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 November 7 to November 12, 2022.

Subodh Kumar Garg vs Union of India CITATION: 2022 TAXSCAN (HC) 856

The Allahabad High Court has, recently while granting bail to a GST accused, held that seriousness of the offences alone cannot be conclusive of the applicant’s entitlement to bail. Thus granting bail to the applicant, Justice Siddharth ruled : “Keeping in view the nature of the offence, argument advanced on behalf of the parties, evidence on record regarding complicity of the accused, larger mandate of the Article 21 of the Constitution of India and the dictum of Apex Court in the case of Dataram Singh Vs. State of U.P. and another reported in (2018)3 SCC 22 and recent judgement dated 11.7.2022 of the Apex Court in the case of Satendra Kumar Antil Vs. C.B.I., and without expressing any opinion on the merits of the case, the Court is of the view that the applicant has made out a case for bail. The bail application is thus allowed”.

Rajeev Kumar vs The State through Enforcement Directorate CITATION: 2022 TAXSCAN (HC) 876

The Jharkhand High Court granted bail to Advocate Rajeev Kumar, who was booked by the Enforcement Directorate (ED) for allegedly possessing unaccounted cash. The Bench consisting of Justice Sanjay Kumar Dwivedi noted that “The petitioner is a practicing advocate, in that circumstance, the liability of the petitioner for further investigation, interrogation and facing trial is not jeopardized and he is already held to be not at ‘flight risk’ and there is no possibility of tampering the evidence or influencing/intimidating the witnesses, as has been submitted by the Mr. Nilesh Kumar, learned counsel appearing for the petitioner.”

M/s Chenab Textile Mills vs State of J&K and others CITATION: 2022 TAXSCAN (HC) 872

The Jammu and Kashmir and Ladakh High Court has recently held that no exemption can be claimed on toll and additional toll on expansion on the basis of interdepartmental communication alone and sufficient rule, circular, notification or guideline must be the basis for levying and excluding assessees from taxation. It was held by the Division Bench of Justice Rajesh Sekhri and Justice Sanjeev Kumar that, “the petitioner is not entitled to the benefit of exemption of additional toll on components, plants and machinery, building material and other equipments procured from outside the State for undertaking substantial expansion of the Unit” owing to the observation that, “with a view to give effect to these promises and declarations made in the Industrial Policy, necessary statutory notifications are required to be issued by the Government under the relevant legislation”.

RAJIV CHAKRABORTY RESOLUTION PROFESSIONAL vs DIRECTORATE OF ENFORCEMENT CITATION: 2022 TAXSCAN (HC) 875

The Delhi High Court ruled that Moratorium under Section 14 of Insolvency and Bankruptcy Code, 2016 (IBC) will not bar attachment under Prevention of Money Laundering Act (PMLA), 2002. The Bench consisting of Justice Yashwant Varma observed that the provisions of PMLA are not subservient to the moratorium provision in Section 14 of the IBC and that while both the statutes are special statutes in the generic sense, they both seek to subserve independent and separate legislative objectives and the subject matter and focus of the two legislations are clearly distinct.

Anandi Water Park Resorts And Club Pvt. Ltd vs State Of Up CITATION: 2022 TAXSCAN (HC) 873

A Single Bench of Allahabad High Court has held that the UP State Government cannot impose an entertainment tax on water parks over rented swimming costumes. It was therefore, held that “in the present case, the costume used in the water park would neither fall within the definition of words ‘instrument’ or ‘contrivance’, thus I am inclined to accept the submission of the Counsel for the petitioner that the renting on ‘costumes’ cannot be included in the term ‘payment for admission’ as defined under Section 2(l), thus on that score alone, the assessment order is beyond the authority of law and is violative of Article 265 of the Constitution of India.”

Genpact India Pvt. Ltd. Vs Union of India and others CITATION: 2022 TAXSCAN (HC) 874

In a recent ruling, the Punjab and Haryana High Court has held that the Genpact India cannot be treated as an “intermediary” and therefore allowed a refund of Rs.26,34,61,625/- in favor of the Company. Allowing relief to the assessee, the Court held that the services provided by the petitioner are in the nature of “Intermediary Services” as per Section 2 (13) of the IGST Act and do not qualify as “export of services” in terms of Section 2 (6) of the Act and thereby rejected the refund claim of un-utilized Input Tax Credit (ITC) used in making zero rated supplies of services without payment of IGST.

AMBARNUJ FINANCE AND INVESTMENT PVT. LTD vs DEPUTY COMMISSIONER OF INCOME TAX & ANR. CITATION: 2022 TAXSCAN (HC) 870

The Delhi High Court( HC )has held that a mere change of opinion cannot form the basis for initiating reassessment proceedings under Income TaxAct,1961. The HC comprisingJustice Manmohan and Justice Manmeet Pritam Singh Arora observed that the rectification order dated 15th February 2021, effectively resulted in a re-assessment of income and not rectification.

Pranjil Batra vs Directorate of Enforcement CITATION: 2022 TAXSCAN (HC) 871

The Punjab & Haryana High Court observed that obesity is a disease which becomes the root cause of several other diseases and granted bail under the Prevention of Money Laundering Act, 2002 (PMLA) to a man weighing 153 kg by considering his medical condition. The HC bench comprise of Justice Gurvinder Singh Gill observed that obesity, as in the case of the petitioner, who weighs 153 kilograms is not just a symptom but is itself a disease which becomes the root cause of several other diseases. With such co-morbidities, the response, resistance, resilience and capacity of the body to fight ailments and recuperate efficaciously, decreases substantially.

M/s. Simon India Ltd vs CT and GST Officer CITATION: 2022 TAXSCAN (HC) 868

A division bench of the Orissa High Court, while considering a petition where the GST department issued the draft and final GST audit report on the same day, has allowed the assesseeto file the reply under section 65(4) of the GST Act. A division bench of Chief Justice Dr. S. Muralidhar and Justice M. S. Raman observed that“Perhaps knowing that the deadline of the 3-month period had already been crossed, the authorities issued both the draft audit report as well as the final audit report on the same day, i.e., 30th June 2022.”

M/s. Bhanjadeo Constructions vs State of Odisha & Others CITATION: 2022 TAXSCAN (HC) 867

In a major relief to the contractors, a division bench of the Orissa High Court headed by Chief Justice Dr. S. Muralidhar has ordered to freeze the coercive actions against the contractors and directed the State GST department to follow its circular dated 10th December, 2018 to resolve the issues relating to works contracts due to change in the tax regime from VAT to GST.

SRI. KOLAPUDI ENOCH WASHINGTON vs THE ADDITIONAL COMMISSIONER CITATION: 2022 TAXSCAN (HC) 869

In a significant ruling, the Karnataka High Court has directed the GST department to restore the cancelled GST registration as the assessee could not file the GST returns due to sudden demise of the auditor.
Justice S.R. Krishna Kumar accepted the contention of the petitioner that the appellate authority does not have any power to condone the delay in preferring an appeal under Section 107 of the CGST Act, in a given case, it is open for this Court to condone the delay by exercising its powers under Article 226 of the Constitution of India.

MASTECH TECHNOLOGIES PVT. LTD. Vs COMMISSIONER OF INCOME TAX NEW DELHI CITATION: 2022 TAXSCAN (SC) 198

The Supreme Court two-judge Bench of Justice M R Shah and Justice M M Sundresh recently held that a second reassessment notice issued to the assessee due to a change of Assessing Officer is not valid. The Supreme Court observed that “the assessee did not challenge the Assessment Order on merits which it ought to have challenged before the CIT-A and the High Court has set aside the Assessment Order on the ground that initiation of the reassessment is bad in law”.

SUNIL KUMAR PANDEY AND ANR vs UNION OF INDIA AND ORS CITATION: 2022 TAXSCAN (HC) 863

The Delhi High Court held that Moratorium ceases to exist once proceedings under Insolvency and Bankruptcy Code, 2016 (IBC) culminates. A Coram consisting of Justice Satish Chandra Sharma, Chief Justice of the Delhi High Court and Justice Subramonium Prasad observed that “The Appellants have claimed that the Single Judge has failed to note that the civil suit has been rendered infructuous due to the moratorium imposed upon Respondent No. 3. However, this anxiety of the Appellants is ill-founded as the moratorium operates qua Respondent No. 3 i.e the Builder, and not the Respondent No. 4 i.e the bank.”

MUNICIPAL CORPORATION vs OPERTY OWNERS’ ASSOCIATION & ORS CITATION: 2022 TAXSCAN (SC) 197

The two-judge Bench of Supreme Court Chief Justice U U Lalit and Justice Ajay Rastogi recently held that the future capital value of the property is not to be taken for determining the property tax as per The Mumbai Municipal Corporation Act (MMC Act), 1888 and upheld the High Court judgment which had refused to strike the validity of various provisions of the MMC Act.

Ramki Cements Private Limited vs The State Tax Officer CITATION: 2022 TAXSCAN (HC) 864

A Single Bench of the Madras High Court quashed demand of Tax and Penalty in Form GST MOV-09 as the issue of Show Cause Notice (SCN) was made to the Driver of the Petitioner, Ramki Cements Private Limited. The Coram consisting of Justice S Srimathy observed that “This Court is of the considered opinion that the petitioner was not given adequate opportunity. The petitioner has not received the show cause notice. The show cause notice was issued to the driver is not adequate. Therefore, the order is liable to be set aside. Accordingly, the Writ Petition is allowed and the impugned order of Demand of Tax and Penalty in Form GST MOV-09, is hereby quashed.”

Rajeev Ranjan vs Republic of India CITATION: 2022 TAXSCAN (HC) 866

The Orissa High Court, on Tuesday acquitted a tax officer from bribery charges after a compliant was lodged for allegedly demanding a bribe of Rs. 8,000 for processing the refund claim of the income tax assessee. Justice S.K. Sahoo observed that “it is well settled that any case instituted without a proper sanction must fail because this being a manifest defect in the prosecution, the entire proceedings are rendered void ab initio. In the first place, there is no question of the presumption being available to the Sanctioning Authority under section 4 of the Prevention of Corruption Act, 1947 because at that stage the occasion for drawing a presumption never arises since there is no case in the Court. Secondly, the presumption does not arise automatically but only on proof of certain circumstances, that is to say, where it is proved by evidence in the Court that the money said to have been paid to the accused was actually recovered from his possession. It is only then that the Court may presume the amount received would be deemed to be an illegal gratification.”

Sri. Ramjanki Tapovan Mandir vs The Commissioner of Income Tax CITATION: 2022 TAXSCAN (HC) 860

The Jharkhand High Court has held that the registration once granted to trust under the Income Tax Act,1961 based on genuineness of activities and the same cannot be cancelled based on same provisions. The HC Bench consisting of Justice Aparesh Kumar Singh and Justice Deepak Roshan held “that once registration has been granted under section 12AA after satisfying the genuineness of the activities of the Trust, the same cannot be cancelled based on the same set of provisions of the Trust.”

PR. COMMISSIONER OF INCOME TAX vs EMMSONS INTERNATIONAL LTD CITATION: 2022 TAXSCAN (HC) 859

The Delhi High Court held that CBDT Instruction on loss of trading in foreign exchange derivatives is not applicable on forward contracts entered not as trading per se. The HC bench Justice Manmohan and Justice Manmeet Pritam Singh Arora have held that “forward contracts entered into by the assessee were not by way of trading per se in foreign exchange derivatives. Consequently, CBDT Circular No.3/2010 dated 23rd March 2010 has no application to the facts of the present case.”

Parveez Ahmad Baba Vs Union Territory of JK and others CITATION: 2022 TAXSCAN (HC) 862

The Jammu and Kashmir & Ladakh High Court recently held that a Goods and Services Tax (GST) registration issued to the assessee and then canceled upon request cannot be revoked merely based on the property disputes with the brother of the applicant. Observing that the proper course in law was to leave the concerned authority free to decide as to who, out of the two, fulfills the criteria for holding a license, the High Court held that “registration of the business unit, the same stands canceled” and restricted the operation/running of the Restaurant until the license has been granted in favor of the deserving party.

Parth Concast Ltd vs State of Chhattisgarh CITATION: 2022 TAXSCAN (HC) 861

The Chhattisgarh High Court has held that Section 35 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002(SARFAESI) Act prevails over the Rules of 2015 and the Demand for the transfer fee is not allowable. The HC bench of Shri Arup Kumar Goswami, Chief Justice and Shri Parth Prateem Sahu, Judge directed the CSIDC to execute the lease deeds in favour of the petitioner for the remaining terms of the original lease deeds based on the sale certificates issued. Further directed to the amounts paid by the petitioner in terms of the interim order dated 07.05.2018 shall be adjusted towards the payment of registration fees.

COMMISSIONER INCOME TAX vs M/S S.KUMAR TYRES MANUFACTURING CO. LTD CITATION: 2022 TAXSCAN (HC) 858

The Madhya Pradesh High Court has held that penalty u/s 271(c) of the Income Tax Act, 1961 is not imposable in the absence of deliberate concealment and inaccurate particulars. The HC Bench comprise of Justice Vivek Rusia & Justice Amar Nath (Kesharwani) found that there was no deliberate attempt to conceal the particular of the income or furnishing any inaccurate particulars thereof does not make the respondent guilty of any violation resulting in the imposition of penalty under Section 271 (1) (c) of the Income Tax Act.

Ishak vs The Chief Commissioner of Customs CITATION: 2022 TAXSCAN (HC) 857

The Madras High Court has recently disposed of the Writ Petition to release goods of Ishak on behalf of the Sri-Lankan Nationals whose goods were seized by the Chennai Air Customs Officers at Chennai International Airport in addition to a plea to quash the Press Release and release the seized goods, in relation to alleged gold smuggling.

STATE OF JHARKHAND vs SHIV SHANKAR SHARMA & ORS CITATION: 2022 TAXSCAN (SC) 196

In a major relief for Jharkhand Chief minister Hemant Soren, the Supreme Court has set aside the Jharkhand high court’s orders holding Public Interest Litigations (PILs) seeking a probe against Jharkhand Mukti Morcha (JMM) leader as maintainable and decided to proceed with the income tax investigation. A bench of Chief Justice of India (CJI) UU Lalit and Justices S Ravindra Bhat and Sudhanshu Dhulia dismissed the PIL in the case involving the alleged lease and investment in a shell company made by close aides of Jharkhand CM.

Commissioner of Income Tax vs M/s. MAC Public Charitable Trust CITATION: 2022 TAXSCAN (HC) 855

The Madras High Court has recently directed the Assessing Officer (AO) to cancel the income tax registration certificate of the trust, issued under Section 12A of the Income Tax Act, 1961 and reopen the previous assessments of the assessee, M/s. MAC Public Charitable Trust for collection of capitation fee. The Division Bench comprising Justice R Mahadevan and Justice Mohammed Shaffiq observed that, “the amounts collected by the assessees are capitation fee in quid pro quo for allotment of seat in deviation of the Tamil Nadu Educational Institutions (Prohibition of Collection of Capitation Fee) Act, 1992 and the same are neither a voluntary contribution nor to be treated as applied for charitable purposes”.

Yokohama India Private Limited vs the State of Telangana CITATION: 2022 TAXSCAN (HC) 854

A division bench of the Telangana High Court has dismissed a plea seeking rectification of the GSTR-1 relying on the Supreme Court decision in Bharti Airtel. Analyzing the provision, Chief Justice Ujjal Bhuyan and Justice C.V. Bhaskar Reddy observed that “the proviso says that no such rectification of any omission or incorrect particulars shall be allowed after the due date for furnishing of return for the month of September or second quarter following the end of the financial year to which such details pertain or the actual date of furnishing of relevant annual return, whichever is earlier. In other words, such rectification could be carried out after the due date for furnishing of return up to the following month of September.”

Subodh Kumar Garg vs Union of India CITATION: 2022 TAXSCAN (HC) 856

The Allahabad High Court had granted bail to the applicant Subodh Kumar Garg after being in jail since 16.3.2022 and having no criminal history, in consideration of the nature of the offence being compoundable. The appellant had allegedly availed Input Tax Credit from non-existent firms, in an attempt to evade GST liability amounting to almost Nine Crore Rupees. According to the observations of the Single Bench of Justice Siddharth, “the applicant has been found to be dealing with 18 non existent firms and their details have been furnished in the complaint. Their registrations have already been cancelled”.

Institute of Company Secretaries of India vs Biman Debnath & Ors CITATION: 2022 TAXSCAN (SC) 195

In a significant ruling, the Supreme Court, today quashed the order of Single and Division bench of Calcutta High Court quashing and setting aside the election of office bearers of EIRC of ICSI held on 27-12-2021 by explaining the difference between vacation of office and resultant absence from meeting and general absence from meeting. A bench of Justice M R Shah and Justice M.M. Sundresh observed that “Under the circumstances, in view of Regulation 114(4) of the Regulations, the High Court ought not to have entertained the writ petition challenging the validity of the election. Even otherwise, it is required to be noted that even as per Regulation 114(4), the election can be challenged by the candidate concerned. In the present case respondent no.1 who challenged the election of the office bearers did not even contest the election. Under the circumstances the High Court erred in entertaining the writ petition challenging the election at the instance of the respondent no.1 who even did not contest the election of the office bearers.” The bench concluded.

I A HOUSING SOLUTION PRIVATE LIMITED vs PRINCIPAL COMMISSIONER OF INCOME TAX CITATION: 2022 TAXSCAN (HC) 853

The Delhi High Court Condoned the delay in payment of the disputed amount under the Vivad Se Vishwas (VSV )Act due to the death of the Director and Covid. The HC observed that the delay in payments of the amounts is attributable to unforeseen and extraneous circumstances that were beyond the control of the Petitioners. It was observed that the country was in lockdown on account of the COVID-19 pandemic from 25th March 2020. Moreover, the death of the Managing Director of the companies was an extraordinary and exceptional event which would render the non-grant of relief on equitable consideration irrational.

M/s Akums Drugs &Pharmaceuticals Ltd vs Commissioner of Commercial Taxes CITATION: 2022 TAXSCAN (HC) 587

The Uttarakhand High Court set aside the assessment order being failed to get approval on total capital investment from the assessment committee while passing the assessment. The Court comprising Justice Sri Sanjaya Kumar Mishra and Justice Shri Ramesh Chandra Khulbe allowed Central Tax Revision and set aside the orders passed by the Commercial Tax Tribunal and the order passed by the Assessing Authority. Further remanded the matter back to the Assessing Officer.

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