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 January 29 to February 4, 2023.

C Form issued at material Item cannot be cancelled Retrospectively: Delhi HC ruled in favour of Louis Dreyfus Company India-M/S LOUIS DREYFUS COMPANY INDIA PVT. LTD. vs THE COMMISSIONER TRADE AND TAX DEPARTMENT & ORS-2023 TAXSCAN (HC) 255

The High Court (HC) of Delhi has held that C Form issued at the material time cannot be cancelled retrospectively. M/s Louis Dreyfus Company India Pvt. Ltd, the petitioner has filed the petition to restore and validate the 4 cancelled Statutory Form C issued to the Petitioner and to declare all the other 9 Statutory Forms issued to the petitioner as Valid and the same is to be communicated to the Gujarat VAT department.

Based on the precedents a two-member bench of Justice Vibhu Bakhru and Justice Amit Mahajan held that “there is no reason for denying the benefit of C-forms to the petitioner as there is no allegation that the petitioner had not supplied the goods in question.” The petition filed by the petitioner was allowed.

Capital Gains earned by Blackstone not liable to Income Tax: Delhi HC quashes Proceedings and Order of Reassessment-BLACKSTONE CAPITAL PARTNERS vs ASSISTANT COMMISSIONER OF INCOME TAX-2023 TAXSCAN (HC) 256

The Delhi High Court has recently ruled in favour of Blackstone Capital Partners, that there is no capital gain earned by the petitioner liable to tax in India in the matter before them.Thus, the Delhi High Court ruled in favour of Blackstone Capital Partners held that the impugned reassessment proceedings are without jurisdiction and the impugned Notice under Section 148 of the Income Tax Act and the impugned Order and subsequent draft Assessment Order under Section 144C of the Act were quashed.

Failure to Communicate Adjournment Invalidates the Order u/s 148(A) :Gujarat HC-SHREE SIDDHI FOODS vs ASST. COMMISSIONER OF INCOME TAX-2023 TAXSCAN (HC) 254

The Gujarat High Court (HC) has held that failure to communicate adjournment invalidates the order under section 148(A) of the Income Tax Act, 1961.A two-member bench comprising Justice Sonia Gokani and Justice Sandeep N Bhatt quashed the order of 148A(d) of the Act and the issuance of notice under Section 148 of the Income Tax Act, 1961.

Non-remittance of EPF Contribution by Establishment due to attachment of bank account by Income Tax dept.: Karnataka HC quashes Criminal Proceedings against employee of Establishment-MR.CH K.S.PRASAD @ K.S.PRASAD vs STATE OF KARNATAKA-2023 TAXSCAN (HC) 253 Be the First to

The Karnataka High Court (HC) chaired by Justice M. Nagaprasanna quashed the criminal proceedings initiated against the petitioner for non-remittance of Employees’ Provident Fund contribution by establishment due to the attachment of bank account by the Income Tax Department Authorities.The High Court noted that the petitioner worked for the Establishment. The Establishment should have been added as a party before any proceedings for offences under Sections 406 or 420 of the IPC were started. The prosecution of the petitioner cannot go forward without the Establishment being named as an accused. It is further considered that allowing the petitioner to be the subject of additional legal actions would turn into harassment, constitute an abuse of the legal system, and ultimately lead to a miscarriage of justice.

Grave violation of Natural Justice Principles: Madras HC remands Penalty Levy for GST ITC Claim based on bogus Tax Invoices/Debit Notes-Hind Aluminium Company Vs Assistant Commissioner (ST)-2023 TAXSCAN (HC) 252

The Madras High Court recently quashed the impugned penalty levy in violation of natural justice principles against the Input Tax Claim of assessee, M/s Hind Aluminium Company on the basis of alleged bogus tax invoices and debit notes.It was thereby held that, “the impugned order has to be necessarily quashed and the matter will have to be remanded back to the respondents for fresh consideration on merits and in accordance with law after affording a fair hearing to the petitioner, including granting them the right of personal hearing”, in favour of the petitioner M/s Hind Aluminium Company.

Income Tax Assessment u/s 153A without incriminating material found in search: Supreme Court commences hearing-COMMISSIONER OF INCOME TAX CENTRAL vs ABHISAR BUILDWELL P. LTD-2023 TAXSCAN (SC) 120

The Supreme Court of India has commenced the hearing of a bunch of civil appeals and petitions with regard to the income tax assessment under Section 153A of the Income Tax Act, 1961.In the part-hearing of the matter held on 1st February 2023, ASG N. Venkataraman, appearing for the appellant-revenue, concluded his arguments. The matter was listed for today (02.02.2023) as part-heard.

No GST on Issuance of Prepaid Payment Instrument Vouchers: Karnataka HC sets aside AAR and AAAR rulings-M/S PREMIER SALES PROMOTION PVT LIMITED vs THE UNION OF INDIA MINISTRY OF FINANCE DEPARTMENT-2023 TAXSCAN (HC) 251

The Karnataka High Court recently quashed the AAR and AAAR rulings on applicability of Goods and Services Tax (GST) on issuance of vouchers. The Court held that no GST was applicable on the vouchers in the nature of prepaid payment instruments issued by the assessee.Answering whether vouchers themselves are chargeable to tax at the time of supply or chargeable when goods and services are redeemed, the Karnataka High Court Division Bench of Justice P S Dinesh Kumar and Justice T G Shivashankare Gowda observed that the issuance of vouchers is similar to pre-deposit and not supply of goods or services.

Central Government employees posted in North East region keeping families in previous places, entitled to additional HRA; Manipur HC-J S Chauhan vs The Union of India-2023 TAXSCAN (HC) 246

A Single Bench of Manipur High Court, while disposing the writ petition has held that Central Government employees posted in the North Eastern region who had kept families in previous places would be entitled to additional HRA. The Bench of Justice M.V. Murali Daran Allowed the writ petition and held that the petitioners were entitled to HRA of last place of posting. The Bench set aside the impugned orders holding that the impugned orders were issued without applying the mind and affording any opportunity of hearing before stopping the payment of HRA.

Food Supplies to Hostel Students are Ancillary Function of Educational Trust, No Tax: AP HC rules in favour of Bharatiya Vidya Bhavan-2023 TAXSCAN (HC) 249

In the case of Bharatiya Vidya Bhavan, the Andhra Pradesh High Court (HC) has held that the food supplies to hostel students as an ancillary function of education trust can’t be brought to tax.While allowing the writ petition, a two-member bench comprising Justice U Durga Prasad Rao and Justice T Malli karjuna Rao held that “the 2nd respondent in directing the petitioner school to obtain registration as a dealer under AP VAT Act, 2005 and the further action of respondents in assessing the petitioner’s school to VAT under the provisions of AP VAT Act, 2005 for the period from 01.04.2005 to 31.12.2005 vide order dated 08.03.2006 is held as illegal, arbitrary and contrary to provisions of AP VAT Act, 2005 and accordingly the said order is set aside”

Calcutta HC Orders to allow opportunity to hear of Assessee who failed to file GST Return due to Mental stress and Physical Illness-M/S. DYM Auto World vs Assistant Commissioner of CGST and Central Excise & Ors-2023 TAXSCAN (HC) 247

In a recent Judgement, the Calcutta High Court ordered to allow the opportunity to hear the assessee who failed to file a GST return due to Mental stress and Physical Illness.The Court held that” the petitioner should be given an opportunity of hearing. But to avail of such opportunity, the petitioner shall first make payment of up-to-date GST with statutory interest and penalty within three weeks from the date.”

Information /Material Which Triggers Assessment Proceeding Needs to be Furnished to Assesee: Delhi HC-CHARU CHAINS AND JEWELS PVT LTD vs ASSISTANT COMMISSIONER OF INCOME TAX-2023 TAXSCAN (HC) 248 Be the First to

The Delhi High Court has held that the underlying information or material that formed the basis for triggering the assessment or reassessment proceedings needs to be furnished to the assessee.It was observed by the Court that since the reply of the petitioner was partial, and the petitioner itself had indicated that even if no material is supplied, it will file a further response to the notice issued under Section 148A(b) of the Act, the one-month timeframe would kick in only from 30.06.2022. The Court set aside the impugned order dated 25.07.2022 passed under Section 148A(d) of the Act and the consequential notice of even date i.e., 25.07.2022 issued under Section 148 of the Act.

Detachable Warrant has conceivable Cost,Sale Consideration from Transfer of Capital Asset is Liable to Capital Gain: Gujarat HC-M/S DEEPAK NITRITE LTD vs DY.COMMISSIONER OF INCOME TAX-2023 TAXSCAN (HC) 250

In a recent case, the High Court( HC) of Gujarat has held that a detachable warrant has a conceivable cost and the sale consideration from the transfer of the capital asset is liable to capital gain.A Coram comprising Chief Justice Aravind Kumar and Justice Ashutosh Shastri upheld the view taken by the lower authority since the assessee itself has accepted the cost. Further upheld that the conclusions arrived at by the Tribunal and by the C.I.T. (Appeals).

Advance Ruling Application Should not be Accepted by ARA When Investigation Started before Application was Filed: Andhra Pradesh HC-2023 TAXSCAN (HC) 243

The Andhra Pradesh High Court (HC) has held that an advance ruling application should not be accepted by Advance Ruling Authority (ARA) when the investigation started before the application was filed.A two-member bench comprising Justice U Durga Prasad Rao and Justice T Mallikarjuna Rao observed that any proceedings referred to in 98(2) proviso encompasses within it the investigation against the applicant as per the provisions of CGST/APGST Act and if by the date of filing of the application before the ARA, already such proceedings were commenced, the ARA shall not admit the application inviting advance ruling.

Writ Court should not act as Expertise to classify Products Under Customs Tariff Act, requires Technical Analysis: Calcutta HC-HARSH POLYFABRIC PVT LTD vs UNION OF INDIA AND ORS-2023 TAXSCAN (HC) 244

In a recent judgment the Calcutta High Court observed that Writ Court should not act as Expertise to classify Products Under Customs Tariff Act, requires Technical Analysis.

The Bench of Justice Md. Nizamuddin has observed that “a writ court in the exercise of its constitutional writ jurisdiction under Article 226 of the Constitution of India should not act as an expert to scrutinize the composition and mode of manufacture of a product and do the job of classifying a product as to under which classification list of the Customs Tariff Act the product falls since it requires scientific and technical analysis to be conducted by experts in scientific and technical fields.”

Cancellation of Contract on last minute on Political Interference is Arbitrary: Karnataka HC asks State to pay for Film made for Global Investors Meet-BBP STUDIO VIRTUAL BHARAT PVT. LTD. vs STATE OF KARNATAKA-2023 TAXSCAN (HC) 245

The Karnataka High Court directed the State Government to release balance payments due to M/s BBP Studio Virtual Bharat Pvt Ltd, the petitioner, which was appointed to produce a 3D film during the Global Investors Meet, held in November 2022, but the contract was cancelled last minute and film was not showcased at the event. on the sole reason that cancellation of contract on last minute on political interference is arbitrary.

Delhi HC allows CSR deduction to Steel Authority of India u/s 37(1) of Income Tax Act-PR. COMMISSIONER OF INCOME TAX-7 vs M/S STEEL AUTHORITY OF INDIA LTD-2023 TAXSCAN (HC) 242

The Division bench of the Delhi High Court allowed corporate social responsibility deduction to steal authority of India under section 37(1) of Income Tax Act 1961.The division bench of the Delhi high court held that CSR expenses had been allowed as deductible expenditure under Section 37(1) of the Income Tax Act 1961.and upheld the decision of the ITAT.

4% Additional VAT on Drilling Rigs not allowable When Assessee already deposited Tax Amount: Supreme Court-M/S.PARANTHAMAN HYDRAULICS AND EQUIPMENTS vs THE STATE OF TAMIL NADU & ORS-2023 TAXSCAN (SC) 119

The Supreme Court (SC) of India has held that 4% additional Value Added Tax (VAT) on drilling rigs is not allowable when the assessee already deposited the tax amount.Justice Krishna Murari and Mr Justice C T Ravikumar observed that tax at the rate of 4% has already been deposited by the petitioner(s) and the direction in the impugned order to pay another 4% is not valid. The Court disposed of the petition by taking the above-said view.

Transfer of Jurisdiction after completion of Assessment: Orissa HC restores matter to Kolkata Income Tax Circle-Biswajaya Dagara vs Asst. Commissioner of Income Tax-2023 TAXSCAN (HC) 241

A Single Bench of Orissa High Court has restored the matter to Kolkata Income Tax Circle holding that transfer of jurisdiction of matter was done after completion of assessment. A single Bench of Chief Justice, MS Raman quashed the impugned order holding that the petitioner would continue to be within the jurisdiction of the relevant Income Tax Circle at Kolkata where he had been filing his returns.

Show Cause Notice issued u/s 73(1) of GST Act is Not mere A Formality: Jharkhand HC directs Re-adjudication-Santosh Kumar Roy vs State of Jharkhand-2023 TAXSCAN (HC) 240

Show Cause Notice (SCN) issued under section 73(1) of Central Goods and Services Act, 2017 (CGST) is not a mere formality, opined the bench of Acting Chief Justice Aparesh Kumar Singh and Justice Deep Roshan of Jharkhand High court.Regarding the facts, the HC noted that the format of the show cause notice does not strictly comply with Section 73(1) of the JGST Act and Rule 142(1)(a) of the Rules, and since the principle of natural justice has not been upheld in the present case, the court will not accept the argument that an alternative remedy is available. The division bench quashed and set aside the disputed show cause notice and DRC 01 and also the summary of order issued under DRC-07.

Supreme Court questions Centre’s recall request in ED Director Tenure Extension Case-JAYA THAKUR vs UNION OF INDIA & ORS.-2023 TAXSCAN (SC) 118

On Monday, the Supreme Court questioned the central government’s request to recall the September 2021 direction that prohibited extending the term of the Director of Enforcement Directorate, Sanjay Kumar Mishra, beyond November 16, 2021.Subsequently, the matter was listed to be heard alongwith M.A. No. 1756/2022 in W.P.(C) 1374/2022 on 27.02.2023. On a related note, the amendment to the Central Vigilance Commission Act has been the subject of challenge recently in at least eight separate public interest litigations before the Supreme Court.

Cost of Transport of Goods from Seller to Buyer does not form part of “Sale Price” under VAT Act: Jharkhand HC-Global Resources Company vs State of Jharkhand- 2023 TAXSCAN (HC) 239

According to the Jharkhand High Court (HC), the cost of transporting goods from the seller to the buyer is not included in the selling price under the Value Added Tax Act, 2005. The orders were invalidated by the acting chief justice’s bench and justice deepak roshan, who determined that the decisions made by the tribunal and the authorities were both unlawful.The HC overturned and annulled the disputed orders. Further instructed to evaluate the materials and the petitioner’s arguments before delivering a new ruling on the petitioner’s claim insofar as it relates to freight charges that the petitioner received from its customers and that are shown and charged separately on the invoices.

Satyam Computers Scam: Telangana HC admits plea to reopen assessments prior to the Scam

The Telangana High Court, on Wednesday, agreed to examine a case in which Rs 126 crore was paid as income tax on non-existent income by the former chairman of Tech Mahindra (formerly Satyam Computers) B Ramalinga Raju. The company has been attempting to correct the accounts since 2011, and if the plea is allowed, it could result in a refund.The bench scheduled further examination of the issue on February 15 and adjourned the hearing after department counsel Sapna Reddy informed the court that an Additional Solicitor General from Chennai will come to argue the case.

Export Obligations met: Penalty on duty exempted Lauryl Alcohol quashed by Bombay HC-Galaxy Surfaitants Ltd. Vs Commissioner of Customs (EP)-2023 TAXSCAN (HC) 238

The Bombay High Court has recently quashed an order, demanding penalty and duty on Lauryl Alcohol, seized from the respondent-assessee, Galaxy Surfactants Ltd., a listed company engaged in the manufacture and export of Surfactants used for manufacture of toothpaste and shampoos.The observation in the same that, no sale liable to tax has occurred in the said transaction was reiterated by the Bombay High Court, ruling the issues in the case in favour of the petitioner.

Taxpayer not to be deprived of SLVDRS-1 Scheme Benefits for pending change of Accounting Code by authorities: Bombay HC-National Centre vs Union of India-2023 TAXSCAN (HC) 236

The Bombay High Court in a recent ruling while allowing the writ petition filed by the assessee held that taxpayers would not be deprived of Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVL DRS-1) benefit for pending change of accounting code by authorities.

After considering the contention of the both parties the division bench of high court of Bombay consisting Nitin Jamdar and Abhay Ahuja, allowed the writ petition and observed that Petitioner could not be deprived of the benefits of this scheme just because the amount of interest was deposited under Accounting Code 00441481 (Other Receipts (interest)) and not under 00441480 in respect of tax receipts which change of Accounting Code was pending with the Respondents Authorities at the time of filing of Form SVLDRS-1 by the Petitioner

Tax levy under repealed VAT regime: Supreme Court issues Notice to Kerala Tax Authorities-T.S. BELARAMAN vs THE COMMERCIAL TAX OFFICER & ORS.-2023 TAXSCAN (SC) 117

The Supreme Court has sought for a response from commercial tax authorities in a case challenging the validity of certain provisions in the Kerala Goods and Services Tax (GST) law, which permit the assessment, imposition, and collection of tax under the repealed Value Added Tax (VAT) system.The High Court had observed that the state has the sufficient legislative authority to incorporate the ‘saving clause’ into the Kerala GST Act. The Supreme Court bench, upon hearing the petitioner counsel, issued notice to the Commercial Tax Officers of Thiruvananthapuram and Thrissur, Kerala, along with other relevant authorities

Segregation of Works Contract and Supply of Materials maintainable in view of Agreement, Separate GST Payable: Allahabad HC-Buldelkhand Engineers vs The Commissioner Commercial Taxes-2023 TAXSCAN (HC) 235

A Single Bench of Allahabad High Court has held that in the case of segregation of works contract and supply of materials maintainable in view of agreement separate Goods and Services Tax shall be payable.

A Single Bench of Justice Rohit Ranjan Agarwal allowed the petition and set aside the impugned order observing that, “The agreement, which was arrived between the parties, did not segregate between works contract and the material to be supplied. The agreement specifically provided for the payment of lump-sum money to the contractor for the material as well as the works contract. The interpretation given by the Assessing Authority and Tribunal cannot be sustained in view of the agreement arrived between the parties. The notification dated 27.4.1987 is not applicable in the case of assessee.”

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