This weekly round-up analytically summarises the key stories related to the High Courts reported at Taxscan.in during the previous week from October 24 to October 29, 2022.
The Delhi High Court, in a recent ruling has held in favour of the assessees, Daikin Shriram Aircon Pvt Ltd and Daikin Air Conditioning India Pvt Ltd that, the assessee is entitled to claim depreciation under Section 32(1)(ii) of the Income Tax Act, 1961 on the Intellectual Property Rights such as Patents and Trademarks purchased by the assessee. In the appeal by the revenue against the decision of ITAT, the contention that the Intellectual Property rights do not belong to the assessee was declined by the Delhi High Court Division Bench comprising Justice Manmohan and Justice Manmeet Pritam Singh Arora.
While upholding an income tax addition, a division bench of the Delhi High Court has held that mere filing of the VAT Returns will not be sufficient to prove the genuineness of the purchase without conducting an inquiry by the income tax department. Rejecting the above contentions, Justice Manmohan and Justice Manmeet Pritam Singh Arora observed that “a perusal of the paper book reveals that during the investigation it has been found that M/s Seema Enterprises is not involved in any real business and hence the contention of the learned counsel for the petitioner that it made payments in the course of business was not accepted. Further, in the impugned order the Assessing Officer has specifically recorded that the proprietor Smt. Seema Gupta has accepted that her firm was not engaged in real business activities. This Court is of the view that merely filing of VAT returns cannot be held to establish genuineness of transaction especially when it was not shown that the VAT Department had made any physical or spot enquiry. Moreover, neither M/s Seema Enterprises nor the Petitioner had produced before the Assessing Officer the transport details, purchase contract or bills with regard to the alleged purchases. Therefore, prima facie this Court is also of the view that income has escaped assessment.”
The Delhi High Court has quashed the reassessment order being failed to be passed within the prescribed time limit. A Coram of Justice Manmohan and Justice Manmeet Pritam Singh Arora quashed the show cause notice dated 2nd June 2022, as well as the order passed under Section 148A(d) of the Act and the notice issued under Section 148 of the Act, both dated 28th July 2022, for the Assessment Year 2017-18.
The Delhi High Court has held that no provision under ITC prohibits the import of parts of firearms which can be manufactured locally. Mr Justice Yashwant Varma observed that the respondents failed to establish that under the prevalent import policy, the operational part which was found fitted to the Frames and Slides required permissions to be obtained separately and independently.
In a significant ruling, a division bench of the Kerala High Court has held that a dealer under the Kerala VAT Act is not entitled to claim any refund of tax paid on such purchase or avail benefit of ITC on paid on such purchase when the purchased goods are returned after period of limitation. Justice S.V. Bhatti & Justice Basant Balaji was conspiring a plea by the dealer Mr. Narendra Kumar Gupta wherein the petitioner challenged an order of the VAT Tribunal. As per the Scheme, the return of goods within 90 days alone is taken note of and adjustments are made in the tax payable by the seller or the dealer.
A Single Bench of the Madras High Court dismissed petition filed by M/s. Sun bright Textiles (India) Pvt Ltd on the ground of mis conception regarding block period. The Bench consisting of Justice Anitha Sumanth observed that “The argument of the petitioner that the block period has to commence from the date of receipt of books by the jurisdictional assessing officer is mis-conceived, contrary to statutory provisions and rejected. The stay granted on 22.01.2020 stands vacated and the respondents are directed to resume proceedings forthwith and complete the same, in accordance with law. Barring the issue dealt with in the paragraphs above, the petitioner is at liberty to raise all defences before the assessing officer, in the proceedings to follow.”
The Bombay High Court ruled that GST Notice failed to mention allegations of fake invoices against the assessee is not valid and the Court warned the respondent department strictly to give proper training to the officers. Justice K R Shriram & Justice A S Doctor observed that the show cause notice does not contain any details of any sale or claims or deductions which the petitioner has incorrectly made or claimed or recorded in an incorrect manner. It was the duty of the respondent to have given all the details to the petitioner.
A Division Bench of the Bombay High Court has recently quashed an order by the Assistant Commissioner of Central Goods and Services Tax & Central Excise demanding Service Tax from the assessee company in liquidation, Swire Oilfield Services India Private Limited. The case of Bharat Sanchar Nigam Limited vs Union of India (2006) was referred to by the High Court Bench comprising Justice A S Doctor and Justice K R Shriram in addition to the decision in Commissioner of Service Tax-V, Mumbai vs. M/s. UFO Moviez India Ltd (2002) to reach the inference in the light of the facts at hand that, the transfer of goods is a deemed sale and that, where VAT liability has been discharged during the relevant period, the question of claiming service tax thereof does not arise.
The Karnataka High Court, in a recent ruling, held that an appeal against cancellation of GST registration due to non-filing of 3b cannot be rejected merely because option of revocation was not opted by the assessee. Justice S. R. Krishna Kumar observed that Section 107 of the CGST Act, 2017 will indicate that as against an order passed by the respondent No.3 canceling the registration of GST, the petitioner has an remedy by way of appeal under Section 107before the respondent No.1-Appellate Authority.
In a significant ruling, a division bench of the Gujarat High Court has held that the date of filing of the application as reflected on GST portal would be liable to be treated as date of filing claim for refund to the satisfaction of the requirement of Section 54 of the Central GST Act and Rule 89 of the Central GST Rules.
The Chhattisgarh High Court, in a recent ruling, directed the Goods & Services Tax ( GST ) Department to restore the registration certificates of the petitioner companies before amendment and held that, the tax liability is absolved. It was observed by the Court that, Show Cause Notice under Section 49 (3) is not stated to be issued nor placed on record by learned counsel for the State and held that, the order impugned is liable to be and was thereby quashed. The consequential order of demand of tax including penalty was also quashed, absolving the assessee’s tax liability by the Single Bench of Justice Parth Prateem Sahu.
A division bench of the Bombay High Court has held that a certificate under Rule 145(2) of the Central GST Rules, 2017 is sufficient to condone delay in filing of appeal due to non-establishment of GST Tribunal. Allowing relief to the assessee, a division bench of Justice A.S. Chandurkar and Justice M.W. Chandwani observed that “Presently, the Appellate Tribunal has not been constituted. Hence, the petitioner on 20/10/2022 has submitted a declaration that it intended to file an appeal before the Appellate Tribunal. Since such Tribunal has not been constituted, the Deputy Commissioner of State Tax has issued a certificate under Rule 145(2) of the Maharashtra Goods and Service Tax Rules, 2017. The aforesaid certificate would constitute a good and sufficient discharge of the liability mentioned therein.”
The High Court of Karnataka has made the observation that Form-16C cannot be used to prove the employer-employee relationship between the assessee company and a contractual/freelance labourer. The Single Bench of Justice Suraj Govindaraj made this observation while considering a writ petition regarding the applicability of Employees Provident Fund and Miscellaneous Provisions Act, (EPF Act) 1962.
In a recent ruling, a division bench of the Telangana High Court has slammed a Joint Commissioner of VAT department for not granting seven days time to file reply as mentioned in the show-cause notice. A bench comprising Chief Justice Ujjal Bhuyan and Justice C.V. Bhaskar Reddy observed that “When we queried Mr. K. Raji Reddy as to how an officer of the level of Joint Commissioner of Commercial Tax could commit such a mistake, explanation furnished is that the Joint Commissioner was under the impression that the period of seven days would commence from the date of show cause notice.”
In a major relief to KRBL Limited, the Delhi High Court has directed the income tax department to pay an amount of Rs. 34 crores to KRBL Limited within six weeks along with Interest. Granting an interim relief to the assessee, Justice Manmohan and Justice Manmeet Pritam Singh Arora observed that the Respondents-Revenue have had sufficient time to file an appeal against the order of the ITAT.
A division bench of the Bombay High Court has held that the levy of service tax is an issue relating to “rate of tax” and therefore, the Supreme Court has jurisdiction to decide the matter under section 35L Excise Act, 1944. Dismissing the appeal, the High Court observed that “In view of the clear mandate, sub-section (2) of section 35L of the Excise Act, since the issue involved in the present appeal pertains to whether the service rendered by the assessee is a taxable service or not, in our opinion, this Court would have no jurisdiction to entertain the appeal.”
A Division Bench of the Gujarat High Court held that a change of opinion on the basis of existing records is not a valid ground for reopening the assessment of Hindustan Marble Pvt. Ltd., the assessee-applicant. The Bench of Justice N V Anjaria and Justice Bhargav D Karia observed that “the words ‘reason to believe’ do not give arbitrary powers to the Assessing Officer to reopen the assessment”.
In a major relief to MUFG Bank, a division bench of the Delhi High Court has directed the income tax department to process the refund of Rs. 93,42,03,834/-to the MUFG Bank along with interest in accordance with the Income Tax Appellate Tribunal order.
The Madras High Court, in a recent ruling, held that, revenue may redetermine the amount demanded after consideration of submissions to be made by the assessee and allowed the attachment of bank account of the petitioner-assessee, V.L.S. Fibre till re-computation is completed. The Single Bench of Justice Anita Sumanth observed that the assessee had not filed a reply to the notice of demand of interest under Section 50 of the Central Goods and Services Tax Act (CGST), 2017.
In a significant move, a two-judge bench of the Supreme Court has issued notice to the assessee on the issue of levy of service tax on the secondment of employees under Section 65(105) (k) of the Finance Act, 1994. Justice Sanjiv Khanna and Justice J.K. Maheshwari was considering an appeal by the service tax department against M/S Komatsu India Pvt. Ltd.
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