Annual Digest 2024: Supreme Court and High Court Cases on Taxation [Part 36]

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.  

Reasons for Non-compliance with GST Notices found Genuine: Madras HC Directs GSTN to allow Return Filing and Payment Subramaniam Senthil Kumar vs The Superintendent of GST and Central Excise CITATION: 2024 TAXSCAN (HC) 2304

Recently, the Madras High court has directed the Goods and Services Tax Network ( GSTN ) to allow the return filing and payment after finding the reasons for Non-Compliance with the GST notices were found to be genuine.

Justice Krishanan Ramasamy ruled that since the petitioner has already filed all the Returns up to date, the cancellation of the registration stands revoked.

Sale Deed Does not Verify Classification of Land as Agricultural for Taxation Purposes: Delhi HC PR. COMMISSIONER OF INCOME TAX DELHI vs SANGEETA JAIN CITATION: 2024 TAXSCAN (HC) 2305

The Delhi High Court  in a significant case has held that sale deed is not a document issued by the revenue authorities or any government authority which would certify the agricultural nature of a land. The court viewed that a sale deed primarily reflects the transaction between the parties and the terms of sale, but it does not, in itself, verify the land’s classification as agricultural for the taxation purposes.

A division bench of Justices Vibhu Bakhru and Swarana Kanta Sharma held that a sale deed primarily reflects the transaction between the parties and the terms of sale, but it does not, in itself, verify the land’s classification as agricultural for the taxation purposes. Therefore, heavy reliance on the sale deed to establish the agricultural character of the land would be misplaced.

Madras HC Quashes GST Demand order issued against Deceased Proprietor after 4 Years of her Death, Remands Matter M/s.S.R.Steels vs The Deputy State Tax Officer CITATION: 2024 TAXSCAN (HC) 2306

The Madras High Court quashed the GST ( Goods and Services Tax ) demand order issued against the deceased proprietor after 4 years. The court remanded the matter for reconsideration.

Considering the submissions of the both counsels, Justice Krishnan Ramasamy noted that impugned order was passed by the respondent against a dead person, who was passed away on 21.11.2019. Thus, it is to be set aside.

The bench directed the department to release the bank attachment and communicate to unfreeze the bank account to the concerned bank as the impugned order was set aside. However, all these should be done on receipt of 10% pre-deposit.

GST Dept neither considered Reply nor Provided any Hearing Opportunity before Passing Order: Madras HC sets aside Order M/s.Raj Guru vs The Assistant Commissioner (ST)(FAC) CITATION: 2024 TAXSCAN (HC) 2307

The Madras High Court set aside the Goods and Services Tax ( GST ) demand order noting that the GST department neither considered reply nor provided any hearing opportunity before passing the demand order.

Justice Krishnan Ramasamy noted that the respondents had neither considered the reply nor provided any opportunity of personal hearing to the petitioner prior to the passing of impugned order. Thus, it set aside the order as the order was passed in violation of principles of natural justice.

Registration of Family Settlement not required for Computing Capital Gains: Punjab & Haryana HC RAJIV MEHRA PROP. H.D. MEHRA CHEMICALS WORKS vs THE COMMISSIONER OF INCOME TAX CITATION: 2024 TAXSCAN (HC) 2308

The Punjab & Haryana High Court in a recent case, has held that family settlement is not required to be registered for computing capital gains.The court held that even if the existence of the Will may be ignored, so far as the Appellant-Assessee is concerned, he has become the holder of the property on the basis of a family settlement.

A division bench of Justice Sanjeev Prakash Sharma and Justice Sanjay Vashisth viewed that even though the documents relating to Will may not have been accepted by the ITAT, still the calculation has to be done treating the indexation as on 01.04.1981 and merely because the family settlement was arrived in the year 2003 would not make any difference, and the order passed by the CIT (A), is therefore, found to be correct although the CIT (A) has applied Section 49(i) (ii) of the Act of 1961.

Karnataka HC Orders Income Tax Dept to Refund Full Amount with Interest to IBM India as per SC’s Directive IBM INDIA PRIVATE LIMITED. vs THE DEPUTY COMMISSIONER OF INCOME TAX CITATION: 2024 TAXSCAN (HC) 2309

In a recent ruling, the Karnataka High Court directed the Income Tax Department to refund the entire amount due, including interest, to IBM India Private Limited. This ruling was made to enforce compliance with previous directives issued by the Supreme Court and other judicial bodies.

Justice S.R. Krishna Kumar acknowledged the undisputed facts that the petitioner was due a refund, supported by evidence from previous orders and Form 26B applications. The court observed that despite the petitioner’s compliance with procedural requirements, the respondents had delayed processing the refunds.

Challenge on Appointment of Junior Assistant (CT & GST): Orissa HC directs to decide on Extending benefit available u/r 16 of RA Rules r/w Rule 12 of CA Rules Ajit Kumar Panda vs State of Odisha CITATION: 2024 TAXSCAN (HC) 2310

In a significant case challenging the appointment of Junior Assistant ( CT & GST ), the Orissa High Court directed to decide on extending benefits available under Rule 16 of Odisha Civil Services ( Rehabilitation Assistant ) Rules, 1990 ( RA Rules ) read with Rule 12 of Odisha Group-C and Group-D Posts ( Contractual Appointment ) Rules, 2013 ( CA Rules ).

Justice Murahari Sri Raman issued writ of mandamus by directing the opposite parties to consider taking a decision with regard to modification of the Office Order of the Additional Commissioner of CT & GST, CT & GST Territorial Range, Bhubaneswar suitably within a period of three months from today.

Turnover Discrepancy of Rs.86 Crore! Delhi HC quashes Income Tax Addition Ultra Vires Grounds for Reopening Assessment by AO THE PR. COMMISSIONER OF INCOME TAX – CENTRAL -1 vs NAVEEN INFRADEVELOPERS & ENGINEERS PVT. LTD CITATION: 2024 TAXSCAN (HC) 2312

The Delhi High Court quashed the addition of supplementary grounds beyond the ones raised during the initiation of reassessment proceedings while adjudging a matter regarding massive discrepancy of Rs.86 Crore in the assessed turnover of an Assessee.

The Division Bench of the Delhi High Court comprising Justice Vibhu Bakhru and Justice Swarana Kanta Sharma while dismissing the Appeal, referred to the decision of the same Court in Ranbaxy Laboratories Ltd. v. Commissioner of Income Tax (2011) and ATS Infrastructure v. Assistant Commissioner of Income Tax, Circle 1 (1) & Ors. (2024) to maintain that no income tax addition can be made by AO during reassessment proceedings, in the event that the proposed additions have not been made on the basis of same Grounds as purported in the preceding Notice issued to the Assessee.

GST Dept Debits 10% before Appeal period completion: Karnataka High Court directs use of amount as Pre-Deposit for Appeal INDIAN POTASH LIMITED vs DEPUTY COMMISSIONER OF COMMERCIAL TAXES CITATION: 2024 TAXSCAN (HC) 2313

In a recent ruling, the Karnataka High Court directed the Goods and Services Tax ( GST ) Act department to treat the prematurely debited 10% amount from the petitioner’s electronic credit ledger as a pre-deposit for the appeal, as the debit was made before the completion of the statutory appeal period.

Justice S.R. Krishna Kumar heard both side’s arguments and acknowledged the petitioner’s right to file an appeal within the four-month period from December 22, 2023, as per Section 107 of the KGST Act.

The court directed AA to use the 10% debited amount from the petitioner’s electronic credit ledger as a pre-deposit for the appeal and to dispose of the appeal without requiring further deposits. The writ petition was allowed.

Notice Sent to Non-Existent Entity Post-Merger Deemed Invalid: Karnataka HC quashes Income Tax Notice HARMAN CONNECTED SERVICES CORPORATION INDIA PRIVATE LIMITED vs INCOME TAX OFFICER CITATION: 2024 TAXSCAN (HC) 2314

In a recent ruling, the Karnataka High Court quashed an income tax notice and deemed it invalid as the notice was issued to an entity that had ceased to exist following its merger.

Justice S Sunil Dutt Yadav heard the case and observed that the petitioner had officially informed the income tax authorities about the merger with Symphony Services Pune Pvt. Ltd. back in 2011.The court quashed the notice issued to Symphony Services Pune Pvt. Ltd., along with any subsequent proceedings under Sections 148A(d) and 148 of the Income Tax Act, 1961. The petition was disposed of.

Hand Sanitisers are not Disinfectants: Bombay HC quashes 2020 GST Press Release by Centre M/s Schulke India Pvt. Ltd vs Union of India CITATION: 2024 TAXSCAN (HC) 2315

In a landmark ruling, the Bombay High Court has quashed a 2020 Press Release issued by the Ministry of Finance, which classified alcohol-based hand sanitisers as “disinfectants” and imposed an 18% Goods and Services Tax (GST) rate.

The Court noted that while the executive can issue guidance, it cannot impose interpretations that preempt judicial or quasi-judicial determinations by tax authorities. By attempting to classify hand sanitisers without legislative backing, the Press Release had intruded upon the domain reserved for judicial interpretation, which was a clear violation of the separation of powers.

Delhi HC grants Writ Petition for Defreezing Bank Account, No Violation of FEMA or Customs Act Found in Export Proceeds Transaction INNOVATIVE CRAFTS vs UNION OF INDIA & ORS CITATION: 2024 TAXSCAN (HC) 2316

The Delhi High Court granted Writ Petition for Defreezing Bank Account as there was no Violation of FEMA (Foreign Exchange Management Act), 1999 or Customs Act, 1962 during the Export of Proceeds Transaction.

In Analysis of the Section 75(1) of the Customs Act, 1962 states that the drawback shall not be allowed in case the sale proceeds in respect of the exports are not received in India within the time allowed under Foreign Exchange Management Act, [“FEMA”] 1999. However, RBI Master Circular No. 14/2013-14 permits the receipt of foreign remittances from an entity other than consignee of the exported goods subject to the conditions prescribed therein.

Full Sale Consideration taken Without Indexed Cost Adjustment in Capital Gain Calculation: Karnataka HC sets aside Income Tax Reassessment Notice DEVANUR THIMMASETTY SRINIVASA vs INCOME TAX OFFICER CITATION: 2024 TAXSCAN (HC) 2317

In a recent ruling, the Karnataka High Court quashed an income tax reassessment notice issued to the petitioner where the full sale consideration was considered in calculating capital gains without applying an indexed cost adjustment.

Justice S Sunil Dutt Yadav heard both side’s arguments and observed that the sale transaction dated July 20, 2015, appeared more relevant to the 2016-17 assessment year. The court also observed that the assessment order did not account for the indexed cost of acquisition in calculating capital gains which prima facie seemed to disadvantage the petitioner.

No Right to Assessing Authority in Reassessing Prior Years Without Inquiry While Considering  Assessment of Relevant Year under Income Tax Act: Kerala HC KINGS INFRA VENTURES LTD vs ASSISTANT COMMISSIONER OF INCOME TAX CITATION: 2024 TAXSCAN (HC) 2318

In a significant case, the Kerala High Court held that assessing authority has no right to reassess prior years without inquiry while determining the assessment of relevant years under Income Tax Act, 1961.

The Division Bench of Justices A.K. Jayasankaran Nambiar and Syam Kumar V.M. viewed that how the assessing authority, as well as the First Appellate Authority, while considering assessment proceedings for the assessment years 2011-12 could have embarked upon an enquiry with regard to the nature and extent of business that was carried on by the assessee during the assessment years from 1999- 2000 to 2009-10.

Kerala HC Sets aside Consequential Order Passed By Assessing Authority Beyond Terms of Remand By Commissioner MANJOO AND COMPANY vs THE ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE - 1 CITATION: 2024 TAXSCAN (HC) 2319

The Kerala High Court sets aside consequential order passed by Assessing Authority beyond terms of remand by Commissioner. It was observed that the concern of the Assessing Authority, while passing a consequential order, has to be limited to those specific issues that have been remanded to it for consideration by the Commissioner.

The Division Bench comprising Justices A.K. Jayasankaran Nambiar and Syam Kumar V.M.viewed that the Assessing Authority, who passed the consequential order, apparently strayed beyond the terms of the remand by the Commissioner under Section 263 of the Income tax act which is unacceptable.

Wrongful Deposit of TDS By Employer: Gauhati HC Denies Interest u/s 244A of Income Tax Act M/S SURYA CONSTRUCTION vs THE UNION OF INDIA AND 6 ORS CITATION: 2024 TAXSCAN (HC) 2320

The Gauhati High Court has held that interest on refund under Section 244A of the Income Tax Act, 1961 applies only to those cases where refund is delayed by the Income Tax Department and declined interest to construction contractor whose TDS was deposited in the wrong PAN number by the Defence Ministry’s Border Roads Organisation, the Employer.

A single bench of Justice Devashis Baruah viewed that even if the amount was deposited in the correct PAN number, Petitioner was not entitled to any refunds, rendering the provision inapplicable to the case.

Entry Made In Dispatch Register Does Not prove Service of Notice under Income Tax Act: Orissa HC Alok Kumar Mohapatra vs Income Tax Officer, Khurda and others CITATION: 2024 TAXSCAN (HC) 2321

The Orissa High Court in a recent case, has made it clear that an entry in the dispatch register maintained by the Revenue is not primary evidence to prove the service of notice on an assessee under Income Tax Act, 1961.

The division bench of Justices Arindam Sinha and MS Sahoo observed, that entry made in the system is not primary evidence. It has to be based on something to show that the assessment order denying the exemption claim was informed to petitioner.

Income Tax Authorities Fail to Consider Submission on Lenders Identity and Creditworthiness: Karnataka HC Remands Matter for Fresh Consideration KIRAN KUMAR vs INCOME TAX OFFICER CITATION: 2024 TAXSCAN (HC) 2322

In a recent ruling, the Karnataka High Court remanded the matter for fresh consideration due to income tax authorities’ failure to consider the submission of the petitioner on lender identity and creditworthiness.

Justice M.I. Arun heard the case and observed that the petitioner submitted a reply and relevant documents, but were disregarded without proper reasoning. The court noted that there was a lack of explanation for dismissing the petitioner’s evidence.

S. 16(5) of CGST Allows Delayed ITC for A.Y. 2018-19 to 2020-21 if returns Filed by Nov 30, 2021: Karnataka HC Remands Matter M/S EMMAR PROJECT CONTRACTORS INDIA (P) LIMITED ANNAPOORNA vs THE ASST. COMMISSIONER OF COMMERCIAL TAXES CITATION: 2024 TAXSCAN (HC) 2323

In a recent ruling, the Karnataka High Court remanded the delayed Input Tax Credit (ITC) claim matter for reconsideration citing Section 16(5) of the Central Goods and Services Tax (CGST) Act as amended by the Finance (No.2) Act, 2024. This provision allows taxpayers to claim ITC for Assessment Years 2018-19 to 2020-21 if returns were filed by November 30, 2021.

Justice S.R. Krishna Kumar heard the case and acknowledged that the recent amendment under Section 16(5) of The Finance (No.2) Act, 2024 retroactively extended the deadline for claiming Input Tax Credit (ITC) for financial years 2017-18 to 2020-21. This amendment allows taxpayers to claim ITC for invoices from the specified periods in returns filed up until November 30, 2021, providing relief for those who missed initial deadlines.

75% Disputed GST already Paid: Madras HC grants Opportunity to Explain Discrepancies between Form GSTR-1 and 3B Shri Yamuna vs State Tax Officer CITATION: 2024 TAXSCAN (HC) 2324

The Madras High Court granted an opportunity to explain the discrepancies between the form GSTR 1 and GSTR 3B as 75% disputed Goods and Services Tax ( GST ) has already been paid.

Justice Mohammed Shaffiq, considering the peculiar facts that the petitioner has already paid the 75% of the disputed tax, viewed that the petitioner can have an additional opportunity to explain the discrepancies.

Explanation in Sl.No.7 of Service Tax Notification No.1/2006 is Ultra Vires to Finance Act and Constitution: Madras HC aligns with SC’s Decision M/s.Bharathi Constructions vs Union of India rep. CITATION: 2024 TAXSCAN (HC) 2325

In a recent ruling, the Madras High Court, concurring with the Supreme Court’s decision in Commissioner of Service Tax v. Bhayana Builders (P) Ltd has ruled that the explanation in serial number 7 of the service tax notification no. 1/2006 is ultra vires to the finance act provisions and the constitution.

The Supreme Court, in its decision observed that there was no evidence to justify the formula used in the notification, which set service tax at 33% of the gross amount charged. The Court noted that the language of the notification implied service tax was based only on the amount charged by the service provider, excluding the value of goods supplied by the service recipient. Even with a 2005 explanation, which clarified inclusion of goods provided by the service provider, there was no provision for including goods supplied by the recipient in the gross amount calculation.

TDS Violation Demand Order issued in name of Previous Company rectifiable u/s 292B of IT Act: Delhi HC COMMISSIONER OF INCOME TAX (TDS)-1 vs M/S ADMA SOLUTIONS PVT. LTD. CITATION: 2024 TAXSCAN (HC) 2326

The Division Bench of the Delhi High Court comprising Justice Yashwant Varma and Justice Ravinder Dudeja recently held that an error in the name on a notice does not automatically invalidate the proceedings, provided the intended recipient’s identity remains clear and unaltered except for nominal changes.

The Delhi High Court decision clarifies that procedural mistakes, like incorrect names post-name change, are curable under Section 292B if the recipient’s identity is unmistakable and duly notified.

Not Necessary for Custom Broker to keep Continuous Surveillance at Physical Address of Exporters: Delhi HC restores License COMMISSIONER OF CUSTOMS (AIRPORT AND GENERAL) vs M/S SHAKTI CARGO MOVERS CITATION: 2024 TAXSCAN (HC) 2327

In a recent ruling, the Delhi High Court clarified that it is not necessary for Customs Brokers to maintain continuous surveillance of the physical addresses of exporters.

The Delhi High Court upheld the decision of the Customs, Excise and Service Tax Appellate ( CESTAT ), affirming that Customs Brokers are not obligated to maintain ongoing surveillance of an exporter’s physical address after the initial verification.

The High Court held that the documents provided by Shakti Cargo Movers, although dated, were still valid at the time of verification. Consequently, the appeal was dismissed, and the CoC’s initial revocation of the customs broker license was annulled.

Non-Issuance of Notice u/s 124 of Customs Act: Delhi HC directs Immediate Release of Detained Patek Philippe Watch MS SHUBHANGI GUPTA vs COMMISSIONER OF CUSTOMS & ORS CITATION: 2024 TAXSCAN (HC) 2328

In a recent decision, the High Court of Delhi has directed the revenue to immediately release goods detained without issuing a notice as required under Section 124 of the Customs Act, 1962.

The Division Bench of the Delhi High Court comprising Justices Vibhu Bakhru and Swarana Kanta Sharma thus directed to release the seized goods to the petitioner immediately.

Kerala HC Directs Refund of Import Duty to Importer as Goods were Re Exported COMMISSIONER OF CUSTOMS vs M/S. HADEED STEELS PVT.LTD CITATION: 2024 TAXSCAN (HC) 2329

In a significant ruling, the Kerala High Court has directed to refund the import duty to importer as the goods were not cleared for home consumption but were re-exported.It was found that there was no clearance for home consumption of goods that had been imported.

The division bench of Justice A.K. Jayasankaran Nambiar and Justice K. V. Jayakumar has observed that the redemption fine paid was in lieu of confiscation and only to enable the importer to reclaim the goods imported for the purpose of re-export. The direction of the Appellate Tribunal to refund the import duty paid by the importer, under circumstances where the goods were never cleared for home consumption but were re-exported in their entirety, cannot be found fault with.

Kerala HC sets aside Denial of ITC under CGST Act in Consideration of Notification u/s 16(5) M/S. REINSTATE RENOVATION SOLUTIONS vs THE ASSISTANT STATE TAX OFFICER CITATION: 2024 TAXSCAN (HC) 2330

In a recent case, the Kerala High Court set aside order denying InputTax Credit ( ITC ) under Central Goods and Service Tax ( CGST ) Act, 2017 in consideration of notification on provision under section 16(5) of the act.

The single bench of Justice Gopinath P observed that on account of notification of Sub-Section (5) of Section 16 of the CGST/SGST Acts, the petitioner will be entitled to input tax credit, which has been denied to the petitioner by order

Refund dues cannot be adjusted against Demand When there is Stay on Account of Provision u/s 60 (1A) of KVAT Act: Kerala HC M/S. NIVZ IMPORTS & EXPORTS A) LTD. vs THE DEPUTY COMMISSIONER OF STATE TAX CITATION: 2024 TAXSCAN (HC) 2331

The Kerala High Court has held that refund dues cannot be adjusted against demand when there was a stay on account of provision under section 60 (1A) of Kerala Value Added Tax ( KVAT ) Act, 2003. The bench directed that the demand for interest out of the liability assessed against the petitioner for the year 2015-16 shall not be demanded as pending disposal of the statutory appeal before the Tribunal for the year 2015-16.

The single bench of Justice Gopinath P disposed of the writ petition directing that the demand for interest out of the liability assessed against the petitioner for the year 2015-16 shall not be demanded or collected from the petitioner pending disposal of the statutory appeal before the Tribunal for the year 2015-16.

Challenge against Attachment Order by Income Tax Dept: Kerala HC Permits to Withdraw 20 % of Pending Demand NOBLE JOHN,AGED 68 YEARS vs ANNIE NOBLE,AGED 58 YEARS CITATION: 2024 TAXSCAN (HC) 2332

The Kerala High Court in its recent judgement related to income tax department’s attachment order, permitted to withdraw 20% of the pending demand. It was held that it will always be open to the Authorities to pass fresh orders under Section 179 of the Act, if circumstances for exercise of jurisdiction under Section 179 of the Income Tax Act subsists in future.

The single bench of Justice Gopinath P disposed of the writ petition permitting the Income Tax Department to withdraw from the bank accounts of the Company/petitioners a total sum of Rs.6,42,07,469/- (Rupees Six Crores Forty two lakhs seven thousand four hundred and sixty nine only) towards 20% of the amount directed to be paid as a condition for stay by the First Appellate Authority in Ext.P3 order;

Income Tax Demand on Denial of Benefit u/s 80P: Kerala HC sets aside Recovery on Pendency of Appeal before ITAT PEROORKADA SERVICE CO-OPERATIVE BANK LTD vs THE INCOME TAX OFFICER CITATION: 2024 TAXSCAN (HC) 2333

In a significant ruling related to demand of Income Tax on denial of benefit under section 80 P of the Income Tax Act, 1961, the Kerala High Court set aside recovery on pendency of appeal before Income Tax Appellate Tribunal ( ITAT ).

The single bench of Justice Gopinath P disposed of the writ petition directing that the steps for recovery of any demands finalized against the petitioner for the years 2012-13 and 2013-14 shall stand deferred till appeals filed for the said years are heard and disposed of by the 3rd respondent and till the appeals filed for the years 2016-17, 2017-18 and 2018-19 are heard and disposed of by the 4th respondent-Tribunal. Recovery relating to the demand arising for the year 2014-15 will be deferred till a decision is taken on the application for rectification of mistake by the 4th respondent-Tribunal.

NSE not ‘Statutory Authority’ to Block Issue of Duplicate Share Certificates: Bombay HC Aloysius D’Souza, Christian vs Union of India Through the Ministry of Corporate Affairs CITATION: 2024 TAXSCAN (HC) 2334

The High Court of Judicature at Bombay while adjudicating a matter before it opined that the National Stock Exchange ( NSE ) should not have illegitimately used its dominating position to block the issuance of duplicate share certificates as sought for by the Petitioner, without being a statutory authority to conduct such activity.

The Division Bench of the Bombay High Court comprising Justice M. S. Sonak and Justice Jitendra Jain, refuted the allegation by NSE that they are not amenable to Writ Jurisdiction of the High Court under Article 226 of the Constitution of India referring to the decision of the Supreme Court in K. C. Sharma Vs. Delhi Stock Exchange and Ors (2005) to observe that the Stock Exchange is amenable to writ jurisdiction under Article 226.

Reserve Transfers by NBFCs under RBI Act not Allowable Deduction in Computing Assessable Income: Madras HC Shriram City Union Finance Limited vs Assistant Commissioner of Income Tax CITATION: 2024 TAXSCAN (HC) 2335

The Statutory Reserves transferred by the Non-Banking Financial Companies ( NBFCs ) under the Reserve Bank of India ( RBI ) Act is not allowable deduction computing assessable income under the provisions of the Act under the regular computation and computation of book profits under section 115JB of Income Tax Act, as the case may be, ruled the Madras High Court.

The bench of Justice Anita Sumath and Justice G. Arul Murugan noted the case which addressed the similar issues. It referred to the ruling of Madras High Court in the case T.C.A.No.755 of 2009 and batch dated 30.06.2022, where bulk orders of different high courts were discussed.

Delayed Income Tax Penalty Order u/s 271C for failure to Deduct TDS not Sustainable: Delhi HC COMMISSIONER OF INCOME TAX (TDS)-2 DELHI vs TURNER GENERAL ENTERTAINMENT NETWORKS INDIA PVT. LTD. CITATION: 2024 TAXSCAN (HC) 2336

The Delhi High Court recently quashed an Income Tax Appeal filed by the Revenue, ruling that delayed order levying penalty on an Assessee under Section 271C of the Income Tax Act, 1961 for default in timely deduction of Tax Deducted at Source (TDS) is unsustainable in law.

The Division Bench of the Delhi High Court comprising Justice Vibhu Bakhru and Justice Swarana Kanta Sharma referenced the decision of the same Court in Principal Commissioner of Income Tax-5 v. JKD Capital & Finlease Ltd. (2015) where the principle that initiation of penalty proceedings cannot be delayed in an arbitrary manner was laid down; further, the date of on which reference was made to the concerned officer was to be deemed the date of initiation of proceedings.

No Money Laundering Cognizance against Govt Officials w/o prior Sanction: Supreme Court Directorate of Enforcement vs Bibhu Prasad Acharya CITATION: 2024 TAXSCAN (SC) 287

In a landmark decision, the Supreme Court of India has ruled that prior sanction under Section 197(1) of the Criminal Procedure Code (CrPC) is mandatory before initiating criminal proceedings against public servants accused under the Prevention of Money Laundering Act, 2002 (PMLA).

The decision by Justices Abhay S. Oka and Augustine George Masih also observed that the issue of sanction can be raised at any stage of the legal process, including after a court has taken cognizance of an offense.

Supreme Court quashes Penalty against Commercial Tax Officer due to Lack of Evidentiary Value in Disciplinary Case SATYENDRA SINGH vs STATE OF UTTAR PRADESH & ANR CITATION: 2024 TAXSCAN (SC) 288

The Supreme Court quashed the penalty against the commercial tax officer on the grounds that its evidence in the disciplinary proceedings against him was not proper. The bench restored the decision of the tribunal and set aside the judgment of the Allahabad High Court.

Justices Pamidighantam Sri Narasimha and Sandeep Mehta, viewed that the inquiry proceedings conducted against the appellant pertaining to charges punishable with major penalty, were totally vitiated and non-est in the eyes of law since no oral evidence whatsoever was recorded by the department in support of the charges.

Mobile Tower, PFBs are “Goods”, Not immovable Property making them Valid Inputs: Supreme Court allows Cenvat Credit Claim M/S BHARTI AIRTEL LTD vs THE COMMISSIONER OF CENTRAL EXCISE CITATION: 2024 TAXSCAN (SC) 289

The Supreme Court of India has delivered a landmark judgment affirming that mobile towers and prefabricated buildings (PFBs) used by Mobile Service Providers (MSPs) qualify as “goods” and not immovable property. This ruling enables MSPs to claim CENVAT credit on excise duties paid for these items under the CENVAT Credit Rules, 2004, a decision that resolves a long-standing controversy in the telecom sector.

Court analyzed whether these items qualify as capital goods or inputs under the CENVAT Rules. It determined that mobile towers and PFBs serve as integral components of Base Transceiver Stations (BTS), essential for transmitting and receiving telecommunication signals. These items are therefore considered components or accessories of telecom equipment, meeting the criteria of capital goods under Rule 2(a)(A) or inputs under Rule 2(k) of the Rules.

Cross-Examination Requests should not be Allowed without Substantive Reply on Merits to SCN: Madras HC to Customs Dept Nalin Gupta vs Commissioner of Customs CITATION: 2024 TAXSCAN (HC) 2337

In a recent ruling, the Madras High Court observed that cross-examination requests should not be entertained unless there is a substantive reply on the merits to the Show Cause Notice (SCN).

The bench comprising Justice R.Suresh Kumar and Justice C.Saravanan observed that the Chief Commissioner validly extended the time for adjudication. The court observed that the petitioner’s actions of filing for cross-examination and appealing procedural orders caused the procedural delay.

Punjab and Haryana HC sets aside S. 74 GST Demand Notice and Order issued after Dropping S.61 Actions M/S J.S.B. TRADING CO. vs STATE OF PUNJAB AND ANOTHER CITATION: 2024 TAXSCAN (HC) 2338

The Punjab and Haryana High Court has quashed a Goods and Services Tax ( GST ) demand notice and order issued under Section 74 of the Central Goods and Services Tax Act, 2017, following the earlier closure of proceedings under Section 61 of the Central GST Act.

The Punjab and Haryana High Court Division Bench of Justice Sanjeev Prakash Sharma and Justice Sanjay Vashisth thus set aside the order dated June 14, 2023, and the notice issued under Section 74(1) of the Goods and Services Tax Act.

Expired Notification cannot be Extended: Madras HC directs Reassessment of Huawei Telecom’s ADD on Imports from China within Valid Period M/s. Huawei Telecommunications (India) Company Pvt. Ltd vs The Principal Commissioner of Customs CITATION: 2024 TAXSCAN (HC) 2339

In a recent ruling, the Madras High Court held that an expired Anti-Dumping Duty ( ADD ) notification cannot be extended. The court directed a reassessment of Huawei Telecommunications’s ADD on imports from China strictly within the valid period of the original notification.

A single bench led by Justice Senthilkumar Ramamoorthy referred to Section 9A(5) of the Customs Tariff Act, 1975, which mandates that an anti-dumping duty notification remains valid for five years unless extended within that period.

Alternative Remedies to be Exhausted before Approaching HC to Quash GST Demand SCN: Bombay HC Oberoi Constructions Ltd vs The Union of India CITATION: 2024 TAXSCAN (HC) 2340

The Bombay High Court was recently faced with multiple petitions pertaining to the quashing of demand notices issued under the Goods and Services Tax ( GST ) Acts, filed by separate entities involved in the construction business. The High Court advised the Petitioners to first approach all alternate remedies available to them to contest their case before approaching the High Court for relief.

The Division Bench of the Bombay High Court comprising Justice M.S. Sonak & Justice Jitendra Jain observed that whether tax demands purported against the Petitioners concerns any activity in relation to the functions of the Municipality under Article 243W may only be determinable through the proper adjudicatory process and not by the High Court exercising extraordinary and summary jurisdiction under Article 226 of the Constitution as the same may require examination of factual aspects that cannot be conveniently undertaken by the High Court at this stage.

Delhi HC upholds PCIT Order overruling AO’s erroneous Land Classification in Income Tax Assessment Order PR. COMMISSIONER OF INCOME TAX vs MS. SANGEETA JAIN CITATION: 2024 TAXSCAN (HC) 2341

The Delhi High Court in a recently upheld an Order passed by the Principal Commissioner of Income Taxes, Delhi-11 ( PCIT ), ruling against the incorrect classification of an Assessee’s land by the jurisdictional Assessing Officer in the course of income tax assessment.

The two-member Bench of the Delhi High Court comprising Justice Vibhu Bakhru and Justice Swarana Kanta Sharma considered the submissions on record and concluded that the AO had absolutely erred in his decision by failing to measure the distance of the land from nearest municipal limits, which is a critical requirement under Section 2(14)(iii) of the Income Tax Act, 1961.

Bombay High Court directs DGFT to Pay ₹50,000 Costs to L&T Over Portal Issues Larsen & Toubro Limited vs The Union of India CITATION: 2024 TAXSCAN (HC) 2342

The Bombay High Court has directed the Directorate General of Foreign Trade (DGFT) to pay ₹50,000 in costs to Larsen & Toubro Limited (L&T) for systemic lapses that caused undue delays in the processing of Merchandise Exports from India Scheme ( MEIS ) benefits.

The judgment by the Division Bench of Justices M.S. Sonak and Jitendra Jain, underscores the court’s disapproval of bureaucratic inefficiencies and technological inadequacies impacting legitimate claims under government schemes.

Relief to Discovery Communications India: Delhi HC halts Reopening of Assessment beyond 4 Years w/o Essential Requirements DISCOVERY COMMUNICATIONS INDIA vs ADDL. COMMISSIONER OF INCOME TAX CITATION: 2024 TAXSCAN (HC) 2343

The Delhi High Court recently granted relief to prominent media entity Discovery Communications by preventing the reopening of their Income Tax Assessment for the Assessment Year (A.Y.) 2011-12, observing that the Respondent Revenue had not been able to satisfy the requisite requirements warranting reopening of Assessment beyond a period of four years from its completion.

The Division Bench of the Delhi High Court composed of Justice Yashwant Varma and Justice Ravinder Dudeja observed that escapement of income by itself is not a sufficient ground for reopening of the Assessment as per the first proviso to Section 147 of the Income Tax Act, 1961. Referring to the Decision of a coordinate Bench of the Delhi High Court in CIT v. Suren International Private Limited (2013) that an Assessment may be reopened only if there is a direct inference that the Assessee had failed to fully and truly disclose all material facts.

Allahabad HC criticizes PMLA Accused’s Lawyer for Sending Emails to Investigating Officer, Calls it Improper and Unethical Padam Singhee vs Directorate Of Enforcement CITATION: 2024 TAXSCAN (HC) 2344

In a recent ruling, the Allahabad High Court criticized the conduct of a lawyer representing a Prevention of Money Laundering Act, 2002 (PMLA) accused of directly sending emails to the investigating officer in the case deeming the action as improper and unethical.

A single bench led by Justice Samit Gopal criticized the applicant counsel’s conduct stating that sending emails directly to the investigating officer was inappropriate and improper. The court observed that such communication bypasses the legal and procedural flow established to ensure fairness in criminal proceedings.

Tax Reduction u/s 4 of TN Entry Tax Act is Available Even for Tax Paid under TNVAT Act: Madras HC Shri Baalaaji Steel Rolling Mill vs The Assistant Commissioner (CT) CITATION: 2024 TAXSCAN (HC) 2345

In a recent ruling, the Madras High Court has ruled that the Section 4 of the Tamil Nadu Tax on Entry of Goods into Local Areas Act, 2001, grants reduction in the tax liability even for the tax paid under the Tamil Nadu Value Added Tax ( TNVAT ) Act, 2006.

The High Court, considering the notification issued, quashed the impugned orders and directed the respondent to give effect to the provisions of Section 4 of the Entry Tax Act in full.

Reassessment Proceedings cannot be Initiated without Completing Assessment : Madras HC The Commissioner of Income-tax-I vs M/s.Super Spinning Mills Ltd. CITATION: 2024 TAXSCAN (HC) 2346

The Madras High Court ruled that the reassessment proceedings under Section 148 of Income Tax Act, 961 cannot be initiated without completing the assessment. The court also clarified that the notices under Section 143(2) can only be issued to the pending assessments.

The bench found this argument misconceived on the grounds that the issuance of notice under Section 143(2) will apply only in the case of pending assessment. The bench further noted that this is a case where the assessment is pending and instead of completing the same, the assessing authority has initiated proceedings for re-assessment. Hence, the submission of Senior Standing Counsel was seen to be devoid of merit and was rejected by the court.

Delhi HC grants Relief to Calcom Vision: Challenge of Assessment Procedure maintainable u/s 81 of DVAT Act CALCOM ELECTRONICS LTD vs THE COMMISSIONER VAT THE TRADE AND TAX DEPARTMENT CITATION: 2024 TAXSCAN (HC) 2347

The Delhi High Court recently granted relief to Calcom Vision, affirming the maintainability of Sales Tax Appeals challenging the procedure of Assessment adopted by authorities of the Value Added Tax (VAT) department, under Section 81 of the Delhi Value Added Tax Act, 2004 (DVAT Act) instead of Section 45 of the Delhi Sales Tax Act, 1975 (DST Act).

The Division Bench of the Delhi High Court comprising Justice Yashwant Varma and Justice Ravinder Dudeja observed that the DVAT Act, in essence, sought to replicate and re-enact the hierarchy of remedies created under the DST Act.

No Denial of GST ITC on Interest-Free Advance Receipts: Bombay HC in L&T, IHI Consortium Case L & T IHI Consortium vs Union of India CITATION: 2024 TAXSCAN (HC) 2348

The Bombay High Court has held that Goods and Services Tax (GST) Input Tax Credit (ITC) cannot be denied on advance receipts.

The Division Bench of Justices G S Kulkarni and Jitendra Jain that, “in the peculiar facts of the case on the basis of Receipt Voucher issued by L&T in favour of the petitioner, the petitioner was entitled to avail the Input Tax Credit under section 16 of the CGST/MGST Act.”

Interest for Delayed IGST Refunds start after 60 Days of Filing Shipping Bill: Bombay HC Ms. Anita Agarwal vs Union of India CITATION: 2024 TAXSCAN (HC) 2349

In a significant ruling, the Bombay High Court has affirmed that interest on delayed Integrated Goods and Services Tax ( IGST ) refunds under Section 56 of Goods and Services Tax Act must be paid starting 60 days after the date of filing the shipping bill until the refund is disbursed.

The Bench of Justices Jitendra S Jain and M S Sonak noted that the petitioner was not informed about being flagged, leading to unwarranted delays. It was also observed that the respondents failed to complete their investigation within the prescribed 30-day window under Circular No. 16/2019.

No Prejudicial Infirmity by Customs during Seizure of Contraband u/s 110: Delhi HC Rejects Bail of Alleged Methaqualone Smuggler SEKELETI DORIS vs CUSTOMS CITATION: 2024 TAXSCAN (HC) 2350

The Delhi High Court recently vitiated the arguments raised in a Bail Application filed by an alleged methaqualone smuggler, observing that there had been no prejudicial infirmity on the end of the Customs Department during the seizure of contraband under Section 110 of the Customs Act, 1962.

The Single-Judge Bench of the Delhi High Court presided over by Justice Anish Dayal, observed that the allegations of planting of drugs and delay in filing of Section 52A Application is a matter to be decided during trial and that the Applicant may contend the same during the Trial of the matter; further, allegedly defective Notices served under Section 50, NDPS Act and 102, Customs Act would have no real effect as the contraband had been seized from her bag and not her person.

Failure to disclose International Address in Tax Evasion case u/ Black Money Act: Delhi HC sustains Criminal Complaint SANJAY BHANDARI vs INCOME TAX OFFICE CITATION: 2024 TAXSCAN (HC) 2351

The Delhi High Court recently dismissed a plea seeking quashal of a criminal complaint in a tax evasion case under The Black Money ( Undisclosed Foreign Income And Assets ) and Imposition Of Tax Act, 2015 ( Black Money Act ), noting that the arraigned Petitioner had failed to disclose their international address to the investigating authorities.

The Single-Judge Bench of the Delhi High Court presided over by Justice Dinesh Kumar Sharma observed that whether a wilful attempt to evade tax under provisions of Section 51(3) of the Black Money Act had been undertaken by the Petitioner by backdating/fabricating documents is a matter of trial, and refused to set aside the summoning order issued against Sanjay Bhandari by the ACMM.

Proforma typed Customs Notice u/s 102 should allow Choice of Mode of Personal Search: Delhi HC while Denying Bail to Smuggling-Accused PAULINE NALWOGA vs CUSTOMS CITATION: 2024 TAXSCAN (HC) 2352

The Delhi High Court recently issued advisory to the Customs Department to alter their proforma notices under Section 102 of the Customs Act, 1962 to provide choice to an apprehended person to opt whether they would like to be searched before a Gazetted Officer/Magistrate or has no objection to being searched by the officer present.

The Single-Judge Bench of the Delhi High Court presided over by Justice Anish Dayal, at the outset, observed that the Applicant’s objections regarding defective Notice under Section 102 of the Customs Act, 1962 and Section 50 of the NDPS Act would not be relevant as the same only pertains to personal search of an apprehended person whereas nothing was revealed in the personal search of the Accused.

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