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 19 to August 25, 2023.
The Supreme Court bench of Justice Abhay S. Oka and Justice Sanjay Karol heard the Safari Retreats Case yesterday at 2:00 pm. This was the Second hearing of this month. The Additional Solicitor General (ASG) of India Venkataraman argued that “ITC neither vested nor statutory right”.
After extensive discussions, the Orissa High Court concluded that it is permissible to claim ITC concerning the GST paid for the construction of immovable property that is intended for rental purposes. The next hearing of the case is scheduled on 31st August 2023.
The Supreme Court heard and listed the next hearing of the Case of M/s. Safari Retreats Private Limited & Ors. on 23rd August 2023 at 2:00 PM before the bench of Justice Abhay S. Oka and Justice Sanjay Karol. The apex court will determine the Goods and Services Tax (GST) implications of the immovable property in the next hearing.
Relying on the VKC Footsteps case, the ASG contended that credits cannot be solely granted based on economic reasoning. He emphasized that such credit assertions were also prohibited during the period preceding GST implementation, and there exists no inherent entitlement to claim such credits.
In a significant case, the Gujarat High Court directed the Director General of Goods and Service Tax (GST) intelligence Wing to transfer documents to GST authority as an investigation had already been initiated on the same matter.
Further directed the petitioner to co-operate with respondent no.4 and produce necessary/required documents demanded by respondent no.4 for investigation/inquiry and thereafter, it is open for respondent no.4 to pass an appropriate order/take appropriate action by the law.
The Delhi High Court has held that the power to order the attachment of bank accounts under the Central Goods and Service Tax (CGST) Act, 2017 is only on the commissioner.
A division bench comprising Justice Vibhu Bakhru and Justice Mr Amit Mahajan set aside the impugned communication to the extent that it seeks to place a debit freeze on the petitioner’s account. Further, the respondents are required to act by the statutory provisions.
The Orissa High Court in the absence of the constitution of the Goods and Service Tax Appellate Tribunal (GSTAT) has held that directed to deposit the entire tax demand within the period of fifteen days.
The division bench comprising Dr Justice B R Sarangi and Justice Murahari Sri Raman held that “Since the petitioner wants to avail the remedy under the provisions of law by approaching 2nd appellate tribunal, which has not yet been constituted, as an interim measure subject to the Petitioner depositing entire tax demand within a period of fifteen days from today, the rest of the demand shall remain stayed during the pendency of the writ petition.”
The Delhi High Court held that issuance of notice after the expiry of the period prescribed under section 28(9) of Customs Act, 1962 doesn’t survive.
A division bench comprising Justice Vibhu Bakhru and Mr Justice Amit Mahajan observed that there is no material to show that the proper Officer couldn’t determine the amount of duty within the prescribed period. The mention of the words, “where it is not possible to do so”, in our opinion, does not enable the Department to defer the determination of the notices for an indeterminate period. “In the absence of any ground that the officer couldn’t determine the amount of duty within the prescribed period, the impugned SCN has lapsed and cannot be adjudicated.” The court held while allowing the writ petition.
In a recent judgement, the Orissa High Court held that a pre-deposit under Goods and Service Tax (GST) appeal can be made through Electronic Cash Ledger (ECL).
“The appeal will now be listed before the 1st appellate authority i.e., the Additional Commissioner of CT & GST on 11th September, 2023. The Petitioner will appear on that date before the appellate authority along with a downloaded copy of this order. The appeal thereafter be disposed of afresh after hearing the Petitioner and the Department within a period of three months thereafter.”, the Court comprising Dr. Justice B R Sarangi and Justice Murahari Sri Raman held.
The Allahabad High Court condoned the three days delay in depositing tax arrears due to sickness.
A coram comprising of Justice Siddhartha Varma and Justice Arun Kumar Singh Deshwal observed 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 Act, 2020 and also the impugned order /letter dated 25.8.2022, passed by Central Board of Direct Tax, is hereby quashed.” Ami Tandon, Abhinav Gaur, Advocate, Vibhu Rai appeared for the petitioner and Counsel for the respondent Naveen Chandra Gupta.
On a Goods and Service Tax (GST) recovery in the absence of the Goods and Service Tax Appellate Tribunal (GSTAT), the Orissa High Court directed to pay 20% disputed tax.
“Since Mr Diganta Dash, Addl. Standing counsel for the Department accepts notice for the Opposite parties, let the required number of copies of the writ petition be served on him within three working days. Reply be filed within two weeks and rejoinder thereto, if any, be filed before the next date.”, Dr Justice B R Sarangi and Mr Justice Murahari Sri Raman held.
In a major relief to the e-commerce giant Flipkart India, a two-judge bench of the Delhi High Court has quashed an order adjusting a sum of Rs. 10 crore of VAT refund and directed the VAT department to release a refund of Rs. 6.62 crores to the Company as the order was observed as illegal and arbitrary.
The High Court observed that “the respondents clearly appear to have acted arbitrarily in making numerous adjustments post 31 May 2015 and thus illegally depriving the petitioner of the refund as claimed. The various adjustments clearly appear to have been made even though objections before the OHA had been duly lodged online by the petitioner. The respondents thus clearly appear to have acted contrary to the clear mandate of Section 38 of the DVAT Act.” Observing that the Vat Department “clearly acted in flagrant violation of the mandate of Section 38 of the DVAT Act,” the Court directed to refund the amount of Rs. 6,62,74,405/- to the Company, along with interest from the date it fell due. “The refund be effected within a period of three weeks from the date of this decision,” the Court added.
In a major decision the Patna High Court observed that Input Tax Credit (ITC) is not sustainable when the supplying dealer has not paid to the Government, despite collection of tax from the purchasing dealer.
A Division Bench comprising Chief Justice K. Vinod Chandran and Justice Partha Sarthy observed that “It is clear that the literal nomenclature and the statutory language, mandates that there should be credit available in the credit ledger of the purchaser to claim Input Tax and otherwise the claim would be frustrated. On the above reasoning, we have to find that the claim of Input Tax Credit raised by the petitioner cannot be sustained when the supplying/selling dealer has not paid up the amounts to the Government; despite collection of tax from the purchasing dealer.”
The Madras High Court directed the Department to consider Representation by Steel Manufacturing Unit in the matter of the demand of interest and penalty provisions under the Central Excise Rules, 1994.
A Single Bench of the Madras High Court comprising Justice S Srimathy observed that “The petitioner is a steel manufacturing unit and is covered by the said judgment. Therefore, the petitioner is seeking to consider and redetermine based on the judgment of Hon’ble Supreme Court. Therefore, this Court is directing the respondents to consider the petitioner’s representation in the light of the aforesaid judgment within a period of twelve weeks from the date of receipt of a copy of this order.”
The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) held that Commissioner of Income Tax (Exemption) [CIT (E)] failed to comply with the direction of High Court (HC) in rejecting application for registration under Section 10(23C) of Income Tax Act,1961 and thus restored the mater to CIT(E) and directed for fresh adjudication.
The tribunal Bench comprising of Amarjit Singh, Accountant Member and Sandeep Singh Karhail, Judicial Member observed that the CIT (E) without examining all the aspects, as directed by the High Court, has reiterated its findings and rejected the application. Since the directions of the High Court had not been complied with by the CIT(E), the appellate tribunal bench deemed it appropriate to restore this issue to the file of the CIT(E) for de novo adjudication as per the directions of the High Court, thus allowing the appeal of the assessee.
A Single Bench of the Madras High Court dismissed a writ petition on lifting of attachment of immovable property by the Sub Registrar.
The Court of Justice C Saravanan observed that “Recording the above said submission made by the learned counsel for the petitioner, this Writ Petition is closed. Consequently, the connected Miscellaneous Petition is closed. No costs.”
The Allahabad High Court imposed costs of Rupees 10,000/- on the Income Tax Authority for violation of natural justice principles.
The Court also noted that the writ petition is allowed with a cost of Rs. 10,000/-, which shall be deposited by the respondent concerned with the Allahabad High Court Legal Services Committee, Allahabad within a period of one month from today.
The Delhi High Court upheld the disallowance of Business Loss in the absence of necessary documents.
Lastly, it was observed that the write off of Rs.1,59,36,508/- was carried out by SAL only in Financial Year (FY) 2014-15 [AY 2015-16], although, according to the appellant/revenue, the defect in the product and its usefulness was discovered way back in March-April 2010.
The Jammu and Kashmir and Ladakh High Court dismissed appeal filed by the GST Department with a delay of 1359 days in the matter of refund of educational cess and secondary & higher educational cess.
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.”
The Madras High Court directed the Income Tax Department to refund excessively recovered amount over and above 20%.
A Single Bench of Justice C Saravanan observed that “This amount shall be refunded to the petitioner by the respondents together with applicable rate of interest, within a period of six weeks from the date of receipt of a copy of this order. The Writ Petition stands disposed of with the above observations.”
In a recent case, the Himachal Pradesh High Court held that milk cream cannot be classified under the category of milk. The milk cream was entirely different from the milk and these two products had different purposes. Also, the Court upheld the demand for Value Added Tax (VAT) imposed on the assessee.
The two-member bench comprising M.S. Ramachandra Rao and Ajay Mohan Goel upheld the demand for Value Added Tax (VAT) imposed on the assessee and dismissed the revision petition filed by the assessee.
The High Court of Gujarat has held that diamond testing & certification services provided by the Gemological Institute of America (GIA) USA is covered Under India-USA Double Taxation Avoidance Agreement (DTAA).
In result, the Gujarat High Court ruled in favour of the respondent assessee, maintaining that the payments for diamond certification services provided by GIA USA were eligible for DTAA benefits between India and the United States. The Court upheld the factual findings and dismissed the Revenue’s appeal.
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