This weekly round-up analytically summarises the key tax judgements of the Supreme Court and all High Courts reported at Taxscan.in during the previous week from June 10 to June 16 2023.
The Ahmedabad High Court while dismissing a writ petition (WP), noted that the proper officer issuing order under Special Economic Zones (SEZ) Act, 2005, is equivalent to order under the Central Goods and Services Tax (CGST) Act, 2017.
The Bench lashed against the petitioners by commenting that the petition was an attempt on the part of petitioners to thwart and delay the legal proceedings which are initiated by respondent authorities and as such this move of petitioners appears to be an abuse of process of law looking to the manner in which the irregularities alleged to have been committed. The Court further directed the petitioner to deposit the costs of Rs.10,000/- (Rupees Ten Thousand only) for each petition to be paid to Gujarat State Legal Service Authority within ten days from the date of judgment.
The Gujarat High Court granted anticipatory bail to public servant arrested under Prevention of Corruption on no need of custodial interrogation
A Single Bench of Justice Nirzar S Desai observed that “Having heard the learned advocates for the parties and perusing the material placed on record and taking into consideration the facts of the case, nature of allegations, gravity of offences, role attributed to the accused, without discussing the evidence in detail, at this stage, I am inclined to grant anticipatory bail to the applicant.” The Court further noted that the anticipatory bail was granted takin into consideration the facts and circumstances of the present case and since the custodial interrogation of the applicant is not required.
The Punjab and Haryana High Court directed the Goods and Service Tax (GST) Department to refund amount recovered through DRC03 when no show cause notice (SCN) was issued.
The Bench further directed the GST Department to return the amount in question to the petitioner along with simple interest at the rate of 6% per annum from the date of deposit till the payment is made. The amount will be refunded to the petitioner within a period of two weeks from the date of receipt of certified copy of this judgment.
A Single Bench of the Calcutta High Court dismissed writ petition (WP) as no cogent explanation was given for the delay of three years.
“In view of the conduct of the petitioner in approaching the writ court after such inordinate delay without any explanation and in view of the fact that an adjudication order has already been passed which is an appealable order, I am not inclined to entertain this writ petition” the Court opined. The Court however, concluded by noting that the dismissal of the writ petition, however, will not be a bar for the petitioner to seek any relief before the appropriate forum in accordance with applicable law.
A Single Bench of the Madras High Court observed that a suit can be maintained by the President as the representative of a trust in terms of the trust deed for and on behalf of the trust.
A Single Bench comprising Justice K Kumarsh Babu observed that “A Suit can be maintained by a representative of the Trust in terms of the Trust Deed for and on behalf of the Trust. In the present case, the Trust Deed produced by the plaintiff would suggest that the President who is one of the trustees is entitled to file a suit.”
A Division Bench of the Rajasthan High Court dismissed a writ petition (WP) which was filed in the apprehension that the GST authorities would not take into consideration reply filed by the petitioner, Sodhani Sweets Private Limited.
A Division Bench of the High Court comprising Chief Justice Augustine George Masih and Justice Manindra Mohan Srivastava observed that “This apprehension on the part of learned counsel for the petitioner cannot be assumed at this stage. However, it is expected and is required that the pleas which would be taken by the petitioner in response to Show Cause Notice would be duly considered and dealt with while taking a decision.”
While entertaining the Sales Tax Revision petition, the Rajasthan High Court quashed the additional tax and interest order. A Single Bench of Justice Sameer Jain observed that the burden to prove that a specific product falls within a particular tariff is always on the revenue.
The High Court opined that the tax board erred in law by not applying the correct ratio of the quoted judgments in their true sense. Further clearly stated that “The burden to prove that a specific product falls within a particular tariff is always on the revenue, more so when the revenue is trying to classify products in the residual entry as against the specific entry. I.” Moreover, in the instant case, the revenue has utterly failed to adduce any evidence, technical or otherwise, to substantiate its claim that CAT-5 or CAT-6 cables are not covered in Part-A of Schedule IV to the RVAT Act which specifically deals with IT Products.
The Punjab and Haryana High Court (HC) directed the authorities to defreeze the 50% of the attached amount of the online betting app to carry out their day to day activities. The bench of Justice Ritu Bahri and Justice Ritu Batra also ordered not to take any coercive steps against the petitioner company.
Considering the submissions of the counsels, the High Court stated that “no coercive steps will be taken for recovery of the amount demanded as per the show cause notice dated 19.05.2023 (Annexure P-1) and 50% of the attached amount should be defreezed so that the petitioner-company can carry out its day to day working. Recently, the Karnataka High Court quashed the GST Notice of Rs. 21000 crores against the Gameskraft which had imposed Rs. 21,000 Crore at 28% GST on online gaming services provided to gamers.
The Calcutta High Court quashes assessment notice issued against non-existing entity on the conversion of a company into a Limited Liability Partnership (LLP).
A Single Bench of Justice Md Nizamuddin observed that “This writ petition is disposed of by quashing the impugned order to the writ petition and the impugned notice to the writ petition.” The Court concluded by noting that “However, dismissal of this writ petition will not prevent the Income Tax Authority concerned to issue any fresh notice, in the matter in accordance with law.”
A Single Bench of the Calcutta High Court observed that the sufficiency of reasons and findings in order under Section 148A(d) of the Income Tax Act, 1961 cannot be scrutinized by a writ court.
“Matter would have been different had the assessing officer not given any reason at all or had not referred the objection of the petitioner. Just by mere coming to a different conclusion on the basis of the objection or the material furnished by the petitioner cannot be a ground of invoking Constitutional Writ Jurisdiction under Article 226 of the Constitution of India” the Court opined.
The Bombay High Court ruled that a writ petition is maintainable to question initiation of proceedings under Section 148 of the Income Tax Act, 1961.
A Division Bench of the Bombay High Court comprising Justices M. W. Chandwani and A. S. Chandurkar observed that “In the present writ petition the petitioner has raised a challenge to the initiation of proceedings and exercise of power under Section 148 of the Income Tax Act of 1961 by urging that the statutory requirements prescribed by Section 148 of the Income Tax Act have not been satisfied. “
“In other words, it is submitted that since there is no existence of any reason to believe, reopening of the proceedings by the respondent is without jurisdiction. Since the jurisdiction of the respondent of initiating the proceedings, itself is under challenge, the writ petition would be maintainable. In the light of the challenge as raised it cannot be said that the writ petition is not maintainable” the Court concluded.
The High Court of Bombay has delivered a significant ruling on the issue of “lifting the corporate veil”. The Bombay High Court has distinguished NYK Line and NYK Theseus Corporation on the observation that the fact of Commonality or Common Ownership without the Element of Deceit or attempt at Fraud is not sufficient for “Lifting the Corporate Veil” &Establishing an “Alter Ego”.
The Single Bench of Justice N. J. Jamadar clarified that the establishment of multiple companies with common shareholding, directed by the same family and holding different assets, is not inherently problematic. The mere existence of commonality or common ownership, directorship, or interlocking shareholding is not sufficient prima facie evidence to conclude that one company is the alter ego of another. To establish alter ego status, there must be an element of deceit, an attempt at fraud, or a colourable transaction, the bench held.
The petitioners claim to be the licensee under one Varun Roshan Kohli who happens to be a sub-tenant under one Sati Mulchandani Business Centre in respect of 1200 sq. ft. in the ground floor flat. A sum of Rs.1,53,48,418/- is due on account of property tax in respect of the ground floor of the subject premises. In the process of recovery of the property tax dues, the Kolkata Municipal Corporation issued a notice of rent attachment against the petitioners.
The petitioners pray for a direction upon the Kolkata Municipal Corporation to refrain from taking any coercive steps against them for recovery of the outstanding property tax dues. A Single Bench of the Calcutta High Court comprising Justice Amrita Sinha observed that “The petitioners admit to be in possession of 1200 sq. ft. of the subject premises. It will be open for the Corporation to raise demand upon the petitioners to recover the property tax dues in respect of the area which is actually possessed by the petitioners. An opportunity of hearing shall be provided to the petitioners prior to initiating steps for recovery of the tax dues.”
The Calcutta High Court dismissed a writ petition as the jurisdiction of “Specified Authority under Section 151 of the Income Tax Act, 1961is not challenged.
Dismissing the writ petition a Single Bench of the Calcutta High Court observed comprising Md Nizamuddin that “On perusal of Section 151(i) and 151(ii) of the Income Tax Act, 1961 which simply says as to who will be the “Specified Authority” for Section 148 and Section 148A of the Income Tax Act and in this case jurisdiction of the “Specified Authority” who hasapproved for Section 148 and 148A of the Income Tax Act has not been challenged.”
In a significant case, the Karnataka High Court quashed the recovery from the banker and directed the department to reconsider the application under the Karasamadhana Scheme.
The bench of Justice S. Sunil Dutt Yadav has observed that if the application is rejected, it is needless to state that the petitioner cannot be placed in a position worse off, and the petitioner is entitled to the restoration of his appeal, which would be a logical course of action.
In a recent case, the Madras High Court (HC) held that the exemption under customs notification was allowable when the export obligation was fulfilled and set aside the demand of Customs Duty.
The Court set aside the impugned order and the matter remanded to the file of Respondent 1, to be decided afresh and in line with the discussion in this order after ascertaining if the petitioner has made any additions to the imported valves by procurement of indigenous products.
While entertaining the Writ Petition against the Ministry of Corporate Affairs (MCA) portal issue, a Single Bench of Justice P.V. Kunhikrishnan was ordered to resolve the issue in filing form NDH-4 within 1 week.
Recently, another plea was submitted before the Kerala High Court in which a designated partner of the petitioner Limited Liability Partnership (LLP) citing the inability to file LLP Forms in the MCA Portal. However, the MCA, represented by Central Government Counsel Jagadeesh Lakshman has submitted that the resolution of the MCA V1/V2/V3/21 Portal issues is in progress.
The Calcutta High Court has held that banks cannot make lookout circular a recovery norm as it violates the fundamental right of movement and allowed the Writ Petition (WP).
“Apart from the reach of Look Out Circulars to cause immediate and irrevocable violation of a person’s fundamental right of movement, Look Out Circulars have an inexplicably long shelf-life. Once a Look Out Circular is issued, it remains alive and kicking for almost all times to come. This spells dangerous repercussions on the person’s right to freely move across and beyond the country and remain mobile, “the bench of Justice Moushumi Bhattacharya observed. While allowing the Writ Petition the Court quashed the impugned Look Out Circular issued by the respondent Bank.
A Division Bench of the Allahabad High Court expressed its grief against the Lucknow GST Commissionerate and expresses its concern that practicing advocates should not have to face harassment on account of the department issuing notices and calling upon them to pay Service Tax/GST when they are exempted from doing so and in the process also calling them to prove that they are practicing advocates.
During the hearing a number of members of the Bar also informed the Court that similar notices have been issued to the various members of the Bar. The Bench comprising Justices Jyotsna Sharma and Alok Mathur observed that “The Commissioner, GST is directed to issue clear direction to the GST Commissionerate in Lucknow that no notices regarding payment of service tax /GST is issued to the lawyers rendering legal service falling in the negative list so far as service tax is concerned.”
The High Court of Delhi Stayed Proceedings against Haj Group Organizers (HGOs) and held that Haj is not merely a holiday but a religious practice and faith.
It was held that “although restrictions and conditions to the issuance of the Registration Certificate as well as to the Quota allotted to the petitioners/HGOs may be imposed, the same should not be held against the pilgrims who, in good faith, registered with the petitioners/HGOs to undertake the pilgrimage. This Court is of the view that such an action would defeat the purpose of the current Haj Policy and is in derogation of Article 25 of the Constitution of India.”
The Gujarat High Court, while dismissing the petition held that the Goods and Services Tax (GST) department can conduct search and seizure against a SEZ unit within its jurisdiction.
The two Bench consisting of Ashutosh Shastri and J. C. Doshi observed that this was an attempt on the part of petitioners by filing these kind of petitions to thwart and belay the legal proceedings which are initiated by respondent authorities and as such this move of petitioners appears to be an abuse of process of law looking to the manner in which the irregularities alleged to have been committed. Such an attempt on the part of petitioners deserved to be dealt firmly so that the litigants may not take disadvantage of the situation by bringing such kind of litigation. Records indicated that after issuance of notice, the petitioners did not cooperate and indicated to wait for the orders from the Court.
A Division Bench of the Delhi High Court ruled that Rule 89(4) of the Central Goods and Services Tax (CGST) Rules, 2017 is inapplicable to cases of refund of integrated tax paid on zero rated supply.
A Division Bench comprising Justices Vibhu Bakhru and Amit Mahajan observed that “The opening sentence of Rule 89(4) of the CGST Rules makes it amply clear that it applies only in cases of zero-rated supply of goods or services, without payment of tax under bond or letter of undertaking. We find merit in the petitioner’s contention that Rule 89(4) of the CGST Rules is inapplicable to cases of refund of integrated tax paid on zero rated supply.”
In a recent ruling, a Single Bench of Justice Dr. Anita Sumanth of Madras High Court (HC) directed the customs officers to release the confiscated goods provisionally on the payment of enhanced customs duty.
The Counsel of the petitioner confirmed categorically that enhanced duty will be remitted. Also, the counsel made a prayer for waiver of demurrage, which may be addressed to the appropriate respondent for the consideration in accordance with law and applicable regulations. The Madras High Court set aside the impugned order and ordered the release of the goods provisionally within a period of two weeks from today on payment of enhanced duty.
The Madras High Court (HC) dismissed the Writ Petition (WP) by Bharat Heavy Electricals since the Commissioner of Goods and Service Tax (GST) dropped the proceeding.
Bharat Heavy Electricals Ltd., the petitioner submitted that pending Writ Petitions, the impugned proceedings were continued by the respondent Assessing Authorities that have culminated in Orders-in-original dated 25.01.2023 and 23.05.2023, whereunder, the Commissioner of GST and Central Excise has dropped the proceedings initiated under impugned show cause notices bearing Nos.40/2011 dated 03.11.2011 and 2/2013 dated 16.01.2023. The single-judge bench comprising Dr Justice Anita Sumanth observed that there was nothing further surviving in these matters and closed the Writ Petitions.
The Madras High Court (HC) has held that the rectification application under section 161 of the Goods and Service Tax Act, 2017 is not valid when the assessee failed to cooperate in the assessment. While dismissing the petition, the single-judge bench comprising Dr Justice Anita Sumanth observed that the Officer has set out in the impugned orders that the petitioner has not cooperated in the course of assessment, either originally or in the rectification sought.
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