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 December 5 to December 10, 2022.
Paritosh Kumar Singh Alias Diwakar Choudhary vs Senior Intelligence Officer–2022 TAXSCAN (HC) 1001
In a recent case of a GST scam worth rupees 258 crores, the single bench of the Chhattisgarh high court granted bail to the accused on a deposit f Rupees One lakh. The bail application was filed by the accused for seeking regular bail Under Section 439 of the Criminal Procedure Code, 1973 against the FIR Registered by the Directorate of GST Intelligence, GST, Raipur for the commission of offence punishable under Section 132 (1) (b) (c) of the Goods and Services Tax Act, 2017. After considering the contention of both sides, the bench of Justice Parth Prateem Sahu Grant bail to all the accused furnishing a personal bond in the sum of Rupees One lakh each with one local surety.
M/s Ultratech Cement Limited vs State of Chhattisgarh–2022 TAXSCAN (HC) 1000
The Chhattisgarh High Court has held that Value Added Tax (VAT) on the lease charges paid by the Railways Department to M/s Ultratech Cement Limited, i.e, the Petitioner Company. Justice P. Sam Koshy relied on various judicial decisions wherein it was held that the taxable event is the transfer of the right to use goods and not the right to use goods or the use of goods. Therefore, the right to use goods or the use of goods is not the relevant factor to justify the levy of tax. Quashing the assessment orders, the Court held that “For all the aforesaid facts and circumstances and also the Judgment of the Hon’ble Supreme Court in the case of “20th Century Finance Corpn. Ltd.” (supra) and the subsequent Judgments of various High Courts including the High Court of Chhattisgarh, this Court is of the opinion that the Orders of the assessment so made by the Assessing Authority and the rejection of the Revision by the Revisional Authority both being in contravention to the provisions of law and also contrary to the Judgments of the Hon’ble Supreme Court, the same thus would not be sustainable and therefore both the Orders deserve to be set-aside/quashed.”
Pr. Commissioner of Income Tax vs Kangra Central Co-op Bank Ltd–2022 TAXSCAN (HC) 999
A Division Bench of the Himachal Pradesh High Court recently held that, the assessee-Kangra Central Co-operative Bank Limited is liable to tax only on receipt of interest of Sticky Loans/Non-Performing Assets (NPAs). The assessee was asked to explain why the interest on loans had not been added to its income. The submission of the assessee was that the amount of interest had not been shown as income because the same had become NPA and the bank was not certain about the recovery of the principal amount/interest. The Court observed that, “A perusal of the objects of amending the existing provisions of Section 43D of the Act vide Finance Bill 2017, reveals that the benefit of the existing provision was available to the scheduled bank or a public financial institution”
Satendra Kumar Jalan vs State of Jharkhand–2022 TAXSCAN (HC) 998
A Single Bench of Justice Sanjay Kumar Dwivedi at Jharkhand High Court has recently set aside the entire criminal proceedings against Karta of a Hindu Undivided Family (HUF). It had been alleged that during the course of the search and seizure operation, it was found that the petitioner had claimed huge Bogus Long Term Capital Gain during the Financial Year 2013-14 relevant to Assessment Year 2014- 15, and during the course of Post Search Investigation, the petitioner was even examined on oath under section 131(1A) of the Income Tax Act, 1961 but he denied that his claim for Long Term Capital Gain is bogus, the Court observed that, “it has been clearly held that once the penalties are cancelled on the ground that there is no concealment, the quashing of prosecution under section 276C is automatic” and set aside the prosecution proceedings against the petitioners – Satendra Kumar Jalan and Murari Lal Jalan.
State vs Chukkapally Prasad –2022 TAXSCAN (HC) 993
The Telangana High Court has confirmed the acquittal of the Excise Officer as the demand for a bribe was not proved beyond a reasonable doubt. In the instant case, an appeal was filed under section 378 (3) & (1) of the Code of Criminal Procedure (Cr. P.C) 1973 against the order passed by the First Additional Special Judge for SPE and ACB Cases on the acquittal of an Excise officer for committing corruption of demanding bribe. Justice Juvvadi Sridevi held that the form was incorrect because the door number mentioned in the form did not exist in the village mentioned thereby misrepresenting the authority. The court also observed that the witnesses were making the trap cleverly therefore a reasonable doubt on the demand of doubt existed. Later on, the second prosecution witness turned hostile. The court confirmed the acquittal of the accused officer and dismissed the appeal as the demand for a bribe had not been proved by the prosecution.
THE COMMISSIONER OF INCOME TAX vs WESTIN HOTEL MANAGEMENT LP–2022 TAXSCAN (HC) 990
The Delhi High Court has held that High Court can’t decide on the taxability of payments received from Indian Customers on Centralized Services which was already pending appeal before the supreme court. The appellant revenue challenged the common order dated 29th April 2022 passed by the Income Tax Appellate Tribunal (‘ITAT’) against Westin Hotel Management and Sheraton Overseas Management, the respondents. The Court comprising Justice Manmohan and Justice Manmeet Pritam Singh Arora observed that the Revenue has not brought anything on record to distinguish the facts of the present case from the facts involved in Sheraton International Inc. It was observed that the already decided matter which was challenged before the supreme court and was pending can’t be decided by the same court.
The Oriental Insurance Co.Ltd vs Ramdulal Pradhan–2022 TAXSCAN (HC) 996
The Calcutta High Court Bench of Justice Bibhas Ranjan De has recently held that, Income Tax Returns are admissible for the determination of income of Motor Accident Claim cases. The claimant disclosed his age as 27 years and income of Rs. 5,000/- per month from his business under the name and style of M/s Ritwik Enterprise. The claimant had filed a claim petition with a prayer for compensation to the tune of Rs. 4.65 Lakhs. The Single Bench of Calcutta High Court, pursuant to the observation of the Hon’ble Apex Court in several cases, did not find any hurdle to accept the gross income of Rs. 55,958/- mentioned in the income tax return which has been admitted in evidence in this case. The Appellant/Insurance Company was directed to pay the balance amount along with interest @ 6% per annum from the date of filing of the claim petition.
SPECTRUM POWER GENERATION LIMITED vs GAIL (INDIA) LIMITED–2022 TAXSCAN (HC) 994
The Delhi High Court has recently allowed the arbitration appeal of Spectrum Power Generation Limited against Gas Authority of India Limited (GAIL) to decide whether GAIL is entitled to the Input Tax Credit claim, which shall disentitle the petitioner from availing refund. GAIL raised invoices billing it under the heads of (i)gas price, (ii)marketing margin, (iii)transmission charges, (iv)Goods and Service Tax costs @ 18%, and (v)Value Added Tax on the sum total of gas price. The aforesaid invoices were acknowledged and payments were made by the petitioner accordingly. The Bench of Justice Yashwant Varma observed that “the petitioner here does not assail, question or dispute a tax that may have been imposed upon it by the State in the exercise of its sovereign or statutory powers.”
MAURIA UDYOG LTD vs UNION OF INDIA & ORS–2022 TAXSCAN (HC) 995
Amidst many complaints regarding the issues with the Income Tax and GST Portals, the Delhi High Court Division Bench of Justice Vibhu Bakhru and Justice Purushaindra Kumar Kaurav warned the department of imposing exemplary costs and interest for non-disbursal of Goods and Services (GST) Transactional Credit. The petitioner had filed the earlier writ petition among other reliefs, seeking a direction that it be allowed credit for the specified amount along with interest, which the petitioner claimed it was entitled to. The petitioner’s grievance was that its revised returns had not been processed by the respondents. The Court also expressed the view that if there were any technical problems in implementing the said order, the respondents ought to have approached this Court rather than disregarding the implementation of the order dated 31.10.2018. “This Court was also inclined to impose exemplary costs for the aforesaid reasons”, said the Delhi High Court.
SHREE GOVIND ALLOYS PVT. LTD. vs STATE OF GUJARAT–2022 TAXSCAN (HC) 997
The Gujarat High Court has recently set aside the detention order of trucks of Shree Ram Road Carriers, as the demand and detention was based merely on assumption of tax evasion from expiry of E-Way Bill. The authority of the respondent demanding the sum of Rs. 7.53 Lakh as demand of tax and penalty was challenged by the petitioner through Advocate Hemal Shah.The Division Bench of Justice Sonia Gokani and Justice Manuna M Bhatt observed that the conduct of petitioner appeared to be bonafide and without establishing any fraudulent intention. Resultantly, the petition for release of goods and the truck was allowed, while the impugned order of demand was set aside.
TAHIR HUSSAIN vs ASSISTANT DIRECTOR ENFORCEMENT DIRECTORATE–2022 TAXSCAN (HC) 992
The Delhi High Court dismissed former Aam Adami Party (AAP) leader Tahir Hussain’s plea in challenging the framing of money laundering charges under Prevention of Money Laundering Act, 2002(PMLA) against him by a trial court in Delhi.Justice Anu Malhotra viewed that the alleged commission of a conspiracy “even for the purpose of GST violation in order to avail money” through criminal conspiracy for using proceeds of crime to commit 2020 riots and to cause unrest, prima facie falls within the ambit of commission of a scheduled offence under PMLA.
Rajesh Kumar Agarwal & Sons vs Union of India & Ors. –2022 TAXSCAN (HC) 987
In its recent order, the Calcutta High Court (HC) has held that the order passed without considering the objection filed by the petitioner against notice u/s 148A(b) of the Income Tax Act,1961 is not valid.Justice Nizamuddin set aside the impugned order dated 29th July 2022 and all subsequent notices only on the ground of violation of the principle of natural justice. The matter was remanded back to the Assessing Officer concerned to pass a fresh speaking order by the law after giving an opportunity of hearing to the petitioner or his authorised representative within eight weeks from the date of communication of this order.
Saurabh Sharad Srivastava vs Central Goods & Services Tax–2022 TAXSCAN (HC) 989
In a recent judgement, the High Court(HC) of Punjab and Haryana grants bail to a petitioner who was behind the bar for 9 months under the charge of an offence under Central Goods and Service Tax (CGST), 2017.Justice Gurvinder Singh Gill noticed that the petitioner has been behind bars for a substantial period of about 9 months and that conclusion of the trial is likely to consume time since alarge number of prosecution witnesses have been cited. The Court viewed that further detention of the petitioner will not serve any useful purpose. The Court ordered to release of the petitioner on regular bail on his furnishing bail bonds/surety bonds to the satisfaction of the trial Court/Chief Judicial Magistrate/Duty Magistrate concerned.
Cure SMA Foundation of India Vs Union Of India– 2022 TAXSCAN (SC) 210
The Supreme Court two-judge bench of Justice M R Shah and Justice C T Ravikumar held that, a Writ of Mandamus cannot be issued directing the Government to exempt the medicine to cure Spinal Muscular Atrophy (SMA) from Goods and Services Tax (GST) as it is a policy matter of the Government.The Supreme Court Bench observed that, “ultimately it is for the Government to take a policy decision whether to completely exempt drugs for treatment of rare diseases from the levy of IGST, CGST, SGT and Custom Duty” and held that “No writ of mandamus can be issued directing the respondent/Union of India to exempt the drugs from payment of any tax or custom duty.” In the second issue as to the direction to permit import of drugs directly, the Court observed that “There may be number of reasons why the drugs are to be cleared by the Centre of Excellence.” and said, “No writ of mandamus can be issued directing the respondents to permit import the drugs for treatment of SMA directly without approaching the Centre of Excellence.”
SMT. SHEELA DEVI vs OFFICE OF COMMISSIONER EXCISE GOVT–2022 TAXSCAN (HC) 988
A Division Bench of the Delhi High Court has recently allowed the Letters Patent Appeal (LPA) challenging the decision of the Single Bench dismissing the Writ Petition of the appellant. The appellant’s car i.e. Kia Seltos (‘said vehicle’) was apprehended by the police when it was being driven by the appellant’s husband and he was found with 192 Nips of impacted grain Whisky 240 nips of Episode Whisky and 1000 Nips of Asli Santra Masaledar Desi Sharab (Annexure P-2), which was being carried for sale in Haryana without any valid transport permit from the Excise Department.It was also observed that, according to the facts, the Appellants had exhausted their appellate remedy under Delhi Excise Act, having appealed to the Financial Commissioner as a last resort as well. Hence, there was no alternate efficacious remedy available to the Appellant
R K OVERSEAS THROUGH ITS PROPRIETOR MR. RAKESH vs SENIOR INTELLIGENCE OFFICER–2022 TAXSCAN (HC) 985
The Delhi Bench High Court has held that duty drawback to the exporter is not allowable in the absence of sale proceedings.It was observed that duty drawback has been paid to the exporter but admittedly, up until now, sale proceeds have not been received against such exports, and therefore the deeming provision incorporated in the second (2nd) proviso to Section 75 of the Act will kick in, where the duty drawback is deemed never to have been allowed. While disposing of the petition, Justice Rajiv Shakdher and Justice Tara Vitasta Ganju allowed the petitioner to operate the impugned bank account, asthere was no legal impediment, given the fact that the provisional attachment orders which were issued to make course correction have outlived their legal efficacy.
Ratnambar Kaushik vs Union of India–2022 TAXSCAN (SC) 209
The Supreme Court of India has recently granted bail to Ratnambar Kaushik, proprietor of Galaxy Tobacco for alleged clandestine transportation of chewing tobacco. The Special Leave Petition was heard by the two-judge bench of Justice A S Bopanna and Justice Hima Kohli. An allegation was made with regard to the transportation of unmanufactured tobacco and it was alleged that such procurement of unmanufactured tobacco is for clandestine manufacture and supply of zarda without payment of leviable duties and taxes.
Maxxcab Wires & Cables Pvt. Ltd. & Anr vs State Tax Officer–2022 TAXSCAN (HC) 986
In its recent order, the Calcutta High Court (HC) held that the Non-speaking order under GST was not valid and set aside the order under section 129 of the West Bengal Goods and Service Tax (WBGST) Act. The impugned order dated 4th November 2022 was set aside by Justice Nizamuddin and the matter was remanded back to the adjudicating authority concerned to pass a fresh speaking order after giving an opportunity of hearing as well as allowing the petitioner to make fresh appropriate representation against the aforesaid show-cause notice dated 27th October 2022.
M.Mylsamy vs Principal Secretary to Government–2022 TAXSCAN (HC) 984
The Madras High Court, while considering a petition by the Commercial Tax Officer challenging the disciplinary action for accepting Diwali mamool, held that the punishment of dismissal from service imposed is disproportionate to the nature of charge. Justice Abdul Quddhose was considering a petition challenging the punishment of dismissal from service imposed under the G.O. The charge against the petitioner was that he along with his colleagues had collected Diwali Mamool from the traders and the petitioner’s share was Rs.6,000/- from the said collection. It was observed that he has failed to maintain absolute integrity and devotion to duty.
Falcon Retreat Private Limited vs The Additional Commissioner of Income Tax–2022 TAXSCAN (HC) 983
The Bombay High Court has held that writ jurisdiction can’t be exercised when an alternate remedy of appeal is available u/s 246 of the Income Tax Act, 1961. Falcon Retreat Private Limited, the petitioner challenged the four assessment orders dated 23 March 2022, passed by Respondent no.1 being assessment orders under Section 147 read with Sections 144 and 144-B of the Income Tax Act, 1961.The Court observed that an alternative remedy of appeal is available to the petitioner which needs to be filed before the Commissioner of Income Tax (Appeals) as per the provisions of Section 246 of the Income Tax Act. The Coram comprising Justice G. S. Kulkarni & Justice Bharat P Deshpande held that the petitioner needs to avail of the alternate remedy as available to the petitioner in law i.e. by filing an appeal before the Commissioner of Income Tax (Appeals).
Commissioner of Central Excise & Service Tax vs Merino Panel Product Ltd–2022 TAXSCAN (SC) 208
The Supreme Court, on Monday upheld the validity of the circular issued by the Central Board of Excise and Customs (CBEC), now CBIC, and held that the circular dated 1.7.2002 regarding valuation of when goods which are sold partly to related persons and partly to independent buyers, is not violative of the Central Excise Act and the Central Excise Valuation Rules.“When the normal price that is ordinarily charged in dealings where the price itself is the sole consideration of the transaction is available, as it is here, that price can be transposed onto the related party purchases as well, to arrive at the assessable value. Hence, the order of the Commissioner regarding the value of the goods sold to the Respondent’s sister concerns is in consonance with this Court’s earlier judgments and the Circular dated 01.07.2002,” the Court concluded.
KPM ENTERPRISES vs COMMISSIONER–2022 TAXSCAN (HC) 979
In a recent ruling, a division bench of the Delhi High Court has quashed an order cancelling GST registration observing that the GST department has not allowed an opportunity to present during the inspection and not uploaded photographs during the inspection.Allowing the writ petition, Justice Vibhu Bakhru and Justice Purushaindra Kumar Kaurav observed that “this Court is unable to accept that the impugned show-cause notice can be sustained, considering that it is clear that it is premised on an alleged inspection that was carried contrary to the 2017 Rules. This court had also enquired whether any photographs were taken at the time of the inspection as required; Mr Satyakam has, after obtaining instructions, responded in the negative. In view of the above, the petition is allowed and the impugned show-cause notice as well as the impugned order is set aside.”
M/S FIRMENICH AROMATICS PRODUCTION (INDIA) PRIVATE LIMITED vs UNION OF INDIA–2022 TAXSCAN (HC) 978
The Gujarat High Court has recently issued notice to the Central Government seeking the steps taken towards the formulation of Goods and Services Tax (GST) Tribunal in a Civil Application filed by Firmenich Aromatics Production (INDIA) Private Limited. The petitioner, a private limited company, registered under the provisions of the Companies Act, 1956, approached the Gujarat High Court, aggrieved by the action of the respondent authority in rejecting the refund claim of the petitioner and upholding the refund rejection on the ground that the Letter of Undertaking or Bond required under Section 16 of the Integrated Goods & Services Tax (IGST) Act, 2017 read with Rule 96A of Central Goods & Services Tax (CGST) Rules, 2017, had not been furnished
Commissioner of Central Excise, Customs & Service Tax vs M/s. Tata Iron & Steel Company Ltd–2022 TAXSCAN (HC) 981
The Orissa High Court Division Bench of Chief Justice S Muralidhar and Justice M S Raman has held in favour of Tata Iron & Steel that there is no scope for review by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) on a matter already decided by it. The Tata Iron & Steel Company Limited, Paradeep (Respondent in the present appeal) imported Low Silica Limestone (LSL) in bulk and being covered by Value-based Duty Exemption Entitlement Certificate and availed the benefit of exemption from payment of duty of customs as the said product was certified to contain Calcium Oxide (CaO) content of more than 53%.
M/s CICO PATEL JV vs Union of India–2022TAXSCAN (HC) 980
The Patna High Court has recently quashed the demand notice and order passed ex-parte against the CICO Patel Joint Venture along with directions to pass fresh order on the merits of the matter. The Joint Commissioner of State Tax, Patna passed an ex parte order without providing an opportunity of hearing to the petitioner and raised a demand on the basis of excess TDS Credit in GSTR 2A of the petitioner’s employer against the payment made to the petitioner in the period October 2019 to March 2019, Whereas the petitioner declared a lesser amount in their Turnover in the said period in their GSTR3B Returns and an amount of Rs. 92 Lakh was imposed as tax interest and penalty on the petitioner under Section 73(9) of Bihar Goods and Services Tax Act.
M/s Inox Air Products Pvt. Ltd. vs State of H.P. and ors–2022 TAXSCAN (HC) 976
The Himachal Pradesh High Court has recently held that stamp duty or registration fee cannot be levied upon conversion from a Public Limited Company to a Private Limited Company for changing the name in the revenue records. Being aggrieved and dissatisfied with a communication whereby request made by petitioner seeking change in the name of the Company from “INOX AIR PRODUCTS LTD” to “INOX AIR PRODUCTS PRIVATE LIMITED” came to be rejected, petitioner-Company approached the Court in a writ petition.
EMERSON PROCESS MANAGEMENT POWER & WATER SOLUTIONS INDIA PVT. LTD vs UNION OF INDIA & ORS–2022 TAXSCAN (HC) 977
The Delhi High Court has directed the assessee to file transitional credit as their claim of cash refund of Cenvat Credit was rejected by the CESTAT and the GST department on ground that the same was barred by limitation. A division bench comprising Justice Vibhu Bakhru and Justice Purushaindra Kumar Kaurav was considering a petition by Emerson Process Management Power & Water Solutions India Pvt. Ltd. the petitioner’s request was rejected for the reason that it had not filed the GST TRAN-1 within the stipulated period. The communication also mentioned that the petitioner’s request for cash refund of the input tax credit was rejected by Customs Excise and Service Tax Appellate Tribunal (CESTAT).
Pr. Commissioner of Income Tax-5 vs Trigent Software Limited–2022 TAXSCAN (HC) 975
A division bench of the Bombay High Court has held that the expenses incurred in respect of the development of an abandoned software would be eligible for income tax deduction as the same constitute “revenue expenditure” for the purpose of the Income Tax Act, 1961.Relying on the Apex Court rulings, Justice Dhiraj Singh Thakur and Justice Abhay Ahuja observed that “if the advantage consisted merely in facilitating the assessee’s trading operations or enabling the management and conduct of the assesse’s business to be carried on more effciently or more proftably, while leaving the fxed capital untouched, the expenditure would be on revenue account, even though the advantage may endure for an indefnite future.”
VIDISHA SINGHAL vs INCOME TAX OFFICER WARD 29(1) DELHI & ORS–2022 TAXSCAN (HC) 973
The Delhi Bench High Court has set aside the Order passed u/s 148A(d) of the Income Tax Act, 1961 when Assessing Officer (AO) voluntarily accepts the mistakes in Show Cause Notice (SCN) issued. Vidisha Singhal challenged the notice issued under Section 148A(b) of the Income Tax Act, 1961 dated 29th May, 2022, order passed under Section 148A(d) dated 22nd July, 2022 and impugned notice issued under Section 148 dated 23rd July, 2022. The Court comprising Justice Manmohan and Justice Manmeet Pritam Singh Arora set aside the impugned order passed under Section 148A(d) and the impugned notice issued under Section 148 of the Act. The Assessing Officer is directed to issue an amended notice under Section 148A(b) of the Act along with the incriminating material in its possession to the assessee within two weeks. While allowing the Writ petition , the Court given the liberty to the assessee to file a reply to the amended notice within four weeks and the Assessing Officer (AO)was directed to decide the matter afresh within a further period of four weeks in accordance with law.
PR. COMMISSIONER OF INCOME TAX -4 vs MOET HENNESSY (I) PVT. LTD–2022 TAXSCAN (HC) 974
The Delhi High Court has held that Advertising, Marketing and Promotion expenditures incurred are revenue expenditures.The Court comprising Justice Manmohan and Justice Manmeet Pritam Singh Arora observed that ITAT held that the said expenses are revenue in nature having been incurred for commercial expediency and deleted the disallowance of AMP expenses of Rs. 6,64,24,161/-, made in light of Explanation 1 to Section 37(1) of the Act. It was observed that the Revenue itself has treated the AMP expenditure incurred by the Assessee in the previous assessment years as a revenue expenditure. The ITAT while adjudicating the appeals of the Assessee for AY 2009-10 and 2010-11 has held that the AMP expenditure incurred by the Assessee was like bonafide business expenditure in furtherance of its legitimate business interests. The appeal was dismissed.
State of Jharkhand and others vs Linde India Limited and Another–2022 TAXSCAN (SC) 207
In a ruling against the manufacturers of Tata Steel, the Supreme Court has held that oxygen cannot be treated as a “raw material” for the manufacturing of the product steel, and therefore, not eligible for a concessional tax rate of 2% sales tax under Section 13(1)(b) of the Bihar Finance Act, 1981.A two judge bench of the Apex Court comprising Justice M R Shah and Justice M.M. Sundresh referred the decision in the case of Thomas Stephen & Co. Ltd. to the facts of the case and observed that“the findings by the committee consisting of six expert members recorded in the detailed inspection report and when it has been found that the oxygen gas is used as a ‘refining agent’ and its main function is to reduce the carbon content as per the requirement, the oxygen gas cannot be said to be a “raw material” used in the manufacture of the end product – steel.“ Concluding the order, the Apex Court held that “Under the circumstances, the respondents are not entitled to the concessional rate of tax @ 2% treating the same as “raw material” in the manufacture of the end product and are liable to pay tax @ 3% on the sale thereof. The High Court has seriously erred in holding contrary and by interfering with the concurrent findings recorded by all the three authorities below. The impugned judgment and order passed by the High Court is unsustainable.”
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