This weekly round-up analytically summarises the key tax judgments of the Supreme Court and all High Courts reported at Taxscan.in during the previous week from August 12 to August 18, 2023.10
In a recent case, the Supreme Court of India held that the manufacture of veterinary products which fall under the category of ‘intravenous fluid’ was eligible for exempt from excise duty under exemption notification.
The two-member bench comprising B.V. Nagarathna and Ujjal Bhuyan upheld the decision of CESTAT and held that the respondent/assessee was eligible for exemption from excise duty under exemption notification while dismissing the appeal filed by the revenue.
The Supreme Court of India directed re-consideration to the Settlement Commission which passed the order under section 245(D)(1) of the Income Tax Act,1961 without giving sufficient opportunity to the assessee to disclose the undisclosed income.
The two-member bench comprising B.V. Nagarathna and Ujjal Bhuyan set aside the order of the High Court as well as the order of the Settlement Commission and remanded the matter to the Settlement Commission for re-consideration while allowing the appeal filed by the assessee.
In a recent decision the Supreme Court of India has ruled that the Court is powerless to modify award, can only set aside partially or wholly award passed under Section 34 of the Arbitration and Conciliation Act, 1996.
“In appeal, Section 37 of the Arbitration and Conciliation Act,1996 grants narrower scope to the appellate court to review the findings in an award, if it has been upheld, or substantially upheld under Section 34. It is important to notice that the old Act contained a provision14 which enabled the court to modify an award. However, that power has been consciously omitted by Parliament, while enacting the Act of 1996. This means that the Parliamentary intent was to exclude power to modify an award, in any manner, to the court” the Bench added.
In a recent case the Bombay High Court no Goods and Service Tax (GST) applicable to Services rendered abroad since it amount to export services.
A division bench comprising Justice S V Gangapurwala & Justice M G Sewlikar held that “the recipient petitioner has rendered services to the ASCL abroad i.e. in U.K. Therefore, GST does not apply to the services rendered abroad as they amount to the export of services.” While allowing the appeal, the Court set aside the orders. Shri Prasad Paranjape appeared for the Petitioner and Shri Pradeep Jetly, appeared for the Respondent.
A Single bench of Justice Md. Nizamuddin of Calcutta High Court directed the West Bengal Government to take necessary steps to pay the extra liability for the execution of ongoing government contracts given under either Pre or Post Goods and Services Tax (GST) regime.
The High Court also recorded that the Additional Chief Secretary, while taking decision on the representation to be filed by the petitioner, shall act in accordance with law and pass a reasoned and speaking order on merit and after considering all the judgements of different High Courts upon which petitioners intend to rely.
In a recent judgment pronounced by the Punjab and Haryana High Court, Justices G.S. Sandhawalia and Harpreet Kaur Jeewan noted that the act of utilising E-way bills and tax invoices again suggests a deliberate effort to avoid making proper tax payments and upheld the penalty imposed by the First Appellate Authority of GST.
While dismissing the appeal, the Punjab and Haryana High Court clearly stated that “‘Intention to evade payment of tax’ is an essential ingredient, for initiating proceedings against a person under section 130 of the said Act. In the present case, the petitioner had tried to reuse the e-way bills and the tax invoices, as such the intention to evade the payment of tax is impliedly proved on record. Hence, the order passed by the Proper Officer under Section 129 as well as under Section 130 of the CGST Act, 2017 read with the provisions of IGST Act, 2017 is legal and valid and has been rightly upheld by the appellate authority.”
In a recent ruling, the Andhra Pradesh High Court (HC) has stated that the obligation or duty of the buyer is confined to proving that they genuinely acquired goods from the seller in exchange for valuable payment. This can be accomplished by confirming the Goods and Services Tax (GST) Registration through the GST portal.
The 1st respondent shall release the detained goods in favour of 1st petitioner on his deposit of 25% of their value and executing personal bond for the balance and he shall also release the vehicles in favour of the 2nd petitioner (the transporter engaged by the 1st petitioner) in the respective writ petitions on their executing personal security bonds for the value of the vehicles as determined by concerned Road Transport Authority.
In a significant ruling the Orissa High Court, dismissed an appeal filed by the Income Tax Department and observed that excess stocks should represent income from undisclosed sources.
A Division Bench of Justices Arindam Sinha and SK Mishra observed that “Here, the Tribunal noted that the PCIT had only come upon an inflated stock statement and there was no inquiry or verification in respect thereof. We do not find any substantial question of law arises in the appeal for admission. It is dismissed.”
The Delhi High Court held that the allotment of shares in a scheme of amalgamation was not construed as transfer under Section 47(vii) of the Income Tax Act,1961.
The two-member bench comprising Rajiv Shakdher and Girish Kathpalia stayed the order passed under Section 148A(d) of the Income Tax Act and the consequent notice issued under Section 148 of the Income Tax Act.
The Delhi High Court granted relief to the Punjab and Sind Bank by allowing the refund of the amount Rs. 1,36,04,250/- deposited by the bank on the ground of involvement of public funds.
The two-member bench comprising Rajiv Shakdher and J Girish Kathpalia held that the revenue had to refund the amount deposited by the petitioner bank amounting to Rs.1,36,04,250/-.
The Delhi High Court held that the Income Tax Appellate Tribunal (ITAT) had no power to recall an order in the exercise of power under section 254(2) of the Income Tax Act, 1961 after the expiry of four years.
The two-member bench comprising Rajiv Shakdher and Girish Kathpalia closed the appeal and granted liberty to the appellant/revenue to file a writ petition, given the judgment of Lachman Dass Bhatia Vs. Assistant Commissioner of Income Tax.
The Jammu and Kashmir and Ladakh High Court dismissed appeal filed with delay of 1488 days and upheld the ruling that no recovery of refunded cess amount by the Revenue Department.
A Division Bench of the High Court comprising Chief Justice N Kotiswar Singh and Justice Wasim Sadiq Nargal observed that “In view of the above, what has been said by the Division Bench of this Court in order dated 23.05.2022 passed in CEA No. 10/2020 and also upheld by the Supreme Court, same applies on all counts to the application on hand. Accordingly, the appeal bearing No. CEA No. 117/2023 is dismissed along with connected applications(s) being barred by limitation.”
In the matter of payment of Service Tax under the category of ‘Mining Services’ based on Circular by Central Government, the Bombay High Court directed the petitioners, International Association of Drilling Contractors (South Central Asia Chapter) and Anr, to file the matter before the Designated Officer.
“In a petition which is filed by the association, it may not be appropriate for us to examine the validity of the impugned circular. The same is already subject matter of contention in the show cause notice issued to one of the petitioner’s member M/s. Transocean Offshore International Ventures Ltd., and it would be for such member of the petitioner, who would be entitled to raise all contentions in regard to the circular by raising all permissible contentions in law and on facts. If such contentions are raised, certainly they fall for consideration of the Designated Officer who would, if at all, is to adjudicate the show cause notice” the Court concluded.
A Single Bench of Justice G. Anupama Chakravarthy of Telangana High Court reduced the surety amount imposed by the Economic Offences Court from Rs. 2 lakhs to Rs. 25,000 on grounds that the offender was found financially poor.
Thus, the bench decided that “The petitioner is directed to be released on bail on condition of his executing a personal bond for a sum of with one surety for a likesum to the satisfaction of Special Judge for Economic Offences, Hyderabad.” S. Ganesh, Assistant Public Prosecutor appeared on behalf of the Respondent, state.
In a major relief to Rockline Entertainments, the Karnataka High Court ruled that non-providing of Accountant General report on which, property tax is demanded amounts to natural justice violation.
“Non-providing of Accountant General report on which, the tax demand is based as could be found from the impugned order passed in Miscellaneous Appeal, would amount to violation of principles of natural justice. Any document which is relied upon by respondent-BBMP to determine the tax liability ought to be furnished to the assessee, so that the assessee would be in a position to answer the same” the Court concluded.
The Madras High Court ordered to pay Rupees one lakh as security penalty as the movement of the seized vehicle carrying diesel was without proper invoice and transport document in violation of the Tamil Nadu Value Added Tax Act, 2006 (TNVAT Act).
The Court further directed that considering the fact that the product in the vehicle is diesel which is prone to inflammable, Court is inclined to order provisional release of the vehicle, subject to the petitioner paying the disputed tax that has been arrived in the impugned order and a further sum of Rs.1,00,000/- (Rupees One Lakh Only) towards security penalty imposed within a period of seven days from the date of receipt of a copy of this order.
The Delhi High Court granted bail to Yuvajana Sramika Rythu Congress Party (YSRCP) Member of Parliament (MP’s) son, Raghav Magunta on medical grounds in the much-discussed Delhi Excise Policy case.
A Single Judge Bench of Justice Dinesh Kumar Sharma observed that “It is a matter of the record that the affidavit filed by the E.D. is only on the peculiar facts and circumstances and therefore this order may not be taken as a precedent for benefit of other accused persons and may also not be taken as a precedent in any other case. Let the petitioner be released on regular bail on furnish a personal bond of Rs. 2,00,000/- (Rupees Two Lakhs) with two sureties of like amount to the satisfaction of the learned Trial Court on the following terms and conditions”. “In view of the statement made and the facts narrated herein above, the interim bail granted vide order dated 18.07.2023 for four weeks on medical grounds is made absolute” the Court noted.
The Allahabad High Court condoned delay of 3 days on the ground that the deposit of balance amount payable under Direct Tax Vivad Se Vishwas Act (DTVSVA) delayed on unforeseen circumstances.
“In view of the law mentioned above, as well as considering the pleadings and perusal of record, the Court is of the view that a delay of three days in depositing the arrears of tax of Rs. 8,67,137/- deserves to be condoned, and the amount balance tax deposited by the petitioner be accepted by the respondents treating the same well within time as per the scheme of the Direct Tax Vivad Se Vishwas Act, 2020 and also the impugned order /letter, passed by Central Board of Direct Tax, is hereby quashed” the Court concluded.
The Calcutta High Court confirmed an order under Section 148A(d) of the Income Tax Act, 1961 in the matter relating to Tax Deduction at Source (TDS) deduction on unsecured loan.
A Single Bench of Justice Md Nizamuddin observed that “Considering the facts and circumstances of this case and the records produced by the learned advocate appearing for the respondents, I am not inclined to interfere with the impugned order under Section 148A(d) of the Income Tax Act, 1961 and accordingly this writ petition being WPO 1288 of 2023 is dismissed”.
The High Court of Bombay has quashed the Maharashtra Value Added Tax (MVAT) Review Order that disallowed deductions for Works Contract Project citing excess scope and misapplied deductions on the part of the revenue authorities.
The division bench comprising Justice G. S. Kulkarni and Justice Jitendra Jain ruled in favour of Kalpataru Power Transmission Ltd., stating that the review order was passed without jurisdiction and in violation of the principles of natural justice. In result, the writ petition is allowed and the review order as well as the order rejecting the rectification application were quashed.
The High Court of Kerala has held that banks and financial institutions hold priority over revenue authorities’ “First Charge” when recovering debts through property sales.
The single bench of Justice Devan Ramachandran held that the Banks/Financial Institutions have priority over the Revenue’s claim in recovering their debts under the SARFAESI Act and RDB Act. In result, the writ petitions are allowed and the respective orders or actions of the Revenue are quashed or set aside.
In a major decision a Single Judge Bench of the Delhi High Court ruled that the members of the families are bound by the terms of arbitration agreement executed between the heads of two branches of families, on signing the arbitration agreement.
“The submission of the counsel for the plaintiff that the parties to the present suit cannot be referred to arbitration, as defendant no.8 is not a signatory to the MoU also cannot be accepted. It is relevant to note that the defendant no.8 is the daughter of the plaintiff and the defendant no.1” the Court added.
In a significant money laundering case against Binnesh Koderi who is the son of Former CPI(M) Leader Kodiyeri Balakrishnan, the Karnataka High Court stayed the Enforcement Department (ED) Proceeding under PMLA Act, after the Arrest.
A single judge bench of Justice Hemant Chandangoudar then ordered “In Interim order as prayed for insofar it relates to the petitioner herein. List this matter after two weeks.” The special court is likely to frame charges against him on August 18.
The Calcutta High Court dismissed an appeal by the Income Tax Department as the tax effect was less than the threshold limit fixed by the Central Board of Direct Taxes (CBDT).
“As could be seen from the above table, the total tax is Rs.80,05,462/-. Thus, it is clear that the tax effect in the instant case is less than the threshold limit fixed by the CBDT. Hence the revenue cannot pursue this appeal. Accordingly, the appeal stands disposed of on the ground of low tax effect and the substantial questions of law are left open” the Court concluded.
In a recent decision the Delhi High Court ruled that there can be no tax concession to company as promoters gifted shares to the company instead of sale to avoid capital gain tax.
A Division Bench of Justices Vibhu Bakhru and Amit Mahajan held that “Neither the order dated 26.02.2013 nor the impugned order indicate that the BIFR had examined the transactions, which had led to the capital gains arising in the hands of the Company or the context in which additional concessions were sought. In view of the above, the impugned order cannot be sustained. The same is set aside. The Income Tax Department is not required to grant any further concessions contrary to the Income Tax Act, to the Company.”
The Delhi High Court in a recent decision observed that no additional concession could be included in Board for Industrial and Financial Reconstruction (BIFR) Scheme by Income Tax Department without any extension or modification.
“In view of the above, there is merit in the contention that the Scheme sanctioned by the BIFR had expired. The Scheme contemplated measures for exceeding the net worth within the period specified in the Scheme and in the manner as stipulated therein viz by settlement with banks and workmen, repayment of statutory dues in instalments over a specified period of time, and infusion of funds by the promoters and sale of certain assets, and other measures” the Court noted.
In a recent decision the Bombay High Court quashed an income tax notice seeking reopening of the assessment on incorrect facts.
A Division Bench comprising Justices Vrushali V Joshi and AS Chandurkar observed that “The notice suffers from fundamental factual errors. An exceptional case thus having been made out to interfere in exercise of writ jurisdiction, the impugned notice issued under Section 148 of the Income Tax is quashed and set-aside. Consequentially, further steps taken by the respondents based on said notice would no longer survive.”
The Punjab and Haryana High Court observed that Trial Court should decide GST Fraud case on evidence uninfluenced by observations in bail order.
The Court further noted that the impugned order passed by the Additional Sessions Judge, is ordered to be modified to the extent that the observations in the said order were made only for the purposes of disposal of the bail application and the trial Court shall decide the main case on the basis of the evidence led by both the parties, uninfluenced by the observations made in the impugned order.
In a major decision the Kerala High Court ruled that electricity is excluded from ‘Goods’ and assessment order should comply with Section 25(1) of Kerala Value Added Tax Act, 2003 (KVAT Act).
“Therefore, the charge against the petitioner could, at best, be one of filing of an incorrect return and not of suppression of taxable turnover or attempt to evade tax. In the above circumstances, the essential ingredient under Section 25(1) would not be available to sustain an order of assessment on best judgment” the Bench noted.
In a major relief to Max Life Insurance Company Limited, the Delhi High Court directed the Income Tax Department to refund excess outstanding demand of Rupees 221 crores.
A Division Bench of Justices Rajiv Shakdher and Girish Kathpalia observed that “The respondents/revenue will refund the amount which is in excess of 20% of the outstanding demand, i.e., Rs.221,03,71,862/-, concerning AY 2017-18. The said sum will also include Rs.12,68,20,270/-, that was sought to be adjusted against the disputed demand for AY 2017-18 by respondent no.1.” The Court further noted that the CIT(A) will endeavour to dispose of the appeal at the earliest. The amount will be remitted as expeditiously as possible, though, not later than six (6) weeks from the date of receipt of this order, along with applicable interest.
The Jharkhand High Court granted bail to the Director of Company alleged of cheating investors on false promises in the much-celebrated Alchemist Group Case.
A Single Bench of Justice Gautam Kumar Choudhary observed that “Considering the submissions of learned counsel and considering that the chargesheet has already been submitted and the fact as discussed above, the anticipatory bail application is allowed.” “Hence, in the event of his arrest or surrender within a period of three weeks from the date of receipt of a copy of this order before the learned court below, the petitioner named above shall be released on bail on furnishing bail bond of Rs.1,00,000/- (Rupees One Lakh) with two sureties of the like amount each to the satisfaction of learned Court below and subject to the condition that one of the Bailors must be Income Tax Payee and subject to the conditions laid down under Section 438(2) Cr. P.C” the Court concluded.
In a benevolent decision the Delhi High Court allowed a Prevention of Money Laundering Act,2002 (PMLA) accused to travel abroad for son’s admission and observed that the Court will not deny moment of togetherness to family and son.
Allowing the accused to travel abroad the Court further stated that “Thus, as a parent, the petitioner’s presence, assistance and support is a precious right as well as moment for the parent, the child and the family, which should be allowed to the petitioner, in the absence of anything reflecting violation of any condition in the past or the petitioner not returning back to the country. This Court will not deny this moment of togetherness to the family and the son and the father at the time of his admission in a university of his choice.”
In a recent decision the Delhi High Court observed that goodwill is intangible asset and claim of depreciation under Section 32(1) of the Income Tax Act, 1961 is allowable.
A Division Bench comprising Justices Yashwant Varma and Dharmesh Sharma observed that “It is well settled that a transfer in terms of a scheme of amalgamation which is sanctioned is accomplished by operation of law as opposed to an act of parties. It is in that backdrop that the decision in Smifs assumes significance. The judgment rendered by the Supreme Court in Smifs clearly recognises goodwill to be an intangible asset and on which depreciation can clearly be claimed in terms of Section 32(1) of the Income Tax Act.”
In a recent decision a Division Bench of the Gujarat High Court quashed an assessment notice issued against non-existent company observed that amalgamating entity ceases to exist upon approved scheme of amalgamation.
“The ratio laid down in those judgements would squarely apply and since the notices for the assessment years 2014-15 to assessment years 2017-18 have been issued to the non-existing entity viz. Satyasarthi Estate Organisers Private Limited, such notices are quashed and set aside” the Court concluded.
The Calcutta High Court dismissed a writ petition as no objection filed before the Assessing Officer (AO) against an assessment order passed under Section147 of Income Tax Act, 1961.
The Court further noted that as such the respondent Income Tax Authority cannot be faulted since neither any adjournment petition nor any objection was filed before the assessing officer on 17th May, 2023 which was the time granted to the petitioner. “In view of the facts and circumstances of the case, I am not inclined to interfere with the impugned assessment order under Section 147 of the Income Tax Act and accordingly this writ petition is dismissed on the ground of availability of alternative remedy by way of appeal.”
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