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 12 to December 17, 2022.
A Single Bench of the Delhi High Court has recently quashed the rejection of the Petitioner, Bajrang’s application to avail of the Central Sector Scholarship Scheme of Top Class Education for SC Students.The Single Bench observed that, “the scholarship is awarded to meritorious students. The background of the Scheme and the eligibility requires that the total annual family income has to be up to Rs.8 lakhs” upon perusal of the scheme. “Considering these facts and submissions, in the opinion of this Court, a mere discrepancy in filing the Income Tax Return instead of the Income Certificate, despite the two documents evidencing the same parameters of income requirements, cannot lead to a situation where an eligible meritorious candidate is deprived of the scholarship.”, the Single Bench of Justice Prathiba M Singh opined.
The Bombay High Court has recently reversed a claim for deduction under Section 80-IB(10) of the Income Tax Act, 1961 as genuine hardships were faced by the tax consultant and returns had to be filed after lapse of the prescribed time. The Division Bench observed that the denial order is liable to be set aside as there was sufficient cause for condonation of delay under Section 119(2)(b) of the Income Tax Act. Observing that, “We do not find that the omission to file petitioner’s return by the income tax consultant to be an act of negligence”, the Division Bench of Justice Abhay Ahuja and Justice Dhiraj Singh Thakur opined that, “The authorities should refrain from over analysis which leads to paralysis of justice.”
The Delhi High Court Division Bench of Justices Vibhu Bakhru and Purushaindra Kumar Kaurav directed the department (respondents) to unblock the Input Tax Credit (ITC) of petitioner available in his Electronic Credit Ledger (ECL). Additionally, solely because the supplier has not been paid, it is not possible to restrict the ITC. According to the bench, the conjoint reading of Rule 37 of the Central Goods and Services Tax Rules and the proviso to Section 16(2) of the Central Goods and Services Tax Act leaves no room for doubt that a taxpayer is entitled to avail of ITC in the first instance even though he has not paid the supplier for the goods/services.
The Calcutta High Court, chaired by Justice Md. Nizamuddin, declared that the Impugned notice issued under S. 148 A(b) of the Income Tax Act 1961 is Invalid. however, the Income Tax Authorities were free to pursue further legal action. The matter involves the assessee’s re-assessment for the A.Y. 2016–17, for which a notice under Section 148A(b) of the Income Tax Act was issued. In this situation, the authorities under Section 151(ii) of the Income Tax Act are the proper authorities for granting approval. The bench emphasised that because the approval of the impugned notice was not issued by the proper authorities, it cannot be sustained by the law. The court further ruled that the contested notice issued pursuant to Section 148A(b) of the Income Tax Act and that all related procedures lack legal backing and should be quashed.
The Calcutta High Court altered the decision of the single bench and held that the petitioners are entitled to pay service tax at compounded rates. The Division Bench of Justice T S Sivagnanam and Justice Hiranmay Bhattacharya relied on the settled position of law that an increase in service tax rates shall not affect the pending contracts between parties.The Bench observed that, the department having accepted such a portion of the judgment, cannot argue contrary to what has been held against them as the substantial part of the order passed by the learned Single Bench was ruled in favour of the appellant. The Calcutta High Court therefore allowed the compounded rate of tax at 2% for the relevant period to be imposed instead of the increased rate.
The Patna High Court has recently set aside the ex-parte Goods and Services Tax (GST) demand order against M/s Cement House for the violation of natural justice principles in passing the order. The Division Bench of Chief Justice Sanjay Karol and Justice ParthaSarthy observed that, “All issues of fact and law ought to have been dealt with, even if the proceedings were ex parte in nature.” The petitioner seeked the Writ remedy for issuing directions to the respondent-department to hear the case and quash the demand order served on the petitioner without a fair chance of hearing.
The Supreme Court has held the education cess paid to be not allowable as expenditure under Section 40(a)(ii) of the Income Tax Act, 1961 amended retrospectively vide Finance Act, 2022. The two-judge Bench of Justice Sanjiv Khanna and Justice M MSundresh observed that “in view of the amendment vide the Finance Act, 2022 with retrospective effect from 01.04.2005 to Section 40(a) (ii) of the Income Tax Act, 1961, the present appeal has to be allowed.” And allowed the appeal of the Revenue in M/s Chambal Fertilizers & Chemicals Ltd v. JCIT-2, Kota.
The Delhi High Court, in an important ruling, has held today that the Institute of Chartered Accountants of India can exercise Suo Motu powers and initiate disciplinary proceedings against its member Chartered Accountants without a written complaint. The Single Bench of Justice Yashwant Varma perused Section 21 of the Chartered Accountants Act, 1949 and observed that “Section 21 does empower the Institute to proceed suo moto and unhindered by the absence of a written complaint or allegation that may be submitted.” It was further observed that, “A written complaint or allegation in writing cannot, in any manner, be understood to be a pre-requisite or a sine qua non for the initiation of action under Section 21” of the Chartered Accountants Act.
The Patna High Court has recently set aside the ex-parte rejection of the Goods and Services Tax (GST) Input Tax Credit (ITC) claim of National Co-operative Consumer Federation of India Limited owing to the violation of natural justice principles. The Division Bench of Chief Justice Sanjay Karol and Justice ParthaSarthy observed that, “All issues of fact and law ought to have been dealt with, even if the proceedings were ex parte in nature.” The petitioner seeked the Writ remedy for issuing directions to the respondent-department to hear the case and for allowing Input Tax Credit (ITC) even on non-reflection of transaction in GSTR-2A.
Kerala High Court, chaired by Justice Gopinath P. awarded an interim relief to the petitioner in the absence of the Good and Services Tax Appellate Tribunal (GSTAT). It was ordered that it is always subjected to any remedy that the petitioner may receive from the GSTAT once it is established. The respondent department detained the petitioner Sheetal Jain’s goods, and she filed a writ petition with the HC upon receiving an order received from the respondents under Section 130 of the Central Goods and Services Tax (CGST)/State Goods and Services Tax (SGST) Acts, which deals with the confiscation of goods and conveyances.
The Delhi High Court has held that GST authorities can retain the seized goods for a maximum period of four and a half years. The Petitioner, Dhruv Krishan Maggufiled the petition to get back his laptop, computer, documents and other things seized by the Respondents / Directorate General of GST Intelligence (DGGI) in a search conducted on 28th August 2019.Justice PrathibaM Singh observed that the period had not lapsed. The Court didn’t find it appropriate to directly release the computer, laptop, documents and other things seized vide punchnama dated 28th August 2019. The Writ petition was dismissed
In a recent ruling of the Delhi High Court, the division bench of Justices Manmohan and Manmeet Pritam Singh Arora, in a Writ Petition, quashed the proceedings of the department, the order passed and notice issued under Sections 148A(d) and 148A(b) of Income Tax Act, 1961 respectively on the distinct and separate grounds. The writ petition was filed in challenging the two notices issued under Section 148 of Income Tax Act on different dates, another notice issued under Section 148A(b) of the act and an order passed under Section 148A(d) of the Income Tax Act for the A.Y. 2017-18.
The Delhi High Court has stayed the imposition of penalty by Competition Commission of India on MakeMyTrip subject to deposit of 10% of the total amount of over 223 Crore Rupees. The National Company Law Appellate Tribunal (NCLAT) had admitted the appeal of MakeMyTrip in challenge of the penalty imposed, however, directed a deposit of 10% of the penalty amount, which was imposed by the CCI as a condition for admission of the appeal.In view of the submission of the petitioner, the Single Bench of Justice Prathiba M Singh stayed the recovery of the remaining 90% of the penalty amount subject to deposit of the 10% as above said. In a parallel proceeding against the imposed penalty, on 22 November 2022, the NCLAT had issued notice to Make My Trip and GoIbibo in Appeal against Penalty imposed by CCI on OYO.
The Division Bench of the Rajasthan High Court comprising Cheif Justice Pankaj Mithal and Justice Dinesh Mehta has mandated recently that the State is statutorily obliged to issue C forms or declaration forms in spite of the implementation of the Goods and Services Tax (GST) Regime. The petitioners challenged the impugned action of the respondents-state in not issuing C Form after coming into force of the Goods and Service Tax Act, 2017. It was prayed that the respondent may be directed to issue C form on their official website or on manual basis to the petitioners’ companies– Green Marble House Pvt Ltd and Jyoti Minerals Pvt Ltd as was done earlier.
The Kerala High Court has recently dismissed a writ petition filed by M/s Viswabharathi Medicals on ground of violation of natural justice principles, on observing the contrary. The petitioner had approached the Kerala High Court being aggrieved by the fact that reassessment proceedings have been initiated against the petitioner under the provisions of the Income Tax Act, 1961 in respect of assessment year 2016-17 illegally and without jurisdiction.The Single Bench of Justice Gopinath P observed that, the impugned order has “considered the submission made by the petitioner and has found that the contentions taken have to be examined in the reassessment proceedings which, will follow.” Further observing that no natural justice violation arises for issuance of a writ from the contended facts, the writ petition was dismissed.
The Division Bench of the Patna High Court comprising Chief Justice Sanjay Karol and Justice ParthaSarthy has recently set aside a GST demand order and the Show Cause Notice issued in violation of Section 74(A) of the Central Goods and Services Tax (CGST) Act, 2017. M/s. MotiprabhaInfratedPvt. Ltd. approached the High Court of Patna under the present writ petition for quashing and setting aside the assessment order passed against the petitioners as the same and the consequent demand order was passed in violation of time period prescribed in Section 74(A) of the CGST Act.
The Calcutta High Court (HC) has held that the Initiation of re-assessment proceeding beyond six years is barred by limitation and is not valid.Justice Md. Nizamuddin observed that the issuance of notice and initiation of re-assessment proceeding are beyond six years and is barred by limitation both under the old Act as well as under newly amended provision relating to Section 147 of the Income Tax Act. The Court viewed that this matter deserves adjudication by calling for affidavits from the respondents and the petitioner has been able to make out a prima facie case for an interim order by raising the issue of jurisdiction of the assessing officer concerned in initiating the impugned re-assessment proceeding.
The Delhi High Court granted bail to former Mumbai police chief Sanjay Pandey in the Prevention of Money Laundering Act (PMLA),2002 case registered by the Enforcement Directorate (ED) about the illegal tapping of phones of employees at the National Stock Exchange (NSE) as there was no evidence. The Court stated that “it was not determining the guilt of the accused but only assessing the matter on broad probabilities at the stage of bail”. The money laundering case being probed by the ED arose from a CBI FIR against the Commissioner and his company ISEC Services Private Limited for the alleged commission of offences under the Indian Penal Code, Indian Telegraph Act and Prevention of Corruption Act.
A Division Bench of the Gujarat High Court has recently allowed a writ petition for Goods and Services Tax (GST) refund to be issued, observing that “the Assessee of those consultants and others could communicate with the GSTN on portal if a feature like “MAY I HELP YOU” is created by the authority on due deliberation or through the “Grievance Redressal Mechanism”.The Bench of Justice Sonia Gokani and Justice Mauna M Bhatt observed that “when Section 54(6) of the CGST read with Section 91(2) of the CGST Rules, the amount is required to be refunded and it is the respondent’s obligation to make an order sanctioning 90% of the amount claimed in Form RFD-04 within a period of seven days from the date of acknowledgment received.” It was further clarified that, “there is nothing for the Court to adjudicate except pointing out to the limitation of the software of the respondent department” and the suggestions to implement a grievance redressal mechanism were made.
A Division Bench of the Gujarat High Court recently granted a major relief to Adani Wilmar Limited, a manufacturer under Adani Group owing to the Customs Duty revision notification published in e-Gazette after the payment of the duty to the revenue. The High Court Bench comprising Justice Sonia Gokani and Justice Nisha M Thakore observed that, “It is thus quite clear that when Section 25 of the Act empowers the Central Government to exempt either totally or subject to certain conditions from the whole or any part of the customs duty leviable thereon by a Notification in the Official Gazette, it has also the powers to modify and cancel.” It was also observed that the power of reassessment under Section 17(4) of the Customs Act could not have been exercised as it was not a case of incorrect self assessment of duty.
The Gujarat High Court has recently set aside the unjust exercise of power by the Principal Commissioner of Income Tax under Section 281(B) of the Income Tax Act, 1961 in the income tax proceedings against F C Manufacturing (India) Pvt Ltd. The High Court also pointed out that the attachment of bank guarantee would suffice in the present matter.The Division bench of Justice Sonia Gokani and Justice Mauna M Bhatt observed that, “we can surely say that the assessing officer, for the purpose of protecting interest of the Revenue, in the instant case, with the prior approval of the higher authority has passed an order in writing recording the reasons and provisionally attaching the property belonging to the assessee.” However, it was clarified by the Court that, “continuation of provisional attachment is not necessary and even otherwise, the interest of the Revenue can be safeguarded by directing a particular amount to be furnished by way of a bank guarantee to the authority concerned, that would sub-serve the purpose.”
The Supreme Court comprising the Two-judge Bench of Justices M.R. Shah and C. T. Ravi Kumar, decided in an appeal moved by M/S S. M. Overseas Pvt. Ltd. that the Revenue department was not entitled to commence the Reassessment process while the Rectification Application was still pending.After hearing arguments from both parties, the Apex Court stated that during the pendency of the proceedings under Section 154 of the Income Tax Act, it was not permissible on the part of the Revenue to initiate the proceedings under Section 147 and 148 of the Income Tax Act. The High Court has erred in presuming and observing that the proceedings under Section 154 of the Income Tax Act, were invalid because the same were beyond the period of limitation.
A Division Bench of the Bombay High Court has recently set aside an order rejecting the Goods and Services Tax (GST) Input Tax Credit (ITC) refund claim of the petitioner-Adisan Laboratories Private Limited for alleged lack of compliance of natural justice of the Department.The Division Bench of Justice Nitin Ramdar and Justice Gauri Godse refrained from deciding the matter on merits and restored it to the respondents for an adjudication after reasonable chances are given to the petitioner to be heard. The impugned order was also set aside. The court also directed that, “Considering the fact that the delay has occurred due to above circumstances, further procedure be completed by the Respondents within a period of 8 weeks from the date the order is uploaded.”
A Single Bench of the Madras High Court has recently set aside the order canceling the GST Registration of the petitioner-Raj Kishore Engineering Construction Pvt Ltd in the absence of a Goods and Services Tax Appellate Tribunal. The matter was subsequently reversed to the First Appellate Authority.The Single Bench of Justice M Sundar observed that, “The Appellate Authority should have given some dispositive reasoning on this aspect of the matter. The Appellate Authority should have gone into the reasons adduced by the writ petitioner – assessee regarding the belated filing of returns and should have returned a finding one way or the other.” and set aside the impugned order reversing the matter to the appellate authority to consider the matter on merits in accordance with law.
A division bench has held that the CST exemption cannot be on ground of mere non-production of agreement between the Indian Exporter and the foreign buyer.Chief Justice S. Muralidhar and Justice Murahari Sri Raman observed that Certificate of Export in Form ‘H’ as issued to the petitioner-penultimate seller is in order and free from defect. “This indicates that the exporter has supplied information with regard to date of agreement with the foreign buyer or the date of purchase order placed by the foreign buyer. Said form also contains details of transport and bill of lading. It is recorded as a matter of fact by the authorities that the petitioner produced purchase order and bill of lading for verification of the authorities,” the Court said.
The Kerala High Court, in a recent order, decided a writ petition challenging GST order on merits under Article 226 of the Constitution considering the fact that the GST Tribunal is not constituted till date and the fact that the period of limitation will start to run only from the date of the constitution of the Appellate Tribunal is no solace to the petitioner.Rejecting the contentions of the department, the Court further held that “the contention raised by the learned counsel for the respondent Department that the petitioner has an effective alternative remedy before the GST Appellate Tribunal does not appeal to this Court for the simple reason that the GST Appellate Tribunal is yet to be constituted. The fact that the period of limitation will start to run only from the date of the constitution of the Appellate Tribunal is no solace to the petitioner. The petitioner is, therefore, entitled to exercise the jurisdiction of this Court under Article 226 of the Constitution of India to challenge the orders impugned in this writ petition.”
In a significant ruling, the Kerala High Court, while allowing a petition by M/s Manappuram Finance Ltd, has held that the circular issued by the Central Board of Indirect Taxes and Customs (CBIC) clarifying that GST not applicable to the notice pay received from an employee, has retrospective effect and has directed the GST department to refund the amount recovered from the petitioner (employee).
A Division Bench of the Madras High Court has recently set aside the Demand Orders issued to the petitioners Win Power Engineering Limited and True Value Homes India Private Limited and directed the revenue to issue appropriate discharge certificates in accordance with the provisions of Sabka Vishwas (Legacy Disputes Resolution) Scheme, 2019.The High Court Division Bench of Justice S Vaidyanathan and Justice C Saravanan observed that, “The petitioner has made a partial quantification of the tax liability.” It was also observed that “it would not disentitle the petitioner from the purview of SVLDRS, 2019 for the amount remaining unpaid as per the admission in the ST-3 Returns prior to the implementation of SVLDRS, 2019.”
A Single Bench of the Madras High Court has recently allowed the withdrawal request of the Empee Distilleries Limited in the Writ of Declaration (quo warranto) filed in order to declare the demand order issued against the assessee quashed in view of the resolution plan. The plea to allow the writ of Certiorari to be filed afterwards was also allowed subject to restrictions.The plea for withdrawal was allowed with the liberty to file a fresh Writ of Certiorari subject to be tested on its own merits and in accordance with law in the Admission Board and for specificity. The Madras High Court also chose to refrain from expressing any views in regard to the proceedings under Income Tax Act and Insolvency and Bankruptcy Code.
The Calcutta High Court (HC) has held that the Objection filed was not considered due to a Technical fault in the department’s system.Justice Nizamuddin observed that the technical fault is in the department’s system, and the petitioner should not be suffered victimized respect unless the respondents’ specific case with the specific record is that the aforesaid objection of the petitioner was uploaded beyond the time granted. In the interest of justice and taking into consideration the principle of observation of natural justice the impugned order dated 30th March 2022 under Section 148A(d) was set aside by the Court,
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