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 October 07 to October 13, 2023.
The Kerala High Court grants one year time to comply with the tribunal order as the Assessee failed to deposit 30% of the tax demanded within 2 years from the Kerala Value Added Tax Appellate Tribunal.
The Court of Dr. Justice A K Jayasankaran Nambiar and Dr. Justice Kauser Edappagath granted the appellant time up to 15.10.2024 for effecting the payment as directed by the Tribunal. If the appellant makes the payment within the time granted above, then the said payment shall be treated as in compliance with the directions of the Tribunal in the order impugned in the writ petition.
In a significant case, the Delhi High Court directed the Re-adjudication to verify additional documents amount received from the sale of khadi yarn already added to taxable income.
Since the petitioner, has filed certain additional documents, which include invoices and documents seeking to establish the movement of the goods in issue, i.e., khadi yarn, from the petitioner to the purchaser, which, as indicated on 12.07.2023, is a proprietorship concern going by the name Sethi International, the Court directed the AO to pass a fresh order.
The Delhi High Court upheld the order of the Tribunal as the Transactional Net Margin Method (TNMM) is the most appropriate method for international transactions.
A division bench comprising Justice Rajiv Shakdher and Mr. Justice Girish Kathpalia observed that “the reasoning of the tribunal in the impugned order was robust and without any flaw. For, the ultimate aim of the transfer pricing exercise is to determine an accurate value of the arms-length price for taxation, and the appellate authorities are not precluded from adopting a method different from that adopted by the assessee in the transfer pricing report.”
The Delhi High Court set aside the penalty order passed under Black Money (Undisclosed Foreign Income And Assets) And the Imposition of Tax Act without considering the reply of the assessee.
A division bench comprising of Justice Rajiv Shakdher and Justice Tara Vitasta Ganju observed that being said, the petitioner/assessee’s reply was on record which, for some reason, was not taken into account by the concerned officer while passing the impugned penalty order. The Court set aside the impugned penalty order, with a direction to the concerned authority to conduct a de novo exercise.
The Kerala High Court directed to decide the appeal within 3 months as the recovery Proceedings under Income Tax Act, 1961 during pendency of stay application.
Justice Dinesh Kumar Singh directed that the appellate authority, i.e. the National Faceless Appeal Centre, Delhi to decide appeal filed by the petitioner against the assessment order dated 19.12.2019 as expeditiously as possible, at any rate, within a period of three months from today. No coercive steps for recovery of the demand shall be taken against the petitioner for the said period.
The Kerala High Court directed the Excise Commissioner to decide access on inhibited distance as per Abkari Laws on presence of Temple near Bar.
A Single Bench of Justice Devan Ramachandran observed that “ it is clear that it does not refer to any ‘Zebra Crossing’, as has been mentioned by the petitioner. This does not mean that this Court finds that there is any such Crossing, but only that even the contention in such regard has not been adverted to.” “In the afore circumstances, I order this writ petition and set aside Ext.P8; with a consequential direction to the 1st respondent Excise Commissioner, to reconsider the claim of the petitioner, adverting to all relevant aspects and the binding precedents, within a period of two months from the date of receipt of a copy of this judgment” the Court ruled.
The Delhi High Court in a recent decision quashed the demand of Rupees 2 crores on executed work contracts and observed that New Okhla Industrial Development Authority (NOIDA) is body corporate under Uttar Pradesh Industrial Area Development Act, 1976.
A Division Bench comprising Justices Amit Mahajan and Vibhu Bakhru observed that “Section 3(2) of the Uttar Pradesh Industrial Area Development Act, 1976 referring to ‘NOIDA’ expressly states that “The Authority shall be a body corporate.” Thus, NOIDA has been constituted as a body corporate under the said statute. In view of the express provisions of Section 3 of the Uttar Pradesh Industrial Area Development Act, 1976, the premise that NOIDA is not a body corporate is fundamentally flawed.” “ NOIDA does not require to be registered under any Act as a body corporate, as it has been constituted by the Uttar Pradesh Industrial Area Development Act, 1976 as a body corporate. Thus, clearly the Revenue has misunderstood the response received from NOIDA as is reflected in the impugned show cause notice.”
The Kerala High Court directed the Deputy Excise Commissioner to pass appropriate orders and noted that the revival of the toddy shop license can be sought only if petitioner can compound offenses alleged.
A Single Bench of Justice Devan Ramachandran observed that “It is indubitable that, it is only if the petitioner is able to compound the offences alleged against him, can he seek any further relief, including for revival of his license. Obviously, therefore, it is for the 2nd respondent to consider this aspect, adverting to recommendations.” “In the afore circumstances, I allow this writ petition and direct the 2nd respondent to hear the petitioner, adverting to recommendations, as also his application for compounding the offences against him; thus culminating in an appropriate order and necessary action thereon, as expeditiously as is possible, but not later than two weeks from the date of receipt of a copy of this judgment” the Court concluded.
The Kerala High Court ruled that the cheque dishonour case can be filed against a Trust as the Trust being a juristic person.
A Single Bench of Justice A Badharudheen observed that “Therefore, following the legal principles set forth above, it has to be held that the challenge raised by the accused on the ground that no prosecution under Section 138 read with Section 141 of the N.I. Act against the Trust would lie, cannot be sustained and the same stands repelled.” “One cheque issued for Rs.10,00,000/- was encashed and cheque dated 03.04.2013 issued for Rs.9,50,000/- was dishonoured. Thus, the transaction and issuance of the cheque, in fact is admitted rather proved by the complainant. In such a case, it is the bounden duty of the accused to rebut the presumptions. In fact, in the case at hand no evidence is available to see the rebuttal” the Court noted.
The Andhra Pradesh High Court ruled that the judgment of the civil court is binding on criminal court to prove legally enforceable debt under Section 138 of the Negotiable Instruments Act, 1881.
The Andhra Pradesh High Court ruled that the judgment of the civil court is binding on criminal court to prove legally enforceable debt under Section 138 of the Negotiable Instruments Act, 1881.
In a recent decision the Telangana High Court ruled that the prosecution has to be launched by Deputy Director of Income Tax once sanction has been given to the authority and not by the Assistant Director of Income Tax, who did not have the power to launch the prosecution proceedings.
A Single Bench of Justice G Anupama Chakravarthy observed that “It is evident that once sanction has been given to a particular authority, i.e., the Deputy Director of Income Tax, the prosecution has to be launched by him alone and not by the Assistant Director of Income Tax, who did not have the power to launch the prosecution proceedings. Though it is the contention of the learned Standing Counsel for the respondent that the Deputy Director of Income Tax is a senior officer and the Assistant Director of Income Tax is a junior officer and both were doing the same duties, the said contention cannot be taken into consideration as in the present case, the sanction is accorded to the Deputy Director of Income Tax for initiating prosecution and not to the Assistant Director of Income Tax.”
The Calcutta High Court observed that inadvertent printing error of GSTIN number not ground for rejecting claim for Input Tax Credit (ITC).
A Single Judge Bench of Justice observed that “However, the petitioner chose not to appear leaving the respondent no.2 with no other option but to pass an ex parte order. Fairness is not a one way street. An assessee cannot have an implacable approach in refusing to appear before the respondent authorities and then complain of violation of the principles of natural justice.” “Similarly, the declaration of the wrong GSTIN of the recipient in the FORM GSTR-1 ought to have been dealt with in terms of the said Circular. There is also absence of reasons in the impugned order in rejecting the contentions raised by the appellant” the Court concluded.
The Kerala High Court directed to file stay application in the matter as only two days’ time was given to file reply to the Show cause notice (SCN) under the Income Tax Act, 1961.
A Single Bench of Justice Dinesh Kumar Singh observed that “I do not find any ground to keep this writ petition pending before this Court. Therefore, this writ petition is disposed of, with liberty to the petitioner to file stay applications in the pending appeals online and if they are facing any difficulties, they may file the applications before the jurisdictional assessing officer, who will transmit it to the concerned appellate authority. The Court further directed that the petitioner may file the application within a period of seven days from today. The interim order granted by the High Court on 14.06.2023 shall remain in operation for a period of fifteen days.
In a recent ruling, a solitary judge of the Madras High Court, while upholding the requirement to pay interest on a penalty imposed by the Securities and Exchange Board of India (SEBI) noted that PAN details serve as one means of identifying an individual, an incorrect PAN number in itself does not alter the individual’s identity, especially when the petitioner had paid the penalty without raising any objections. Therefore, the incorrect PAN cannot serve as a valid reason to avoid the interest payment.
The bench of Justice N. Seshasayee concurred with the authorities’ arguments. The High Court ruled that the regulatory order should have been contested through the avenues provided under the SEBI Act. Subsequently, the court dismissed the writ petition, asserting that his obligation to pay interest remained, especially considering that the penalty had already been paid. The court underscored that PAN details serve as a mode of identification but are not the sole determinants of an individual’s responsibilities within a regulatory context.
The Income Tax (I-T) department has made a significant decision to refund an amount of Rs 190 crore, along with interest, to the mining conglomerate Vedanta pertaining to the assessment year (AY) 2021-22.
This recent decision by the Income Tax department to refund the substantial amount to Vedanta represents a significant development in the ongoing legal dispute between the company and the revenue department. The decision to refund, along with the interest component, aligns with the court’s considerations, as demonstrated during the proceedings before Justice Rajiv Shakdher. The upcoming compliance date in October will mark the culmination of this particular aspect of the case.
The Delhi High Court upheld the annulment of the assessment order as the approval under Section 153D of the Income Tax Act, 1961 was made in a mechanical manner.
A Division Bench comprising Justices Rajiv Shakdher and Girish Kathpalia observed that “In view of aforesaid facts and circumstances, and since the annulment of the assessment order has been sustained by this Court, no substantial question of law arises for our consideration in this appeal. Accordingly, the appeal is closed.”
A Single Bench of the Madras High Court held that consumer complaints are not maintainable against revenue and the Goods and Services Tax (GST) department for levy of excess GST by Hotel Managements.
It was observed that, “The petitioner, Commercial Taxes Department, is executing the statutory function under the State GST Act and the petitioner is not collecting any GST over and above what is prescribed in the GST Act.” It was further noted that, “The consumer may have right against the Hotel Management but not against the Commercial Tax Department. The respondents were directed to forebear from entertaining any petition against the statutory authority.” It was thus held by the Bench of Justice S Srimathy that, if the Hotel Management is imposing any GST beyond the prescription of the Act, the petitioner (GST Department/Revenue) will not be liable for the same.
The Allahabad High Court remanded matter to Adjudicating Authority to decide on Insecticide exemption claim of Ethephon seized under the Customs Act, 1969.
A Division Bench of Justices Saumitra Dayal Singh and Rajendra Kumar-IV observed that “At present, Ethephon being a scheduled commodity under the Insecticides Act, it falls outside the scope of any fruitful discussion if it is an insecticide for the purpose of the Insecticide Act. Clearly, it is. In absence of any further fact proven to establish any exemption available to it under section 38 of the Insecticides Act, prima facie it stands made out that Ethephon is a regulated insecticide.” “Accordingly, while no relief is being granted as prayed for, the writ petition is disposed of with a direction, in case the petitioner files its reply to the show cause notice dated 21.12.2021 within a period of four weeks from today, the adjudicating authority may ensure expeditious conclusion of the adjudication proceedings, after due opportunity of hearing etc. to the petitioner, preferably within a period of three months therefrom” the Court noted.
In a major ruling the Uttarakhand High Court ruled that mere activation of PAN number may not give right to revenue to issue notice to non-existent entity.
A Single Bench comprising Justice Ravindra Maithani observed that “Mere activation of PAN number may not give a right to the revenue to issue notice to a non-existent entity. Admittedly, in the instant case, the notice was given to the Transferor company, which is a non-existent entity, after the appointed date, i.e. 01.04.2018. Admittedly, the order under Section 148 A (d) of the Income Tax Act has been passed by the revenue against a non-existent entity.”
The Patna High Court directed the Railways to refund Rs 38.22 lakhs in the matter of illegal deduction of VAT from contractors in inter-state sale of goods.
A Division Bench of Chief Justice K. Vinod Chandran and Justice Partha Sarathy observed that “We direct the refund, but, confined to the deductions made three years prior to the date of registration of the above writ petition which is on 14.05.2012; giving effect to the limitation as prescribed for recovery of money under the Limitation Act. “The Railways shall refund the amounts with 6% interest within a period of 4 months from the date of receipt of the certified copy of this judgment. If the refund is not granted within that time then the interest shall run at the rate of 12% from the date of expiry of the 4-month period. The Railways can apply for refund or adjustment to future dues from the State of Bihar” the Court noted.
The Kerala High Court granted one month time to file appeal in the matter of direction to deposit service tax before the Statutory Period of 3 Months under Section 86 of the Finance Act, 1994.
A Single Judge Bench of Justice Dinesh Kumar Singh observed that “Considering the submissions, the petitioner is granted one month’s time from today to file an appeal against the Ext.P2 order. For a period of one month from today, Ext.P3 impugned notice shall not be implemented.”
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