Supreme Court and High Courts Weekly Round-up

This weekly round-up analytically summarises the key stories related to the Supreme Court and High Court reported at Taxscan.in during the previous week from October 31 to November 6, 2022.

RAVI CHANDRA MISHRA vs UNION OF INDIA AND ORS. CITATION: 2022 TAXSCAN (HC) 847

The Delhi High Court has granted bail to detenu Ravi Chandra Mishra, on the ground that the RUDs supplied to the detenu were the same and illegible ones as those supplied to the detenus in the case of Zakir Khan v. Union of India & Ors (2022).It was observed by the bench that several RUDs supplied to the detenu, as well as those on the record with the detaining authority were admittedly illegible/dim/blank pages.

Ms. Todi Investors vs Ashis Kr. Dutta & Anr CITATION: 2022 TAXSCAN (HC) 849

The Calcutta High Court ruled that the High Court is solely empowered to hear appeal against acquittal Cheque Bounce case. A Single Bench of the High Court consisting of Justice Subhendu Samanta observed that “A complainant in a case arising out of private complaint, who has already provided the right of appeal Under Section 378(4) of the Code of Criminal Procedure, cannot be permitted to take recourse to Section 372 of the Code.”

Sanjay Kumar Agarwal vs Directorate of Enforcement CITATION: 2022 TAXSCAN (HC) 848

The High Court of Jharkhand has held that a person can be released on bail u/s 45 of the Prevention of Money Laundering Act (PML) Act if he suffered from sick or infirm. Justice Sanjay Kumar Dwivedi set aside the order dated 09.05.2022 passed in Misc. Criminal Application No.362 of 2022 by learned Additional Judicial Commissioner-XVIII-cum-Special Judge, Prevention of Money Laundering Act, Ranchi whereby the petition filed by the petitioner under Section 205 of the Code of Criminal Procedure (Cr.P.C.) for dispensing with the personal appearance of the petitioner has been rejected in connection with ECIR 05/2021, corresponding to CNR-JHRN01-002561-2022.

M/S PRISM CEMENT-UNIT II vs COMMISSIONER OF COMMERCIAL TAX CITATION: 2022 TAXSCAN (HC) 850

The Madhya Pradesh High Court held that no vat leviable as the Trial production of cement and clinker does not come under the head of ‘Business ‘ u/s 2(d) of the Value Added Tax Act, 2005. A Bench consisting of Shri Justice Sheel Nagu & Shri Justice Virender Singh has held that the so-called trial production of cement and clinker from 05.08.2010 till 01.11.2010 when the appellant claims to have started commercial production has been claimed to be not coming within the definition of “Business” as defined in Sec.2(d) of VAT Act.

AMARJEET SHARMA vs SERIOUS FRAUD INVESTIGATION OFFICE CITATION: 2022 TAXSCAN (HC) 852

The Delhi High Court has recently held that the applicants are not entitled for grant of bail even on merits and dismissed the bail pleas of accused in the fraud allegedly resulting in misappropriation of the public money to the tune of Rs. 5,435/- Crores, in the Bhushan Power and Steel Limited case. The investigation is pending under the Serious Fraud Investigation Office(SFIO) under the Ministry of Corporate Affairs(MCA).

EMPLOYEES PROVIDENT FUND ORGANISATION & ANR vs SUNIL KUMAR B. & ORS CITATION: 2022 TAXSCAN (SC) 192

In a significant ruling, the Supreme Court of India, on Friday held that, the provisions contained in the notification no. G.S.R. 609(E) dated 22nd August 2014 are legal and valid; in addition to allowing the employees to pay 8.33% of the salary drawn, instead of 8.33% of Rs. 15,000/- (Rs. 1250/-)  as earlier capped in the amendment.The 12-month service period for calculation of pension revised to 60 months in the amendment, which was contested against by the employees, has been affirmed by the Supreme Court Division Bench of Chief Justice UU Lalit, Justice Aniruddha Bose and Justice Sudhanshu Dhulia.

N/s.Sayar Cars vs The Appellate Deputy Commissioner CITATION: 2022 TAXSCAN (HC) 851

The Madras High Court has held that the imposition of penalty under section 27(3) of the Tamil Nadu VAT Act is not automatic, and deleted the penalty order.Justice Anita Sumant observed that there was no finding recorded by the assessing authority specific to the position that the escapement of turnover was as a result of wilful non-disclosure or suppression by the assessee concerned.

M/s. OCL INDIA LTD vs STATE OF ORISSA & ORS CITATION: 2022 TAXSCAN (SC) 193

A division bench of the Supreme Court, while upholding the Orissa Entry Tax Act, 1999, has held that the industrial townships are “local areas” for the purpose of levy of Entry Tax.Upholding the impugned legislations, the Court held that “The Court is of the opinion that the argument – made by counsel that the levy could not be retrospective, in the facts of this case, is insubstantial. The earlier effort to tax the assessee by demand led to petitions which quashed them – where the legal regime was that some compensatory element had to be disclosed. With the object of curing this defect, the fresh law was enacted by the State of U.P., with retrospective effect which on the application of principles enunciated by this Court, in Sri Prithvi Cotton Mills v. Baroda Borough Municipality & Ors.24, is valid.”

JAI PRAKASH ASSOCIATES LTD. Vs COMMISSIONER OF INCOME TAX (TDS) CITATION: 2022 TAXSCAN (SC) 191

A two-judge bench of the Supreme Court has upheld a High Court order wherein it was held that TDS is not leviable on the non-convertible debentures and fixed deposit of the value less than Rs.5,000/-, under the provisions of the Income Tax Act, 1961. A bench comprising Justice M.R. Shah and Justice M.M. Sundresh was considering an issue regarding the chargeability of TDS on non-convertible debentures and FDR below Rs.5,000/-.

T. D. Sonia vs Deputy Director CITATION: 2022 TAXSCAN (HC) 846

The High Court of Madras has held that Prosecution under the Prevention of Money Laundering Act, 2002permissible even if Petitioner indirectly involved in offence of money laundering.Justice P N Prakash and Justice Rmt Teekaa Raman have held that “we do not find any infirmity in the orders dated 29.10.2021 and 02.05.2022 passed by the trial Court in the discharge petitions in Cr.M.P.Nos.11655 of 2019 and 8009 of 2021, respectively, warranting interference by this Court.  Similarly, there are prima facie materials against Sonia and therefore, the prosecution against her cannot be quashed.” The Court dismissed the petition with no costs.

HARSHA D vs HIGH GROUND POLICE STATION CITATION: 2022 TAXSCAN (HC) 844

The Karnataka High Court has quashed a Magistrate Court order permitting the Enforcement Directorate (ED) to question five undertrials who are in judicial custody under the Prevention of Money Laundering Act, 2002 (PMLA) in a Special Court case. The case pertained to Harsha D, a first divisional clerk who was arrested in the Police Sub-Inspector Recruitment Scam.

Enforcement Directorate vs Assistant Director CITATION: 2022 TAXSCAN (HC) 845

The Rajasthan High Court has held that the Director or Additional Director can issue summons on the person under section Prevention of Money-Laundering Act, 2002. The petitioner challenged the summons dated 31.08.2022 issued by the Assistant Director, PMLA, Directorate of Enforcement, Ministry of Finance, Government of India, Jaipur under the provisions of the Prevention of Money-Laundering Act, 2002 (“the Act of 2002”).Justice Dinesh Mehta observed that the mere fact that the reply has been filed and the requisite documents as required in the first summons have been furnished, does not absolve the petitioner of his statutory obligation to honour the summons.

COMMISSIONER OF CENTRAL EXCISE CUSTOMS AND SERVICE TAX vs M/S SUCH SILK INTERNATIONAL LTD CITATION: 2022 TAXSCAN (SC) 190

The Supreme Court of India ruled that no appeals can be dismissed by HC, as not maintainable under Section 130(1) of the Customs Act holding that it is tenable before the Supreme Court. M/s Such Silk International is the respondent-assessee in the present appeal.A Coram consisting of Justice MR Shah and Justice MM Sundresh observed that “In the present case, the dispute also is with respect to breach of condition of notification which may ultimately lead to subsequent demand of duty or imposition, but that itself cannot be said to be a dispute with respect to valuation. Therefore, the High Court is wrong in not entertaining the appeal on the ground that the same was not maintainable.”

Sham Lal Vs State of Haryana and others CITATION:   2022 TAXSCAN (HC) 842

The Punjab and Haryana High Court has recently held that service tax is not applicable to cycle parking stands and ordered the release of the security amount along with interest accrued on the same in favour of the petitioner.It was observed by the Single Bench of Justice Vinod S Bhardwaj that, “Department of Central Excise (as it was then), now the Assistant Commissioner Central GST clearly states that in the present case service tax was not applicable and that no demand of service tax has ever been raised by the concerned department” and ordered to release the security amount and interest accrued on fixed deposit of the same expeditiously and preferably within four weeks of receipt of copy of the order.

Syed Adeel Shah vs Directorate of Enforcement through its Director and anr CITATION: 2022 TAXSCAN (HC) 840

A Division Bench of Jammu & Kashmir and Ladakh High Court has recently directed the Appellate Tribunal to hear the application of the appellants for staying the order of attachment of the Adjudicating Authority and it was held that writ jurisdiction is not to be invoked to bypass the proceedings of Appellate/Adjudicating Authorities. It was observed by a division bench of the court in an LPA filed by the appellant, while dismissing it, that, the appellants cannot bypass the remedy of appeal by invoking writ jurisdiction of this Court simply by laying challenge to the proceedings which are essentially offshoot of the order passed by the Adjudicating Authority which is appealable under Section 26 of the PMLA Act, 2002.

State Of U.P. vs M/S Maa Vindhyavasini Tobacco Pvt Ltd Thru Dir Uday Prakash CITATION: 2022 TAXSCAN (HC) 839

In a recent ruling, the Allahabad High Court, while quashing an order demanding GST and penalty, has held that the tax demand and penalty cannot be solely based on presumptions under the Central GST Act, 2017.“In the present case, as the respondent has not approached for availing the benefit that flow from Section 129, coupled with the fact that the appellate authority found that the basis for initiating proceedings were non-existent, I do not see any reason to interfere with the order passed by the appellate authority, in exercise of powers under Section 226 of the Constitution of India,” the Court said.

KRBL LIMITED vs DEPUTY COMMISSIONER OF INCOME TAX CIRCLE 13-1 CITATION: 2022 TAXSCAN (HC) 837

In a major relief to M/s KRBL Limited, a division bench of the Delhi High Court has ordered the income tax department to process the refund of Rs. 54 Crores along with interest. The orders were passed for two assessment years.After hearing arguments from both parties, a bench of 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 Income Tax Appellate Tribunal. In any event, in accordance with the mandate of law, the appeal effect order has to be passed within three months of passing the appeal order.”

SUBHRA JYOTI BHARALI vs THE DIRECTORATE OF ENFORCEMENT GUWAHATI ZONE CITATION: 2022 TAXSCAN (HC) 835

A Single Bench of Gauhati High Court has recently held that, filing of supplementary charge sheet by the State is not a sufficient ground to deny bail to the accused in money laundering cases. The petitioner was the Managing Director of Industrial Co-operative Bank Limited. An allegation has been made against him and 7 other persons alleging that the petitioner has misappropriated a sum of Rs.9,50,61,499/-. He was subsequently arrested and had spent 120 days in judicial custody.It was observed that, “the incomplete complaint (charge sheet in CrPC parlance) filed against the petitioner is against the law stipulated by Section 173 CrPC because law does not permit piecemeal investigation”.

RISE PROJECTS PRIVATE LIMITED vs ASSISTANT COMMISSIONER OF INCOME TAX AND ANR. CITATION: 2022 TAXSCAN (HC) 836

A division bench of the Delhi High Court, while considering a writ petition, has quashed a pre-consultation notice issued under section 148A(d) of the Income Tax Act, 1961 stating that the same was passed without considering the detailed reply of the assessee.Allowing the petition, the Court quashed the orders and held that “Keeping in view the aforesaid, the impugned order passed under Section 148A(d) and the notice issued under Section 148A of the income tax Act both dated 15th July, 2022 for the assessment year 2016-17 are set aside and the Assessing Officer is directed to pass a fresh order under Section 148A(d) of the Act in accordance with law within eight weeks. The rights and contentions of all the parties are left open. With the aforesaid directions, the present writ petition and application stand disposed of.”

Commissioner Of Income Tax TDS vs Mewar Hospital Pvt Ltd CITATION: 2022 TAXSCAN (HC) 834

The Rajasthan High Court, while holding in favor of the assessee hospital, held that the retainer fee paid to the doctors, being not a professional service, shall not be subject to TDS under the provisions of section 194-I of the Income Tax Act, 1961.Allowing the appeal of the assessee, Justice Sandeep Mehta and Justice Kuldeep Mathur observed that “Again same question came up for consideration in other decision of Karnataka High Court where after considering the judgment in Elbit Medical Diagnostics Ltd., the Court has come to the conclusion that retainer in service are professional service and issue was answered in favour of the assessee.”

ALM Industries Ltd vs Deputy Commissioner of Income Tax CITATION: 2022 TAXSCAN (HC) 831

The Allahabad High Court, in a recent ruling, has held that the discretionary power vested on the Assessing Officer to grant stay of demand is not absolute and the same shall be exercised within the four corners of law.Justice Rohit Ranjan Agarwal observed that “from the reading of the aforesaid provision it is clear that once an appeal has been filed under Section 246 or 246A of Act of 1961, it is the discretion of the ‘Assessing Officer’ and subject to the condition as he may think fit to impose in the circumstances of the case, treat the Assessee as not being in default in respect of the amount in dispute in the appeal.”

VTS STEELS vs ASSISTANT STATE TAX OFFICER CITATION: 2022 TAXSCAN (HC) 833

The Kerala High Court has held that the GST department cannot refuse to release the goods and conveyance once the assessee has complied with the requirements under section 129 (1)(c) of the Central Goods and Services Tax (GST) Act, 2017. Justice Gopinath. P was considering a writ petition where in the petitioner, M/s VTS Steels faced with proceedings under Section 129 of the CGST/SGST Act, 2017. The petitioner contended that despite the willingness of the petitioner to comply with the provisions of Section 129 (1)(c), the department is refusing to accept the bank guarantee and release the goods, pending adjudication of the notice.

Shri Rajesh Kumar vs Commissioner of Customs CITATION: 2022 TAXSCAN (CESTAT) 589

A Single Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), deleted penalty of Rupees 40 lakhs as there was no violation of Section 111 of the Customs Act.The Bench consisting of Anil Choudhary, Judicial Member held that “The appellant has admitted that he had sold smuggled gold having foreign marking earlier in cash without any bill/ invoice. Further, recovery of Indian currency having face value of Rs. 6.44 crore corroborates the admission of dealing in smuggled gold. Further, observed that the appellant was aware that he was dealing in smuggled gold and accordingly upheld the order of penalty dismissing the appeal. provisions of Section 111 as alleged.”

Abis Export India Private Limited vs State of Chhattisgarh CITATION: 2022 TAXSCAN (HC) 832

The Chhattisgarh High Court has held that the amendment to section 50 of the Central GST Act, 2017 regarding the imposition of the interest on late payment of tax has a retrospective effect.Justice Narendra Kumar Vyas observed that “the amendment which has been made effective from 01.07.2017 clearly provides that the interest on tax payable in respect of supplies made during the tax paid and declared in the return for the said period furnished after the due date in accordance with the provisions of Section 39 of the Act, 2017 except where the such return is furnished after commencement of any proceedings under Section 73 or 74 of the Act, 2017 shall be levied on that portion of tax i.e. paid by debiting the electronic cash ledger, as such, the amendments are having retrospectively applicability effect, as such, in view of the amendment made by the Central Government, the writ petition is disposed of with a direction to the appellate authority to examine whether, in the given facts and circumstances of the case, the petitioner can be extended benefits of the amendment made in Section 50 of the Income Tax Act or not.”

DIRECTORATE OF ENFORCEMENT vs PADMANABHAN KISHORE CITATION: 2022 TAXSCAN (SC) 188

Handing over money with the intent of giving a bribe, then such a person will be assisting or will knowingly be a party to an activity connected with the proceeds of crime, the Apex Court ruled while interpreting Section 3 of the Prevention of Money Laundering Act, 2002 (PMLA). A Bench consisting of the Chief Justice of India U.U. Lalit and Justice Bela M. Trivedi set aside a judgment passed by the Madras High Court in March 2021, which quashed the proceedings against Padmanabhan Kishore, the respondent under the Prevention of Money Laundering Act (PMLA), 2002. The Enforcement Directorate (ED) moved to the Apex Court challenging the High Court judgment.

MEDEOR HOSPITAL LIMITED vs PRINCIPAL COMMISSIONER OF INCOME TAX CITATION: 2022 TAXSCAN (HC) 829

A division bench of the Delhi High Court has held that an appeal filed with delay shall be treated as “pending” for the purpose of settlement under the Vivad Se Vishwas Scheme.Granting relief to the assessee, the bench held that “keeping in view the aforesaid, the Forms 3 dated 23rd January, 2021 and 12th February, 2021 attached as Annexures P-16 and P-21 as well as the FAQ No.59 of Circular No.21/2020 dated 4th December, 2020 issued by CBDT to the extent mentioned hereinabove are quashed and respondent No.1 is directed to treat the appeal filed against the assessment order under Section 143(3) for assessment year 2014-15 before CIT(A) on 24th May, 2019 as pending as on 31st January, 2020. The respondents are also directed to issue revised Forms 3 by settling both the appeals against the assessment order for assessment year 2014- 15 (i.e. quantum appeal pending before CIT(A) and the appeal against levy of penalty pending before ITAT) in accordance with the provisions of VSV Act within eight weeks.”

M/S Automark Industries (India) Pvt. Ltd vs Commissioner Of Commercial Tax CITATION: 2022 TAXSCAN (HC) 827

In a significant ruling, the Allahabad High Court allowed the fresh Revision when the revisionist failed to appear for adjudication due to non-issuance of notice by the Commercial Tax Tribunal.Justice Mathur observed that the revisionist ‘s non-appearance was not intentional or deliberate and the revisionist is permitted to place his arguments/contentions before the Tribunal. The Court set aside the order and the issue is remitted back to the Commercial Tax Tribunal for a fresh determination. “With the consent of the parties, it is provided that the matter shall be listed before the Tribunal on 21.11.2022 and the revisionist shall appear before the Tribunal on the said date and press their appeal accordingly”, held the Court. The revisions were allowed.

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