Annual Digest 2024: Supreme Court and High Court Cases on Taxation [Part 29]

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.

Delhi HC upholds Section 14A Disallowance in rejection of Retrospective Application of 2022 Amendment [Read Order]  PRINCIPAL COMMISSIONER OF INCOME TAX vs ALCHEMIST LTD CITATION:   2024 TAXSCAN (HC) 1946

In a recent ruling, the Delhi High Court dismissed the appeals and denied the retrospective application of the amendment made to the Finance Act, 2022. In this case, the two appeals have been filed by the Principal Commissioner of Income Tax. The petitioner department has challenged the Tribunal’s view that disallowance under Section 14A of the Income Tax Act, 1961 should be limited to the extent of exempt income earned during the year.

The bench relied on the memorandum explaining the provisions of the Finance Bill, 2022 which states that “This amendment will take effect from 1st April, 2022, and will accordingly apply in relation to the assessment year 2022-23 and subsequent assessment years.”. Thus, the Delhi High Court bench consisting of Justice Yashwant Varma and Justice Ravinder Dudeja dismissed the appeals and rejected the retrospective application of the 2022 amendment.

GST SCN and Assessment Order sent to Old Address Instead of New Address: Madras HC Sets aside Order [Read Order] M/s.Exacto Technology vs . The Assistant Commissioner of GST CITATION:   2024 TAXSCAN (HC) 1955

The Madras High Court has set aside the assessment order due to the Goods and Service Tax, the show cause notice and the assessment order were sent to the outdated address, while only the recovery notice was sent to the updated address. This lack of proper notice and failure to provide a personal hearing constituted a violation of natural justice.

The Court set aside the impugned order dated 21.09.2022. The petitioner is directed to submit their reply/objection along with necessary documents within two weeks. The respondent must then consider the reply and issue a 14-day clear notice for a personal hearing. The respondent will pass appropriate orders on merits and in accordance with the law after hearing the petitioner. The Writ Petition was allowed with no order as to costs. The connected miscellaneous petitions were closed.

Karnataka HC sets aside Income Tax Assessment Order Relying on Stock Exchange and Bank Data Without Providing Hearing Opportunity [Read Order] MR. SHAMEER RAZAIK vs THE PRINCIPAL COMMISSIONER OF INCOME TAX CITATION:   2024 TAXSCAN (HC) 1956

In a recent hearing, the Karnataka High Court set aside an assessment order passed on relying on stock exchange and band information without providing hearing opportunity for the assessee.

The court found that the information procured from the Stock Exchange and Banks had not been shared with the petitioner, which violated the natural justice principles. The court agreed with the petitioner that the Income Declaration Scheme should have been considered, and its omission vitiated the impugned orders. Therefore, the court set aside the order and remanded the case for fresh adjudication. The petitioner’s petition was allowed

Bombay HC rejects faulty affidavit filed by Customs Officer, ordered fresh filing by September 20 [Read Order] Prem Mehra & Ors vs Deputy Commissioner of Customs CITATION:   2024 TAXSCAN (HC) 1957

The Bombay High Court (HC), in a recent ruling, rejected the affidavit produced by the Customs Officer. The Bombay HC was satisfied that the respondent Surgive Mehra may not even have read the affidavit before signing it, as it begins by stating that he works as the Principal Commissioner in the Customs Commissionerate in Jodhpur (Preventive), Jaipur Headquarters, dated 27-08-2024.

The court held that Mr. Surgive Meena should affirm the copy and serve it by 20-09-2024. The court allowed the petitioner in this case to use the affidavit to show any contradiction in subsequent affidavits to be filed.

Wrongful deduction u/s 194-IB instead of 194 C: Madras HC quashes Income Tax Addition [Read Order] Manjula Jaganathan Hariprasad vs The Assessment Unit Income Tax Department CITATION:   2024 TAXSCAN (HC) 1949

The Madras High Court quashed the income tax addition due to wrongful deduction under Section 194-IB instead of Section 194C of the Income Tax Act, 1961. The respondents proposed three additions to the declared income, but the additions were dismissed without adequate reasoning.

The court, finding the assessment order flawed, quashed it and remanded the case to the Assessing Officer for reconsideration, directing the officer to await the valuation report before proceeding. The writ petition was disposed of without any order as to costs, and the connected miscellaneous petitions were also closed.

Revenue Challenges ITAT’s ESOP Deduction Decision: Karnataka HC Dismisses Petition, Upholds ESOP as Legitimate Business Expense [Read Order] THE PR. COMMISSIONER OF INCOME -TAX vs SAP INDIA PVT. LTD CITATION:   2024 TAXSCAN (HC) 1954

In a recent ruling, the Karnataka High Court dismissed the revenue’s petition challenging the Income Tax Tribunal Appellate decision on Employee Stock Ownership Plan ( ESOP ) deduction, the court upheld that ESOP as a legitimate Business expense.

The Bench comprising Justice S. G. Pandit and Justice C.M. Poonacha heard the arguments of both sides. The court observed that the Tribunal’s ruling was based on the Biocon Ltd. case, which held that ESOP discounts are valid business expenditures under Section 37(1). Since the Tribunal followed a well-established legal precedent, no substantial question of law was involved. Thus, the court dismissed the Revenue’s appeal, upholding the ITAT’s order that allowed SAP India’s deduction for ESOP expenses.

AO’s failure to Record Reasons for Subjective Satisfaction u/s 271 E: Madras HC sets aside Penalty Order [Read Order] GPR Textiles P Ltd vs The Additional Commissioner of Income Tax CITATION:   2024 TAXSCAN (HC) 1950

The Madras High Court set aside the penalty order under Section 271E of the Income Tax Act, 1961, due to the Assessing Officer’s failure to record reasons for subjective satisfaction. The petitioner has filed writ petitions challenging the orders issued by the 1st Respondent under Section 271D of the Income Tax Act, 1961, dated April 29, 2024.

Considering the facts and the arguments presented, the Court determined that the impugned orders should be set aside. The matter was remanded to the 1st respondent, who is directed to issue a detailed, reasoned order, documenting the satisfaction for the penalty under Section 271D and addressing the petitioner’s reply and objections. The 1st Respondent is also instructed to provide an opportunity for a personal hearing. The writ petitions are thus disposed of, with no order as to costs. The connected miscellaneous petitions are also closed.

Madras HC restores Cancelled GST Registration of Film Production Company on Payment of Part of Tax in due [Read Order] M/s.Chendur Film International vs The Superintendent of GST & Central Excise CITATION:   2024 TAXSCAN (HC) 1960

The Madras High Court has ordered the restoration of the GST registration for M/s. Chendur Film International, a film production company, which had its registration cancelled due to non-payment of taxes.

After considering the arguments, the high court decided to set aside the cancellation order. It directed that the GST registration be restored to enable the company to file all outstanding returns and remit statutory dues. The court stipulated that the restoration process should be completed within two weeks, and the petitioner must settle all returns and outstanding dues within eight weeks following the restoration.

Karnataka HC Quashes Income Tax Assessment Proceedings u/s 148A(b) Due to Non-Service of SCN [Read Order] SITHAPPANA HALLI BYCHAPPA vs THE INCOME-TAX OFFICER CITATION:   2024 TAXSCAN (HC) 1959

In a recent ruling, the Karnataka High Court quashed the income tax assessment proceedings under section 148A (b) of the Income Tax Act, 1961 due to non-service of the show-cause notice.

Since the petitioner was not properly served with the notice, the court concluded that the petitioner was deprived of the opportunity to present their case and explain the source of the cash deposit. Thus, the court set aside the impugned notices and orders. The court restored the matter to the stage of the reply to the Section 148A(b) notice, allowing the petitioner an opportunity to explain the source of the cash deposit.

GST Registration Cancelled Due to Non-Filing of Returns: Calcutta HC directs to restore Registration on Condition of Paying Tax with Interest and Penalty [Read Order] Biswajit Basu vs The Superintendent of Central Goods and Services Tax & Central Excise CITATION:   2024 TAXSCAN (HC) 1962

In the recent case, the High Court Of Calcutta, set aside the cancellation of GST registration due to non-filing of returns and directed the restoration of the registration, provided the petitioner filed all overdue returns and paid the necessary tax, interest, fines, and penalties.

A single bench of Judge Raja Basu Chowdhury directed the respondents to activate the portal within one week for the petitioner to file returns and pay dues, set aside the Appellate Authority’s order from 15th April 2024, and disposed of the writ petition.

Septic Shock Causes Delay in Filing GST Appeal, Clears Entire Tax liabilities: Madras HC condones Delay [Read Order] Great Heights Developers LLP vs Additional Commissioner CITATION:   2024 TAXSCAN (HC) 1961

In the recent case, the High Court of Madras condoned the delay in filing a GST appeal caused by septic shock. The petitioner, had cleared the entire tax liability but was unable to meet the appeal deadline due to medical complications

The court noted that the period of further delay in this case was only 24 days, and the petitioner had provided valid reasons to justify the delay. It was also observed that the petitioner had already paid the entire tax liability, and the proposed appeal was limited to contesting the penalty and interest. A single bench of Justice Senthilkumar Ramamoorthy directed the AA that if the appeal was submitted within ten days from the receipt of the order, it should be accepted and decided on its merits.

Deemed Assessment u/s 22(4) TNVAT can be issued if No Returns Filed, Considered as First Assessment Order: Madras HC dismisses Petition challenging Limitation Period [Read Order] M/s.Indira, proprietrix vs The Assistant Commissioner CITATION:   2024 TAXSCAN (HC) 1958

In a recent ruling, the Madras High Court dismissed the petition challenging the assessment order’s limitation period, stating that deemed assessment under section 22(4) of Tamil Nadu Value Added Tax Act ( TNVAT), 2006 can be issued if no VAT returns were filed and it should be considered the first assessment order.

Since no valid returns were filed, the court held that the first assessment was made in 2019. The limitation for reopening assessments under Section 27 of the TNVAT Act was not applicable until six years after the assessment, meaning the petitioner’s challenge to the orders had no merit. Hence, the writ petition of the petitioner was dismissed at no cost.

Madras HC Allows CVD Exemption on Silk Fabrics Import from China u/s 149 of Customs Act [Read Order] M/s.Microweb Enterprises Pvt Ltd vs The Deputy Commissioner of Customs Appraising Group CITATION:   2024 TAXSCAN (HC) 1948

The Madras High Court has granted the petitioner an exemption from Countervailing Duty (CVD) on silk fabrics imported from China under Central Excise Notification No. 30/2004, in accordance with Section 149 of the Customs Act, 1962.

Justice Senthil Kumar Ramamoorthi, in disposing of the writ petition, instructed the respondent to review and resolve the petitioner’s amendment request dated April 29, 2023, as per Section 149 of the Customs Act, within six weeks, ensuring that the petitioner is provided with a reasonable opportunity to present their case.

Madras High Court calls GST Registration Cancellation ‘Capital Punishment’ for Traders, orders easier rules and SMS alerts in regional languages [Read Order] M.G.Exim vs The Assistant Commissioner (Circle) (ST) CITATION:   2024 TAXSCAN (HC) 1951

In the recent case,the High Court of Madras called the cancellation of GST registration ‘capital punishment’ for traders. The court ordered the Goods and Services Tax ( GST ) department to simplify rules and send notices via SMS and in regional languages to better support small-scale entrepreneurs.

The court stated that the government’s goal is to promote trade, not to restrict it. The current practice of canceling registrations acts as a “capital punishment” for small-scale entrepreneurs, halting their business, affecting salaries, and damaging long-term progress. The GST department should relax rules, issue notices via SMS, and in regional languages.The court expects the GST department to amend provisions to consider these consequences.

A single bench of Justice B.Pugalendhi disposed of the writ petition.

2 hours 38 minutes Delay in Filing ITR due to Genuine Hardship: Karnataka HC condones delay, quashes Order issued u/s 119(2)(b) [Read Order] M/s. CENTURY JOINT DEVELOPMENTS PVT vs CENTRAL BOARD OF DIRECT TAXES GOVERNMENT OF INDIA CITATION:   2024 TAXSCAN (HC) 1963

In the recent ruling, the High Court of Karnataka, condoned a 2-hour, 38-minute 26 seconds delay in filing the Income Tax Return ( ITR ) due to genuine hardship and quashed the order issued under Section 119(2)(b) of the Income Tax Act,1961.

A single bench of Justice S.R. Krishna Kumar quashed both the order and the intimation, directed the respondents to condone the delay, and ordered the processing of the petitioner’s income tax return in accordance with the law, including the carry-forward of losses.

Income from Leasing IT Park Property Classifiable as Business Income: Madras HC [Read Order] The Commissioner of Income Tax vs M/s.Ascendas IT Park (Chennai) Ltd CITATION:   2024 TAXSCAN (HC) 1964

In a recent ruling, the Madras High Court upheld the Income Tax Appellate Tribunal’s (ITAT) decision that income derived from leasing out property in an IT park should be classified as business income, rather than income from house property.

Observing that there was no merit in the appeals filed by the Income Tax Department, the Court affirmed the tribunal’s ruling that the income in question should be taxed as business income. Consequently, the appeals were dismissed, and the substantial questions of law raised by the department were resolved in favor of the respondent.

Madras HC Rejects Plea to quash Income Tax Case Transfer after Incriminating Evidence Found in Kolkata [Read Order] M/s.Arise Industries and Agency Private Limited vs The Principal Commissioner of Income Tax CITATION:   2024 TAXSCAN (HC) 1965

Madras High Court, in a recent ruling, dismissed a writ petition challenging the transfer of an income tax case to the Central Circle in Kolkata, following the discovery of incriminating materials during a search and seizure operation.

Furthermore, the court determined that the petitioner’s objections regarding jurisdiction and financial hardship lacked merit, as the assessment needed to occur where the incriminating evidence was located. As a result, the writ petition was dismissed, affirming the transfer of the case to Kolkata.

No Denial of Preferential Duty or Detention by Customs Authorities w/o Formation of Opinion of Forgery in Import: Delhi High Court [Read Order] AUSIL CORPORATION PVT. LTD vs UNION OF INDIA & ORS CITATION:   2024 TAXSCAN (HC) 1970

The Delhi High Court has recently ruled that customs authorities cannot deny preferential duty rates or detain imported goods without forming a reasonable belief or opinion of forgery or non-compliance in import documentation. The court thus quashed detention orders against two companies importing platinum alloy sheets under the India-UAE Comprehensive Economic Partnership Agreement ( CEPA ).

This ruling reinforces the necessity for customs authorities to strictly adhere to statutory procedures when detaining goods or denying preferential duty rates under trade agreements like the India-UAE CEPA. Importers can expect that any verification of COO certificates or detention of goods must be based on well-substantiated grounds with proper application of mind by the authorities, as upheld by the Delhi High Court here.

Assessee’s Admission not a valid Ground for Income Tax Addition: Rajasthan HC [Read Order] Pr. Commissioner Of Income Tax vs M/s Esspal International Pvt. Ltd CITATION:   2024 TAXSCAN (HC) 1972

The Rajasthan High Court has recently held that an assessee’s admission cannot be treated as conclusive evidence for income tax additions in the absence of corroborating material.

The judgement was delivered in the case of Principal Commissioner of Income Tax, Udaipur vs. M/s Esspal International Pvt. Ltd., marking an important precedent on the interpretation of Section 68 of the Income Tax Act, 1961.

Delhi HC quashes Income Tax Reassessment Notices issued after Completion of Assessment Proceedings [Read Order] SATISH CHAND JAIN vs ASSISTANT COMMISSIONER OF INCOME TAX CITATION:   2024 TAXSCAN (HC) 1971

In a recent ruling, the Delhi High Court held that the impugned action for income tax reassessment could be sustained.

The bench comprising of Justice Ravinder Dudeja and Justice Yashwant Varma allowed the writ petition and quashed the impugned order dated 19.07.2022 under Section 148-A(d) as well as consequential notice under Section 148 of the Income Tax Act, 1961.

Violation of Natural Justice: Delhi HC quashes Retrospective GST Registration Cancellation [Read Order] CHAUHAN CONSTRUCTION CO vs COMMISSIONER OF DGST AND ANR CITATION:   2024 TAXSCAN (HC) 1973

The Delhi High Court in a recent ruling quashed the Goods and Services Tax ( GST ) cancellation order and restored registration for lack of compliance with natural justice.

The bench directed the respondents to restore the petitioner’s GST. registration. The bench further directed the petitioner to file his GST returns, which were due within thirty days, and also pay the tax along with interest and penalty. This the High Court bench comprising of Justice Vibhu Bakhru and Justice Sachin Datta allowed the present petition and set aside the impugned cancellation order and the SCN.

Liability for tax cannot be imposed on petitioner after the vehicle was taken by financier: Allahabad HC quashed recovery citation against petitioner [Read Order] Dileep Kumar Upadhyay vs State Of Up And 3 Others CITATION:   2024 TAXSCAN (HC) 1975

The Allahabad High Court quashed the recovery citation against the petitioner and held that the Liability for payment of motor vehicle tax cannot be imposed on the petitioner after the vehicle was taken by the financier.

The bench directed the petitioner to pay tax for the period prior, if not paid. The High Court bench comprising of Justice Shekhar B. Saraf and Justice Manjive Shukla, quashed the recovery citation against the petitioner.

Single Satisfaction Note Sufficient u/s 153C When Same Assessing Officer Handles Both Searched Person and Other Party: Madras HC [Read Order] M/s.LKS Gold House Private Limited vs The Deputy Commissioner of Income Tax CITATION:   2024 TAXSCAN (HC) 1974

In a recent ruling, the Madras High Court ruled that a single satisfaction note was sufficient under Section 153C of the Income Tax Act, 1961, when the same assessing officer handles both searched persons and other persons.

The court emphasized that the satisfaction note only needs to reflect a prima facie belief that the documents seized during the search related to the income of another person. The court found that the AO had sufficient reason to believe that the seized materials were related to the petitioners, based on the “J Pack” software entries and the statements recorded during the search. Therefore, the satisfaction note was validly recorded, even though the same Assessing Officer was involved for both the searched person and the petitioners. The court dismissed the petition and upheld the validity of the assessment orders.

Income Tax Refund Cannot Be Denied Merely Due to Non-Reflection in Form 26AS: Delhi HC [Read Order] HARI KISHAN SHARMA vs GOVT OF NCT OF DELHI & ANR. CITATION:   2024 TAXSCAN (HC) 1968

In a significant ruling, the Delhi High Court has held that the Income Tax Department cannot deny a taxpayer’s refund claim merely because the Tax Deducted at Source ( TDS ) does not reflect in Form 26AS. The court quashed the department’s order rejecting the taxpayer’s application to file a revised return and directed that the refund be processed accordingly.

This ruling reassures that procedural lapses or administrative errors, such as non-reflection of TDS in Form 26AS, would not trouble taxpayers who have complied with their statutory and compliance obligations.

Natural Justice Violation: Delhi HC allows Second Opportunity to Contest GST Registration Cancellation Order [Read Order] M/S SS ENTERPRISES vs PRINCIPAL COMMISSIONER CITATION:   2024 TAXSCAN (HC) 1969

In a recent ruling, the Delhi High Court allowed M/S SS Enterprises a second opportunity to contest the cancellation of its GST registration, recognizing a violation of the principles of natural justice. The petitioner, SS Enterprises, challenged both the Show Cause Notice (SCN) issued on March 5, 2024, and the subsequent cancellation order dated April 2, 2024.

However, it did annul the rejection order dated May 1, 2024, for revocation of the cancellation, granting the petitioner an additional time of two weeks to respond to the allegations raised in the SCN dated April 19, 2024, for ensuring that due process is followed.

Illness of Petitioner: Delhi HC directs to Restore GST Registration for 30 days for Filing Returns [Read Order] M/S BANSAL EXIM vs COMMISSIONER OF DGST CITATION:   2024 TAXSCAN (HC) 1967

The Delhi High Court, recently issued a directive to restore the Goods and Services Tax (GST) registration of a petitioner for 30 days to allow them to file their outstanding returns.

Drawing from the precedent set in the TVL. Suguna Cutpiece Center case by the Madras High Court, the court observed that a taxpayer’s GST registration, vital for business operations, cannot be cancelled without providing a fair opportunity to rectify the issue. Consequently, the Delhi High Court restored the GST registration for the limited period, allowing the petitioner to file the necessary returns.

The proper officer was instructed to review the filings and decide on any further action, including the issuance of a fresh show cause notice if needed.

Kerala High Court sets aside ITC denial u/s 16(4) of CGST Act, Orders Reconsideration in Line with M. Trade Links Judgment [Read Order] GOVINDAPURATH MEETHAL DEEPAK vs STATE OF KERALA CITATION:   2024 TAXSCAN (HC) 1984

The Kerala High Court has overturned a denial of Input Tax Credit ( ITC ) under Section 16(4) of the Central Goods and Services Tax (CGST) Act, 2017 directing a reassessment in line with the principles established in the recent M. Trade Links case.

In a very similar case, the Kerala High Court issued a similar ruling in favour of Malamal Variamthody Manoj, Proprietor of Kairali Tradelink, Kozhikode, setting aside the denial of ITC on account of the provisions of Section 16(4) of the CGST/SGST Acts, directing the respondents to reconsider the petitioner’s claim in line with the court’s decision in M. Trade Links v. Union of India. Notably, the petitioner was represented by the same team of lawyers in this case.

Second Provisional Attachment Order u/s 83 of GST Act cannot be issued without Fresh Reasons: Allahabad HC [Read Order] M/S R D Enterprises vs Union Of India And 3 Others CITATION:   2024 TAXSCAN (HC) 1987

A second provisional attachment order issued under Section 83 of GST ( Goods and Services Tax ) Act cannot be issued without providing fresh reasons, ruled the Allahabad High Court. Without proper justification, the attachment order is arbitrary. A writ petition challenging a provisional attachment order dated May 16, 2024. This order, issued under Section 83 of the CGST Act, targeted the same bank account that had previously been attached by an order dated February 16, 2023.

The bank was instructed to lift the attachment, allowing the petitioner access to their account. However, it was also clarified that the department have the liberty to proceed in accordance with law.

Rs. 17.48Cr adjusted erroneously towards Income Tax Demand: Karnataka HC directs for Refund with Interest [Read Order] LSI INDIA RESEARCH AND DEVELOPMENT PRIVATE LIMITED vs ASSISTANT DIRECTOR OF INCOME TAX CITATION:   2024 TAXSCAN (HC) 1978

In a significant ruling, the Karnataka High Court has directed the refund of Rs. 17.48 crore, which was erroneously adjusted towards an Income Tax demand, along with interest.

Given that the stay order was issued before the adjustment of the refund, the adjustment was deemed illegal. As a result, the single bench of Justice Sunil Dutt Yadav directed the third respondent to refund ₹17, 48, 45,320 within eight weeks, along with applicable interest. The petition was thereby disposed of.

Delhi HC quashes Income Tax Reassessment Advanced on Same Grounds as Prior Assessment and Order [Read Order] JASWANT SINGH JUNEJA vs INCOME TAX OFFICER CITATION:   2024 TAXSCAN (HC) 1976

The Delhi High Court recently allowed a Petition seeking to quash an impugned reassessment order issued by the Income Tax Officer, Ward-63(1), Delhi against the Financials of the Petitioner Proprietary firm M/s. JMK Enterprises. The instant Writ Petition was filed against the Revenue alleging mishandling of the Petitioner’s Assessment for the Assessment Year 2014-15 by the Respondent Income Tax Officer.

On the basis of the findings and evaluation of law, the Delhi HC allowed the Petition while quashing the impugned reassessment order under Section 148-A(d) and the consequential Notice under Section 148 of the Income Tax Act, 1961 citing its overlap with the prior Notice and Assessment Order.

Delhi HC quashes Customs Duty Recovery  against Deceased Individual, sets aside Demand of Rs. 22.6 Lakhs and Penalty [Read Order] SANGEETA GOYAL vs COMMISSIONER OF CUSTOMS (EXPORTS) CITATION:   2024 TAXSCAN (HC) 1977

In a recent ruling, the Delhi High Court set aside the customs duty recovery proceedings initiated against a deceased individual.

The Delhi High Court bench observed that the SCN and the order in the original was passed against a dead person and there was a failure to include legal representatives. Thus the bench held that Order-in-Original confirming the demand of duty drawback amounting to Rs. 22,62,352 and penalty to be set aside. The bench comprising of Justice Ravinder Dudeja and Justice Yashwant Varma allowed the writ petition and quashed the recovery proceedings initiated against a dead person.

GST Dept has to Verify Correctness of Returns and Particulars before Initiating Action u/s 73:  Madras HC [Read Order] A K M Balu vs The Assistant Commissioner CITATION:   2024 TAXSCAN (HC) 1988

The Madras High Court has ruled that the Goods and Services Tax ( GST ) Department should thoroughly verify the correctness of tax returns before initiating action under Section 73 of the Tamil Nadu Goods and Services Tax ( TNGST ) Act, 2017. Thus, the court set aside the demand order.

The GST department was instructed to review the matter afresh, considering the petitioner’s additional submissions, and provide an opportunity for a personal hearing, ensuring that the decision was made based on the merits of the case and in accordance with the law. With these directions, the writ petition was disposed of, and the connected miscellaneous petitions were closed.

Light Green Float Glass (tinted non-wired type) shall be Classified under Tinted Glass: Madras HC [Read Order] M/s.Asahi India Glass Ltd vs Commissioner of Customs CITATION:   2024 TAXSCAN (HC) 1983

The Madras High Court ( HC ) in a recent case ruled that light green float glass ( tinted non-wired type ) shall be classified under tinted glass for duty purposes.

In result, the Court quashed the show cause notice issued by the Customs Department and directed the department to clear the goods under CTH 70051010, provided that the goods imported matched the description of “Light Green Float Glass (Tinted Non-Wired Type).” However, the Court declined to issue a declaration affirming the correctness of the classification, noting that such a declaration would require a detailed examination of the goods, which was beyond the scope of the writ jurisdiction.

Surplus Electricity Supplied Free of Cost Entitled to Cenvat Credit: Orissa HC [Read Order] Principal Commissioner, CGST vs Indian Metal and Ferro Alloys Limited CITATION:   2024 TAXSCAN (HC) 1989

In a recent case before Orissa High Court it was ruled that surplus electricity supplied free of cost is entitled to Cenvat Credit allowing businesses to benefit from tax relief.

The High Court Bench of Justice Arindam Sinha and Justice M.S. Sahoo that there was no substantial question of law regarding the use of manufactured electricity in one unit of respondent but transmitted for use by another for use in manufacture of dutiable goods, to obtain cenvat credit. Hence Appeal was dismissed.

Cancellation of GST registration cannot be withheld due to ongoing Assessment Proceedings: Delhi HC [Read Order] M/S PIHU ENTERPRISES vs PRINCIPAL COMMISSIONER OF DEPARTMENT OF TRADE AND TAXES GNCTD CITATION:   2024 TAXSCAN (HC) 1981

In a recent ruling, the Delhi High Court directed Goods and Service Tax ( GST ) authorities to reconsider the application cancellation of the petitioner’s GST registration and held that cancellation cannot be withheld due to ongoing assessment proceedings.

The Delhi High Court bench directed the petitioner to consider the application for cancellation of GST registration as the cancellation cannot be withheld due to any assessment proceedings or any proceedings for recovery of any statutory dues from the taxpayers. The Delhi High Court bench consisting of Justice Vibhu Bakhru and Justice Sachin Datta, directed the petitioner to provide the proper officer with an address for future correspondence along with the necessary KYC documents.

Karnataka HC sets aside Income Tax Penalty Notice and Order issued by AO on Unwarranted Genuineness Doubts ignoring Society’s Submissions [Read Order] SRI SHIVAKUMARASWAMY CREDIT CO-OPERATIVE SOCIETY LTD vs THE INCOME TAX OFFICER WARD-1 CITATION:   2024 TAXSCAN (HC) 1982

In a recent ruling, the Karnataka High Court set aside the assessment order and penalty notices due to the assessing officer’s unwarranted doubts about the genuineness of the transaction, ignoring the society’s submissions.

Therefore, the court set aside the assessment orders and penalty notices related to the assessment, and the matter was returned to the stage of reply to the notice under Section 148-A(b) of the Income Tax Act. All contentions were kept open for reconsideration. The petition of the petitioner was disposed of.

Application for Cancellation of GST Registration cannot be withheld on account of Assessment/Recovery Proceedings: Delhi HC [Read Order] M/S KUNDAN TRADING COMPANY vs PR. COMMISSIONER OF DEPARTMENT OF TRADE CITATION:   2024 TAXSCAN (HC) 1986

The Delhi High Court held in a recent matter that an Application for the Cancellation of Goods and Services Tax (GST) Registration cannot be withheld by the Revenue Department on the basis of any impending assessment or recovery proceedings against the Applicant applying for cancellation.

In light of the observations, the Delhi High Court proceeded to direct the Respondent Principal Commissioner of Department of Trade & Taxes, Government of NCT of Delhi to consider the application for cancellation of GST Registration reaffirming that the cancellation may not be withheld by the Commissioner citing any impending assessment or recovery proceedings against the Applicant seeking cancellation.

Additionally, the Delhi High Court directed the Petitioner to furnish proper documentation regarding their address and other particulars in order to facilitate the cancellation of their GST registration.

Indirect Taxes do not Supersede Orders in CIRP: Andhra Pradesh HC quashes Demand Orders Against Patanjali [Read Order] Patanjali Foods Limited vs The Assistant Commissioner St Fac and Others CITATION:   2024 TAXSCAN (HC) 1985

In a recent case before Andhra Pradesh High Court the Patanjali’s liabilities under Value-added Taxes (VAT)/ Goods and Services Tax ( GST ) were nullified following the approval of Resolution Plan by the National Company Law Tribunal’s ( NCLT ).

The High Court Bench of Andhra Pradesh comprising Justice R Raghunandan Rao and Justice Harinath.N allowed both the writ petitions, setting aside the Demand-cum-Adjudication orders issued by Assistant Commissioner, Kakinda and Deputy Commissioner (ST), Vijayawada.

However, since the proceedings had covered the period which would not be affected by orders of the NCLT, Mumbai Bench. It would be open to the Assessing Authorities to issue fresh notice for quantifying the taxes and other dues arising for the period 05.09.2019 to 31.03.2020.

Setback to Hero Motocorp: Rajasthan HC dismisses Writ filed challenging GST Show-Cause Notice [Read Order] M/s Hero Motocorp Limited vs Union Of India CITATION:   2024 TAXSCAN (HC) 1990

The Rajasthan High Court in a recent ruling held that the writ jurisdiction of the High Court cannot be invoked for challenging GST Show-Cause Notices.

The High Court bench comprising Justice Ganesh Ram Meena and Justice Pankaj Bhandari was of the view that writ jurisdiction cannot be invoked to challenge an SCN as the petitioner has the right to file a reply to the show-cause notice according to the CGST Act and held that any order passed by the authorities is appealable.

The writ petition was dismissed by the High Court, but it was held that the petitioner was free to reply to the notice and that the authorities had to act in accordance with law while dealing with the representations.

Instructions and Circulars can be issued Only for Supplementing Statutory Provisions: Punjab & Haryana HC sets aside Income Tax Order Contrary to Income Tax Act [Read Order] AMARJIT KAUR vs UNION OF INDIA AND OTHERS CITATION:   2024 TAXSCAN (HC) 1991

In a recent case, the Punjab and Haryana High Court held that instructions and circulars can be issued only for supplementing statutory provisions and set aside Income Tax Order Contrary to Income Tax Act,1961.

In view of the judgement , the division bench of Justice Sanjeev Prakash Sharma and Justice Sanjay Vashisth allowed the writ petition . Further held that the observations and order passed above shall apply mutatis mutandis to the present case. The court set aside the notice issued by the Jurisdictional Assessing Officer under section 148 of the Act and the consequential proceedings.

“Immediately Allow Petitioner-Firm to Login on the GST portal”: Rajasthan HC to GSTN for Failure to Login with provisional GSTN since 2017 [Read Order] M/s Shri Dayalu Enterprises vs State Of Rajasthan CITATION:   2024 TAXSCAN (HC) 1996

The Rajasthan High Court recently directed the GST Network ( GSTN ) to immediately allow the petitioner firm to log in on the Goods and Services Tax ( GST ) portal.

The firm, which had successfully migrated from the VAT regime to GST, faced issues when it was denied login access on the GST portal due to the mismatch. Despite resubmitting the correct PAN details and reaching out to various authorities, including the jurisdictional GST officers and the GSTN helpdesk, the petitioner could not resolve the issue, resulting in an inability to file returns and comply with GST obligations since July 2017.

Thus, the Goods and Services Tax Network and GST Authorities were directed to immediately allow the petitioner-Firm to login on the GST portal for completing the process of migration for uploading its returns and to deposit the due tax.

“Vitamins And Minerals Pre-Mix” does Not Fall Under “Ores And Minerals”, “Drugs And Medicines” Or “Chemicals”: Allahabad HC [Read Order] M/S Sarswat Peroxides Private Ltd vs The Commissioner Commercial Taxes CITATION:   2024 TAXSCAN (HC) 1992

In a significant ruling, the Allahabad High Court has upheld the finding of the Commercial Tax Tribunal holding that “vitamins and minerals pre-mix” are unclassified goods, do not fall under “ores and minerals”, “drugs and medicines” or “chemicals” under Schedule II of the U.P. Value Added Tax Act, 2008.

While dismissing the revision application, the court upheld the decision of the Commercial Tax Tribunal that “vitamins and minerals pre-mix” is an unclassified item under the UPVAT Act.

Madhya Pradesh HC upholds Deletion of Addition u/s 68 of Income Tax Act in absence of Substantial Question [Read Order] PR. COMMISSIONER OF INCOME TAX CENTRAL vs MUKUL KAKAR CITATION:   2024 TAXSCAN (HC) 1995

The Madhya Pradesh High Court in a recent case held upheld the order deleting the addition made under section 68 of the Income Tax Act, 1961 due to lack of substantial question.

The bench held that the present case does not involve any substantial question of law so as to meet the provisions of Section 260(A) for admitting the appeal, the High Court dismissed the Revenue’s appeal.

Gauhati HC quashes Demand & Penalty In Absence of Element Of Misstatement & Intention To Evade Payment Of Service Tax [Read Order] COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX vs M/S NORTH EASTERN CABLES AND CONDUCTORS PRIVATE LIMITED CITATION:   2024 TAXSCAN (HC) 1997

The Gauhati High Court in a recent case quashed the demand and penalty under Central Goods and service Tax Act ( CGST ), 2017 in absence of element of misstatement and intention to evade payment of service tax . It was held that the fact of wilful misstatement or suppression should specifically be mentioned in the show-cause notice.

Since the Department had not misstated any fact with intent to evade the payment of service tax, the Division Bench of Chief Justice Vijay Bishnoi and Justice Suman Shyam quashed the demand of service tax and penalty as there was no element of misstatement and contravention of Service Tax Rules with the intent to evade payment of Service Tax.

Gauhati HC quashes GST Notification 56/2023 Extending of Demand Order Deadlines ruling Ultra Vires to Provision 168A [Read Order] SHREE SHYAM STEEL vs UNION OF INDIA AND 5 ORS CITATION:   2024 TAXSCAN (HC) 2000

In a recent judgment, the Gauhati High Court quashed Notification No. 56/2023, issued by the Central Board of Indirect Taxes and Customs ( CBIC ) on December 28, 2023, deeming it ultra vires to Section 168A of the Central Goods and Services Tax (CGST) Act, 2017.

After hearing the arguments, the bench of Devashis Baruah ruled that Notification 56/2023 was inconsistent with Section 168A of the CGST Act and could not withstand legal scrutiny. Consequently, any actions based on the notification, including the extension of deadlines for passing orders, were deemed invalid.

‘Abuse of Process of Law Cannot be Permitted’: MP HC Bars GST Authorities invoking IPC Provisions without applying GST Penal Provisions [Read Order] DEEPAK SINGHAL vs UNION OF INDIA AND OTHERS CITATION:   2024 TAXSCAN (HC) 1999

The Madhya Pradesh High Court has ruled that the GST authorities cannot invoke penal provisions under the Indian Penal Code ( IPC ) without applying the corresponding penal provisions under the GST Act, 2017. The court added that such abuse of process of law cannot be permitted.

The Madhya Pradesh High Court quashed the FIR and the consequential proceedings against the petitioner, affirming that the GST authorities must adhere to the procedural requirements of the GST Act before initiating prosecution.

No GST Provision Compels Disclosure of Route of Transportation: Allahabad HC quashes Detention of Goods based on Different Route Taken [Read Order] M/S Vishal Steel Supplier vs State Of U.P. And 3 Others CITATION:   2024 TAXSCAN (HC) 2006

In a landmark decision, the Allahabad High Court quashed the detention of goods belonging to M/s Vishal Steel Supplier, which were intercepted by authorities on the grounds that the transportation route deviated from the usual path. The court found that no provision under the Goods and Services Tax ( GST ) law mandates the disclosure of the specific route for transportation, and the detention was based on mere speculation.

The Allahabad High Court Single Bench of Justice Piyush Agrawal cited a prior ruling in M/s Om Prakash Kuldeep Kumar to reinforce that the power to detain and seize can only be exercised if the goods are not accompanied by genuine documents.

The Allahabad High Court ruled in favour of the petitioner, quashing the orders from the tax authorities, and directed the refund of any deposited amount.

Penalty alone can be Challenged when Tax is Paid: Madras HC directs GST dept to take Appeal on Record [Read Order] M/s.Aatral Associates vs The State Tax Officer CITATION:   2024 TAXSCAN (HC) 2004

The Madras High Court ruled that a taxpayer can challenge the imposition of a penalty under the Goods and Services Tax ( GST ), when the liability is paid. The court directed the GST Department to take an appeal filed solely against the penalty on record, thereby providing relief to the petitioner who had faced rejection of their appeal by the lower authority.

The court thus set aside the intimation dated 07.02.2024, issued by the second respondent, which had rejected the appeal. The court further directed the second respondent to take the appeal on record and proceed to adjudicate the matter on its merits, while ensuring that the petitioner is provided with sufficient opportunity to present their case.

Uncooked Extruded Snack Pellets attract 5% GST: Gujarat HC quashes SCN raising 18% GST Demand against Food Products Manufacturer [Read Order] J. K. PAPAD INDUSTRIES & ANR. vs UNION OF INDIA & ORS. CITATION:   2024 TAXSCAN (HC) 2012

In a recent ruling, the Gujarat High Court quashed a Show Cause Notice (SCN) issued against J.K. Papad Industries, which had demanded an 18% Goods and Services Tax (GST) on the supply of uncooked extruded snack pellets. It was noted that the petitioner had acted in good faith by classifying their product as per the earlier rulings and was entitled to the benefit of the lower 5% rate.

The Gujarat High Court bench of Justice Bhargav D Karia and Justice Niral R Mehta, after reviewing the case, held that the demand for 18% GST was unjustified. It found that the petitioner had acted in good faith by classifying their product as per the earlier rulings and was entitled to the benefit of the lower 5% rate. The court also directed the authorities to regularize the past returns filed by the petitioner at the 5% rate, rejecting the imposition of 18% GST for the prior period.

Failure of CA to appear before AO Results in Ex-Parte Income Tax Assessment: Karnataka High Court quashes Order [Read Order]  KABBATHI BOCHEGOWDA SHIVANNA vs COMMISSIONER OF INCOME TAX (APPEALS) CITATION:   2024 TAXSCAN (HC) 1980

In a recent ruling, the Karnataka High Court quashed income tax assessment order, ruling that the petitioner had entrusted the case to a Chartered Accountant, who was unable to appear before the Assessing Officer (AO). This absence led to an ex parte order being passed against the petitioner.

The court also recorded the petitioner’s commitment to unconditionally withdraw the appeal and set aside both the Assessment Order and Demand Notice dated March 24, 2023.

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