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 December 09 to December 16, 2023.
Read Article: Supreme Court Validates Article 370 Abrogation: Examining the Ripple Effects on Income Tax and GST
The Supreme Court of India has upheld the revocation of Article 370, a constitutional provision granting special autonomy to Jammu and Kashmir. Chief Justice D.Y. Chandrachud and a five-judge bench, including Justices Sanjay Kishan Kaul, Sanjiv Khanna, B R Gavai, and Surya Kant, affirmed the government’s constitutional validity in scrapping Article 370 in 2019, with significant implications across governance, including fiscal policies.
Chief Justice Chandrachud emphasized that Article 370 is a temporary provision in the Indian Constitution. Even before its abrogation, the Income Tax Act, 1961, applied to Kashmir, as it extended to the entire country. The act was introduced in Kashmir through The Taxation Laws (Extension to Jammu & Kashmir) Act, 1954. The sole exemption from income tax in Kashmir, Section 269S concerning the “Acquisition of immovable properties in certain cases of transfer to counteract evasion of tax,” was repealed by the Central Government via the Jammu and Kashmir Reorganisation (Adaptation of Central Laws) Order, 2020, effective March 18, 2020. This elimination of provisions restricting the applicability of the Income Tax Act confirms Jammu and Kashmir’s integral status within India.
On July 6, 2017, the President extended the application of GST to Jammu and Kashmir. The Jammu and Kashmir Goods and Services Tax Bill was subsequently passed on July 7, 2017, with ordinances issued on July 8, 2017, extending Central GST and Integrated GST to the region. This move aligned Jammu and Kashmir with the ‘one nation, one tax’ vision under the GST regime, and the Central Board of Indirect Taxes and Customs (CBIC) issued a related press release.
The CGST and IGST Act’s provisions, initially not applicable in Jammu & Kashmir, were extended to the state post-July 7, 2017, transforming the taxation landscape and bringing it in line with the national tax structure under the Goods and Services Tax.
The Supreme Court’s landmark decision has confirmed these changes, brought before the court by Lok Sabha MP Mohammad Akhbar Lone. The mutual benefits for both the state and central governments include financial support for Jammu and Kashmir from the central government, addressing fiscal concerns, and granting the government unrestricted operational freedom in the region, similar to other states.
Relief to Vodafone India: SC dismisses Income Tax Appeal filed with Delay of 2472 days PRINCIPAL COMMISSOINER OF INCOME TAX 5 MUMBAI vs M/S VODAFONE IDEA LTD 2023 TAXSCAN (SC) 305
The Income Tax Appeal filed by M/s Vodafone Idea Limited, delayed by 2472 days, was dismissed by the Supreme Court of India. A Two-Judge Bench, including Justice BV Nagarathna and Justice Ujjal Bhuyan, granted relief to M/s Vodafone Idea Limited, condoning the delay in filing the special leave petition. The decision followed the order dated 30.10.2023 in SLP (C) Diary No.41228/2023, involving the same parties. The Special Leave Petition (SLP) arose from the final judgment and order dated 01-02-2023 in ITAT No. 3/2023 issued by the High Court at Calcutta.
Relief to Goa Carbon: SC Condones Delay in filing SLP GOA CARBON LIMITED vs THE ASSISTANT COMMISSIONER OF INCOME TAX 2023 TAXSCAN (SC) 306
The Supreme Court of India granted relief to Goa Carbon Limited by condoning the delay in filing the special leave petition. The current Special Leave Petition (SLP) is a result of the final judgment and order dated 31-07-2023 in TA No. 04/2023 and TA No. 05/2023 passed by the High Court of Judicature at Bombay at Goa. A Two-Judge Bench, including Justice BV Nagarathna and Justice Ujjal Bhuyan, observed, “Delay in filing the special leave petitions is condoned. Issue notice to the respondent.”
No Income Tax payable on Amount of Profit Transferred u/s 29(2)of SIDBI Act: Supreme Court Grants Leave CENTRAL BOARD OF DIRECT TAXES vs SMALL INDUSTRIES DEVELOPMENT BANK OF INDIA & ANR 2023 TAXSCAN (SC) 307
The Supreme Court of India granted leave in a case stemming from the challenged final judgment and order passed by the High Court of Judicature at Bombay. The high court had ruled that income tax is payable on the profit transferred under section 29(2) of the Small Industries Developments Bank of India Act, 1989 (SIDBI Act).
The primary challenge revolves around Section 50 of the SIDBI Act, which exempts the petitioner from paying income tax on any income, profits, gains, or amounts received. Due to ambiguity regarding the petitioner’s liability under Section 115-O of the Act, the petitioner sought clarification from respondent on the matter.
The petitioner had contended that, according to Section 50 of the SIDBI Act, it is not liable to pay additional income tax under Section 115-O. A two-judge bench, comprising Justice B V Nagarathna and Justice Ujjal Bhuyan, granted leave to the petitioner with regards to the matter.
Relief to Ad2pro Media: SC dismisses SLP by Income Tax Dept THE COMMISSIONER OF INCOME TAX INTERNATIONAL TAXATION & ANR vs M/S AD2PRO MEDIA SOLUTIONS PVT LTD 2023 TAXSCAN (SC) 308
The special leave petition (SLP) filed by the Income Tax Department was dismissed by the Supreme Court of India. The SLP arose from the challenged final judgment and order dated 24-02-2023 in ITA No. 238/2020, as passed by the High Court of Karnataka at Bengaluru. The Income Tax Appellate Tribunal (ITAT) had allowed the assessee’s appeal, stating that the payments made should not be treated as royalty or fees, and therefore, no TDS (Tax Deducted at Source) was required. Subsequently, the Income Tax Department had approached the Karnataka High Court to contest this decision. The Karnataka High Court concurred with the assessee’s position. In response, the Income Tax Department filed a Special Leave Petition challenging the Karnataka High Court’s decision.
A Two-Judge Bench comprising Justice BV Nagarathna and Justice Ujjal Bhuyan dismissed the Special Leave Petition referencing a prior order dated 10.11.2023 in SLP (C) Diary No.43014/2023.
Relief to Godaddy: Delhi HC rules fee received for registration of domain names of third parties not royalty GODADDY.COM LLC vs ASSISTANT COMMISSIONER OF INCOME TAX 2023 TAXSCAN (HC) 1949
The Delhi High Court held that the fees collected for the registration of domain names for third parties do not qualify as royalty. The petitioner’s(Godaddy.Com LLC,) counsel argued that the appellant/assessee does not transfer any right to use the domain name to the customer, i.e., the registrant. According to the argument, it is the registrant who possesses ownership of the domain name, and any potential transfer of the domain name would be initiated by the customer/the registrant.
Furthermore, it was asserted that the appellant/assessee functions solely as an intermediary, providing registration services in this capacity. Therefore, the appellant/assessee lacks any rights in the property or trademark associated with the domain name. The consideration received by the appellant/assessee in the form of fees is not compensation for the use or right to use the domain name, nor does it involve the transfer of any rights related to the domain name.
A Division Bench comprising Justice Rajiv Shakdher and Justice Girish Kathpalia noted, “The Supreme Court, in Satyam Infoway, held that it is the registrant (and not the Registrar) who owns the domain name and can protect its goodwill by initiating a passing-off action against a subsequent registrant of the same domain name or a deceptively similar domain name.”
Arbitration Clauses in Unstamped Agreements are Enforceable: Supreme Court IN RE: THE INTERPLAY BETWEEN ARBITRATION AGREEMENTS UNDER THE ARBITRATION AND CONCILIATION ACT, 1996 AND THE INDIAN STAMP ACT 1899 2023 TAXSCAN (SC) 309
A Seven-Judge Bench of the Supreme Court of India has noted that arbitration clauses in unstamped agreements are enforceable. The bench, consisting of Chief Justice of India DY Chandrachud, Justice Sanjay Kishan Kaul, Justice Sanjiv Khanna, Justice B R Gavai, Justice Surya Kant, Justice JB Pardiwala, and Justice Manoj Misra, issued this judgment in the case “In Re Interplay Between Arbitration Agreements Under the Arbitration and Conciliation Act 1996 and the Indian Stamp Act 1899.”
The petitioners contended that the existence of an arbitration agreement and the validity of the arbitration agreement were two distinct concepts. Moreover, under Section 11 of the Arbitration and Conciliation Act, 1996, the court’s power was limited to examining the existence of the agreement, not its validity.
Chief Justice DY Chandrachud observed that, “Agreements which are not stamped or inadequately stamped are not void ab initio or unenforceable; they are inadmissible in evidence. Non-stamping or inadequate stamping is a curable defect. An objection as to stamping does not fall for determination under Sections 8 or 11 of the Arbitration Act. The concerned court must examine if an arbitration agreement prima facie exists. Any objection related to the stamping of the agreement falls within the ambit of the arbitral tribunal.”
Satisfaction of Joint Commissioner not obtained u/s 151(2) of Income Tax Act before issuing Income Tax Notice: SC Condones Delay in SLP filed by Income Tax Dept INCOME TAX OFFICER & ORS vs PINKI RAJESH MODI 2023 TAXSCAN (SC) 310
The Supreme Court of India granted condonation for the delay in the special leave petition (SLP) filed by the Income Tax Department. The SLP pertains to the issue of satisfaction of the Joint Commissioner not being obtained under Section 151(2) of the Income Tax Act, 1961 before issuing an income tax notice. A Two-Judge Bench, comprising Justice BV Nagarathna and Justice Ujjal Bhuyan, noted, “Delay in filing the special leave petition is condoned. Issue notice to the respondent.”
Previously, the Bombay High Court had ruled on the matter, stating, “Having heard the learned counsel for the parties and having perused the relevant material, we are of the view that the impugned notice dated 30/03/2021 is liable to be set aside on the ground of the absence of jurisdiction with the issuing authority.”
Relief to Durr India: SC dismisses SLP filed with Delay of 340 days ASSISTANT COMMISSIONER OF INCOME TAX (OSD) & ANR vs M/S DURR INDIA PRIVATE LIMITED 2023 TAXSCAN (SC) 312
A Two-Judge Bench of the Supreme Court comprising of Justice BV Nagarathna and Justice Ujjal Bhuyan, constituting, dismissed a special leave petition (SLP) due to a delay of 340 days. The SLP originated from the final judgment and order dated 29-08-2022 in WA No. 1081/2021, issued by the High Court of Judicature at Madras. The dismissal was based both on the ground of delay as well as on merits.
Supreme Court Condones Delay of SLP filed by Income Tax Dept THE COMMISSIONER OF COMMERCIAL TAXES vs M/S INDERA MOTORS 2023 TAXSCAN (SC) 311
The Supreme Court granted condonation of delay in the special leave petition (SLP) filed by the Income Tax Department. The respondent in this case is M/s Indera Motors. The SLP originated from the final judgment and order dated 15-03-2023 in WP(C) No. 12628/2017 issued by the High Court of Orissa at Cuttack. A Two-Judge Bench comprising Justice BV Nagarathna and Justice Ujjal Bhuyan remarked, “Delay condoned. Issue notice to the respondent(s).”
Setback to Gowardhan Ayurfarma: SC dismisses SLP filed against Income Tax Dept GOWARDHAN AYURFARMA PVT. LTD vs COMMISSIONER OF INCOME TAX CIRCLE 1 (2) 2023 TAXSCAN (SC) 313
A two member bench of the Supreme Court, comprising of Justice BV Nagarathna and Justice Ujjal Bhuyan, rejected the special leave petition (SLP) filed by Gowardhan Ayurfarma Pvt Ltd against the Income Tax Department, marking a setback for the company. The special leave petition was based on the final judgment and order dated 18-10-2023 in ITAL No. 28828/2022 issued by the High Court of Judicature at Bombay.
The Supreme Court, with a Two-Judge Bench led by Justices B V Nagarathna and Ujjal Bhuyan, has affirmed the decision of the Calcutta High Court in the Suncraft Energy Private Limited Case. The Calcutta High Court’s ruling, which the Supreme Court upheld, states that the Input Tax Credit (ITC) for the purchasing dealer cannot be denied solely based on the non-remittance of tax by the supplying dealer, as per Section 16(2) of the Central Goods and Services Tax (CGST) Act and State Goods and Services Tax (SGST) Act, 2017.
In this case, compliant buyers who meet the conditions outlined in Section 16(2) are entitled to avail Input Tax Credit (ITC) and are not responsible for discrepancies in the Goods and Services Tax Return (GSTR) 2A and GSTR 3B due to the default of the seller.
The Calcutta High Court justices, Chief Justice T.S. Sivagnanam and Justice Hiranmay Bhattacharyya had criticized the reversal of ITC without taking action against the defaulting seller. They instructed the tax officer to prioritize actions against the seller, allowing proceedings against the buyer only in exceptional circumstances as per CBIC guidance.
No Obligation to Grant Bail to Women Accused u/s 45 of PMLA, being not mandatory: SC SAUMYA CHAURASIA vs DIRECTORATE OF ENFORCEMENT 2023 TAXSCAN (SC) 314
The Supreme Court, in rejecting the bail appeal and imposing a cost of Rs. 1 Lakh for misrepresentation of facts, has clarified that there is no obligation to grant bail solely based on the accused being a woman, in accordance with Section 45 of the Prevention of Money Laundering Activities Act.
This Appeal challenges the order of the High Court of Chhattisgarh at Bilaspur, which dismissed the bail application under Section 439 of Cr.P.C. The appellant, dissatisfied with the High Court’s decision, has approached the Supreme Court under Article 136 of the Constitution of India. Justices Aniruddha Bose and Bela M Trivedi, a Two-Judge Bench, observed that there was a bold attempt to misrepresent facts for challenging the impugned order.
The court emphasized the need for discretion in granting the benefit of the first proviso to Section 45 PMLA to the specified category of persons. Considerations such as the extent of their involvement in the alleged offenses and the nature of evidence collected by the investigating agency should guide the court’s discretion. The bench concluded that, in this case, there is neither discharge nor acquittal nor quashing of the criminal case against Suryakant Tiwari in the predicate/scheduled offense, and therefore, the appeal lacks merit.
Cases where Payment made during search is not Voluntary, Taxpayer is required to be Refunded : Delhi HC SANTOSH KUMAR GUPTA PROP. MAHAN POLYMERS vs COMMISSIONER, DELHI GOODS AND SERVICES TAX ACT & ORS 2023 TAXSCAN (HC) 1915
In a recent ruling, the Delhi High Court emphasized that in cases where the payment made during a search is not voluntary, the taxpayer is entitled to a refund. The petitioner claimed that a sum of ₹22,14,226/- was deposited by reversing the Input Tax Credit (ITC) available in the Electronic Credit Ledger (ECL) under duress. The statement recorded on 18.10.2022, indicating the reversal of ITC, was also alleged to be made under coercion.
The Division Bench, comprising Justices Vibhu Bakhru and Amit Mahajan, noted that if the tax is not paid on a self-ascertainment basis, the taxpayer cannot avail the benefit of Section 73(6) of the DGST Act or Section 74(6) of the DGST Act. In the present case, where the petitioner contested the voluntariness of the ITC reversal, the court affirmed that if the payment made during the search is not voluntary, the taxpayer should be refunded the deposit. However, it clarified that GST authorities retain the right to proceed against the taxpayer in accordance with the law.
Destruction of confiscated goods by Explosives Department: Kerala HC directs Customs Dept to process refund SHAJI K.A vs COMMISSIONER OF CUSTOMS 2023 TAXSCAN (HC) 1914
A Single Bench of the Kerala High Court, presided over by Justice Dinesh Kumar Singh, recently instructed the Customs Department to proceed with the refund process following the destruction of confiscated goods by the Explosives Department. Another plea in the writ petition sought an order or directive to instruct the respondents to dispose of the confiscated goods and reimburse the remaining excess duty and deposit paid by the petitioner, deducting the actual cost of destruction of the confiscated goods within a timeframe set by the Court. The Standing Counsel for the Customs Department stated that, according to his instructions, the confiscated goods have been demolished by the State Government’s Explosives Department. He further emphasized that the cost of destroying those confiscated goods would be evaluated and subtracted from the petitioner’s refund claim.
Extraordinary Jurisdiction under Article 226 cannot be Invoked When Assessee Failed to File Statutory Appeal under GST Act: Patna HC M/s Punit Kumar Choubey vs The Commissioner 2023 TAXSCAN (HC) 1916
The Patna High Court has held that extraordinary jurisdiction under Article 226 of the Constitution of India cannot be invoked when the assessee fails to file a statutory appeal before the Central Goods and Service Tax Act(CGST).
The GSTR-2A provided by the petitioner-assessee’s supplier indicated a credit of only Rs. 93,825.77/-. Initially, an electronic notice was posted on the portal, dated 17.08.2021, receiving no response. Subsequent reminders on 06.09.2021 and 16.09.2021 also went unanswered. Ultimately, a show-cause notice, along with a summary in Form GST DRC-01 dated 08.11.2021, was issued to the petitioner, setting 07.12.2021 as the last hearing date. The petitioner did not appear, and the order was issued on 10.12.2021 under Section 73(9) of the BGST Act.
The order summary was electronically served on the petitioner on 10.12.2021 by uploading it to the common portal. The petitioner filed an appeal with a substantial delay of one month and nine days, as the assessment order was dated 10.12.2021, and the appeal was submitted on 10.07.2022. The High Court can decline to exercise discretion if there is a suitable and effective alternative remedy. The High Court can use its power only if it determines a breach of principles of natural justice or a lack of due procedure required for the decision.
The petitioner’s failure to avail the appellate remedy precludes the invocation of extraordinary jurisdiction under Article 226 of the Constitution of India. The Court determined that there is no jurisdictional error, violation of principles of natural justice, or abuse of the court process alleged or argued by the petitioner in the aforementioned writ petition. The writ petition was dismissed.
Delhi HC upholds Deletion of Income Tax Addition made on investment in Wrist Watches PR. COMMISSIONER OF INCOME TAX vs NIRMAL KUMAR MIND 2023 TAXSCAN (HC) 1919
The Delhi High Court upheld the order ofthe Income Tax Appellate Tribunal [“Tribunal”] which deleted the Income Tax Addition made on investment in Wrist Watches.
The appellant/revenue challenges the decision dated 03.05.2023 rendered by the Income Tax Appellate Tribunal [“Tribunal”]. A search and seizure operation, as per Section 132 of the Income Tax Act, 1961 [“Act”], was conducted at the business and residential premises of the Minda Group.
The Tribunal acknowledged that the entire family resided in a single residential premise, constituting a unified family unit. It further noted that the family had disclosed all jewelry as a single unit in its wealth tax return, which exceeded the jewelry discovered during the search operation. The Tribunal emphasized that the respondent/assessee provided the Assessing Officer (AO) with a detailed item-wise reconciliation of the articles listed in the wealth tax return, accompanied by the valuation report from the search. The Tribunal found no flaws in the reconciliation statement submitted by the respondent/assessee, as noted by the AO.
Regarding the valuation of artwork, the Tribunal concluded that differences among experts are conceivable. Additionally, considering that the valuers appointed by the appellant/revenue did not raise any concerns about the report submitted by the expert appointed by the respondent/assessee, the Tribunal deemed the additional assessment related to paintings unwarranted.
The division bench comprising Justice Rajiv Shakdher and Justice Girish Kathpalia, Tribunal dismissed the additions made for investments in wristwatches.
Procuring Entity and First Appellate Authority cannot be the Same in Municipal Corporation Tenders: Rajasthan HC Sets Aside Tender on Apprehension of Bias Yashi Consulting Services Pvt. Ltd vs State of Rajasthan 2023 TAXSCAN (HC) 1921
The Rajasthan High Court has held that the procuring entity and first appellate authority cannot be the same in municipal corporation tenders and set aside the tender on apprehension of bias.
The petitioner filed the initial appeal pursuant to Section 38 of the Rajasthan Transparency in Public Procurement Act, 2012 (‘the Act of 2012’). The counsel contended that the procuring entity was the Deputy Commissioner (Development), Ajmer Municipal Corporation, Ajmer (‘the Deputy Commissioner’), and according to Annexure-C, attached with the tender document, the Deputy Commissioner was designated as the First Appellate Authority.
The petitioner contended that an error was committed by the respondents in appointing the Deputy Commissioner as the First Appellate Authority and the Commissioner, Ajmer Municipal Corporation, Ajmer as the Second Appellate Authority. Conversely, the respondents’ counsel opposed the petitioner’s arguments, asserting that, without utilizing the alternative statutory remedy of filing a second appeal under Section 38(4) of the Act of 2012, the petitioner has approached this Court through the filing of this writ petition under Article 226 of the Constitution of India.
It was noted that “Since the respondents have rectified their mistake by sending a letter to the petitioner stating that the First Appellate Authority is the Director, Department of Local Bodies, the petitioner is instructed to file a statutory appeal under Section 38 of the Act of 2012 before the Director, Department of Local Bodies, along with an application under Section 39 of the Act of 2012. If such an appeal is submitted before the Director, Department of Local Bodies within ten days from today, the First Appellate Authority, i.e., the Director, Department of Local Bodies, is expected to hear and decide the appeal after affording a due opportunity of hearing to all the respective parties, including respondent No.4, strictly adhering to the law and expeditiously, preferably within 15 days following the filing of the appeal.”
Direction to deposit 20 % of Income Tax Demanded as Condition to Treat assessee as Person not in Default: Kerala HC upholds Order Directing to file Stay Application T.S. AJI vs INCOME TAX OFFICER CITATION: 2023 TAXSCAN (HC) 1918
The Kerala High Court upheld the order granting one week time to file a stay application against an income tax order where the assessee was directed to remit 20% of the demand as a condition for Treating him as a person, not in default.
T. S. Aji, the appellant, is dissatisfied with the uniform orders issued by the respondent, requiring a 20% remittance of the demand as a condition to be regarded as a person not in default. The appellant’s father was a taxpayer under the Income Tax Act of 1961 (the IT Act). Unhappy with the assessment order, the appellant’s father filed statutory appeals before the Commissioner of Income Tax (Appeals). Additionally, the appellant’s father submitted an application under section 220(6) of the IT Act before the first respondent.
It was determined that the appeals filed by the appellant’s father against the assessment orders are currently pending before the Appellate Authority/Commissioner of Income Tax (Appeals). The appellant has the option to submit stay applications before the Appellate Authority. However, there is no indication that the appellant has filed any such stay applications. The learned Single Judge granted the appellant one week to file the stay applications. A division bench, consisting of Dr. Justice A. K. Jayasankaran Nambiar and Dr. Justice Kauser Edappagath, dismissed the petition.
Hearing through Video Conferencing; Failure to file Affidavit for Dealy in Filing Income Tax Appeal: Kerala HC allows to File Condonation Application Afresh 2023 TAXSCAN (HC) 1917 2023 TAXSCAN (HC) 1917
The Kerala High Court was allowed to file condonation of application afresh as the Income Tax Appeal was dismissed in the absence of cogent reason and the assessee failed to file an affidavit on time due to facing difficulty in Hearing through video conferencing.
The Income Tax Appellate Tribunal (the Tribunal) dismissed the appeal filed by the appellant assessee, Save A Family Plan (India), solely due to the inadequacy of reasons presented in the affidavit accompanying the delay condonation application, aiming to excuse the delay in filing the appeal before the Tribunal.
The Tribunal expressed the need for a more comprehensive affidavit to support the delay condonation application and directed the appellant to submit a more satisfactory affidavit. Despite the granted time, the appellant allegedly did not file the requested affidavit, leading to the dismissal of the delay condonation application. Senior counsel Sri.V.Abraham Markose, representing the appellant, asserted that the revised affidavit, as requested by the Tribunal, was prepared and ready for submission on the scheduled date of the appeal.
A division bench comprising Justice A K Jayasankaran Nambiar and Justice Kauser Edappagath instructed the appellant to submit an additional affidavit explaining the reasons for the delay in filing the appeal within two weeks. Upon receiving the said affidavit, the Tribunal is directed to review the application for condonation of delay within an additional three weeks, following a hearing with the appellant.The impugned order dated 03.07.2023 of the Tribunal was set aside.
High Court cannot exercise jurisdiction on Non-Consideration of one or more Grounds by ITAT: Kerala HC VALLAPUZHA SERVICE CO-OPERATIVE BANK LTD vs THE INCOME TAX OFFICER CITATION: 2023 TAXSCAN (HC) 1922
The Kerala High Court has held that the High Court cannot exercise jurisdiction on the Non-Consideration of one or more grounds by the Income Tax Appellate Tribunal(ITAT).
The petitioner, Vallapuzha Service Co-Operative Bank Ltd, contested the decisions made by the second respondent under Section 250 of the Income Tax Act, 1961, pertaining to the assessment years 2014-15 and 2015-16.
A single bench, presided over by Justice Dinesh Kumar Singh, noted that the order passed by the first appellate authority does not become legally flawed if certain grounds raised by the assessee were not considered. The petitioner retains the option to appeal against the orders, presenting all grounds raised before the first appellate authority, including additional ones. The court further emphasized that it cannot invoke its judicial review jurisdiction under Article 226 of the Constitution of India solely on the basis of certain grounds not being considered by the first appellate authority.
Pending Income Tax Appeal before ITAT on Income Tax Recovery: Kerala HC directs to file Stay Application PULIYAMMAKKAL MATHAI SEBASTIAN vs INCOME TAX OFFICER 2023 TAXSCAN (HC) 1920
The Kerala High Court directed the petitioner to file a stay application as the Income-tax appeal is Pending before the Income Tax Appellate Tribunal (ITAT) on Income Tax Recovery.
Puliyammakkal Mathai Sebastian and Punathil Nishriya, the appellants, are dissatisfied with the identical orders issued by the respondent, which requires them to remit 20% of the demand as a prerequisite for being considered as individuals not in default. The appellants fall under the purview of the Income Tax Act, 1961 (the IT Act). Following the assessment order, the appellants lodged statutory appeals with the Commissioner of Income Tax (Appeals) and also submitted an application under Section 220(6) of the IT Act to the 1st respondent.
In response, the respondent mandated the appellants to remit 20% of the demand for the status of non-defaulters. Dissatisfied with this condition, the appellants filed writ petitions to challenge it. After a thorough hearing of both parties, the Single Judge dismissed the writ petitions.
In rejecting the plea, the division bench of Dr. Justice A K Jayasankaran Nambiar & Dr. Justice Kauser Edappagath stated that “provided the appellants submit stay applications before the Commissioner of Income Tax (Appeals) within one week from today, he is obligated to review and resolve either the stay applications or the appeals themselves within three weeks after receiving the stay applications and hearing both parties involved.
No Violation of Principle of Natural Justice on Income Tax addition made u/s 68 of Income Tax Act: Kerala HC directs to File Statutory Appeal HEARTWARES MEDICALS INDIA PRIVATE LIMITED vs ASSESSMENT UNIT 2023 TAXSCAN (HC) 1924
The Kerala High Court was directed to file a statutory appeal against the Income Tax Addition under section 68 of the Income Tax Act, 1961 was made in violation of the principle of Natural Justice.
The appellant, instead of utilizing the available statutory remedy of appeal against the assessment order, promptly approached the court with a writ petition, even though the appellant had been duly notified and the assessment proceedings were subsequently finalized.
In the context of exercising judicial review powers under Article 226 of the Constitution of India, the court is precluded from delving into the substantive merits of the assessment order.
A division bench of Dr. Justice A K Jayasankaran Nambiar & Dr. Justice Kauser Edappagath held that no jurisdictional lapse or violation of principles of natural justice was identified in the impugned assessment order.
The court also held that if such an appeal and stay application are submitted, the Appellate Authority is directed to assess and resolve either the appeal or the stay application within one month from the date of receipt, affording an opportunity for both parties to present their cases.
Direction to Deposit 10% of Demanded VAT to Stay Recovery Notice under KVAT is Reasonable: Kerala HC Dismisses Petition of Nirapara Roller Flour Mills NIRAPARA ROLLER FLOUR MILLS (P) LTD vs THE STATE TAX OFFICER 2023 TAXSCAN (HC) 1925
In a recent judgment, the Kerala High Court dismissed the petition of Nirapara Roller Flour Mills as the direction to deposit 10% of the demanded VAT to stay recovery notice under the Kerala Value Added Tax Act(KVAT), 2003 is found to be reasonable.
The appellant simultaneously submitted a stay petition. Meanwhile, the respondent issued a notice to initiate revenue recovery procedures for collecting the demanded amount through attachment. The appellant challenged the notice in front of the Single Judge.
A division bench, consisting of Dr. Justice A K Jayasankaran Nambiar & Dr. Justice Kauser Edappagath, affirmed the reasonableness of the Single Judge’s instruction to remit 10% of the penalty amount as a precondition for a stay, particularly since the appellant did not establish grounds for an unconditional stay. The Court dismissed the appeal while extending the one-month duration granted by the Single Judge for remitting 10% of the penalty amount.
Disallowance u/s 14 A of Income Tax Act Cannot Exceed Exempt Income: Delhi HC
The Delhi High Court has held that disallowance under section 14 A of the Income Tax Act cannot exceed exempt income.
A two member bench of the Delhi High court held that that disallowance under section 14 A of the Income Tax Act cannot exceed exempt income.
The bench observed that upon careful examination of the straightforward language used, it becomes evident that the correlation must be assessed between the exempt income and the associated expenditure, not the other way around. The crucial factor is determining the expenditure related to the exempt income, not vice versa. The three clauses of Rule 8D reveal that the section’s requirement is to calculate the amount of expenditure not allowed under Section 14A, which is attributable to the exempt income, rather than evaluating individual expenses to ascertain if any of them led to exempt income and subsequently treating such an amount as disallowable under Section 14A.
The bench comprising of Justice Rajiv Shakder and Justice Girish Kathpalia held that once the appellant/revenue acknowledges the transaction as one involving the sale of shares held as stock-in-trade, neither the CIT(A) nor the AO should have additionally considered the interest paid on the loan obtained by the respondent/assessee. The shares purchased with borrowed funds were sold, and the resulting profit was offered for taxation, an acceptance by the appellant/revenue. The question, as presented, focuses on the disallowance of Rs. 5,06,73,874/- under Section 14A of the Act, read with Rule 8D of the Rules.
Revision Order on LTCG Exemption Passed Against Buyer of Non-Existing Seller: Delhi HC Quashes Revision Order COMMISSIONER OF INCOME TAX vs CAIRNHILL CIPEF LTD 2023 TAXSCAN (HC) 1927
The Delhi High Court quashed the revision order and held that a revisionary order under Section 263 of the Income Tax Act, 1961 could not be passed against a non-existing seller entity. The Long Term Capital Gain (LTCG) exemption passed against the buyer of non existing seller.
A share purchase agreement was executed among three entities, namely Cairnhill CIPEF Ltd., Cairnhill CGPE Ltd., and Monet Ltd., regarding the shares of the Indian public limited company, Mankind Pharmaceutical Ltd. [“Mankind Ltd.”], for the sale of shares to Cairnhill CIPEF Ltd. and Cairnhill CGPE Ltd. An assessment order was issued regarding Monet Ltd., the entity that sold the shares to Cairnhill CIPEF Ltd. and Cairnhill CGPE Ltd. The records indicate that Monet Ltd. was, at that time, a wholly-owned subsidiary of another company incorporated in Mauritius, namely Chryscapital IV LLC.
The Assessing Officer (AO) scrutinized the sale of shares, and the utilization of the carried forward loss is evident from the assessment order. The appellant/revenue contends that the Commissioner of Income Tax (CIT) issued an order dated 27.03.2021 under Section 163 of the Act related to the respondent/assessee.
A division bench comprising Justice Rajiv Shakdher and Justice Girish Kathpalia remarked that the assertion that the revisory power under Section 263 of the Act is directed at the assessment order is untenable since the assessment order is framed with respect to “an assessee.”
AO cannot Trigger Reassessment When Pending Appeal on Income Tax Addition Sustain: Delhi HC THE PR. COMMISSIONER OF INCOME TAX vs SHRI GAUTAM BHALLA 2023 TAXSCAN (HC) 1923
The Delhi High Court has held that the Assessing Officer cannot trigger reassessment when a pending appeal on income tax addition is sustained.
The appellant had initiated an addition upon the filing of the Return of Income [ROI] by Shri Gautam Bhalla, the respondent/assessee. The assessment order dated 30.03.2015 was framed under Section 153A, in conjunction with Section 143(3) of the Act. It’s worth noting that Section 153A was invoked by the appellant/revenue in the context of search and seizure proceedings initiated around 16.01.2013 against Vatika Group and the respondent/assessee. The respondent/assessee, dissatisfied with the assessment order, appealed to the Commissioner of Income Tax (Appeals) [“CIT(A)”]. The CIT(A) deleted the aforementioned additions made against the respondent/assessee primarily on the grounds that no incriminating material was found and the assessments for the relevant assessment years were already completed, rendering the Assessing Officer (AO) without jurisdiction to frame an assessment order.
To trigger reassessment proceedings against the respondent/assessee, the appellant/revenue issued a notice dated 29.03.2017 under Section 148 of the Act. While the reassessment proceedings were ongoing, both the appellant/revenue and the respondent/assessee filed appeals before the Tribunal concerning the order dated 07.03.2017 issued by the CIT(A). These appeals were lodged around June 2017. Meanwhile, while the appeals were pending before the Tribunal, two separate orders dated 28.12.2017 were issued under Section 148, read with Section 143(3) of the Act.
A division bench of Justice Rajiv Shakdher and Justice Girish Kathpalia held that “while the appeals preferred were pending adjudication with the Tribunal, the AO could not have triggered reassessment proceedings against the additions which were the subject matter of the appeal.”
Accusation of Goonda Tax Demand: Madhya Pradesh HC grants Bail NAKOOL NISHAD vs THE STATE OF MADHYA PRADESH 2023 TAXSCAN (HC) 1929
A Single Bench of the High Court of Madhya Pradesh, presided over by Justice Dinesh Kumar Paliwal, has granted bail to Nakool Nishad, a 28-year-old transporter from Katni, who was detained since October 21, 2023 for alleged demand of Goonda Tax.
The complainant had harbored suspicions about Nishad’s involvement in the arson incident. Nakool Nishad, represented by his advocate Pankaj Tiwari, maintains his innocence, asserting that he has been falsely implicated in the case. The defense contends that there is no substantial evidence against Nishad and points to CCTV footage supporting his alibi, which places him at home during the alleged incident. Additionally, the defense argues that the accusation against Nishad is a result of his opposition to the illegal sand loading in the complainant’s trucks.
Nupur Dhameja, the State’s panel lawyer, presented that the applicant has a criminal background with 13 cases but acknowledged that CCTV footage indicates the bail applicant was at his home at the time of the offense. After considering arguments from both parties, Justice Dinesh Kumar Paliwal expressed the opinion that further pre-trial detention of the applicant is not justified. While refraining from commenting on the case’s merit, the court granted bail to Nakool Nishad.
Pendency of VAT Appeal before Tribunal: Kerala HC stays Recovery Proceedings till Disposal of Appeal K.T. MANOJKUMAR vs THE STATE TAX OFFICER 2023 TAXSCAN (HC) 1928
A Single Bench of the Kerala High Court stayed Value Added Tax (VAT) recovery proceedings till disposal of pending appeal before the Kerala VAT Tribunal.
An appeal had been lodged by the petitioner in the KVAT tribunal against the decision of the Sales Tax department’s order. The Appellate Authority had granted a stay on the condition that the petitioner deposits 30% of the disputed tax amount and furnishes a simple bond for the remaining sum within one month, a condition the petitioner adhered to. After six months, the petitioner submitted another petition seeking an extension of the interim order previously granted by this Court. In the earlier case, the petitioner’s counsel argued that the petition filed by the petitioner before the Kerala VAT Tribunal remained unaddressed, awaiting orders. The petitioner expressed concern that without timely orders, irreparable harm and loss might be incurred.
The Bench of Justice Basant Balaji allowed the review petition taking into consideration the fact that the recovery proceedings were sought to be imposed against the petitioner.
Kerala HC rejects Contention of non-receipt of Notice, upholds Reopening of Assessment against Co-Op Society TDGSM CO-OPERATIVE SOCIETY LTD NO.R.1112 vs THE COMMISSIONER OF INCOME TAX 2023 TAXSCAN (HC) 1930
A single bench of the Kerala High Court dismissed a writ petition challenging the assessment order and demand related to the assessment year 2016-2017. The petitioner, a cooperative society, failed to file returns for the said year, prompting the tax authorities to reopen the assessment.
The case gained attention due to significant cash deposits in the financial years 2015-2016 and 2016-2017, as detected through Multi-layer NMS cases in the AIMS module of ITBA. The Income Tax Department initiated the reopening of the petitioner’s case by issuing a notice under Section 148 of the Income Tax Act, 1961. Despite receiving the notice, the petitioner filed the return of income on 29.04.2021, declaring a total income of ‘Nil’ after claiming a deduction under Chapter VIA (80P) of Rs. 2,64,133/-.
Subsequent notices under Section 142(1) of the Income Tax Act dated 08.07.2021 and 18.11.2021 were issued, but the petitioner failed to respond. The final opportunity provided on 24.02.2022 also went unanswered. In response to the non-cooperation, the Income Tax Department passed an ex-parte assessment order under Section 144 of the Income Tax Act. The petitioner did not submit the return in response to the initial notice under Section 148.
Justice Dinesh Kumar Singh rejected the petitioner‘s claim of not having received the notice. The court found no grounds to entertain the writ petition against the impugned assessment order. Consequently, the writ petition was dismissed.
Income Tax Penalty on NRI: Kerala HC directs to Pursue Statutory Remedy, stays Sale Proceedings of Attached Property ASHRAF HASSAN vs THE CENTRAL BOARD OF DIRECT TAXES 2023 TAXSCAN (HC) 1931
The Kerala High Court has directed a Non-Resident Indian, a United Arab Emirates Resident to pursue available statutory remedy, when he challenged the imposition of income tax penalty orders through a Writ Petition.
A Non-Resident Indian (NRI) residing in the United Arab Emirates has filed a writ petition challenging income tax notices issued by the respondents for the collection of Rs. 28,56,391/-. The petitioner challenges notices sent by the respondent, alleging unfair issuance. In response to the petitioner’s plea, the court issued an interim order on March 22, 2022, directing the petitioner to appear before the Tax Recovery Officer, following the submission of relevant documents and notices. The petitioner complied with the court’s directive and appeared before the Tax Recovery Officer, who handed over copies of assessment and penalty orders under Sections 144 and 147 of the Income Tax Act, 1961, dated December 23, 2019, and November 9, 2020, respectively. Despite the attachment of the petitioner’s property, the court has temporarily halted the sale proceedings.
In response, Mr. Naveeth R. Nath, counsel for the Revenue, argued that the petitioner has not challenged the assessment and penalty orders through statutory means. He suggested that the court stay the sale of the attached property until the Appellate Authority reviews the appeal. Acknowledging the Revenue’s suggestion, the court disposes of the writ petition, granting the petitioner the liberty to file an appeal before the Appellate Authority within three weeks. The petitioner must include applications for condonation of delay and stay.
Setback to Hindustan Coca Cola Beverages: Limitation u/s 17D of KGST Act Not Applicable to Pre-Assessment Notice, rules Kerala HC M/S HINDUSTAN COCA-COLA BEVERAGES PVT LTD vs COMMISSIONER OF STATE TAX 2023 TAXSCAN (HC) 1932
A single bench of the Kerala High Court has held that limitation under Section 17(D) of the Kerala General Sales Tax Act is not applicable to the notice of pre-assessment issued against the petitioner under the instructions of the High Court, in a major setback to Hindustan Coca Cola Beverages Private Limited.
The assessment order for the financial year 2004-05, under Section 17(D) of the Kerala General Sales Tax Act, 1963 (KGST Act), was contested by the petitioner. A Single Judge of the Kerala High Court granted the writ petition, setting aside the original assessment order and remanding the matter for a fresh order. A fast track team was formed to complete the assessment under Section 17(D) for the petitioner’s financial year 2004-05. Despite the petitioner’s response stating that the original assessment was set aside by the High Court in 2009, and the records were unavailable, a notice was issued on 02.12.2021, directing the petitioner to produce documents by 16.12.2021. The petitioner’s subsequent reply reiterated the objection, emphasizing the time lapse since the High Court’s order.
The petitioner raised objections, asserting that the notice was issued after the statutory assessment period. The petitioner argued that the High Court had fixed a two-month time frame for redoing the assessment. The counsel for the petitioner contended that issuing a notice after 12 years was against the time prescribed in Section 17D of the KGST Act.
Justice Dinesh Kumar Singh held that the limitation prescribed for assessment or revised assessment did not apply in this case.
No Ascertainment of Liability and Non-Issuance of Notice: Delhi HC directs GST Dept to Refund Rs 23 Lakhs NEERAJ PAPER MARKETING LTD vs SPECIAL COMMISSIONER, DEPARTMENT OF TRADE AND TAXES, GNCTD & ORS. 2023 TAXSCAN (HC) 1934
The Delhi High Court directed the GST Department to refund Rupees 23 lakhs as there was no ascertainment of liability and non-issuance of notice as per the procedure contemplated in the Central Goods & Services Tax Act, 2017 (CGST Act).
The petitioner, Neeraj Paper Marketing Limited, has filed this petition seeking, among other things, a direction for respondent no.1 to refund the amount of ₹28,20,000/- deposited by the petitioner during the search and inspection conducted on 29.07.2022, along with a simple interest of 12% p.a. from the payment date. The petitioner contends that it was compelled to deposit the said amount and asserts that it cannot be considered a voluntary deposit under Section 74(5) of the Central Goods & Services Tax Act, 2017 (‘CGST Act’). The petitioner was seeking a refund for the amounts paid in cash and debited from the Electronic Credit Ledger (ECL) during the operations conducted by respondent no.1 under Section 67(2) of the CGST Act.
The central issue for consideration was whether the payments made can be deemed voluntary under Section 73(5) or Section 74(5) of the CGST Act. The counsel for the respondents contends that the payments were voluntary, as the petitioner acknowledged its liability during the inspection on 29.07.2022. It is asserted that the Director of the petitioner admitted a mismatch in the returns filed for the Financial Years 2018-2019 and 2019-2020.
A Two-Judge Bench, comprising of Justices Vibhu Bakhru and Amit Mahajan allowed the present petition and the respondents were directed to refund the amount deposited by the petitioner by making a payment of ₹23,70,000/- in cash along with interest at the rate of 6% per annum from 13.12.2022 till the date of payment.The respondents are also directed to refund an amount of ₹4,50,000/- by reversing the debit from the petitioner’s ECL.
Final Assessment should be passed by AO in accordance with Directions issued by DRP on filing of Objections against Draft Assessment Order within Time Limit: Delhi HC PEPSICO INDIA HOLDINGS Pvt Ltd vs ASSESSMENT UNIT INCOME TAX DEPARTMENT NATIONAL FACELESS ASSESSMENT CENTRE 2023 TAXSCAN (HC) 1935
The Delhi High Court recently ruled that the final assessment should be passed by the Assessing Officer (AO) in accordance with directions issued by DRP(Dispute Resolution Panel) on filing of objections against draft assessment order within time limit
The current writ petition has been initiated by Pepsico India Holdings Private Limited to challenge the order dated November 21, 2023, issued by Assessing Officer under Section 143(3) read with Section 144C(4) of the Income Tax Act, 1961, for the Assessment Year 2020-21. Additionally, the computation sheet and demand notice issued under Section 156 of the Income Tax Act are contested.
The petitioner also contested the notice dated November 21, 2023, issued under Section 274 in conjunction with Section 270A of the Income Tax Act, which initiated penalty proceedings. The petitioner requests directions for the DRP to address the objections dated October 20, 2023, in accordance with the law. The petitioner’s counsel noted that, although objections against the draft assessment order dated September 26, 2023, were promptly submitted to the DRP under Section 144C(2)(b)(i) read with Section 144B(1)(xxiv)(b)(I) of the Income Tax Act, the petitioner inadvertently omitted to inform the Assessing Officer about the objections as required by Section 144C(2)(b)(ii) of the Income Tax Act. As a result of this oversight, the Respondent Assessing Officer issued the contested final assessment order on November 21, 2023, thereby concluding the assessment for the relevant fiscal year.
The bench observed thus “This Court is further of the view that no prejudice will be caused to the Respondent-Department if the present petition is allowed and the impugned assessment order is set aside as Respondent-Department would be well within its rights to pass a fresh assessment order post the receipt of direction from the Respondent No. 3-DRP”
Relief to IOCL: Delhi HC sets aside denial of claims for refund of accumulated ITC INDIAN OIL CORPORATION LIMITED vs COMMISSIONER OF CENTRAL GOODS AND SERVICES TAX & ORS 2023 TAXSCAN (HC) 1936
The Delhi High Court set aside denial of claims for refund of accumulated input tax credit (ITC), thereby granting relief to Indian Oil Corporation Limited (IOCL).
The petitioner (‘IOCL’) has initiated the present petition due to the denial of claims for the refund of accumulated Input Tax Credit (‘ITC’). The denial was based on the assertion that the tax rate on input supply and output supply is identical. The Revenue contends that the refund is impermissible under Clause (ii) of the proviso to Section 54(3) of the Central Goods & Service Tax Act, 2017 (‘the CGST Act’).
The petitioner argues that it accumulates unutilized ITC because the tax rate on certain inputs is higher than the rate charged on bottled Liquid Petroleum Gas (‘LPG’) – the petitioner’s output supply. Thus, the petitioner contends that the refund of unutilized ITC is not prohibited under the proviso to Section 54(3) of the CGST Act. The determination of whether IOCL’s claim for the refund of accumulated unutilized ITC is admissible needs to be made in accordance with the explicit provisions of Section 54 of the CGST Act.
Pursuant to Section 54(1) of the CGST Act, any person seeking a refund of tax and interest paid on such tax or any amount paid by him is entitled to submit an application for refund within two years from the relevant date, as defined under Explanation (2) to Section 54 of the CGST Act.
The Division Bench of Justices Vibhu Bakhru and Amit Mahajan held that It is not necessary for this Court to examine whether such clarification falls foul of Section 54(3) of the CGST Act as it is apparent that the same is inapplicable in the facts of the present case.
Material which considered in Prior Reassessment Proceedings shall not subject matter of Reassessment in Fresh Proceedings: Delhi HC PMC FINCORP LTD vs ASSISTANT COMMISSIONER OF INCOME-TAX CENTRAL CIRCLE-30 2023 TAXSCAN (HC) 1940
In a recent case, the Delhi High Court, while allowing the writ petition, held that material considered in prior reassessment proceedings should not be the subject matter of reassessment in fresh proceedings.
Petitioner PMC Fincorp Ltd, formerly known as Priti Mercantile Company Ltd., submitted its Return of Income (ROI) for the Assessment Year (AY) 2011-12 on 30.09.2011. The mentioned ROI underwent processing under Section 143(1) of the Income Tax Act. Nearly four years later, a notice dated 17.09.2013 was served on the petitioner under Section 148 of the Act. In response to this notice, the petitioner filed a ROI, mirroring the one submitted on 30.09.2011. Upon receipt of the reasons recorded by the Assessing Officer (AO) to initiate reassessment proceedings, the petitioner raised objections.
Following the disposal of the objections, the AO issued another notice dated 15.01.2015, indicating a search on Mr. S.K.Jain and disclosing the petitioner as a beneficiary of an accommodation entry from Transnational Growth Fund Ltd. In reply to the notice dated 29.01.2015, the petitioner clarified that it had received a loan of Rs. 50 lakhs from TGFL in FY 2010-11, with proper banking transactions and TDS deduction. Subsequently, the respondent/revenue issued an order on 22.11.2016 under Section 127 of the Income Tax Act.
After reviewing the facts, the division bench of Justice Rajiv Shakdher and Justice Girish Kathpalia allowed the writ petition filed by the petitioner.
Daughter can be “Karta” of HUF and represent HUF before Competent Authorities including Tax Depts: Delhi HC MANU GUPTA vs SUJATA SHARMA & ORS.2023 TAXSCAN (HC) 1942
The Delhi High Court has held that daughters can be “Karta” of Hindu Undivided Family (HUF) and represent the HUF before the competent authorities like tax departments.
The appellant and the respondents, being Hindus and governed by the Mitakshara Law, are descendants of Late Shri D.R. Gupta, son of Late Shri Sunder Das Gupta, who passed away on 01.10.1971. Late Shri D.R. Gupta established a Hindu Joint Family (HUF) known as D.R Gupta and Sons (HUF) on 05.01.1963, comprising himself and his five sons.
The following Civil Suit was filed in 2006 by respondent Sujata Sharma, seeking a Declaration that she is the Karta of “D.R. Gupta & Sons HUF.” It was held that the Amendment in Section 6 of the Act, 1956, by the Amendment Act, 2005, does not impose any restriction on the right of a woman to be a coparcener, and she cannot be denied the status of Karta to manage the affairs, including the property of HUF. The Suit was decided in favor of the plaintiff/respondent No.1, declaring her the Karta of “D.R. Gupta & Sons HUF.”
The challenge to the judgment by the Manu Gupta is essentially based on the ground that his cousin sister, i.e., Sujata Sharma was married on 28.02.1969 and had become an active member of the HUF in her marital home. It was claimed that Kartaship owes its provenance to Hindu customs and laws, which cannot be outmaneuvered by the opinion or acts of the family members. It was further stated that Section 6 of the Act, 1956 (as amended in 2005) only recognizes the right of daughters to have an interest in the coparcenary, and the same cannot be equated with her right to become a Karta.
The Amicus Curiae submitted that, “On the basis of the recommendations of the Law Commission of India in its 174th Report on “Properly Rights of Women: Proposed Reforms under the Hindu Law”, the Legislature has not included the distinction drawn in State Amendments between a married and an unmarried daughter in the 2005 Amendment. Thus, all daughters of Coparceners are entitled to become a Coparcener, which also entitled them to become a Karta.”
The Delhi High Court’s ruling affirmed a daughter’s eligibility to be ‘Karta’ for HUF heralds a new era of empowerment and representation. This pivotal decision not only redefines traditional roles but also underscores the evolving legal dynamics within family structures.
Anti-Dumping Duty Imposed Based on Lapsed Excise Notification: Bombay HC Directs to Appeal Before CESTAT Sarla Performance Fibres Ltd vs Union of India 2023 TAXSCAN (HC) 1938
The Bombay High Court directed to appeal before the Customs Excise Service Tax Appellate Tribunal (CESTAT) against the anti-dumping duty imposed based on lapsed excise notification.
M/s. Sarla Performance Fibres Ltd., the petitioner, has contested the legality of the notifications dated January 13, 2012, and January 19, 2017, issued by the Government of India under Section 9A(5) of the Customs Tariff Act, 1975, imposing anti dumping duty on Nylon Filament yarn. The petitioner highlighted in the petition that a show cause notice was issued on December 27, 2016, to which responses were submitted on March 30, 2017, and April 20, 2017. Following a personal hearing, on December 18, 2017, the Commissioner of Central Excise and GST issued an order imposing anti dumping duty of Rs. 4,31,05,000/- on the petitioner based on the impugned notifications.
The petitioner’s challenge to the Commissioner’s orders encompasses various grounds, including the applicability of the notifications. The petitioner argued that the court has the authority to strike down the notifications, a power not vested in the Tribunal. It was contended that it is now an established legal principle that when the primary notification lapses upon the expiry of the specified period, there is no scope for amending a non-existent notification.
The court referenced Union of India vs. M/s. Kumho Petrochemicals Co. Ltd in its verdict. The court observed that the verdict merely states that the petitioners are entitled to a refund of the amount of anti-dumping duty paid till date would not do away with the requirement of the petitioner’s therein satisfying the doctrine of unjust enrichment, if at all applicable in the facts of that case. A division bench of Justice G S Kulkarni & Justice Jitendra Jain observed that the CESTAT has already seized the matter.
Pendency of Appeal before Appellate Authority: Kerala HC refuses to Stay Demand of Pre-Deposit PULIYAMMAKKAL MATHAI SEBASTIAN vs INCOME TAX OFFICER 2023 TAXSCAN (HC) 1939
In these writ appeals, the appellants are aggrieved by the identical orders passed by the Commissioner of Income Tax (Appeals).
Both appellants are taxpayers under the Income Tax Act, 1961 (hereinafter referred to as the IT Act). Dissatisfied with the assessment order, they initiated statutory appeals before the Commissioner of Income Tax (Appeals). Concurrently, the appellants submitted an application under Section 220(6) of the Income Tax Act to the Commissioner of Income Tax (Appeals).
In response to this application, the Commissioner of Income Tax (Appeals).directed the appellants to remit 20% of the demanded amount to be considered as individuals not in default. Disagreeing with this condition, the appellants filed writ petitions challenging its imposition. The Single Judge of the Kerala High Court, after considering both parties’ arguments, dismissed the writ petitions. Subsequently, the appellants contested the judgments in the writ petitions.
It was held that, “if the appellants prefer stay applications before the Commissioner of Income Tax (Appeals) within one week from today, he shall consider and dispose of either the stay applications or the appeals itself within a period of three weeks after the receipt of the stay applications after hearing both sides.”
Delhi HC directs Income Tax Department to release Refund amount adjusted against outstanding demand for AY 2011-12 TIRUPATI BUILDINGS AND OFFICES PRIVATE LIMITED vs COMMISSIONER OF INCOME TAX 2023 TAXSCAN (HC) 1941
In a recent case, the Delhi High Court directed the Income Tax Department to release a refund amounting to Rs. 87,89,440/- for the Assessment Year (AY) 2018-19, which had been adjusted against outstanding demand for AY 2011-12.
The petitioner, Tirupati Buildings And Offices Private Limited, filed a writ petition seeking a directive for the release of a refund totaling Rs. 87,89,440/- for the Assessment Year (AY) 2018-19. This amount had been adjusted against the outstanding demand for AY 2011-12. The background of the petition involves a total demand of Rs. 14.90 crores raised against the petitioner for AY 2008-09, 2009-10, and 2011-12. Referring to the Office Memorandum (OM) dated 31.07.2017 issued by the CBDT, which allows for a stay of demand on payment of 20% of the disputed demand when the outstanding demand is contested before the Commissioner of Income Tax [CIT(A)], the petitioner asserts its entitlement to seek such a stay by paying 20% of the disputed demand, which, in this case, amounts to Rs. 2.98 crores [20% of Rs. 14.90 crores].
In response, the Assessing Officer (AO) added a specific amount to each assessment year—AY 2008-09, AY 2009-10, AY 2011-12. Subsequently, the petitioner appealed the AO’s decision by approaching the CIT(A). The issue of staying the outstanding demand becomes pivotal in this context.
After reviewing the facts and records, the division bench of Justice Rajiv Shakdher and Justice Girish Kathpalia allowed the writ petition filed by the petitioner.
Delay of 400 days: Kerala HC directs KVAT Tribunal to pass appropriate orders on an application for delay condonation ABRAHAM VARGHESE vs THE KERALA VALUE ADDED TAX APPELLATE TRIBUNAL 2023 TAXSCAN (HC) 1944
The Kerala High Court Directed Kerala Value Added tax Tribunal to pass appropriate application for 400 days of delay condonation.
In accordance with the provisions of the Kerala Value Added Tax Act, 2003 (KVAT Act), a dealer, identified as the petitioner, has filed returns for the assessment year 2009-2010, disclosing a total sales turnover of Rs.1, 24, 14,283/-. Following the submission of returns, a show cause notice has been issued by the commercial tax officer to the petitioner, as indicated by Mrs. Reshmitha Ramachandran, counsel for the Respondent.
An order dated 26.11.2014 has been issued, rejecting the petitioner’s contentions and resulting in a total demand of Rs.14, 72,170/-, which includes Rs.5, 28,471/- in interest. In response to the assessment order, the petitioner’s counsel filed an appeal with the Deputy Commissioner(Appeals) – II, State GST department.
The first appellate authority partially allowed the appeal, remanding the matter to the assessing authority for modifications. Instead of participating in the remand proceedings, the petitioner filed a delayed appeal before the Kerala Value Added Tax Appellate Tribunal, spanning 450 days. Currently, the petitioner seeks relief through this writ petition. The single bench of the Tribunal, consisting of Mr. Dinesh Kumar Singh (Judicial) member, concluded that the appeal before the State Tribunal will not be expedited, citing the petitioner’s 400-day delay.
Setback to Ceat Ltd: Patna HC confirms VAT Penalty for Clerical Mistake in Invoice M/s Ceat Ltd vs The State of Bihar 2023 TAXSCAN (HC) 1943
The Patna High Court has confirmed a penalty imposed under Bihar Value Added Tax Act for clerical mistake in invoice resulting in failure to prove genuineness of transport.
Ceat Limited, the petitioner, is involved in the manufacturing and sale of tyres, tubes, and flaps and is currently challenging a penalty order issued under Section 60(4) (b) read with Section 56(4) (b) of the Bihar Value Added Tax Act, 2005 (referred to as ‘the Act’), following the detention of a truck carrying goods at the integrated check post in Dhobi, Gaya. The alleged offense pertains to the clandestine removal of goods.
The petitioner operates a main Warehouse located in Patna and additional branch Warehouses in nearby states, one of which is situated in Ranchi, Jharkhand. According to the petitioner, a stock transfer was made to the Ranchi Warehouse
Although the value and quantity matched the invoice, a clerical error was noted in the invoice number, which was mistakenly recorded. The petitioner asserted that this was a minor clerical mistake. However, the detaining authority rejected the petitioner’s explanation and imposed the maximum penalty under Section 60(4) of the Act. The documents submitted by the petitioner, according to the learned Government Advocate, do not sufficiently establish the authenticity of the transportation.
The detention occurred in the early hours of 02.01.2015, and the invoices along with supporting documents, were generated after the detention—clearly in response to the awareness of the check-post detention and the identified mistake in the invoice number, as revealed by the SUVIDHA Form.
The bench observed that while the value consistency is apparent between the invoice and the SUVIDHA Form, the quantity, as noted in the notice, is handwritten and lacks the authorized signatory’s confirmation.
Statutory Appellate Remedy already Availed by Petitioner against Denial of GST Transitional Credit: Kerala HC dismisses Writ Petition Read Order SATYAM STEELS vs THE ASSISTANT COMMISSIONER 2023 TAXSCAN (HC) 1937
A single bench of the Kerala High Court dismissed a writ petition directed against the denial of transitional credit as the petitioner had already availed the statutory appellate remedy available.
The assessee, Satyam Steels, contested the order that denied transitional credit under Section 140(3) of the Central Goods and Services Tax Act. This writ petition challenged the order dated 10.3.2023, which denied transitional credit under Section 140(3) of the Central Goods and Services Tax Act (CGST).
The petitioner pointed out that, during the pendency of this writ petition, the Central Board of Indirect Taxes and Customs issued a notification on 31.7.2023, extending the limitation for filing an appeal by three (3) months from the date of issuance of the notification.
It was further noted that, taking advantage of the said notification, the petitioner has already filed an appeal under Section 107 of the Central Goods and Services Tax Act, 2017, challenging the impugned order before the Additional Commissioner (Appeals) of CGST, Kochi. Justice Dinesh Kumar Singh deemed it inappropriate to keep the writ petition pending since the petitioner has already pursued the statutory remedy.
Director not liable to pay GST when it is not Determinable that Company is unable to Pay during Liquidation Proceedings: Madras HC K.Malathi vs State Tax Officer 2023 TAXSCAN (HC) 1945
A single bench of the Madras High Court ruled that the director is not liable to pay GST when it is not determinable that the company is unable to pay during liquidation proceedings.
State GST Officers conducted an inspection at the factory premises of SKMPL, recovering certain documents. Subsequently, a show cause notice dated 15.06.2020 was issued under Section 74 of the CGST & SGST Act, alleging various infractions and demanding the recovery of input tax credit and tax for the year 2018-19 based on the seized documents. According to the petitioner, K. Malathi, she sought legal advice and discovered that she has no standing to represent SKMPL after the NCLT’s order of liquidation. Consequently, she did not respond to the show cause notice. The first respondent then informed the Official Liquidator and offered an opportunity for a hearing. However, the Official Liquidator neither replied nor attended the hearing, leading the State Tax Officer to pass ex parte orders, demanding substantial taxes, interest, and penalties against SKMPL.
The counsel for the petitioner argued that the impugned demand orders were issued in the name of the company in liquidation, and the first respondent was aware of the company’s liquidation status. He emphasized that, given the appointment of the Official Liquidator, the petitioner cannot respond to the impugned orders. Unfortunately, the Official Liquidator also failed to participate or file any reply during the adjudication by the first respondent, resulting in the ex parte issuance of the impugned orders. Therefore, the petitioner contends that the impugned orders are unsustainable and should be set aside.
The court observed that the company in liquidation lacks sufficient funds, making it impossible to retrieve the sales tax dues from the said company, a new legal basis would emerge to pursue the recovery of sales tax dues from the former Directors of the company in liquidation. In the ongoing matter, the determination of the availability of funds with the Official Liquidator for settling claims is still pending. Consequently, there is currently no legal basis to initiate proceedings against the former Directors for the recovery of sales tax dues owed by the company in liquidation.
Delhi HC directs Income Tax Dept to Remit Rs 44.6 Lakhs of Refund already Crystallized on Deposit of 20% of Demand SYED HABEEBUR REHMAN vs DEPUTY COMMISSIONER OF INCOME TAX CIRCLE 28(1) & ORS.2023 TAXSCAN (HC) 1947
The Delhi High Court directed the Income Tax Department to remit Rs 44.6 lakhs of refund already crystallized on deposit of 20% of demand.
Abhishek Maratha, senior standing counsel representing the respondents/revenue, has returned with instructions indicating that the respondents/revenue have calculated the refundable amount for the petitioner/assessee. It has been specified that the amount refundable to the petitioner/assessee is Rs. 44.60 lakhs. Pankaj Aggarwal, representing the petitioner/assessee, stated that the amount claimed for refund is Rs. 46 lakhs, as mentioned in the prayers of the writ petition. Additionally, it was emphasized that the petitioner/assessee should also be entitled to interest.
A Division Bench comprising Justices Rajiv Shakdher and Girish Kathpalia observed, that the respondents/revenue will disburse the crystallized refund amount [i.e., Rs. 44.60 lakhs] to the petitioner/assessee within the next two (2) weeks. (ii) The petitioner is free to pursue a statutory remedy for the payment of interest and the remaining refund claimed by them.
Delhi HC dismisses News click’s Plea seeking Stay of Income Tax Demand During Pendency of Appeal Before Commissioner of Income Tax PPK NEWSCLICK STUDIO PVT LTD vs PRINCIPAL CHIEF COMMISSIONER OF INCOME TAX CENTRAL DELHI AND ANR 2023 TAXSCAN (HC) 1952
The Delhi High Court dismissed Newsclick’s plea seeking stay of income tax demand during pendency of appeal before the Commissioner of Income Tax.
The present petition challenges the orders issued by the respondents, wherein the petitioner’s request for a stay of demand during the pendency of the appeal before the Commissioner of Income Tax (Appeals), against the assessment order dated December 30, 2022, has been rejected. The petitioner also seeks a stay of demand during the pendency of their appeal before the Commissioner of Income Tax (Appeals). The senior counsel for the petitioner argued that the impugned order fails to recognize that the petitioner has a strong prima facie case on merits, as evidenced by the petitioner’s Service Agreement with Justice and Education Fund Inc. (‘JEF’), the disclosure of contents in the ITR, receipts through proper banking channels, and the undisputed legitimacy of the petitioner’s business activity or expenditure.
Furthermore, the senior counsel contended that there is no requirement for a pre-deposit for granting a stay of deposit under Section 220(6) of the Income Tax Act, 1961, and that the Office Orders of the CBDT on this matter are not binding and do not restrict the discretionary powers vested under Section 220(6), as held by the Supreme Court in CIT V. LG Electronics India (P) Ltd.
A Division Bench of Acting Chief Justice Manmohan and Justice Mini Pushkarna observed that this Court is of the view that the petitioner has not been able to make out a prima facie case in its favour.Accordingly, the writ petition was dismissed.
Orders u/r 86A of CGST Rules can be passed by Commissioner or Duly Authorized Officer on Reason to Believe that ITC available in ECL has been Fraudulently Availed: Delhi HC LOVELESH SINGHAL PROP SHIVANI OVERSEAS vs COMMISSIONER, DELHI GOODS AND SERVICES 2023 TAXSCAN (HC) 1946
A Division Bench of the Delhi High Court comprising Justices Vibhu Bakhru and Amit Mahajan Delhi High Court ruled that the orders under Rule 86A of the Central Goods and Services Tax (CGST) Rules, 2017 can be passed by Commissioner or duly authorized officer on reason to believe that input tax credit (ITC) available in electronic cash ledger (ECL) has been fraudulently availed.
The respondents contended that the department’s relevant officers visited both the principal place of business and additional locations. The respondents assert that the petitioner granted access to its supplementary place of business; however, the pertinent documents were not found at that particular location.
The petitioner acknowledged depositing a sum of ₹18,72,000/- at 2:06 am by debiting the ECL. The search and inspection proceedings were ongoing during this period. The petitioner underwent the search/inspection operations well beyond regular business hours and was asked to furnish copies of various books of accounts. The statement recorded on that date, relied upon by the respondents, explicitly states that the petitioner provided multiple documents, including the Trading Account, to the concerned officers. In the current scenario, the petitioner disputes any obligation to pay tax, and there is no definitive determination regarding the petitioner’s tax liability. In light of these circumstances, the tax deposited by the petitioner cannot be deemed voluntary and in accordance with the provisions of Section 73(5) of the CGST Act.
No Violation of Natural Justice Principles: Kerala HC dismisses Petition Challenging Notice u/s 148(a)(d), Directs Prompt Response within Time Limit THE PULIYOOR SERVICE CO-OPERATIVE BANK LTD NO vs THE PRINCIPAL CHIEF COMMISSIONER OF INCOME TAX 2023 TAXSCAN (HC) 1950
The Kerala High Court, in a single-bench ruling, decided not to entertain a writ petition challenging the show cause notice issued by the income tax department. The court emphasized that there are still nine days remaining for the assessee to respond to the show cause notice and concluded that there is no justification to annul the notice.
Justice Dinesh Kumar Singh observed the absence of any breach of natural justice principles. Puliyoor Service Co-operative Bank, the petitioner, failed to submit an income tax return for the assessment year 2015-16, leading the Commissioner of Income Tax to issue a show cause notice. Although the petitioner was given an opportunity to be heard under Section 148A Clause (d) of the Income Tax Act, 1961, there was no response to the notice.
The initiation of the process by the Income Tax department began with the first notice on April 6, 2022, followed by subsequent notices and a final notice on April 30, 2022. In reaction, the petitioner approached the High Court seeking relief and the annulment of the show cause notice. Justice Dinesh Kumar Singh concluded, “The petitioner still has nine days remaining to respond to the said show cause notice. This Court finds no reason to intervene with the writ petition. Therefore, the writ petition is dismissed, as there is no jurisdictional error or violation of principles of natural justice.
Solid Waste Management Activity exempt from BGST: Patna HC grants relief to Cooperative Society Mahavir Sharmik and Nirman Swalambi Sahkari Samiti Limited vs State of Bihar through Commissioner of State Tax 2023 TAXSCAN (HC) 1951
A division bench of Patna High court comprising of Chief Justice K. Vinod Chandran and Justice Partha Sarthy of the Patna High Court granted relief to Mahavir Sharmik and Nirman Swalambi Sahkari Samiti Limited (a Cooperative Society) and ruled that solid waste management activity exempt from Bihar Goods and Service Tax (BGST).
The petitioner has contested an assessment order dated 11.01.2021, as affirmed by the first Appellate Authority under the Bihar Goods and Services Tax Act, 2017 (“BGST Act”) through a writ petition. This challenge is particularly significant since the Tribunal under the BGST Act has not been established yet, thereby denying the petitioner the opportunity for consideration in the second appeal, as stipulated by the statute.
According to the government’s notification, there is a stay on recovery pending the establishment of the Tribunal, provided that 20 percent of the disputed amounts is paid, as indicated in the assessment order. However, in the current case, the petitioner argues that the imposition is untenable based on a specific notification that exempts the petitioner’s activity—removal of solid waste—from the scope of the levy. The petitioner asserts that this activity does not qualify as a works contract, and there is no supply of goods as required by the definition of ‘works contract’ under the BGST Act.
In the appeal, the petitioner specifically highlighted Notification No. 12/2017 issued by the Government of India, granting an exemption from tax payment related to a function entrusted to a Municipality under Article 243W of the Constitution of India. The argument put forth was that the exercise of jurisdiction under Section 74 was illegal, lacked authority, and was entirely improper. Despite a similar appeal from another assessee being allowed by the same Appellate Authority, the petitioner’s appeal was dismissed repeatedly.
Expansion of Telecommunication Service with Internet Service does Not change Infrastructure: Delhi HC upholds Deletion of Disallowance of Deduction u/s 80IA of Income Tax Act
Expansion of Telecommunication Service with Internet Service does Not change Infrastructure: Delhi HC upholds Deletion of Disallowance of Deduction u/s 80IA of Income Tax Act THE PR. COMMISSIONER OF INCOME TAX vs VERIZONE COMMUNICATIONS INDIA PVT. LTD 2023 TAXSCAN (HC) 1953
A division bench of the Delhi High Court has held that the expansion of Telecommunication service with internet service does not change infrastructure and upheld the deletion of disallowance of deduction under section 80IA of the Income Tax Act, 1961.
The appellant, representing the revenue, contested the decision of the Income Tax Appellate Tribunal (Tribunal) in favor of Verizone Communications India Pvt Ltd, the respondent-assessee. The key issue pertained to whether the Tribunal was mistaken in eliminating the addition of Rs. 5,89,34,508/- due to the disallowance made under Section 80IA of the Income Tax Act, 1961. The respondent was established on 11.01.2002 with the primary objective of providing telecommunication services. In May 2002, the respondent obtained an Internet Service Provider (ISP) License from the Department of Telecommunication (DOT) to further its primary objective. Consequently, the respondent claimed a tax holiday under Section 80IA of the Act, initially at a rate of 100% for profits earned up to AY 2011-12, and subsequently at a rate of 30% from AY 2012-13 to AY 2016-17.
The Commissioner of Income Tax (Appeals) after affirming the Assessing Officer’s view, prompted the respondent/assessee to appeal to the Tribunal seeking redress. It was determined that Section 80IA, the main provision, applies to any undertaking that started providing telecommunication services, including internet services, on or after 01.04.1995 but on or before 31.03.2005. The AO’s denial of deduction to the respondent/assessee under Section 80IA for AY 2011-12 was based on the argument that acquiring two new licenses, enabling NLD and ILD services for a specific group of private users, constituted an expansion of the existing undertaking beyond the cut-off date, i.e., 31.03.2005. The contention was that the term mentioned in Sub-Section (4) Clause (ii) of Section 80IA of the Act is “undertaking,” and since the undertaking remained the same, the respondent should not be deprived of the deductions provided before the AO’s assessment order.
A division bench of Justice Rajiv Shakdher and Justice Girish Kathpalia observed that there was no material brought on record by the appellant/revenue to back its claim that a separate undertaking had been established to provide the NLD and ILD services offered by the assessee.
No TDS shall made towards Management Fee paid to Associated Enterprises which cannot be categorized as “FTS”: Delhi HC disposes Notice issued by ITD INTERTEK INDIA PRIVATE LIMITED vs INCOME TAX OFFICER WARD INTERNATIONAL TAXATION 2023 TAXSCAN (HC) 1956
The Delhi High Court, while disposing of the notice issued by the Income Tax Department (ITD), held that no Tax Deduction at Source should be made towards the management fee paid to Associated Enterprises (AE) that could not be categorized as Fee for Technical Service (FTS).
The petitioner, Intertek India Private Limited, filed a writ petition challenging the notice issued by the Income Tax Department alleging non-deduction of Tax at Source (TAS) for the remittance of management fees totaling Rs. 2,06,29,647/-. In the assessment proceedings, the Assessing Officer (AO) disallowed the amount under Section 40(a)(i) of the Income-Tax Act. Subsequently, the matter was brought before the CIT(A), who decided to eliminate the addition made by the AO.
The CIT(A) had reasoned that the management fees paid by the petitioner/assessee to its Associated Enterprises (AEs) did not fall under the category of “Fee for Technical Services” (FTS), and therefore, it was not subject to tax deduction at source under Section 195 of the Income Tax Act. The tribunal, in line with the CIT(A)’s decision, upheld it by noting that the AO had not provided a list of the “highly technical services” rendered by the AEs to the petitioner/assessee. Additionally, the AO failed to reference the relevant clause in the agreement indicating that the expertise of the AEs was “made available” to the petitioner.
After reviewing the facts and records, the division bench of Justice Rajiv Shakdher and Justice Girish Kathpalia disposed of the notice issued by the Income Tax Department, holding that no Tax Deduction at Source should be made towards the management fee paid to Associated Enterprises (AE) that could not be categorized as Fee for Technical Service (FTS).
Carry Forward of Business Loss and set off against profit shall be decided by AO who deals with assessment concerning Subsequent Year: Delhi HC COMMISSIONER OF INCOME TAX, DELHI-1 vs BURDA DRUCK INDIA PVT. LTD 2023 TAXSCAN (HC) 1954
The Delhi High Court emphasized that the determination of carrying forward business losses and offsetting them against profits should be addressed by Assessing Officers (AO) handling assessments for subsequent years. The assessee, Burda Druck India Pvt. Ltd, filed its Return of Income (ROI) for the relevant assessment year, i.e., AY 2014-15, on 29.11.2014, declaring a current loss of Rs. 17,56,64,494/-. The AO, during scrutiny, disallowed the carryforward of losses. Dissatisfied with this decision, the respondent appealed to the CIT(A), who upheld the AO’s decision. Subsequently, the respondent approached the tribunal, which allowed the appeal and directed the AO to remove the concluding remark stating that the “brought forward loss is not allowed to be carried forward.”
Revenue, aggrieved by this, appealed to the court. Vipul Agrawal, senior standing counsel for revenue, argued that the Tribunal’s view is legally unsustainable because a change in shareholding of over fifty-one percent had occurred in the respondent. Thus, the determination of whether business losses could be carried forward fell within the AO’s jurisdiction. Upon scrutinizing Section 79 of the Income Tax Act, the court noted that Section 79 prohibits the carryforward and setoff of losses from periods before the previous year when there is a change in shareholding, unless any of the provisos mentioned therein apply.
After reviewing the facts and records, the division bench of Justice Rajiv Shakdher and Justice Girish Kathpalia held that the carryforward of business loss and setoff against profit should be decided by Assessing Officers (AO) who deal with the assessment concerning the subsequent year.
Capital goods used in power generation eligible for input tax credit rules Kerala High Court THE KERALA MINERALS AND METALS LTD vs THE STATE TAX OFFICER CITATION: 2023 TAXSCAN (HC) 1955 2023 TAXSCAN (HC) 1955
Justice Dinesh Kumar Singh in single bench verdict of the Kerala High Court granted the input tax credit claims made by the assessee. The assessee had made the claim with regard to purchase of capital goods which would be used for electricity production. This claim had been denied by the GST department.
The petitioner, Kerala Mineral and Metals Ltd(a Government of Kerala undertaking) had approached the court contesting the decision of the GST department to deny the input credit claim. The Court instructed the assessing authority to adjudicate on the petitioner’s application in Form No.25, ensuring compliance with Rule 13(3) of the Kerala Value Added Tax Rules.
Kerala HC quashes NCLT Order directing production of statement of affairs made against Shareholder K.N. ABDUL GAFOOR vs M/S KASMISONS BUILDERS PVT. LTD 2023 TAXSCAN (HC) 1958
The Kerala High Court emphasized the limits of the National Company Law Tribunal’s (NCLT) authority in directing companies to submit statements of affairs during winding-up petitions.
Justice C. Jayachandran issued the order after a meticulous examination of Section 274(1) of the Companies Act, which precisely delineates the “directions for filing statements of affairs.” The case originated from the NCLT, Kochi Bench’s instruction to a petitioner to furnish a copy of the statement of affairs, accompanied by a specified payment of Rs.50,000/-. However, the petitioner contested this directive, invoking Section 274(1) of the Companies Act, 2013. According to the petitioner, this section only allows such directives against the company itself and not individual shareholders.
Section 271(1) of the Companies Act stipulates that, “(1) Where a petition for winding up is filed before the Tribunal by any person other than the company, the Tribunal shall, if satisfied that a prima facie case for winding up of the company is made out, by an order direct the company to file its objections along with a statement of its affairs within thirty days of the order in such form and in such manner as may be prescribed.
The court held that “The winding-up proceedings will continue in accordance with the law, directing the company to produce the statement of affairs if found necessary to proceed with the matter,” stated the Single Bench of Kerala High Court while disposing of the case.
This ruling establishes a clear delineation of NCLT powers, ensuring that directives for filing statements of affairs are appropriately aligned with the Companies Act’s provisions, providing a crucial precedent for future legal proceedings.
Relief to Kalyan Jewellers: Kerala HC Stays Coercive Steps on Apprehension of Income Tax Assessment Order Enforcement during Appeal Proceedings KALYAN JEWELLERS INDIA LIMITED vs THE ASSISTANT COMMISSIONER OF INCOME TAX 2023 TAXSCAN (HC) 1957
A single-judge bench of the Kerala High Court has ordered a stay on proceedings initiated by the Income Tax department against Kalyan Jewelers. The assessee argues that, dissatisfied with the assessment order, they have filed an appeal, stay petition, and delay petition with the respondent. Kalyan Jewelers India Ltd, the petitioner, is concerned that, while the appeal and condonation petitions are pending, the respondents might proceed with the enforcement of the assessment order. Hence, the filing of this writ petition.
Justice C.S. Dias, in his judgment, directed the Commissioner of Income Tax (Appeals) to review and address the delay petition in compliance with the law and with promptness, preferably within three months from the receipt of a certified copy of this judgment, ensuring the petitioner is granted an opportunity to present their case.
Non-issuance of Rectification Orders by Intelligence wing of VAT Dept.: Kerala HC stays Coercive Action M/S. E.G. GRANITES vs THE STATE TAX OFFICER (INTELLIGENCE) 2023 TAXSCAN (HC) 1959
The Kerala High Court observed that the Intelligence Wing of the VAT Department is not issuing rectification orders, leading to a stay on coercive actions.
The key question at hand was whether the filed writ petition can be approved to instruct the second respondent to promptly review and address the copy of the representation submitted by the petitioner before the issuance of the Respondents DTD letter. The petitioner asserts a considerable delay in receiving orders following the objection to the Section 66 notice under the KVAT Act. Concurrently, a coercive notice from the third respondent prompts the petitioner’s plea. With a deferral request already submitted, the petitioner, concerned about potential coercive measures, seeks judicial intervention through a writ petition. This case underscores bureaucratic challenges, emphasizing the need for timely adjudication and transparency in tax matters.
The single bench of the Kerala High Court, comprising Justice C.S. Dias, directed that the concerned authority in the Intelligence Wing of Value Added Tax (KVAT) Department shall pass orders on copy of reply filed by the petitioner after affording the petitioner an opportunity of being heard.
Karnataka HC directs ICAI to grant Membership to CA Student who pursued Multiple Courses during CA Studies NIKKITHA K.J vs THE UNION OF INDIA 2023 TAXSCAN (HC) 1960
The Karnataka High Court issued a mandamus to the Institute of Chartered Accountants of India (ICAI) to consider addressing the grievance of the petitioner in accordance with law and enrolling her as a Member of the Institute bearing in mind the observations made in the course of the order.
The filed writ petition challenges an order dated 1-05-2023 issued by the Institute of Chartered Accountants of India (ICAI), which refused the petitioner’s request for membership to practice as a Chartered Accountant. The petitioner, a student, enrolled in B.Com degree at ASC Evening Degree College in May 2017. Simultaneously, she joined a CMA Foundation course, completing it along with the intermediate course in June 2018. Additionally, she pursued the CS-Executive Course, which concluded in June 2018. While enrolled in various courses, the petitioner commenced Chartered Accountant Articleship training on 27-08-2018. She sought and obtained permission to continue her B.Com. degree course by submitting the necessary application in Form No.112 under the Chartered Accountants Regulations, 1988.
After completing her B.Com degree in September 2020, the petitioner sought permission to write the CMA final exam, which was granted by the respondent. In December 2020, she completed the CMA final exam and subsequently, on 30-03-2021, sought permission to pursue an additional course – CS professional, once again submitting an application in Form No.112, and permission was granted. Upon completing all the courses and Articleship, the petitioner applied for enrollment as a Member of the ICAI to become a Chartered Accountant. The ICAI sought clarifications regarding how she pursued multiple courses through Form No.112. After obtaining responses from the petitioner, on 01-05-2023, the membership was categorically denied, and the petitioner, a student, challenged this action before the Karnataka High Court in the subject petition.
The petitioner contended that the petitioner consistently sought and obtained permission to pursue multiple courses. There is no instance where she pursued courses without proper authorization. Therefore, there should be no obstacle preventing the petitioner from practicing as a Chartered Accountant, and the Institute should register the petitioner accordingly.
Justice E M Nagaprasanna allowed the petition quashing the order issued against the student by the ICAI
Period of House Arrest can be Considered While Calculating Total Period of Custody: Bombay HC grants Bail to PMLA Accused Mohammed Farooq Mohamemed Hanif Shaikh @ Farooqe Shaik vs The Deputy Director & Anr 2023 TAXSCAN (HC) 1961
The Bombay High Court granted bail to an accused of Prevention of Money Laundering Act, 2002 (PMLA) and observed that the period of house arrest can be considered while calculating total period of custody.
The petitioner in this case is Mohammed Farooq Mohamemed Hanif Shaikh, also known as Farooqe Shaikh. The senior counsel representing the petitioner argued that he was arrested on April 23, 2018, in connection with the current crime and has been in custody for approximately 5 years and 8 months. The counsel contended that the petitioner is charged with money laundering under Section 3, punishable under Section 4 of the Prevention of Money-Laundering Act (P.M.L.A.), with a maximum prescribed punishment of 7 years. On the other hand, the counsel for the Enforcement Directorate asserted that the period of house arrest should not be considered in calculating the total period of the petitioner’s custody and should be excluded.
The court, however, disagreed with this argument, stating that house arrest essentially constitutes a form of arrest, where the individual’s liberty to be a free person is legally restricted. The Division Bench of Justices AS Gadkari and Shyam C Chandak emphasized that prolonged custody violates the accused person’s rights under Article 21 of the Constitution of India, which guarantees personal liberty.
Income chargeable to Tax which has Escaped Assessment is not more than Rs. 12,800: Delhi HC dismisses Writ Petition as Amount being Meagre BHOLI KUMAR vs ITO WARD 51(1) DELHI & ANR 2023 TAXSCAN (HC) 1962
The Delhi High Court dismissed writ petition as amount being meagre in the matter that the income chargeable to tax which has escaped assessment is not more than Rs. 12,800.
The petitioner, Bholi Kumar argued that the income subject to tax, which has allegedly escaped assessment, does not exceed Rs. 12,800. Even if the revenue’s presented case is considered, the taxable income cannot surpass the aforementioned amount.
A Division Bench consisting of Chief Justice Satish Chandra Sharma and Justice Tushar Rao Gedela noted, that considering the representations by Maratha, Senior Standing Counsel, along with the letter placed on record on behalf of the Revenue, we resolve the present writ petition based on the fact that the Revenue has decided not to pursue the case due to the nominal amount involved.
Service of Notice through GST Portal to Assessee whose Registration was Canceled is Invalid: Madras HC M/s. Thirumalai Sales Corporation vs The Assistant Commissioner (Circle) 2023 TAXSCAN (HC) 1964
A Single bench of the Madras High Court quashed an order initiated by Revenue against assessee. Revenue had taken action against the assessee for the non filing of returns. Revenue had also canceled the respondent’s GST license citing non response of the assessee for the show cause notice.
Due to the failure to submit GST returns, an error made by the petitioner’s consultant resulted in the cancellation of the petitioner’s GST registration by the respondent. Subsequently, on 09.07.2021, a show cause notice and a notice for a personal hearing were issued, both of which were uploaded on the common GST Portal. However, since the petitioner’s GST registration was canceled, they were unable to access the GST Portal and remained unaware of the notices. The petitioner, Thirumalai Sales Corporation argued that the respondent was aware of the GST registration cancellation but neglected to serve the show cause notice and the notice for a personal hearing through conventional physical means, relying solely on the GST Portal.
Revenue contended that the petitioner’s GST registration was revoked due to non-filing of returns. Despite the cancellation, the petitioner continued business operations, prompting the issuance of a show cause notice on 09.07.2021. As no response was received and the petitioner did not attend the personal hearing, the respondent confirmed the demand, leading to the issuance of the impugned orders and consequential attachment orders.
Justice Krishnan Ramaswamy set aside the impugned orders on violation of natural justice. Consequential proceedings initiated against the petitioner, including property attachment notices were also set aside.
Non-Service of Notice in GST Portal due to Technical Changes: Madras HC quashes and Remands GST DRC-07 Summary Demand Order M/s.East Coast Constructions and Industries Limited vs Assistant Commissioner 2023 TAXSCAN (HC) 1965
Madras High Court’s single bench quashed the order passed against East Coast Constructions and Industries Limited. The assessee’s grievance stems from the fact that, since the inception of GST on, all notices and communications were consistently sent/hosted on the petitioner’s Dashboard under “View Notices and Orders.” However, recently, the respondent has started placing these notices/communications under a different head in the Dashboard.
The petitioner, East Coast Constructions and Industries Ltd, argued that this ambiguity is the reason for their non-response to the notices issued by the respondent. The respondent, the Tamil Nadu Goods and Services Tax (TNGST) department, contended that there was appropriate communication of notices in accordance with Section 169 of the TNGST Act, 2017.
The single bench held that the petitioner deserves a fair chance since there appears to be a discrepancy in the turnover indicated in Form GST ASMT-10 dated 21.03.2022 and in Form GSTR-1 and Form GSTR-3B.
Justice C. Sharavanan in his judgment set aside the impugned order, and instructed the reconsideration of the case by the respondent.The court instructed the respondent to address the issue arising from hosting information in the Dashboard menu while reconsidering the matter.
Cancellation Of GST Registration failed due to Technical Glitches: Delhi HC Application for Cancellation of GST Registration DELHI METAL COMPANY vs PR COMMISSIONER OF GOODS AND SERVICE TAX SOUTH DELHI 2023 TAXSCAN (HC) 1966 DELHI METAL COMPANY vs PR COMMISSIONER OF GOODS AND SERVICE TAX SOUTH DELHI 2023 TAXSCAN (HC) 1966
The Delhi High Court directed to consider the application of cancellation of Goods and Service Tax (GST) Registration as the GST department failed to do so due to Technical Glitches.
The petitioner, Delhi Metal Company requested a directive to compel the respondent to approve the petitioner’s application for the cancellation of its Goods and Service Tax (GST) registration. The petitioner, engaged in the trading of aluminum and copper scrap, initially applied for GST registration, later opting for cancellation on 12.04.2023, as the business had been closed since that date. Subsequently, on 02.06.2023, the petitioner reapplied for GST registration cancellation.
However, the respondent raised queries similar to those in their communication dated 10.05.2023, once again on 08.06.2023. The petitioner contended that its constituent partners participated in discussions at the GST Commissionerate’s office on 27.07.2023 and 01.08.2023 concerning an ongoing investigation.
A Division Bench comprising Justices Vibhu Bakhru and Amit Mahajan held that “in view of the above, we consider it apposite to dispose of the writ petition by directing that the respondent shall take steps for cancellation of the petitioner’s GST registration in terms of its application.
Delhi HC dismisses News click’s Plea seeking Stay of Income Tax Demand During Pendency of Appeal Before Commissioner of Income Tax PPK NEWSCLICK STUDIO PVT LTD vs PRINCIPAL CHIEF COMMISSIONER OF INCOME TAX CENTRAL DELHI AND ANR 2023 TAXSCAN (HC) 1952
The Delhi High Court rejected Newsclick’s petition requesting a halt to the income tax demand while the appeal is pending before the Commissioner of Income Tax. The current petition challenges the decisions of the respondents, who dismissed the petitioner’s application for a stay on demand during the appeal before the Commissioner of Income Tax (Appeals) against the assessment order dated December 30, 2022. The petitioner also sought a stay on demand during the pendency of the appeal before the Commissioner of Income Tax (Appeals).
A Division Bench comprising Acting Chief Justice Manmohan and Justice Mini Pushkarna stated that the court believes the petitioner has not been able to establish a prima facie case in its favor.
“Accordingly, the writ petition is dismissed. However, this Court clarifies that the findings given by this Court are only in the context of the present writ proceedings and shall not prejudice either of the parties at the stage of the appellate proceedings.” The Court concluded.
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