This weekly round-up analytically summarizes the key stories related to the High Court reported at Taxscan.in during the previous week from November 22 to November 27, 2021.
Aleem Miah Works Vs. Commissioner of Central Tax
The Telangana High Court remitted the matter to the Central Tax Commissioner as no definite view can be taken and Show Cause Notice was beyond the period of limitation. The division bench of Justice Ujjal Bhuyan and Justice Chillakur Sumalatha held that to pre-empt the adjudicating authority from carrying out the said exercise at the threshold would not be justified. “From a reading of the show cause notice dated 18.10.2021, no definite view can be taken at this stage, that the said notice is beyond the period of limitation in terms of the proviso to sub-section (1) of Section 73. These are matters for examination and adjudication by the primary authority. In the circumstances we are of the view that it would be in the interest of justice if the petitioner is relegated to the forum of adjudication before the respondent,” the court said.
Commissioner of GST Vs. M/s.Bharat Electronics Limited
The Madras High Court directed the GST Authority to allow filing of revised Form TRAN-1 by opening the GST portal as Benefit of Input Tax Credit (ITC) cannot be frustrated on grounds of technicalities. The division bench of Justice Pushpa Sathyanarayan and Justice Mohammed Shafiq ruled that if there is substantial compliance, denial of benefit of Input Tax Credit which is a beneficial scheme and framed with the larger public interest of bringing down the cascading effect of multiple taxes ought not to be frustrated on the ground of technicalities.
M/s Laxmi Barter Private Limited Vs. UOI
The Patna High Court quashed the order imposing interest on gross amount without deducting Input Tax Credit as it was passed without the issuance of Show Cause Notice. The division bench of Chief Justice Sanjay Karol and Justice S. Kumar held that the order is bad in law on the grounds that violation of principles of natural justice, i.e. Fair opportunity of hearing. No sufficient time was afforded to the petitioner to represent his case, and the order passed ex parte in nature, does not assign any sufficient reasons even decipherable from the record, as to how the officer could determine the amount due and payable by the assessee. The order, ex parte in nature, passed in violation of the principles of natural justice, entails civil consequences.
Commercial Tax Officer Vs. Chungath Jewellery
The Kerala High Court while upholding the validity of the demand notices ruled that the state is bound to recover differential Value Added Tax (VAT) from dealers. The division bench of Justice S.V. Bhatti and Justice Bechu Kurian Thomas held that the retrospectivity of tax or its collection brought in by the Finance Act 16 of 2011 is not controlled by the validation clause in section 12 of that Act. “We are of the view that the State was bound and entitled to recover the differential tax from the dealers and the demand notices were issued in valid exercise of power,” the court ruled.
Glenmark Pharmaceuticals Limited Vs. UOI
In a relief to Glenmark Pharmaceuticals Limited, the Sikkim High Court has held that the Claim of Budgetary Support under GST can not be rejected as it was made for a period prior to the registration. The division bench of Justice Bhaskar Raj Pradhan and Justice Meenakshi Madan Rai noted that although the application for registration and issuance of UID made by the petitioner had been received by the respondent on 12.12.2017, the authority neither registered the petitioner nor rejected the application compelling the petitioner to reapply for the same electronically pursuant to which registration and UID was granted on 31.10.2018. The fact that registration and UID were granted makes it evident that the petitioner was eligible for budgetary support under the scheme.
The Delhi High Court has granted anticipatory bail to a person accused of fraudulently availing and passing on fake Input Tax Credit (ITC) worth Rs. 72 Crores. The single bench of Justice Chandra Dhari Singh allows the instant application under section 438 of the Code of Criminal Procedure. In the event of arrest, the petitioner has been released on bail on his furnishing a personal bond in the sum of Rs. 5,00,000/- with two solvent sureties of like amount to the satisfaction of the Investigating Officer/Apprehending Authority with various terms and conditions.
M/s Steelcon Pvt. Ltd. Vs. Principal Commissioner of Central Tax
The Delhi High Court upholds the Seizure of cash as the Taxpayer voluntarily deposited the balance GST, interest and penalty. The division bench of Justice Navin Chawla and Justice Manmohan held that the assessee can by making a voluntary deposit of tax, interest, and penalty avail the benefit of restriction of penalty to only 15% of such tax. In the present case, the petitioner availed of this remedy, and based thereon, proceedings against the petitioner arising out of the search and seizure activities carried out on 04.03.2021 were closed. This was also informed to the petitioner vide impugned letter dated 24.09.2021 of the respondents. The petitioner having availed of the relief, cannot now turn around and challenge the said proceedings.
PCIT Vs. Delhi International Airport
The Karnataka High Court held that AO cannot disturb Assessment or Reassessment order while passing Section 153A order unless any incriminating Material is Seized during Search of Third Party. The division bench of Justice S.Sujatha and Justice Ravi V. Hosmani held that the Assessing Officer while passing the order under Section 153A read with Section 143[3] of the Act, ordinarily cannot disturb the assessment/reassessment order which has attained finality, unless the materials gathered in the course of the proceedings establishes that the finalized assessments are contrary to the material unearthed during the course of 153A proceedings.
PCIT Vs. Kartik Vijaysinh Sonavane
The Gujarat High Court while allowing the Income Tax Refund to Pilot of Kingfisher Airlines held that Mere deduction of TDS does not close the chapter of tax liability unless deposited in Government treasury. The division bench of Justice Sonia Gokani and Justice Nisha M. Thakore held that the department is precluded from denying the benefit of the tax deducted at source by the employer during the relevant financial years to the petitioner. “The credit of the tax shall be given to the petitioner and if in the interregnum any recovery or adjustment is made by the respondent, the petitioner shall be entitled to the refund of the same, with the statutory interest, within eight weeks from the date of receipt of copy of this order,” the bench ruled.
In a major relief to South Indian Bank, the Kerala High Court allowed the Income Tax Deduction on bad debts. The division bench of Justice S.V. Bhatti and Justice Bechu Kurian Thomas while relying on the decision of the Supreme Court in the case of Catholic Syrian Bank v. Commissioner of Income Tax allowed the appeals of the assessee and dismissed the appeals preferred by the revenue. Further, directed that all matters be remanded to the Assessment Officer for computation in accordance with the law.
The Kerala High Court while disallowing the deduction to Oil Palm India held that agricultural income was excluded from the purview of the Central Act, not part of the computation of income under the Central Act. The division bench of Justice S.V.Bhatti and Justice Viju Abraham held that agricultural income does not form part of computation under Section 14 of the Act, 1991. Further, the deduction is envisaged for the purpose of ascertaining the net income of the assessee under different heads. The agricultural income is excluded and tapering into admissible tax, a deduction would again be inconsistent with Sections 10,14, and 43B of the Act. Clause-B of Section 43B deals with the tax payable by the assessee. The main fault under any law for the time being in force means the tax payable by the assessee for earning the income for which the computation is carried out.
PCIT Vs. Bangiya Gramin Vikash Bank
In a major relief to Bangiya Gramin Vikash Bank, the Calcutta High Court allowed the deduction on arrear payment payable consequent to wage revision. The division bench of Justice T.S.Sivagnanam and Justice Hiranmay Bhattacharyya found that there was nothing to interfere with the order passed by the Tribunal.
Tvl.Sree Karumariamman Granites Vs. ACIT
The Madras High Court held that writ petition is not maintainable as Statutory Alternative Remedy under Income Tax Act. The division bench of Justice M.Sundar held that when the appeal remedy is available and there is nothing to demonstrate that it is not efficacious, in the light of the discussion and dispositive reasoning thus far, this Court has no hesitation in holding that this is a fit case for relegating the writ petitioner to the alternate remedy under Section 246-A of Income Tax Act. “The sequitur is captioned writ petition or in other words campaign against the impugned order in writ jurisdiction fails and the writ petition is dismissed, albeit, preserving the rights of the writ petitioner to prefer a statutory appeal inter alia under Section 246-A of Income Tax Act subject of course to limitation and pre-deposit condition, if any. If the writ petitioner files an appeal, as already alluded to supra, subject to limitation and subject to pre- deposit condition if any, the said appeal shall be considered on its own merits and in accordance with law by the appellate authority. It is also made clear that it is open to the writ petitioner to seek exclusion of time spent in the captioned writ petition under Section 14 of the Limitation Act and if the writ petitioner chooses to do so, the Appellate Authority shall decide the same on its own merits and in accordance with law,” the court said.
PCIT Vs. M/s Apeejay Shipping Ltd.
The Calcutta High Court held that period of limitation to be reckoned from the date of the Revision order passed by the AO. The division bench of Justice T.S. Sivagnanam and Justice Hiranmay Bhattacharyya found that the Tribunal took note of the decision of the Hon’ble Supreme Court in CIT vs. Alagendran Finance Limited [211 CTR (SC) 69] and held that the order passed by the Commissioner of Income Tax under Section 263(2) is hopelessly barred by limitation. The Tribunal rightly held that the period of limitation for the assessment year 2007-08 has to be reckoned from the date of the order passed by the Assessing Officer under Section 143(3)read with Section 263 i.e. 8th December, 2011 and not from the date of the order passed by the Assessing Officer under Section 143(3) read with Section 263 and 251 dated 29th November, 2012. Thus, the Tribunal rightly allowed the appeal filed by the assessee.
The Delhi High Court has ruled that no income tax evasion is done by the assessee as it is for parties to settle the sale consideration for transfer of respective shares in the property. The division bench of Justice Navin Chawla and Justice Manmohan held that in a case where from a given set of circumstances two inferences of fact are possible, the one drawn by the lower appellate court will not be interfered by the High Court in the second appeal. Adopting any other approach is not permissible. It has also been held that there is a difference between a question of law and a ‘substantial question of law’.
PCIT Vs. M/s Akzo Nobel India Ltd.
The Calcutta High Court deleted the disallowance on account of Slump Sale of Chemical Undertaking. The division bench of Justice T.S. Sivagnanam and Justice Hiranmay Bhattacharyya noted that the concept of slump sale was discussed in CIT v. Mugneeram Bangur & Co. At this stage, it is quite important to appreciate the ratio of CIT v. Artex Manufacturing Co. The written down value of the plant, machinery, and deadstock according to the assessee’s books was Rs. 4,36,896/-. The undertaking was sold on a valuation of these items as Rs. 15,87,296/-. According to the department, the written down value was Rs. 3,32,276/-. The difference between them was the bone of contention in this case. Whether it would be taxed as capital gains or under the head “business”. The Supreme Court ruled that if the value of the individual assets could not be determined, then the value of all the assets together should be taken. In that case, the profit or gain made would be taxed as a capital gain. In other cases, it would be taxed as business income. The entire matter was referred to the tribunal for a decision. In that decision the Income Tax Act, 1922 was under consideration.
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