This weekly round-up analytically summarises the key stories related to the Supreme Court and High Court reported at Taxscan.in during the previous week from September 26 to October 2, 2022.
A division bench of Delhi High Court comprising Justice Manmohan and Justice Manmeet Pritam Singh Arora held that, Section 148 Notices sent as an attachment through emails, from the designated e-mail addresses of the JAOs, which do not bear the respective JAO’s Digital Signature Certificate (DSC) are valid. the Bench observed that these circulars are not applicable to the notices issued and served u/s 148 of the Income Tax Act, 1961 and that the proviso to Section 282A and the amendments carried out to the said section by the Finance Act, 2016, therefore, gives recognition to the notices served in the e-form. Sub-section (2) of Section 282A provides that any notice issued by the such authority with his/her name and his/her office provided, as may or otherwise written thereon will be deemed to be authenticated and thus validly issued.
The Calcutta High Court has, staying the permanent suspension of the petitioner’s Customs Broker License, held that the time limit prescribed by Regulation 17(7), CBLR, 2018, is to be strictly observed by the authorities in the exercise of the powers conferred upon them by the same. Considering the facts and circumstances of the case as appears from record and submission of the parties and discussion made on the impugned order of revocation of petitioner’s license dated 11th July, 2022, the same shall remain stayed till 31st January, 2023 or until further order, whichever is earlier. Respondents shall file affidavit-in-opposition to the Writ Petition within four weeks after Puja Vacation. Petitioner to file reply thereto, if any, within two weeks thereafter. List this matter for ‘Final Hearing’ in the monthly list of January, 2023”
In a ruling by the Division Bench of the Delhi High Court, it was held that, the Generation of Notice by the Jurisdictional Assessing Officer (JAO) without dispatch fails to meet the expression “shall be issued” u/s 149, leaving it to be time-barred. The Delhi High Court bench headed by Justice Manmohan relied on the ruling in Kanubhai M. Patel (HUF) v. Hiren Bhatt, (2011) 334 ITR 25 (Guj), in which The Gujarat High Court categorically held that it is on the date of despatch of Section 148 notice that the same will be held to be issued for the purpose of Section 149 of the Act of 1961 and reiterated that, The mere generation of a notice on the ITBA Screen and signing the same is not sufficient for satisfying the test of ‘issued’ and it is only when the Notice has been despatched in terms of Section 13 the Act of 2000, would the same be declared to be issued. The High Court also relied on the judgment of the Supreme Court in UOI vs. G.S. Chatha Rice Mills, (2021) 2 SCC 209, wherein the Supreme Court held that a notification would be in effect from the time and date on which it was uploaded on the e-gazette and not the date mentioned in the notification.
A division bench of the Bombay High Court has held that the amount remaining in the Electronic Credit Ledger can be utilized to pay pre-deposit as per section 107(6) of the Maharashtra GST Act, 2017. Considering the submissions, Justice K. R. Shriram & Justice A. S. Doctor held that “since in the Petitions before us the amounts payable are towards output tax, we hold that Petitioners may utilise the amount available in the Electronic Credit Ledger to pay the 10% of Tax in dispute as prescribed under Sub-section (6) of Section 107 of MGST Act.” “Accordingly, the impugned Order-in-Appeal No.JC/APP-V/GST Defective/A.F.Y/2021-22/A.O.Y..2022-23/-B-1 dated 6th April, 2022 and FORM GST APL-02 passed by Respondent No.2 is quashed and set aside. The Appeal is restored to file on the undertaking of Petitioner that it shall debit the Electronic Credit Ledger within one week of this order getting uploaded towards this 10% payable under Section 107(6)(b), if not already debited, is accepted,” the Court said.
A division bench of the Delhi High Court has held that GST is not leviable on the portion of rent received by a Proprietor of a registered proprietorship firm when such renting is sone in his /her own personal capacity for use as his/her own residence as well as not for use in the course or furtherance of business of his/her proprietorship firm. Justice Manmohan and Justice Manmeet Pritam Singh Arora observed that “Consequently, the aforesaid clarification that renting of a residential dwelling by a proprietor of a registered proprietorship firm, who rents it in his/her own personal capacity for use as his/her own residence as well as not for use in the course or furtherance of business of his/her proprietorship firm and such renting is on his/her own account and not that of proprietorship firm shall be exempt from GST, is accepted by this Court and all the respondents are held bound by the same.”
A Division Bench of the Delhi High Court has held that, a notice issued under Section 148 of the Income Tax Act, 1961 sent to an unrelated email address does not constitute proper service of notice. It was observed by the Bench comprising Justice Manmohan and Justice Manmeet Pritam Singh Arora and that– the impugned Notice issued by the respondent was not served on the petitioner/assessee’s registered email ID and was sent to an unrelated e-mail ID. The petitioner learnt about the impugned Notice which was neither signed physically nor any DSC was appended, incidentally through its E-filing portal. Therefore, there has been no compliance of the provisions of Section 149 of the Act of 1961, while issuing the impugned notice.
A Division Bench of the Delhi High Court while upholding the order of the Delhi Bench of the Income Tax Appellate Tribunal(ITAT), held that, the recovery of annual report and share certificates from the assessee are not incriminating documents as they were seized from the issuing authority of the share certificates. The Division Bench comprising Hon’ble Mr. Justice Manmohan and Hon’ble Ms. Justice Manmeet Pritam Singh Arora held that, the recovery of annual report and share certificates of the assessee are not incriminating due to two reasons. First, that the documents were seized from the issuing authority of the same and second, that the assessment year pertaining to the documents is none of the assessment years in question as held in Commissioner of Income Tax-III, Pune v. Sinhgad Technical Education Society [2017] 397 ITR 344. The Court taking note of the concurrent orders of both CIT(A) and ITAT, held that, no protective additions were to be made and dismissed the appeals in the view that no substantial question of law had arisen for consideration.
While considering an application for anticipatory bail by an accused allegedly involved in claiming input tax credit (ITC) using fake invoices, the Uttarakhand High Court has held that the bail cannot be granted since the allegations are grave and the accused is not co-operating with the department during investigation. Rejecting the arguments of the applicant, Justice Ravindra Maithani observed that” In the cases cited on behalf of the applicant, as such no absolute rule is laid down that in the matters pertaining to the Act, custodial interrogation is not required. Therefore, it cannot be said that anticipatory bail has to be granted in each and every case, in which a person is summoned under Section 70 of the Act.”
The Bombay High Court, in a significant ruling, held that where an Order of Cancellation of Registration under GST Act was uploaded on the GST Portal without signature, the limitation for filing appeal cannot start at all until the signature is affixed on such an order. “In the affidavit in reply it is not denied that the order in original dated 14th November 2019 was not digitally signed. In the affidavit in reply it is specifically stated that the show cause notice was digitally signed by the issuing authority but when it refers to the order in original dated 14th November 2019 there is total silence about any digital signature being put by the issuing authority. Conveniently, respondent stated that petitioner cannot take stand of not receiving the signed copy because the unsigned order was admittedly received by petitioner electronically. However, if this stand of respondent has to be accepted, then the Rules which prescribe specifically that digital signature has to be put will be rendered redundant. In our view, unless digital signature is put by the issuing authority that order will have no effect in the eyes of law,” the Court said.
The Delhi High Court has held that the employer-employee relationship cannot be construed between the Company and a freelancer merely on the basis of the emails and form-16A. Dismissing the petition, the Court held that “a bare perusal of the documents filed as evidence on behalf of the petitioner workman, which includes the various emails and the forms under 16A, do not, in any way, prove that there existed any relationship of employer-employee between the parties. The emails show mere correspondence and the Form 16A categorically reflects that TDS was deducted by the Management in respect of payments made to the petitioner under the „head of payments made to contractors and sub-contractors‟, thereby disqualifying the petitioner to fall within the definition of workman as enumerated under Section 2(s) of ID Act.”
In a recent ruling delivered on Tuesday, a division bench of the Calcutta High Court has held that the cenvat credit is allowable to pharma companies on the service tax paid to the commission agents for the sales promotion. Justice T.S. Sivagnanam and Justice Supratim Bhattacharya relied on the decision in CCE, Ahmedabad-II Versus Cadila Healthcare and observed that “the decisions of one other High Court in all cases will not bind another High Court and such decisions were held to be of persuasive value. In any event on facts in Cadila Health Care Limited, the Court found no material on record to indicate that commission agents were involved in the activities of sales promotion. Therefore, the decision in the case of Prabhat Pan does not render any assistance to the revenue. Further it is seen that the commission paid by the respondent to the commission stockist is included in the assessable value of the goods on which excise duty has been paid by the respondent on the final products namely carbon black. In fact, this has been noted by the adjudicating authority.”
The Rajasthan High Court has dismissed a bulk of petitions challenging the levy of GST on ‘royalty’ considering the fact that the matter is pending before a nine-judge bench of the Supreme Court. A bench comprising Acting Chief Justice Mr. Manindra Mohan Shrivastava and Justice Shubha Mehta observed that “though the orders passed by this Court in the cases referred to above repelling challenge to leviability of GST on royalty have been assailed by filing SLPs before the Hon’ble Supreme Court, learned counsel appearing on behalf of all the parties do not dispute that the issue has not been decided by the Hon’ble Supreme Court and learned counsel for the parties have also brought to our notice that the issue as to whether royalty is in the nature of tax has been referred by the Hon’ble Supreme Court for consideration by the Bench of nine-Judge in the case of Mineral Area Development Authority etc. & Others Vs. M/s. Steel Authority of India and Others.”
The Himachal Pradesh High Court presided by Ms. Justice Sabina and Mr. Justice Satyen Vaidya has held that substantial work of production was got done in other State and upholds the denial of tax subsidy for North-Eastern states u/s 80IC (2)(ii). The division bench of the High court has held that substantial work in the entire process of production was got done by the assessee from Ludhiana in Punjab by outsourcing the jobs. The only minimal job was given effect to at Parwanoo. The findings recorded by the AO that only a small part of the entire process involved in the production of the Anchors was done at Parwanoo and that by itself could not be considered sufficient to hold that the assessee was engaged in the manufacture or producing of the end product at Parwanoo, The division bench has held that “the findings recorded by the ITAT in both the appeals, only to the extent of holding the assessee involved in ‘manufacture’ or ‘production’ of “Anchors” without considering the effect and implication of very small quantum of work done at Industrial Area Parwanoo, are set aside”. Mr. Vinay Kuthiala appeared on behalf of the revenue and Mr. Vishal Mohan appeared on behalf of the assessee.
In a significant ruling, the Delhi High Court has held that the physical verification of the business premises without notice for granting GST registration would be invalid as the same is in violation of the principles of natural justice. The division bench of Justice Rajeev Shakdher and Justice Taravitasta Ganju observed that “A careful perusal of the rule shows that, if after the grant of registration, the proper officer is satisfied that physical verification of the place of business of the concerned person is required, the proper officer may get such verification of the business place carried out, albeit, in the presence of the said person, and thereafter, have the verification report along with other documents including photographs uploaded in Form GST REG30 on the common portal within 15 working days following the date of such verification.”
A division bench of the Delhi High Court has upheld the order of the Delhi bench of the Income Tax Appellate Tribunal (ITAT) that the income from the supply of CAS and middleware products to Indian customers does not fall under the ‘royalty’ under the India- Swiss DTAA. Justice Manmohan and Justice Manmeet Pritam Singh Arora dismissed the appeal and held that though the review petition in Engineering Analysis (supra) is pending before the Supreme Court, yet there is no stay of the said judgment till date. “Consequently, in view of the judgments of the Supreme Court in Kunhayammed and Others Vs. State of Kerala And Another, (2000) 6 SCC 359 and Shree Chamundi Mopeds Ltd. Vs. Church of South India Trust Association CSI Cinod Secretariat, Madras (1992) 3 SCC 1, the present appeal is covered by the judgment of the Supreme Court in Engineering Analysis,” the Court said.
In a significant ruling, the Tripura High Court has dismissed a Public Interest Litigation filed by a lawyer seeking amendments to the Wild Life (Protection) Act, 1972 and the Customs Act, 1962 to regulate the import and export of the exotic species. A bench of Chief Justice Mr. Indrajit Mahanty and Justice S.G. Chattopadhyay held that “there is no change in the statutory provisions in this regard to the period pre or post-advisory. The judgment dated 11.09.2019 of Bombay High Court in the matter of Anil Naidu Versus UOI (Writ Petition No. 807 of 2019) as well as the judgment dated 30.08.2019 passed by the Allahabad High Court in the matter of Dinesh Chandra Versus UOI (PIL Civil 22903 of 2019), which clarify the position in regard to the inapplicability of the penal provisions of Wild Life Act, 1972 and the Customs Act 1962 in regard to exotic species continue to apply as per extant laws and regulations despite advisory dated 11.06.2020.”
The Gujarat High Court has allowed bail to an accused of GST offenses considering the fact that the prosecution has not yet determined the amount off evaded GST and FIR was not lodged against the accused. Pronouncing an oral order, Justice Niral R. Mehta held that “Having heard the learned advocates for the parties and perusing the material placed on record and taking into consideration the facts of the case, nature of allegations, gravity of offences, role attributed to the accused, without discussing the evidence in detail, this Court is of the opinion that this is a fit case to exercise the discretion and enlarge the applicant on regular bail.”
Support our journalism by subscribing to TaxscanPremium. Follow us on Telegram for quick updates.
