cabinet Note. However, the court held that the reduction applied only to specific lockdown periods, as stated in the Cabinet Note, and denied the review, stating that no error was evident on record to warrant reconsideration.
The Delhi High Court granted bail to Sanjay Jain under the Prevention of Money Laundering Act, 2002, as there was no incriminating material to prove his involvement in the offence. The Enforcement Case Information Report (ECIR) was registered based on an FIR by the CBI alleging a conspiracy to cheat and defraud IFFCO, IPL, and the Government of India. However, the court found a lack of evidence to establish the predicate offence and money trail, leading to a weak case against the petitioner. Noting that other accused were also granted bail and considering the absence of likelihood to commit further offences, the court granted bail on a personal bond of Rs. 2,00,000/- and two sureties, one of which should be a family member.
The Delhi High Court directed the revenue department to decide on the cancellation of GST registration within four weeks, as the department failed to do so even after one month since additional information was provided by the petitioner. M/S Air Pro Styles sought cancellation of their GST registration, but the application was pending due to a query raised by the department. Despite the petitioner’s response to the query, the application remained unresolved. The bench of Justice Sanjeev Sachdeva and Justice Ravinder Dudeja disposed of the petition, reserving all rights and contentions of the parties.
The Delhi High Court directed the refund of the GST amount credited due to a technical error in the automatic generation of non-migrated GST numbers. BCC Developers and Promoters Pvt Ltd sought refund of Rs. 16,19,838 deposited against the non-migrated GST. The petitioner was unaware of the non-migrated GST number until a client claimed to have deposited GST credit not reflected in the migrated GST number. The court directed the respondent and the Central Board of Indirect Taxes and Customs to rectify the issue of automatic generation of non-migrated GST numbers within four weeks. Justices Sanjeev Sachdeva and Ravinder Dudeja presided over the case. Petitioner was represented by Mr. Rahul Malhotra and Mr. Ativ Gupta, while Respondents were represented by Mr. Aditya Singla and Mr. Raghav Bakshi.
In the case of Blackberry India Pvt Ltd, the Delhi High Court set aside a Show Cause Notice denying interest in delayed payment of CENVAT credit. The petitioner had filed refund applications in 2013 and 2014, which were rejected initially but later granted by the Tribunal. Despite the refund being sanctioned and paid to the petitioner, the Revenue issued a Show Cause Notice seeking recovery of the refunded amount, claiming it as erroneous. The High Court dismissed the Revenue’s challenge and held that unless the Revenue succeeds before the Supreme Court, there is no question of refunding the CENVAT credit or the interest paid to the petitioner. Justices Sanjeev Sachdeva and Ravinder Dudeja observed that the Revenue can seek interim orders of protection from the Supreme Court. Consequently, the Court quashed the show cause notice.
The Delhi High Court set aside the retrospective cancellation of Goods and Service Tax (GST) registration of R8 Space Design Pvt Ltd, citing lack of cogent reason. The court modified the impugned order, specifying that the registration would be treated as cancelled from 19.11.2020, the date when the Show Cause Notice was issued. The petitioner argued that the notice lacked details and opportunity for objection, and the impugned order did not provide clear reasons for the retrospective cancellation. Justices Sanjeev Sachdeva and Ravinder Dudeja viewed the lack of justification for the retrospective cancellation and modified the order accordingly. The petitioner, represented by Mr Anurag Soan, Mr Siddhant Gupta, and Mr Saransh Gupta, challenged the order, while the respondents were represented by Mr Rajeev Aggarwal, ASC, with Mr Prateek Badhwar, Ms Shaguftha H. Badhwar, and Ms Samridhi Vats.
The Gujarat High Court granted bail to Mr. Bharat Gordhandas Patel in a GST scam case involving Rs. 37.95 crore. Bail was subject to depositing Rs. 10 lakhs to the Government in six installments. Patel was implicated in a scam uncovered during search proceedings at M/s JK Traders. He was accused of aiding the principal accused in wrongly claiming input tax credit and creating fictitious firms. Considering Patel’s role and the fact that the principal accused was granted bail on depositing Rs. 2 crore, the court deemed Patel’s application worthy of consideration.
Justice Ilesh J. Vora noted that Patel’s custody wasn’t necessary, and the case relied on documentary evidence. Following the precedent set in the case of P. Chidambaram Vs. Directorate of Enforcement, the court released Patel on bail with the condition to deposit Rs. 10 lakhs in six installments within six months. Failure to comply would result in automatic cancellation of bail. Patel was directed to file an undertaking within 15 days of release.
The Supreme Court of India condoned delay in a matter related to the challenge on interest under section 42(1) of the Delhi Value Added Tax (DVAT) Act, 2004, pertaining to withholding of Value Added Tax (VAT) refund. The delay was condoned in a Special Leave Petition (SLP) arising from a final judgment dated 21-09-2023 in WP(C) No. 2491/2023 by the Delhi High Court. The High Court ruled that objections regarding the impugned default notices of tax & interest should be raised through a statutory appeal under Section 74 of the DVAT Act. A Two-Judge Bench of the Supreme Court, comprising Justices Pamidighantam Sri Narasimha and Prasanna Bhalachandra Varale, granted leave after condoning the delay, concluding the hearing and reserving judgment.
A division Bench of the Delhi High Court overturned the retrospective cancellation of GST registration due to the absence of specific details in the show cause notice (SCN), such as the name or designation of the officer or the place where the assessee should appear. The petitioner challenged the SCN dated 10.11.2023, which suspended their GST registration, citing Section 29(2)(e) regarding registration obtained through fraudulent means.
The petitioner had initially applied for cancellation of GST registration on 23.02.2023, and subsequently received a show cause notice on 27.02.2023 seeking information. However, a show cause notice dated 10.11.2023, issued after a nine-month gap, sought cancellation of registration without specifying the officer’s name or designation or the place for appearance.
The court, comprising Justices Sanjeev Sachdeva and Ravinder Dudeja, set aside the order rejecting the petitioner’s application and cancelled the GST registration from 23.02.2023, the date of the initial application. The petitioner must comply with Section 29 of the Central Goods and Services Tax Act, 2017, and provide the required details accordingly.
The Bombay High Court invalidated an improper Show Cause Notice (SCN) issued to employees of Maersk Line India, demanding a hefty penalty of Rs. 3731 Cr, presuming their involvement in transactions made by the company. Justices Sanjeev Sachdeva and Ravinder Dudeja observed that targeting employees with such notices, without specifying their involvement, lacked jurisdiction and was unjust.
The court found it disproportionate to demand such a substantial sum from the employees, especially when it pertained to the company’s liability. The ruling emphasised that the remarks made solely concern the SCN directed at the employees and do not extend to other parties involved. Consequently, the court allowed all four petitions challenging similar notices.
The Delhi High Court directed the matter back to the GST Commissioner for reconsideration of delay condonation, noting that the date of filing is considered the date of initial online filing. The petitioner contested the dismissal of their appeal against the original order dated 04.05.2023, claiming it was time-barred. The appeal, filed on 02.09.2023, was deemed to have a delay of only one month, falling within the Commissioner’s power to condone.
Justices Sanjeev Sachdeva and Ravinder Dudeja overturned the previous ruling, stating that the Commissioner should have considered the delay condonation application and remitted the matter accordingly.
The Delhi High Court ruled that GST registration is deemed cancelled from the date of application for cancellation. The petitioner contested an order dated 03.01.2024 rejecting their application for cancellation of GST registration, citing non-attendance at a personal hearing and failure to reply to queries.
However, the court, comprising Justices Ravinder Dudeja and Sanjeev Sachdeva, found the order lacking in details and reasons, thus setting it aside. Consequently, the petitioner’s application for cancellation was allowed, and their GST registration is deemed cancelled from the date of application, i.e., 21.11.2023.
The Karnataka High Court dismissed the Prevention of Money Laundering Act (PMLA) case against Razorpay concerning commissions earned from an illegal business. The complaint alleged negligence on the part of the accused payment gateway, Razorpay, for allowing transactions without due diligence.
However, Justice Hemand Chandangoudar observed that there was no evidence to suggest Razorpay had knowledge of funds derived from criminal activity or knowingly assisted in concealing illicit proceeds. The court concluded that the complaint did not satisfy essential elements to constitute the alleged offences, deeming the continuation of criminal proceedings as an abuse of the legal process.
The Gujarat High Court highlighted the necessity for lender banks to provide audit reports to borrowers before classifying accounts as fraud, ensuring the borrower’s representation. The petitioners argued that the account of their company was declared fraudulently without adhering to principles of natural justice.
Justice Sangeeta K Vishen emphasized that the lenders failed to follow the principles of natural justice by not providing the audit reports to the borrowers for representation. Consequently, the decision of the respondent banks declaring the account as fraud was quashed, and the matter was remitted for the completion of proceedings after providing the necessary documents and allowing the petitioners to submit representations.
The Madras High Court ruled that an order referring to Section 144(C)(1) of the Income Tax Act, 1961 should be construed as a draft assessment order, even if the term “draft assessment” is not explicitly mentioned. The petitioner had filed revised returns, leading to a variation in income, prompting the Assessing Officer to refer the matter to the Transfer Pricing Officer (TPO). Despite the TPO’s report, the final assessment order was passed directly without issuing a draft assessment order. The petitioner argued that this violated the mandatory procedure under Section 144(C).
However, the court held that the order should be considered a draft assessment order as per the provisions of Section 144(C), even if it lacked explicit labelling. Therefore, the court rejected the petitioner’s contention and upheld the order.
The Delhi High Court emphasised that the arbitrary rejection of entries from the books of account by a pick-and-choose method is unjustifiable. The case involved the respondent-assessee filing its income tax return for AY 2014-15, with subsequent notices issued under relevant sections of the Income Tax Act.
The Income Tax Appellate Tribunal partly allowed the respondent’s appeal, remitting the issue of unaccounted profits back to the AO for further investigation. The revenue’s counsel argued that the expenses claimed lacked substantiation and were inflated to reduce taxable income. Conversely, the respondent’s counsel contended that the AO’s additions were speculative and unsupported by evidence.
The division bench of justices stressed that such arbitrary rejection methods jeopardise the accuracy and transparency of income computation, emphasising the need for justified and comprehensive assessment procedures.
The Delhi High Court ruled that the period specified under Section 153(3) of the Income Tax Act, 1961 should be calculated from the receipt date of the order from the Income Tax Appellate Tribunal (ITAT). Despite the ITAT’s order on 20 December 2018 remitting the matter back to the Assessing Officer (AO) and Transfer Pricing Officer (TPO) for re-adjudication, the final assessment order was passed on 13 February 2023, surpassing the prescribed time limit.
The court observed that the period under Section 153(3) should commence from the date of receipt of the ITAT order. Consequently, the impugned order dated 13 February 2023 was quashed, and the respondents were directed to recalculate the refund payable to the petitioner along with statutory interest, considering the annulled adjustments made against a perceived outstanding demand for certain assessment years.
The Madras High Court deemed an assessment order issued beyond the time limit under Section 144C(13) of the Income Tax Act, 1961 as unsustainable. The petitioner filed objections against the draft assessment order before the Dispute Resolution Panel (DRP), which confirmed the addition. The DRP’s directions, received by the petitioner on 16.06.2022, were uploaded on the ITBA portal on 17.06.2022. However, the final assessment order was issued on 25.03.2023, surpassing the time limit.
The court noted that the assessment proceedings were barred by limitation, rendering the assessment order invalid. Therefore, it deemed the assessment order unsustainable based on statutory provisions and judicial interpretations.
The Punjab and Haryana High Court ruled that a stay on an FIR does not prevent the Enforcement Directorate (ED) from registering an Enforcement Case Information Report (ECIR) for a Prevention of Money Laundering Act, 2002 (PMLA) offence. The petitioners, Sikandar Singh and Vikas Chhoker, were accused in complaints alleging fraud in a construction project. They argued that since the basic order on the complaint was set aside, the FIRs should be nullified, and no PMLA offence remains.
However, the court noted that other FIRs were pending, suggesting potential proceeds of crime, and concluded that the matter requires investigation before any final determination can be made.
The Orissa High Court restored an application for registration under Section 12AB of the Income Tax Act, 1961, as the application was filed in the wrong section code in Form-10A. The petitioner’s Senior Counsel argued that the application was mistakenly filed with the wrong section code for the Assessment Year 2022-23, resulting in its rejection.
The court noted that despite the petitioner’s explanation furnished digitally, the rejection lacked proper reasoning, violating principles of natural justice. Therefore, the court set aside the order and directed reconsideration of the application by the Commissioner of Income Tax (Exemption), Hyderabad, with a mandate to provide a reasonable opportunity of hearing to the assessee.
The Bombay High Court upheld the Income Tax Appellate Tribunal’s (ITAT) order directing a remand to the Transfer Pricing Officer (TPO), emphasising that comparisons must be made between equals. The case involved international transactions exceeding Rs.15 crores. The TPO determined an adjustment of Rs.3,59,81,523/-.
The Assessing Officer made additions based on this determination. The Commissioner of Income Tax (Appeal) partly allowed the appeal, which was further contested before the ITAT. The ITAT partially allowed the appeal, remanding the matter to the TPO for fresh adjudication. The TPO was instructed to reconsider factors such as capacity underutilization. The ITAT also highlighted the need to reassess comparables objected to by the assessee.
The High Court concurred with the ITAT’s finding that comparisons should be made between equals, noting that a business starting in a particular year cannot be equated with those operating for many years. The Court agreed that despite lower sales in the initial year, the expenses incurred were comparable to the subsequent year when sales increased significantly, indicating business stabilisation.
The Madras High Court advised the petitioner, a contractor working under the PWD Department of the Government of Tamil Nadu, to approach the appellate authority regarding the imposition of service tax and penalty without proper issuance of a Show Cause Notice or opportunity for hearing.
The bench granted the petitioner liberty to file a statutory appeal within four weeks and instructed the Appellate Authority to consider the appeal expeditiously, taking previous orders into account. No costs were imposed, and all related miscellaneous petitions were closed.
The Kerala High Court stayed Income Tax recovery proceedings and directed the Commissioner of Income Tax Appeal (CIT (A)) to pass necessary orders on the condonation application and stay petition. The petitioner sought a copy of the assessment order for the assessment year 2018-19 under the Income Tax Act, 1961. The petitioner filed an appeal before the CIT (A) along with applications for condonation of delay and stay.
The court directed the CIT (A) to consider and pass orders on the condonation of delay petition and stay application after affording an opportunity of hearing to the petitioner. Until such orders are passed, any recovery proceedings based on the assessment order shall remain suspended. The CIT (A) is instructed to decide on the application for stay only if the delay in filing the appeal is condoned.
The Delhi High Court set aside an order rejecting a GST appeal due to technical glitches on the GST portal, noting that the petitioner had submitted the required digital data online. M/S Reva Giant Implex LLP sought a refund of Rs 8,37,487, but only a partial refund was granted by the Assistant Commissioner. The petitioner filed an appeal, which was rejected as time-barred, despite claiming to have filed it electronically within the deadline.
The court found no evidence to doubt the petitioner’s claim that the original order was submitted online with the appeal. The matter was remitted to the Appellate Authority for reconsideration on its merits.
The Kerala High Court dismissed a writ petition concerning an online income tax appeal and stay petition filed beyond the statutory time limit for the assessment year 2020-21. The petitioner appealed and sought a stay before the CIT(A), but the Income Tax Department argued that the stay petition should have been filed before the Jurisdictional Commissioner of Income Tax (Appeals) due to the Faceless Assessment Scheme. The petitioner’s counsel argued that the stay petition was filed correctly.
The court directed the CIT(A) to consider and pass orders on the stay petition after hearing the petitioner and deferred recovery of assessed amounts until a decision is made. However, the CIT(A) must first decide on the merits of the stay petition and whether to condone the delay in filing the online appeal. The writ petition was disposed of accordingly.
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