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 September 16 to September 22, 2023.
“We are not inclined to interfere with the impugned judgment as the criminal prosecution relates to delayed payment of self-assessment tax and the application under the Direct Tax Vivad Se Vishwas Act, 20201 relates to the additions made in the assessment order”, the Supreme Court noted, disposing appeals against the assessee by the Revenue.
The Bombay High Court had thus held that “the clarification given by respondent by way of answer to question No.73 vide circular No.21/2020 dated December 4, 2020 is not in consonance with section 9(a)(ii) of the Vivad se Vishwas Act and, therefore, the same would stand set aside and quashed. Declaration of the petitioner would have to be decided by respondent in conformity with the provisions of the Vivad se Vishwas Act dehors the answer given to question No.73 which is set aside and quashed.”
The Supreme Court bench of Justice Surya Kant and Justice Dipankar Datta has granted interim relief to the petitioner by ruling not to levy border tax on the vehicles owned by the petitioners for which a valid All India Tourist Bus permit has been granted.
Presently, the Supreme Court has provided temporary assistance to tourist bus operators by directing states not to levy border taxes.
A Division Bench of the Supreme Court has stayed the operation of the Delhi High Court Judgement against HDFC Bank Ltd. with regard to the service tax demand on the bank to the tune of Rs.27,87,374/- on renting of immovable property for commercial purposes.
Subject to deposit of the sum quantified by the High Court for the entire service tax i.e. Rs.27,87,374/-, the operation of the High Court judgment is stayed, the bench stated, granting interim relief to the bank.
On September 18, 2023, a crucial legal proceeding unfolded as the Supreme Court’s bench, comprising Justice Aniruddha Bose and Justice Bela Trivedi, convened to deliberate upon an appeal filed by the Tamil Nadu government. This appeal was lodged in response to the decision by the Madras High Court to nullify a law that imposed a ban on online gaming within the state.
The Central Government has taken a momentous step in the taxation of online gaming services by establishing a GST rate of 28% for these services. This represents a noteworthy change in the tax framework and is slated to be put into effect as of October 2023.
The Bombay High Court Thursday rejected the petitions filed by businessman Mehul Choksi challenging the applications of the Enforcement Directorate (ED) to declare him a fugitive economic offender (FEO). In relation to the Punjab National Bank (PNB) Scam case.
The Court of Justice Sarang V Kotwal observed that “Firstly I do not find any infirmity in the verification and even otherwise I find that all the requirements under Section 4 of the FEO Act and under Rule 3 of the FEO Rules are properly complied with in this case. Therefore, I do not see any reason to interfere with the impugned order and hence the application is rejected.”
A Single bench of Justice Dinesh Kumar Singh of Kerala High Court, while upholding the penalty imposed by the authorities has ruled that “in the absence of valid documents in possession of the person in charge of the goods would be treated as a willful act of evasion of tax.”
Taking into account the guidelines outlined in Section 129 of the KGST Act, 2017, along with Rule 138 of the KSGT Rules established under it, and considering the specific circumstances of this case, the Kerala High Court determined that there is no need to intervene in the challenged decision that imposed the tax and penalty. Consequently, the writ petition was not successful and was dismissed.
The Kerala High Court, based on the Calcutta High Court’s ruling in the case of Suncraft Energy Private Limited v. The Assistant Commissioner, State Tax, Ballygunge Charge, has ruled that, in the GST regime, the assessee cannot be refused the Input Tax Credit simply due to variations between GSTR 2A and GSTR 3B.
Further, directed that the Assessing Authority to issue new orders in compliance with the applicable regulations after examining the submissions. The petitioner is also instructed to attend a meeting with the Assessing Officer on October 3, 2023, at 11:00 a.m., and should bring all supporting evidence for their input tax credit claim.
In a noteworthy ruling, the Delhi High Court has concluded that the preference of Chartered Accountants (CAs) over Cost Accountants for Finance Director positions is neither arbitrary nor in violation of Articles 14 and 16 of the Indian Constitution.
The bench stated that the Supreme Court in a large number of cases has held that unless a policy decision taken by the Government is demonstrably capricious or arbitrary or if it suffers from the vice of discrimination or infringes any statute or provisions of the Constitution, the same cannot be interfered with. Thus, the bench justified the dismissal of the writ petition by the single bench and held that there is no case for interference with the Impugned Judgment made out in the instant appeal.
In a significant ruling a Single Bench of the Kerala High Court observed that Input Tax Credit (ITC) cannot be denied to a purchaser merely on ground of non-recording of the transaction in the GSTR-2A Form.
The Court of Justice Dinesh Kumar Singh observed that “If on examination of the evidence submitted by the petitioner, the assessing officer is satisfied that the claim is bonafide and genuine, the petitioner should be given input tax credit. Merely on the ground that in Form GSTR-2A the said tax is not reflected should not be a sufficient ground to deny the assessee the claim of the input tax credit.” Advocates Aji V. Dev, H. Abdul Lathief, Alan Priyadarshi Dev, and S. Sajeevan appeared for the petitioner and Government Pleader Jasmine M.M, appeared for the respondents.
The Bombay High Court ruled that commission payments are allowable as business expenditure and commented that “There cannot be contradictory course of action as Revenue needs to be consistent”.
A Division Bench comprising Justices Jitendra Jain and GS Kulkarni observed that “It is the business prerogative of the Appellant-Assessee as to whose services they should engage in the course of its business and on what terms and conditions. Most significantly, the fact that the Assessing Officer and the Tribunal have allowed part of the commission payment for the purpose of business also indicates that the Revenue has accepted the services rendered by and this part of expenditure in that regard was held to be allowable. There cannot be a contradictory course of action as the Revenue needs to be consistent.” “We are of the view that the Assessing Officer and the Tribunal were not justified in disallowing part of the commission payment for the assessment years 1986-87, 1987-88 and 1988-89. In view thereof, the appeal of the Assessee is allowed by answering the question of law in favour of the Assessee and against the Revenue” the Bench concluded.
The Kerala High Court condoned a delay of 467 days in the matter of payment of disputed tax under the Kerala Value Added Tax Act, 2003 (KVAT Act).
A Division Bench of Dr Justice A.K. Jayasankaran Nambiar and Dr Justice Kauser Edappagath observed that “The above application is filed to condone the delay of 467 days in filing the Writ Appeal. Heard. Taking note of the averments in the affidavit filed in support of the delay condonation application, the delay is condoned.”
In a major ruling the Kerala High Court observed that “When a party can be compensated in terms of money, it cannot be a case of suffering irreparable loss” and thereby upheld the payment of 30% of disputed tax under the Kerala Value Added Tax Act, 2003 (KVAT Act).
By noting that the Tribunal has not committed any error of law in passing the impugned order by balancing the equities, the Court further went on to add that the Tribunal, while deciding the stay petition has observed that, for granting stay to the impugned disputed demand, interest of revenue is required to be considered and, in that premises, it has proceeded to direct the petitioner to deposit 30% of the disputed demand apart from furnishing simple bond for the balance amount.
A Division Bench of the Bombay High Court criticized the Commissioner of Customs for non-consideration of representations for 2 years and noted that this is not expected from a public servant.
The Bench further noted that the “Respondent No.2 hence could not have taken a position, that he would not even respond to such representations/applications of the petitioner. This was certainly not, what would be expected from a public official”. The Court allowed the petition by ordering that the goods be provisionally released on the Petitioner furnishing a bond containing an undertaking that the Petitioner shall pay the duty, fine and/or penalty as may be adjudged by the Adjudicating Authority.
In a significant ruling the Kerala High Court upheld the cancellation of Goods and Service Tax (GST) Registration and ruled that the assessee is responsible to monitor GST portal on GST registration cancellation.
The Court of Justices CS Dias observed that “It was the bounden duty of the petitioner to have verified its common portal that is made available as per the provision. Thus, I am of the definite view that the contentions raised in the writ petition that Ext P1 assessment order was not served as per the provisions of the Act is untenable. The writ petition is meritless and is consequentially dismissed.” Alan Priyadarshi Dev, the counsel appeared for the petitioner and Thushara James, the Senior Government Pleader appeared for the respondents.
A Single Bench of the Kerala High Court dismissed a writ petition filed under Article 226 of the Constitution of India as there was delay of 3 years in approaching High Court against assessment order passed under Kerala Value Added Tax Act, 2003 (KVAT Act).
A Single Bench of Justice Dinesh Kumar Singh observed that “The petitioner, instead of filing an appeal on time, approached this Court after more than three years of passing the impugned order. This Court is not inclined to entertain such a writ petition on the ground of delay and latches. Accordingly, this writ petition is dismissed on the ground of delay alone.”
In a major set back to the Indian Overseas Bank (IOB), the Madras High Court ruled that the Bank cannot file writ petition to protect interest of third party, who knowingly purchased property having encumbrance.
“Once the purchaser has the knowledge about the encumbrances and purchased the property through auction, then it is his obligation to discharge the encumbrances and convert the encumbered property free from encumbrances. The Bank cannot file a writ petition so as to protect the interest of the third party, who has purchased the property knowing the fact that there are other encumbrances” the Court concluded.
The High Court of Patna has held that the reopening of assessments under Section 153A of the Income Tax Act, 1961 is unjustified if no incriminating material linked to undisclosed income is discovered during the search operation.
The bench emphasised the requirement of incriminating material linked to undisclosed income and concrete evidence to justify reopening assessments under Section 153A of the Income Tax Act. Providing taxpayers with a crucial safeguard against arbitrary or baseless assessments, ensuring that the tax authorities adhere to the statutory framework and established legal principles when conducting such proceedings. In conclusion, the division bench of Chief Justice K Vinod Chandran and Justice Partha Sarthy rejected the appeal filed by the revenue.
The Kerala High Court quashed the intimation order issued under the Income Tax Act, 1961 in the matter of levy of late fees under Section 234E of the Income Tax Act, 1961 for filing delayed previous Tax Deducted at Source (TDS) return.
The Court of Justice Dinesh Kumar Singh observed that “I find that the grievance of the petitioner thus covered by the said Judgment of the Division Bench and therefore, the Writ Petition is allowed. Impugned orders in Ext. P1 to Ext.P6 (the intimation orders) are hereby set aside.” K.N.Sreekumaran, Counsel appeared for the petitioner and Christopher Abraham, Standing Counsel for appeared for the Income Tax Department.
The Delhi High Court quashed the revocation of Customs Broker Licence by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), and observed that there is no necessity that every contravention of the Customs Brokers Licensing Regulation, 2013 (CBLR) be visited with extreme punishment or revocation of license.
The Court noted that the CESTAT had failed to consider whether the punishment imposed was disproportionately high, as contended by the appellant and was of the view that the punishment of revocation of appellant’s CB License, is disproportionately excessive. “In view of the above, we set aside the impugned order revoking the appellant’s CB License and direct that in the event the appellant seeks renewal of the CB License or applies afresh, the same would be considered in accordance with law” the Bench concluded.
A Single Bench of the Kerala High Court quashed an assessment order passed without affording personal hearing as under Section 75(4) of the Goods and Service Tax (GST) Act, 2017.
The petitioner was directed by the Court to appear before the State Tax Officer on 20.09.2023 and to make his submission with respect to the Show Cause Notice issued to him for finalization of the assessment order. It was also made clear that no notice of hearing shall be given to the petitioner. Harisankar V. Menon, Counsel appeared for the petitioner and Jasmine M. M., Government Pleader appeared for the respondents.
A Division Bench of the Kerala High Court directed the petitioner to remit balance tax amount in 3 instalments as per Kerala Value Added Tax Act, 2003 (KVAT) order taking into consideration the financial incapacity of the petitioner, Pyramid Architects and Engineers.
The Coram comprising Justice A Muhamed Mustaque and Justice Shoba Annamma Eapen observed that “we do not find any reason to interfere with Ext.P6 (the common stay) order. Sufficient reasons have been stated by the Appellate Tribunal while passing Ext.P6 order. However, we feel that the petitioner can be given instalment facility to pay off the amount now demanded as per Ext.P6.” The Bench further allowed the petitioner to remit the amount demanded as per Ext.P6 (the common stay order) in three equated monthly instalments.
In a recent ruling, the Delhi High Court ruled that the telecommunication company Providing export services and entering separate contracts with Indian telecom operators on its own is not an ‘Intermediary’. Thus, the bench allowed the refund of CENVAT credit.
The High Court also observed that the agreement envisages that SGIPL has to provide, at its own expense, all necessary infrastructure in order to provide the services to SingTel and its customers. It further envisages that SGIPL shall raise invoices upon SingTel in US dollars for the services rendered on a monthly basis and on such transfer prices as may be agreed upon from time to time. On a careful perusal of the terms and conditions of the Agreement between SingTel and SGIPL, the bench of Justice Yashwant Varma and Justice Dharmesh Sharma observed that there is no legal infirmity or irrational approach adopted by the CESTAT when it came to conclude that SGIPL is not providing “intermediary services”. Thus, entitled to CENVAT credit refund. Subsequently dismissed the appeals of the revenue.
A Single Bench of the Kerala High Court quashed notice issued under Section 148 A (b) of the Income Tax Act, 1961 as no reasonable opportunity of being heard was provided.
The Court of Justice Dinesh Kumar Singh observed that “There is no opportunity of being heard provided to the petitioner, issued the impugned order and thereafter Notice which are unsustainable. The present petition is allowed. The impugned order and Notice are set aside. The matter is remanded back to the respondents to pass a fresh order, after giving an opportunity of being heard to the petitioner.” Nikitha Susan Paulson, Counsel appeared for the petitioner and Jose Joseph, Standing Counsel appeared for the Income Tax Department.
The Delhi High Court, in its decision to restore the appeal to the appellate authority [Commissioner (Appeals)], noted that the GST authorities had neglected to take into account the evidence that supported the input supplies in relation to the Input Tax Credit (ITC) that was being claimed.
It was further mentioned that “the Appellate Authority shall examine the material relied upon by the petitioner and if the Appellate Authority is of the view that the same cannot be corelated to the export of sugar as claimed by the petitioner, the Appellate Authority will state the reasons for the same.”
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