This weekly round-up analytically summarizes the key judgments reported at Taxscan.in by the Supreme Court and High Courts from 19th to 25th of June 2022.
A division bench of Justice Ujjal Bhuyan and Justice Surepalli Nanda has held that a VAT dealer who has opted for a composition scheme under the Telangana VAT Act, 2005 shall not be subjected to regular assessment under the Act. The Court held that if there is payment of tax under the composition scheme, question of regular assessment would not arise. In such circumstances receipt or nonreceipt of pre-assessment notices or assessment orders would have no significance or bearing as those are beside the point. When an action is without jurisdiction, the fact that the same has been put to challenge after two years would not be of material consequence.
In a ruling granting bail to an accused person involved in a GST scam of around 7 crores, the Chhattisgarh High Court has held that the accused shall be released on bail since the offence of wrongful availment of input tax credit under section 138 of CGST Act, 2017 is a bailable, non-cognizable and compoundable offence.Particularly considering the fact that the allegation against the present applicant is of wrongfully utilizing Input Tax Credit of Rs.6,95,32,472/- and supplied taxable goods without payment of taxes and without issuing invoices to the tune of Rs.27,70,559/-, totalling Rs.7,23,03,031/-, and that offence under the Act are bailable and non-cognizable except for the offence under Section 132 (5) of the Act, further considering that the applicant can be punished with maximum sentence of 5 years with fine, he is in jail since 27.10.2021, further considering that Proprietors of the firm namelyhave already been enlarged on bail by the co-ordinate Bench and also considering that the applicant in the bail application raised a ground that the offence is compoundable in nature.
The Chhattisgarh High Court has granted bail to a person allegedly committed the offense of fabrication of GST portal and e-way bills. The bail was granted with conditions including the issue of personal bond.Having considered the submissions, nature of allegations, further considering the undertaking given by the applicants that they are ready and willing to return the amount of Rs.3,35,08,958.91/- within 4 months and if the complainant is interested to receive the scrap materials of the said value, then the scrap materials may be supplied to the complainant, on which learned counsel for the complainant, on instructions, would submit that he is not interested to receive the supply of scrap materials, and without further commenting anything on the merits of the case, this Court is inclined to grant bail to both the applicants.
While considering a bail application of persons arrested in relation with a matter of illegal import of foreign liquor, has directed the GST department, Police and Chief Secretary of the State to file a detailed report on the steps taken for the effective implementation of Bihar Prohibition and Excise Act, 2016 in order to prevent smuggling and manufacture of liquor within the State.
The Madras High Court has recently ordered the GST department to release the detained vehicle since the “proper officer” has failed to issue a notice during the proceedings.Granting relief to the petitioner, the Court held that “In the present case, admittedly, no such notice has been issued till date though the seizure has been affected as early as on 30.05.2022. In the aforesaid circumstances, the act of the respondent in insisting that the petitioner retain the vehicle at the present location is in gross contravention of the statutory provisions.
A division bench of the Delhi High Court has held that the GST department cannot issue a fresh notice during the pendency of the proceedings under section 73 and 74 of the Goods and Services Tax Act, 2017.The division bench observed that “the notice was adjudicated up on and the matter was decided partly in favour of the Petitioner, pursuant to which no demand was raised in the Refund Sanction/Rejection Order dated 18.05.2022. While the Petitioner has assailed part of the order by an appeal, the Respondent has not filed any appeal and it is thus not open to issue the impugned Demand Notice on the same cause of action under Section 73 of the Act.”
The Patna High Court, while considering a writ petition seeking to grant stay for the GST demand since the statutory remedy through appeal cannot be invoked due to the non-constitution of GST Tribunal, has refused to grant stay holding that the same would amount to staying the effect of Section 16(4) of the GST Act, 2017.
The division bench of Madras High Court presided by Mr. Justice R. Mahadevan and Mr. Justice J. Sathya Narayana Prasad has upheld the exclusion of royalty income from business profits for calculation of deduction u/s 80HHC since the assessee fails to prove royalty income is related to export business.
The Division Bench of Madras High Court presided by Mr. Justice R. Mahadevan and Mr. Justice J. Sathya Narayana Prasad has upheld the addition since, relevant documents to substantiate purchase expenses lost in the flood. The High Court observed that the appellant did not furnish the relevant materials to substantiate their claim before the authorities below and they admitted that they were unable to produce the supporting evidence for purchases, since the relevant records about the assessment year in question, were washed away in 2015 flood. The High court further observed that the appellant filed the auditor’s report, as per which, there was no adverse comment on books of accounts maintained by the appellant and the purchases debited into the P and L account. The opinion of CIT(A) that there was a decline in gross profit declared by the assessee for the assessment year in question compared to the earlier financial year, directed the assessing officer to restrict the disallowance of purchases to the extent of 2.5% of the total turnover.
A division bench of the Madhya Pradesh High Court has held that the Authority for Advance Ruling (AAR) under GST cannot be sought after the initiation of assessment proceedings when the department issued a show-cause notice.The Petitioner approached the Authority for obtaining the advance ruling only after a search conducted on 20.03.2020 in which the evasion of SGST was found which has resulted in issuing a show-cause notice dated 21.05.2020. By the aforesaid impugned notice, the petitioner has been called upon to pay the remaining amount of GST/SGST liability and submit the reply. Since the petitioner has not paid GST @ 18% and appears to be contesting the aforesaid notice, therefore, the issue is treated to be pending before the Authority under the GST/SGST Act,2017 hence, Authorities have rightly declined to grant advance ruling to the petitioner as the petitioner did not approach in advance before the Authority for obtaining the ruling,” the Court said.
The Madras High Court has dismissed a writ petition wherein the petitioner, a franchise of BSNL challenged the levy of service tax on activity of marketing and distribution of Cellular Mobile Telephone Service as a franchise of BSNL under the category ‘Business Auxiliary Services’.While concluding, the Court added that “the petitioner is permitted to file its objections to the show cause notice, placing reliance on such materials including orders as it deems fit, within a period four weeks (4) from today. Upon receipt of the objections and annexures, if any, the authority will consider the same, hear the petitioner and pass orders in accordance with law within a period of four (4) weeks from date of conclusion of personal hearing. With this, this writ petition stands disposed of.”
A two-judge bench of the Supreme Court comprising Justice Sanjiv Khanna and Justice Bela M. Trivedi, while overruling an order of the Karnataka High Court has held that the criminal proceedings cannot be quashed on the basis of the fact that stay of demand was granted by the CESTAT. Allowing the appeal, the Court has clarified that “We, however, clarify that it will be open to the respondents to file an application seeking exemption from personal appearance as well as under Section 309 of the Code of Criminal Procedure, 1973. If any, such applications are filed, the same would be considered and decided in accordance with the law. We have not made any comments in that regard. We also request the CESTAT to take the appeal preferred by the respondents expeditiously.”
The Madras High Court, while considering a writ petition, has held that the VAT department shall raise interest demand within a reasonable time under the provisions of the Tamil Nadu VAT Act.The impugned notice does not make a distinction between the components of the tax being admitted tax & tax levied on additions made in assessment upon which interest has been levied, had this been done, and the assessing authority made a bifurcation as regards the interest related to the belated payment of admitted tax and the interest relating to the tax on added turnover, there would have been no necessity for further discussion in relation to the first category of interest. “Needless to say, if the admitted tax has been paid in time, the question of levying interest in 2019 for the remainder of the taxes, after a period of four years when the tax was paid, will not arise as the authorities are expected to have raised demands of interest concurrent with the tax demand or in any event, within a reasonable period of time thereafter. All contentions of the learned counsel for the petitioner are left open to be advanced before the authority in the course of personal hearing,” the Court said.
The Delhi High Court presided by Mr. Justice Manmohan and Ms. Justice Manmeet Pritam Singh Arora has directs revenue to decide application under section 154 within eight weeks since rectification applications pending unanswered.The division bench of Delhi High Court has held that “this Court disposes of the present writ petition along with pending application with a direction to the Respondent-Revenue to decide the Petitioner’s six rectification applications in accordance with law within eight weeks. The Respondent-Revenue shall also pass the appeal effect orders for the Assessment years 2009-10 and 2012-13 within eight weeks”.
Support our journalism by subscribing to TaxscanAdFree. Follow us on Telegram for quick updates
