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.
The Madras High Court has set aside a GST order due to the failure of the authorities to provide the petitioner with a reasonable opportunity to establish the genuineness of the C-Forms submitted.
The Court directed the GST department to reconsider the matter, allowing the petitioner to submit a detailed reply along with the relevant documents concerning the C-Forms.
The bench of Justice Senthilkumar Ramamoorthy determined that the matter required reconsideration. It set aside the order and remanded the case back to the tax authorities for a fresh evaluation. The Court directed the petitioner to submit a reply, along with all relevant documents concerning the C-Forms, within fifteen days from the receipt of the order. Furthermore, the department was directed to issue a fresh order within three months of receiving the petitioner’s reply, after ensuring that the petitioner is given a reasonable opportunity, including a personal hearing.
The Karnataka High Court has ruled that the Settlement Commission, by accepting explanations “in the spirit of settlement,” cannot be faulted or subjected to interference within the limited scope of judicial review.
The Single Bench of Justice S. Sunil Dutt Yadav, in his observation, noted that the Settlement Commission had acknowledged the declaration made under Rule 8 of the Income Tax Settlement Commission (Procedure) Rules and accepted the assertion regarding cash gifts. It was noted by the Karnataka High Court that, “Conclusion of the Settlement Commission by accepting the explanation ‘in the spirit of settlement’ cannot be faulted calling for interference in exercise of the limited jurisdiction.”
The Kerala High Court in a significant judgement has found that the assessee failed to check the Goods and Service Tax ( GST ) portal to check the uploaded order of cancellation of GST Registration and thus remained challenged.
The court quashed the assessment orders and remanded the matter back on condition of remitting Rs. 10 lakhs towards the GST liabilities.
Read More: https://www.taxscan.in/receipt-of-subscription-amount-from-holding-company-calcutta-hc-reaffirms-income-tax-addition-deleted-by-itat/428024/
The Calcutta High Court recently in a case reaffirmed Income Tax Appellate Tribunal ( ITAT ) deletion of addition made on Income Tax under section 68 of the Income Tax Act 1961. Consequently, the appeal contesting the ITAT’s decision was dismissed.
The bench of Justice T S Sivagnanam and Justice Hiranmay Bhattacharya observed that the share subscriber company was a holding company of the assessee company, and that both the companies had common directors, and also that the share subscribing/ holding company was interested in the business of the assessee. It was noted that the nature of business activity was examined by the ITAT, who observed that the assessee company had completed multiple pieces of land in the State of UP for developing a project in phases.
The High Court of Calcutta disposed of the appeal on the grounds of the monetary limit, as stipulated by the Central Board of Direct Taxes (CBDT) Circular. The Court concluded that the amount involved did not meet the threshold required for the Department to appeal to this Court.
A coram comprising Chief Justice T.S. Sivagnanam and Justice Hiranmay Bhattacharyya disposed of the appeal on the grounds of monetary limit. Consequently, the substantial questions of law remain unresolved.
The Madras High Court set aside the penalty of 300% citing that the GST department did not consider the same High Court ruling that Section 27(4) Tamil Nadu Value Added Tax ( TNVAT ) cannot be invoked for belated filing of returns.
The bench of Justice Senthilkumar Ramamoorthy upheld the tax component but found that the imposition of a 300% penalty was unjustified due to the department’s failure to consider the binding precedent.
The Bombay High Court recently ruled that contributions to a public welfare fund, if linked to the assessee’s business or resulting in benefits to the business, should be eligible for deduction under Section 37 of the Income Tax Act. This decision arose from a case involving contributions of Tata Engineering & Locomotive to its workers’ union under a settlement agreement.
The High Court Division Bench upheld the lower authorities’ findings that these payments were linked to the company’s business and brought benefits to it. It dismissed the Revenue’s appeal, affirming that the nature and character of these expenditures did not fall under Section 37(1) or attract Section 40A(9) of the Income Tax Act due to their commercial nexus with the business operations of the assessee.
In a recent case before the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ), Bangalore, the Kerala State Electricity Board Ltd filed an appeal against an impugned order passed by Commissioner of Customs, charges for supervision of installation and field efficiency test paid to overseas suppliers were excluded from the value of post- importation charges.
A Division Bench of the Bombay High Court has directed re-credit of Rs. 8.15 Lakhs debited from the Cash/Credit ledger of the petitioner as a letter by Petitioner’s Chartered Accountant (CA) was not accepted by the office of the State Tax Officer, leading to gross violation of natural justice.
The Gauhati High Court directed the department to release Interest on delayed refund under section 11BB of Excise Act to GAIL ( India Ltd ).
Justice Devashish Baruah directed the respondent authorities and, more particularly, the Assistant Commissioner, Central GST Division Dibrugarh to verify the amount of interest on the delayed refund of the dues of the petitioners and thereupon release the said amount within two months.
The Bombay High Court has quashed the entire process undertaken by the Jurisdictional Assessing Officer (AO) under Section 148A outside the faceless mechanism, noting that the scheme notified by the Central Government does not exclude the application of Section 148A. The High Court emphasised that the procedures outlined in Section 148A are inextricably linked to Section 148.
The Gauhati High Court has held that section 9 (2) (g) of Delhi Value Added tax ( VAT ) Act ,2004 cannot be Invoke to deny Input Tax Credit ( ITC ) to a bonafide purchaser. It was views that a purchasing dealer cannot be punished for the act of the selling dealer in case the selling dealer had failed to deposit the tax collected by it.
The division bench of Chief Justice Vijay Bishnoi and Justice Suman Shyam has observed that the Department is precluded from invoking Section 9(2)(g) of the DVAT to deny ITC to a purchasing dealer who has bona fide entered into a purchase transaction with a registered selling dealer who has issued a tax invoice reflecting the TIN number.
The Delhi High Court ruled that the settlement consideration should be categorised as “capital gains” rather than “profits in lieu of salary.”
Justices Yashwant Varma and Ravinder Dudeja observed that the Tribunal’s error lay in overlooking the distinction between a “perquisite” and “profits in lieu of salary,” delineated separately under Section 17 of the Income Tax Act, 1961. Section 17(3) specifically addresses “profits in lieu of salary,” pertaining to compensation received upon termination of employment or modification of service terms. The Tribunal’s oversight was significant as the employment had ceased before any legal action was initiated before the Company Law Board ( CLB ).
The Calcutta High Court in a recent case held that High Court Rulings stayed by the Supreme Court cannot be used as a precedent to base decisions as long as the Supreme Court hasn’t delivered its final verdict on the matter.
The bench of Justice TS Sivagnanam and Justice Hiranmay Bhattacharya observed that when similar appeal came up before the Court on earlier occasion, the Court set aside the order of the Tribunal and remanded the matter back to be kept pending, and only to be taken up for decision after the judgment is rendered by the Supreme Court.
The Calcutta High Court in a recent ruling gave the appellant a final opportunity to substantiate their case of non-cooperation in assessment proceedings under the Income Tax Act 1961 ( ITA ) before the Assessing Officer ( AO ).
The division bench observed that the reasons set out by the assessee for the non appearance seemed to be not wholly false and nor there is any material to show that the assessee has willfully not proceeded to appear before the Appellate authority/ Tribunal. The bench also pointed out that in any event, what is required to be considered is whether appropriate tax has been computed and levied upon execution of the factual position.
The High Court Of Calcutta, upholding the Income Tax Appellate Tribunal’s ( ITAT ) decision that deemed dividends under Section 2(22)(e) of the Income Tax Act,1961 can only be taxed in the hands of shareholders. The court found no new evidence or arguments to overturn this established interpretation.
The division bench of Chief Justice T.S Sivagnanam and Justice Hiranmay Bhattacharyya noted that the revenue petitioner did not provide any new evidence or arguments to overturn the decisions. Therefore, the court upheld the ITAT’s ruling and dismissed the appeal.
The High Court of Calcutta dismissed the revenue petitioner’s appeal challenging the Income Tax Appellate Tribunal’s( ITAT ) decision for assessment year(AY) 2020-21. The Court upheld the ITAT’s ruling, noting it correctly applied Central Board of Direct Taxes ( CBDT ) Circulars on timely filing for tax exemptions, finding no significant legal errors.
The Calcutta High court dismissed the appeal as it lacked a substantial question of law. The Court found that the addition was made under section 68 of the Income Tax Act, 1961 as the Assessing Officer ( AO ) failed to verify the genuineness of the transaction.
The court found that the Assessing Officer has not paid any independent enquiry to verify the genuineness of the transaction in spite of the assessee having furnished all details and documents before the Assessing Officer. The chief Justice T S Sivagnanam and Justice Hiranmay Bhattacharya dismissed the appeal as the matter is fully factual and no substantial question of law arises for consideration.
The Kerala High Court has held that income tax exemption claimed by public charitable trusts should not be denied merely on the bar of limitations. The court was of view to consider the applications for condonation of delay without being too hyper-technical and in a judicious manner.
The division bench of Justice Gopinath P. has observed that the delay in filing the audit report in Form-10B can at best be 30 days, as the law only requires that the audit report be uploaded at least a month before the due date for filing returns. The Commissioner exercised his jurisdiction under Section 119(2)(b) of the Income Tax Act, 1961, to condone the delay instead of taking a strict view of the matter.
The Gujarat High Court has ruled that 12% Goods and Service Tax ( GST ) applicable on geo membrane for waterproof lining fabrics and allowed the refund of the excess 6% GST paid by the petitioner.
The Court held that the product manufactured by the petitioner being Geo Membrane is classifiable would fall under Chapter 59 and not under Chapter 39 as held by the respondent No.4 – the Gujarat Advance Ruling Authority relying upon the decision of the Madhya Pradesh High Court in case of Raj Packwell Ltd. The petitioner, therefore, is liable to pay the GST @ 12% from 15.11.2017 onwards and not @ 18%.
The Calcutta High Court held that failure to comply with statutory provision which mandates consideration of explanation on the part of assessee before passing adverse order invalidates such order.
The High Court remanded the matter back to the proper officer, with a direction to re-adjudicate the issues involved in the show-cause upon giving an opportunity of personal hearing to the petitioner or his authorized representative.
The Madras High Court set aside Goods and Service Tax (GST) demand order and recovery notice passed without providing a hearing opportunity, which violated the principles of natural justice. The court found that the entire GST demand was recovered without providing hearing.
The court noted that the entire tax demand was recovered without following due process, further justifying the petitioner’s claim of a violation of their rights. Thus it set aside the impugned order and consequential recovery notice. The matter was remanded.
The Allahabad High court ruled that Freight charges, delivery acknowledgement, and toll receipts and the payments thereof required to prove physical movement of goods. The court refused to interfere in the orders issued by the GST ( Goods and Services Tax ) department as the petitioner failed to submit these documents and GSTR 2A Filing.
The Andhra Pradesh High Court addressed a matter where the GST registration of a business was cancelled on the grounds that the suppliers had availed of Input Tax Credit ( ITC ) without the actual receipt of goods and had passed on this credit to the petitioner without supplying goods.
The court also observed that the petitioner had an alternative remedy available to challenge the impugned order, which they had not utilised. Consequently, the court concluded that the writ petition did not warrant any favourable order. However, considering the significant impact of the GST registration cancellation on the petitioner’s business operations, the court allowed the petitioner another opportunity to challenge the order. The writ petition was dismissed, but the petitioner was granted the option to either file an application under Section 30 of the GST Act for revocation of the cancellation or appeal the order within 15 days of receiving the court’s decision. The court also instructed that, should the petitioner choose to proceed, the relevant authority must issue a decision on the merits of the case after a hearing for both parties.
In a recent ruling of Delhi High Court the writ petitions were allowed, quashing the reassessment proceedings of the respondents as mere failure to digitally upload Audit Report doesn’t contribute to non-disclosure of material facts.
The writ petition was allowed and impugned notices issued under Section 148 of the Act and initiation of reassessment proceedings were quashed.
The Madras High Court has condoned a one-day delay in filing GSTR-3B and set aside the Input Tax Credit ( ITC ) reversal notice issued by the Goods and Services Tax (GST) department. The court observed that the one day delay needed consideration.
The court concluded that the respondent’s refusal to condone the delay and the subsequent ITC reversal under Section 73(1) was unfair and detrimental to the petitioner. Thus, the Madras High Court set aside the show cause notice and allowed the writ petition, with no order as to costs.
The Madras High Court in a matter under its consideration clarified on the scope of responsibilities of a Commercial Tax Officer while issuing refunds of Input Tax Credit claimed by exporters.
The Court reaffirmed that the Petitioner was not required to “physically” verify the E-way Bills produced by the Exporter while maintaining that the Petitioner was time-bound to process the refund claim within a period of 7 days from the date of application by the Exporter, failing which, would attract interest and sanctions under the GST Act.
In a recent case of Delhi High Court, it was held that the cancellation of Goods and Services Tax ( GST ) registration with retrospective effect was unreasonable as the impugned order failed to inform specific reasons for cancellation.
The Madras High Court remanded the matter to the Principal Commissioner of Income Tax ( PCIT ) as the income tax order passed violated natural justice and was deemed non-est in law.
A single bench of Justice Krishnan Ramasamy observed that the assessment order included certain additions and was passed by the PCIT. The court noted that the petitioner had given a reply, arguing that the additions were improper, and requested a personal hearing. However, the PCIT did not grant the hearing, violating the principles of natural justice. Therefore, the impugned orders passed by the PCIT for the assessment years 2017-18, 2019-20, and 2018-19 are non-est in law.
The Madras High Court granted relief to the City Union Bank by deferring the Income Tax Department’s dues until the bank has fully recovered its debts.
A single bench led by Justice Krishnan Ramasamy observed City Union Bank’s difficulties in selling the property due to the charge created by the Income Tax Department, as reflected in the encumbrance certificate, which hindered potential buyers from participating in the auction. The court declared City Union Bank as the first charge holder, allowing it to proceed with the sale of the property. After the bank’s dues are settled, any remaining funds must be paid to the Income Tax Department (the first respondent). Therefore, the writ petition was disposed of with no costs and related miscellaneous petitions were closed.
The Delhi High Court has ruled that a deduction under Section 80-IA(7) of the Income Tax Act cannot be denied solely because the assessee failed to digitally file an audit report.
Justices Yashwant Varma and Ravinder Dudeja noted that since the audit report was submitted to the Assessing Officer (AO) and available for examination during the assessment process, the requirements of Section 80-IA(7), as they stood before the 2020 amendments, were effectively met. The court further held that the failure to file the report digitally should not be considered fatal to the claim under Section 80-IA(7). The court, in favour of the petitioner, ruled that the reassessment action for AY 2013-14, being initiated beyond the six-year limitation period, was invalid and must be set aside.
The Delhi High Court has ruled that simply appending the word “approved” by the PCCIT when granting approval under Section 151 of the Income Tax Act is insufficient for reopening under Section 148 of the Income Tax Act.
The Division Bench comprising Justice Yashwant Varma and Justice Ravinder Dudeja emphasised that while the Principal Chief Commissioner of Income Tax (PCCIT) is not required to provide detailed reasons, there must be a satisfaction recorded after due consideration. The approval process is intended as a safeguard and should be substantive, not merely a formal or ritualistic gesture. The reasons given serve as a crucial link between the evidence presented and the conclusions drawn by the authority, ensuring transparency in how the decision was reached. In disposing of the petition, the court held that the PCCIT failed to satisfactorily document its approval. The mere use of the term “approved” does not indicate independent consideration, making such approval legally flawed.
In a recent ruling of Delhi High Court the writ petition filed was allowed owing to lack of compliance with provisions of Section 153(3) of Income tax Act and barred the fresh assessment order passed by the respondent.
The Impugned notices and assessment order are set aside. Respondents are directed to refund Rs. 36,62,185/ along with interest within eight weeks from date of order. The petition was allowed on the aforesaid terms.
The Allahabad High Court directed the revenue to pay the excess amount paid as stamp duty to the petitioner as the respondents could not produce any material to show that the category of the land in question had been changed as per Section 143 of the UPZA & LR Act.
The court, after observing relevant judgments, observed that “ it is clear that deficiency of stamp can neither be determined on the value of future use of the property nor it can be levied on the ground that property can fetch good market value nor in the absence of any declaration made by the State Government changing the nature of the land from industrial to commercial.” The single bench comprising of Piyush Agrawal held that the respondents were unable to produce any evidence of land category change and also directed to refund the petitioner with any amount paid by him in accordance with the impugned order within a month of the certified copy of this order being produced.
The Bombay High Court has imposed a fine of Rs. 25,000 on the Jurisdictional Assessing Officer (JAO) for failing to adhere to a binding judgement in the case of Hexaware Technologies Limited vs. Assistant Commissioner of Income Tax & 4 Ors.
The Bombay High Court thus directed both the JAO and the Chief Commissioner to personally deposit costs of Rs. 25,000 each with the “National Association for the Blind” within two weeks, reflecting the seriousness of their misconduct.
The Delhi High Court has nullified a reassessment order against Vedanta, ruling that the payment made for acquiring mining rights through e-auctions cannot be treated as income.
The Division Bench, comprising Justice Yashwant Varma and Justice Tara Vitasta Ganju, observed that the Department of Mines and Geology had merely informed the Assessing Officer (AO) about the total amount paid by the petitioner to secure mining rights through e-auctions. This amount, the court held, clearly does not qualify as the assessee’s income for the relevant year. The assessee’s income should be calculated based on the revenue generated from the sale of iron ore and other non-ferrous metals.
The Bombay High Court provided relief to Larsen & Toubro by setting aside a service tax demand Show Cause Notice ( SCN ) that was issued without jurisdiction. The court, agreeing with the Gujarat High Court’s reasoning, quashed the show cause notice.
The Division Bench, comprising Justices Jithendra Jain and K.R. Shriram, noted that the basis of the show cause notice was similar to that which was quashed by the Gujarat High Court. They observed that L&T had already discharged the service tax liabilities for 2013-14 and that the notice was issued without jurisdiction. The court, agreeing with the Gujarat High Court’s reasoning, quashed the impugned show cause notice dated October 23, 2018.
The Bombay High Court provided relief to Larsen & Toubro by setting aside a service tax demand Show Cause Notice ( SCN ) that was issued without jurisdiction. The court, agreeing with the Gujarat High Court’s reasoning, quashed the show cause notice.
The Division Bench, comprising Justices Jithendra Jain and K.R. Shriram, noted that the basis of the show cause notice was similar to that which was quashed by the Gujarat High Court. They observed that L&T had already discharged the service tax liabilities for 2013-14 and that the notice was issued without jurisdiction. The court, agreeing with the Gujarat High Court’s reasoning, quashed the impugned show cause notice dated October 23, 2018.
The Bombay High Court on Monday dismissed a Public Interest Litigation ( PIL ) filed by Crimeophobia, a self-proclaimed criminology firm, which sought state-sponsored funding from the exchequer for Hindu rituals in Maharashtra’s cave temples, the formation of a Transnational Sanatan Commission, and other unrelated demands, while imposing a cost of ₹10,000 on the petitioner. The Division Bench, consisting of Chief Justice DK Upadhyaya and Justice Amit Borkar, warned the petitioner against the misuse of PILs for advancing personal agendas.
In a recent judgment, the Delhi High Court directed the trial court to release the Rs. 25 lakh Fixed Deposit Receipt (FDR) to the petitioner, citing the absence of a fresh Look-Out Circular (LOC).
Justice Manoj Jain of the Delhi High Court, allowed the petition and directed the Trial Court to release the FDR of Rs. 25 lakhs to the petitioner, after which the petition was subsequently disposed of.
The Delhi High Court directed the Goods and Services Tax authority to re adjudicate the Show Cause Notice ( SCN ) to the petitioner, in a scenario where the SCN is issued before the GST portal redesign.
The Division Bench consisting of Justice Vibhu Bakhru and Justice Sachin Datta remanded to the concerned authority to adjudicate the impugned SCN afresh. And also the petitioner is given the liberty to file a response to the impugned SCN within a period of two weeks from date. The concerned authority can adjudicate the impugned SCN after considering the petitioner’s response and after providing the petitioner an opportunity to be heard.
The Delhi High Court directed expeditious action on application for cancellation of the GST Registration and told not to hold the application on Account of assessment of tax, interest or penalty that may be recoverable from the petitioner.
The Delhi High Court restricted the retrospective cancellation of Goods and Services Tax (GST) registration due to lack of justification in the impugned order.
The bench comprising Justice Vibhu Bakhru and Justice Sachin Datta disposed of the petition and held that the cancellation order will take effect from the date of the SCN, which is 21.12.2021, not retrospectively, which is on 17.07.2021. Thus, the Delhi HC directed cancellation of GST registration to be prospective as the impugned order does not reflect the reason for cancellation.
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