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 14 to October 20, 2023.
The Supreme Court of India in a recent judgement has held that the classification of Installation cables, outlet modules, and fibre Optic cables Under Part E of the Second Schedule under the Karnataka Sales Tax Act, 1957 is correct.
A two-judge bench comprising Justice S Ravindra Bhat and Justice Aravind Kumar was “satisfied that the final decision classifying all the items in question, as falling in Part ‘E’ of the Second Schedule to the Karnataka Sales Tax Act,1957 is correct.”
The Supreme Bench, while entertaining the appeal filed by the East India Udyog Ltd, has directed the SPML Infra Ltd (respondents) to submit the affidavit disclosing the Goods and Services Tax (GST) Input Tax Credit (ITC) benefits and also the utilisation of the transformer usage details.
The parties are required to furnish these affidavits and the corresponding documents and balance sheets within six weeks from the present date. The case is scheduled for re-listing in January 2024.
A Single Bench of Delhi High Court has granted bail to chartered accountant on money laundering under Prevention of Money Laundering Act (PMLA) 2002 based upon the prima facie view on material on record.
A Single Bench of Justice Dinesh Kumar Sharma observed that, “Generally speaking, the professional would act on the instructions of his client. However, whether he had gone beyond his professional duty is something which is required to be seen and examined during the trial. The plea of the petitioner that he had acted on the basis of information and record provided to him could not be rejected outrightly at this stage. This was required to be tested during the course of the trial.” The Bench further noted that any further appreciation of the evidence at this stage may prejudice the case and therefore was not expected. It has repeatedly been held that stage of bail cannot convert into a mini-trial. It was also pertinent to mention here that that the court had only to take a prima facie view on the basis of the material on record. The Bench granted the bail with certain conditions.
The Madras High Court has held that the addition of undisclosed income under the Income Tax Act, 1961 cannot be made based on mere voluntary disclosure and dismissed the Income Tax appeal.
A single judge bench of Justice Mohammed Shaffiq observed that there is merit in the submission made by the counsel for the respondent that the writ petitions at this stage are premature and thus ought not to be entertained.
The Madras High Court in a recent case has held that taxable turnover cannot be arrived without giving particulars of value of goods and services under Tamil Nadu Value Added Tax Act, (TNVAT Act), 2006.
A single judge bench of Justice C.Saravanan observed that “Since it is the case of the petitioner that few more TDS certificates have been issued to the Petitioner by the Greater Corporation of Chennai, the petitioner is directed to furnish the same to the respondent within thirty (30) days from the date of receipt of a copy of this Order.” Further directed the 1st respondent to issue a corrigendum to the impugned order by revising the tax liability after adjusting the TDS certificates said to have been issued during the pendency of this Writ Petition, within sixty (60) days. While disposing of the appeal, the court held that “the petitioner shall thereafter file an appeal before the Appellate Authority under the provisions of the TNVAT Act, 2006, within ninety (90) days from the date of receipt of a copy of this order.”
In a case, the Kerala High Court set aside the assessment order under the Income Tax Act, 1961 which was passed without considering the reply of the asseseee to the assessment Notice.
The Court directed that the appellant appear for a personal hearing through video conference before the respondent on 16.10.2023, to enable the respondent to pass a fresh assessment order, after hearing the appellant and considering the reply furnished by the appellant.
The Kerala High Court directed the Income Tax department to dispose of the pending appeal within 3 months as the recovery proceedings under the Income Tax Act, 1961 was initiated during the pendency of the Income Tax Appeal.
A single judge bench of Justice Sathish Ninan disposed of the writ petition with a direction to the Tribunal to hear and dispose of the appeal as expeditiously as possible and at any rate within three months from the date of receipt.
The Kerala High Court dismissed the appeal praying for issuing direction to deposit amount for disposing Pending Assessment Proceedings Under Income Tax Act, 1961, as there was an order modified the direction.
A single judge bench of Justice P.V. Kunhikrishnan observed that in the above said circumstances, no further order is necessary in this case. Therefore, the Writ petition (Crl.) is disposed of in the light of the order dated 09.10.2023 in Crl.M.C.No.7793/2023.
The Madras High Court quashed the Goods and Service Tas (GST ) Cancellation order passed by the GST department as the department failed to inform about the cancellation to the GST Registration holder approapriateiy. It was found that the GST registration holder was informed about the cancellation by another end tax payer.
Justice S.Srimathy observed that “the benefit extended by this Court in the earlier orders referred to above in Suguna Cutpiece Centre’s case cited supra, may be extended to the Petitioner.” The Court quashed the impugned order.
In a recent decision the Delhi High Court observed that the Assessing Officer has to form an opinion before recording disallowance under Section 40A(2)(a) of the Income Tax Act, 1961.
A Division Bench comprising Justices Girish Kathpalia and Rajiv Shakdher observed that “The provision under Section 40A(2)(a) of the Income Tax Act, clearly shows that before recording disallowance, the Assessing Officer has to form an opinion; and that opinion has to be having regard to inter alia legitimate needs of the business or benefit derived or even what would be the fair payment outgo for services rendered. Such an opinion cannot be arrived at without adducing necessary evidence. That being so, the Assessing Officer was duty bound to provide an opportunity to the appellant/assessee to place on record the requisite evidence to justify its claim.” “To our mind, therefore, the best way forward would be to grant an opportunity to the appellant/assessee to adduce appropriate evidence – documentary or otherwise before the Assessing Officer in order to establish its claim regarding educational qualification, experience, the work profile and in particular the duties discharged by the concerned persons to justify claim of the appellant/assessee qua payment of salary to the persons concerned” the Court concluded.
The Delhi High Court has ruled that 20% recovery on income tax demand which is in dispute shall be made on the crystallised tax liability and not on scaled down amount. Also, the same shall not exceed 20%. The court directed the income tax authorities to refund the excess amount recovered.
In conclusion, the court has ruled in favour of the petitioner/assessee, finding that the recovery of taxes exceeded the permissible 20% limit specified in the CBDT Memorandum. The excess amount is to be refunded, factoring in the TDS and TCS already collected. The court directed that the refund, along with applicable interest, is to be processed within the next four weeks.
The Kerala High Court directed to adjudicate the show cause notice (SCN) expeditiously in the case of smuggling gold from Jeddah to India in violation of Customs Act, 1962.
The Court of Justice Dinesh Kumar Singh observed that “Considering the above said submission, the writ petition is disposed of with a direction to the authority who had issued the show cause notice to conclude the adjudication of the show cause notice expeditiously, preferably within a period of two months subject to the co-operation of the petitioner.”
In a recent decision the Madras High Court ruled that the Aluminium Foil Container attracts GST 12%.
A Single Bench of Justice S Srimathy observed that “And the issue raised by the petitioner is settled by the Hon’ble Supreme Court in favour of the petitioner and against revenue. Therefore, this Court is of the considered opinion that the product Aluminium Foil Container is classifiable under 7615 with GST 12%. Hence the impugned order is liable to be quashed and accordingly quashed.” “However, the petitioner has already paid tax for the month of July 2017 to November 2017 at 18%, which is accumulated credit available to the petitioner. However, this Court is not inclined to decide the refund issue, since it has to be considered on various factors. The refund is left open between the parties and the same shall be adjudicated as per Provisions of Law” the Court noted.
The Allahabad High Court has held that premium for plots allocated for hospitals under lease extending up to 30 years or more falls under the definition of ‘amount paid upfront’ and is exempt from Goods and Service Tax.
While quashing the demand letter by Yamuna Expressway Industrial Development Authority issued to the petitioner, the division bench comprising of Justice Saumitra Dayal Singh and Justice Vinod Diwakar observed that “the exemption made available to the petitioner by virtue of the original Notification issued under Section 11 read with order of the Authority for Advance Ruling, is unconditional. Consequently, the letter issued on behalf of YEIDA is wholly unfounded in law and also in facts. Besides absence of conditions imposed by the legislature while granting exemption, no fact allegation has been made in the said communication of any specific condition having been violated by the petitioner.”
The Allahabad High Court quashed Rs 235 crores demand against Vivo Mobile India and ruled that Input Tax Credit (ITC) is substantive right granted to the assessee under Section 16 of the Goods and Service Tax (GST) Act, 2017.
“The entire amount recovered may be returned to the petitioner within a period of six weeks from the date a copy of this order is served on the proper officer, by the petitioner. At the same time, the petitioner would remain entitled to interest that we provide @ 6% on the amount of excess recovery of Rs. 11,00,69,010/-, from the date of that excess recovery to the date of its actual refund” the Court concluded. Counsels Nishant Mishra and Alok Yadav appeared for the petitioner and A.S.G.I., Ashok Singh, C.S.C. and Manu Ghildyal appeared for the State.
The Madras High Court, while entertaining the Writ Petition, upheld the decision of the Customs Excise and Service Tax Appellate Tribunal (CESTAT) confirming the product “Upgraded Beneficiated Ilmenite” falls under 2823 of Customs Tariff Act, 1975. The High Court granted duty drawback.
The instant writ petition sought to quash the disputed order and establish the correct classification of “Upgraded Beneficiated Ilmenite” under 28230090. The bench of Justice Srimathy ruled in favour of the petitioner, confirming the classification under Customs Tariff Item No.28230090 and granting the petitioner the corresponding duty drawback.
The Kerala High Court directed to dispose appeal expeditiously as direction cannot be given to refund income tax as the tax amount was already realised from the account of the assessee, the Cooperative Society.
It was found that the tax amount has already been realised from the account of the petitioner maintained in the State Bank of India, therefore the single-member bench comprising of Justice Dinesh Kumar Singh held that “the court cannot direct to refund of the tax amount and therefore, the present writ petitions are disposed of with a direction to the Income Tax Appellate Tribunal to dispose of the pending appeals filed by the petitioner, expeditiously, preferably within three months.”
The High Court of Kerala has ordered the release of the passport of Irshad Mancheri, a 27-year-old individual, whose passport had been detained due to his alleged possession of smuggled. The decision was made in response to a writ petition filed by Irshad Mancheri against the Commissioner of Customs (Preventive).
The single bench of Justice Dinesh Kumar Singh issued a direction that the passport of Irshad Mancheri should be released. However, this release is subject to the condition that the petitioner must provide the requested details of his future travels to the Customs Authorities. This condition aims to ensure that the authorities can keep track of the petitioner’s movements and activities to prevent any further involvement in illegal activities. The petitioner has been given a period of two weeks from the date of the judgment to submit the undertaking to the Customs authorities regarding the provision of details about his future travels. Once this undertaking is submitted and accepted, the Customs Authorities are directed to release the passport, with the conditions to be imposed. In result, the writ petition filed by the petitioner is disposed of, and any pending interlocutory applications related to the case have been dismissed.
The Delhi Bench of High Court has directed denovo examination as addition was made on presumptive income without considering the loss in trading in equity and commodities.
The Bench further held that the question of law, as to Whether the Income Tax Appellate Tribunal [in short, “Tribunal”] misdirected itself on facts and in law, in directing the addition of Rs. 2,50,000/- on the ground that is represented unexplained cash deposit without having regard to the loss suffered by the appellant/assessee while trading in equities and commodities must be answered in favour of the appellant. The Bench set aside the impugned order and remanded to the Tribunal for a de novo examination, against the backdrop of the findings arrived at by the AO.
The Supreme Court, in favour of Asian Paints, has affirmed the Bombay High Court’s ruling, which invalidated the reassessment proceedings initiated against the company. The bench has rejected the Special Leave Petitions (SLPs) filed by the Income Tax Department.
The Bombay High Court decided that “Be that as it may, the notice impugned does not satisfy the jurisdictional requirement of section 147 of the Act and, therefore, is held to be unsustainable, and is accordingly quashed.” Aggrieved by the High Court’s decision, the Income Tax Dept filed the SLP before the Supreme Court. Considering the decision of the Bombay High Court, bench of Justice Sanjiv Khanna and Justice Bhatti has stated that “There is a categorical finding by the High Court that full material facts with regard to the expenditure in question were placed by the assessee – Asian Paints Ltd. before the Assessing Officer during the course of the regular assessment proceedings. In view of the aforesaid, we do not find any merit in the present special leave petitions and the same are dismissed.”
In a recent case, the Kerala High Court, while allowing the writ petition filed before it, held that excess Input Tax Credit (ITC) availed in Form GST-3B and not reflected in GSTR-2A are not grounds for denying the claim of Input Tax Credit (ITC).
After considering the submissions of both parties, the single bench of Dinesh Kumar Singh allowed the writ petition and held that excess Input Tax Credit availed in Form GST-3B and not reflected in GSTR-2A are not grounds for denying the claim of Input Tax Credit. Therefore, the matter is remitted back to the Assessing Office to give one opportunity to the petitioner for providing evidence and documents in support of his claim for input tax credit, which has been denied. Advocates K. Latha and Jomton F. Payankan appeared for the petitioner.
Upholding the cancellation of GST registration, the Kerala High Court ruled that the enquiry conducted by the competent officer is not trial.
A Single Bench of Justice Dinesh Kumar Singh observed that “On the basis of the materials and enquiries made, the State Tax Officer came to the conclusion that no business activity was carried out by the petitioner from the declared place of business. Upon such conclusion, the State Tax Officer would be well within the power to cancel the registration after affording an opportunity of being heard to the dealer.” Dismissing the writ petition, the Court noted that “The enquiry conducted by the competent officer is not a trial, but it is summary proceedings to find out whether the registered dealer is conducting any business from his declared place of business or not. The petitioner did not file any document for the change of his business place nor he supported his claim that he was running the business from the given address by producing any documentary or oral evidence.”
The Delhi High Court suspended the reassessment proceedings in the matter of remission of income tax refund of Rupees 95.26 crores.
A Division Bench of Justices Rajiv Shakdher and Girish Kathpalia observed that “We are of the view that at present, the best way forward would be to keep the reassessment proceeding at abeyance, to await the decision of the AAR upon remand order by the Bombay High Court. As and when the decision is rendered by the AAR, parties can then approach the court for appropriate directions, which may include the direction to reignite the reassessment proceeding.”
The Kerala High Court quashed assessment order on reflection of tax for which Input Tax Credit (ITC) was claimed in the Form GSTR2A.
A Single Judge Bench of Justice Dinesh Kumar Singh observed that “Considering the said aspect of the matter that as per the stand of the petitioner/assessee, the tax for which the petitioner claimed input tax credit is reflected in Form GSTR 2A, though with some delay, the claim of the petitioner for input tax credit which has been denied in the assessment order does not appear to be correct.”
The High Court of Kerala has issued a directive to the petitioner, M/S. HLLLIFECARE LTD., a Government of India Enterprise, regarding the denial of legitimate Input Tax Credit (ITC) by the Deputy Commissioner of Central Goods and Services Tax (CGST) and Central Excise. The court has directed the petitioner to file GST Form DRC-03, a move that will enable the sanctioned ITC credit to be transferred to the petitioner’s bank account.
The single bench of Justice Dinesh Kumar Singh directed the petitioner to file GST Form DRC-03 within a period of two weeks. This specific form, titled “Intimation for Voluntary Payment”, is crucial in enabling the sanctioned refund of ITC to be transferred to the petitioner’s bank account. The court’s directive to file GST Form DRC-03 is a practical solution to resolve the impasse and ensure that the petitioner receives the rightful refund. It acknowledges the need for procedural compliance to facilitate the smooth transfer of funds from the Electronic Credit Ledger to the petitioner’s bank account.
The Delhi High Court dismissed an income tax appeal on proof that the entry in books of accounts was loan extended by Dayal Trust.
A Division Bench of Justices Rajiv Shakdher and Girish Kathpalia observed that “To be noted, the respondent/assessee had taken a loan from Dayal Trust for the acquisition of the subject property from Emaar MGF Land Ltd. According to us, the addition made by the AO was not called for in the instant case. The respondent/assessee had been able to place the relevant material to back his explanation that the entry in its books of accounts was nothing but a loan extended by Dayal Trust.” “Thus, for the foregoing reasons, we are of the view that no substantial question of law arises for our consideration. The appeal is, accordingly, closed” the Court concluded.
The Delhi High Court quashed an order passed under Section 148A(d) of the Income Tax Act, 1961 for non-consideration of reply.
A Division Judge Bench of Justice Rajiv Shakdher and Justice Girish Kathpalia observed that “Therefore, in our opinion, the principles of natural justice have been violated as submitted by Shurbhi Chandra, advocate, who appears on behalf of the petitioner. Thus, according to us, the best way forward would be to set aside the impugned order and notice.” “Liberty is, however, given to the AO to pass a fresh order, after taking into account the reply filed by the petitioner. Furthermore, the AO will also accord a personal hearing to the petitioner and/or her authorised representative. For this purpose, the AO will issue a notice to the petitioner” the Court noted.
The Delhi High Court recently ruled that the expenses incurred solely for Indian business do not fall under Section 44C of the Income Tax Act, 1961 on deduction of head office expenses for non-residents.
A Division Bench of Justices Rajiv Shakdher and Girish Kathpalia observed that “Clearly, these expenses do not fall within the ambit of Section 44C, which relates to the deduction of head office expenses in case of non- residents. Therefore, in our view, no substantial question of law arises for consideration.”
The Delhi High court has directed the Income Tax Appellate Tribunal (ITAT) to decide the issue under Section 254 of Income Tax Act 1961 on exclusion of Onward Technologies Limited (OTL) comparable while benchmarking engineering, technical and inspection segments which was accepted by the Transfer Pricing Officer (TPO).
The Division Bench comprising JUSTICE RAJIV SHAKDHER and JUSTICE GIRISH KATHPALIA observed that the Tribunal, without discussing the scope and ambit of its power under Section 254 of the Income Tax Act, had proceeded to issue operative directions, which, inter alia, excluded OTL as a comparable. The Bench set aside the impugned order holding that the matter needed a relook by the Tribunal, with regard to the scope and ambit of its power under Section 254 of the Income Tax Act. 15. Accordingly, the question of law, as framed, is answered in favour of the appellant/assessee for statistical purposes. Accordingly, the Tribunal was directed to decide the issue as regards the scope and ambit of its powers under Section 254 of the Income Tax Act and then, having regard to the facts on record, reach a conclusion one way or the other, as to the validity of OTL’s exclusion as a comparable.
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