Supreme Court and High Courts Weekly Round-Up

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 July 15 to July 21 2023.

Goods Meant for Exports were taken Back to Factory for Repair not a Case of Tax Evasion: Calcutta HC USHA MARTIN LIMITED vs THE DEPUTY COMMISSIONER OF STATE TAX CITATION: 2023 TAXSCAN (HC) 1089

The Calcutta High Court held that goods meant for exports were taken back to the factory for repair not a case of tax evasion.
The Court Comprising Chief Justice T. S. Sivagnanam and Justice Uday Kumar considered the conduct of the assessee and having found that the conduct was not with the intention to evade tax, granted relief to those assessees. The case on hand also would fall under the said category since there is no allegation of any evasion of tax rather it is not disputed that the goods were being transported under a cover of challan to the factory of the appellants for carrying out repairs. The appeal as well as the writ petition was allowed and set aside the impugned order.

Madras HC dismisses WP Filed for Render Legal Opportunity of Cross-Examination in Personal Hearing on ground of Non-Appearance of Transporters M/s.Ambika Timber Depot vs The Assistant Commissioner of GST CITATION: 2023 TAXSCAN (HC) 1090

The Madras High Court dismissed the writ petition filed by the petitioner for rendering the legal opportunity of cross-examination in a personal hearing on the ground of the non-appearance of transporters.
A single-member panel comprising Justice Anitha Sumanth held that the petitioner do not pursue the writ petitions filed and it was unnecessary to issue a writ of mandamus and dismissed the writ petition filed by the petitioner.

Notices And Proceedings Under Income Tax Act for Deceased Assessee as Null and Void: Bombay HC Dhirendra Bhupendra Sanghvi vs Assistant Commissioner of Income Tax Cirlce CITATION: 2023 TAXSCAN (HC) 1088

A Division Bench of Bombay High Court has held that the notices and proceedings under Income Tax Act, 1961 for deceased assessee as null and void.
The Division Bench of Justice Kamal Khata and Justice Dhiraj Singh Thakur quashed the impugned order holding that the notice and all consequential proceedings in the name of a deceased assessee are null and void.

Madras HC Directs to Decide Maintainability of Statutory Appeal which Unable to Access Online Filing Portal Due to Technical Glitches M/s Sundaram Clayton Limited vs The Deputy Commissioner (ST) CITATION: 2023 TAXSCAN (HC) 1091

In a recent judgment, the Madras High Court directed the adjudicating authority to decide the maintainability of a statutory appeal filed by the petitioner who was unable to access the online portal of filing on account of some technical glitches.
A single-member panel Justice Anitha Sumanth held to direct the officials to the decision taken about the maintainability of the statutory appeal filed by the petitioner.

Gujarat HC grants permission to pay Tax liability in Instalments NIRAJKUMAR NARESHKUMAR LAKHYANI vs STATE OF GUJARAT CITATION: 2023 TAXSCAN (HC) 1092

The Gujarat High Court has overturned the decision of the Adjudicating Authority and granted permission to an assessee to fulfil their tax liability
The division bench comprising Justice NV Anjaria and Devan M Desai observed that since the petitioner has shown readiness and willingness to pay up the demand for Input Tax Credit raised by the authorities although without prejudice to the rights, the Court allowed the petitioner to pay within the span of 15 equal monthly instalments the tax demanded.

Dyeing Chemicals Embedded in Final Cloth is Leviable to Tax; not Waste Generated During Job Process: Supreme Court HE STATE OF HARYANA & ANR vs M/S A. P. PROCESSORS CITATION: 2023 TAXSCAN (SC) 193

The Supreme Court bench comprising Justice B.V. Nagarathna and Justice Prashant Kumar Mishra upheld the ruling of the Punjab and Haryana High Court. They stated that the tax shall be applicable to the dyeing chemicals present in the finished fabric, but not on the waste produced during the dyeing process.
The Supreme Court affirming the decision of the High Court stated that “the matters have been remanded to the Assessing Officer to consider the case of the assessees as well as of the Appellants herein and to pass fresh orders in terms of the directions issued by the High Court. We do not find any reason to interfere with the impugned orders.”

GST Dept cannot Deny ITC on Ground of Deficiency in Memo Once Taxpayer Succeeded in Appeal: Delhi HCADVANCE SYSTEMS vs THE COMMISSIONER OF CENTRAL EXCISE AND CGST CITATION: 2023 TAXSCAN (HC) 1093

The Delhi High Court held that the Goods and Service Tax (GST) Department cannot deny the Input Tax Credit (ITC) on the ground of the deficiency in the memo filed by the taxpayer and once the taxpayer succeeded in appeal. The two-member bench comprising Vibhu Bakhru And J Amit Mahajan, J allowed the refund of the claim of Input Tax Credit filed by the petitioner.

Karnataka High Court Directs Defreezing of Bank Account in Service Tax Dispute upon Furnishing of Security by Assessee M/S GUARD INDIA SECURE SERVICES PVT LTD vs UNION OF INDIA CITATION: 2023 TAXSCAN (HC) 1095

The Karnataka High Court has directed the defreezing of the bank account of the assessee in a service tax dispute upon the furnishing of security by the assessee.
The bench also clarified that its decision to defreeze the account was limited to the specific issue of the bank account attachment and would not be binding in other proceedings. All other contentions raised by both parties shall be kept open for future consideration, the court held.

Subscription Amount Received from Subscribers of E-Journals Cannot be Treated as Royalty: Delhi HC THE COMMISSIONER OF INCOME TAX vs SPRINGER NATURE CUSTOMER SERVICES CENTRE GMBH CITATION: 2023 TAXSCAN (HC) 1103

In a significant case, the Delhi High Court has held that the subscription amount received from subscribers of e-journals cannot be treated as royalty.
The division bench of Justice Rajiv Shakdher and Justice Girish Kathpalia has observed that “the subscription amount cannot be treated as royalty, having regard to the fact that there is nothing on record to suggest that the respondent/assessee has granted the right in respect of copyright to the concerned subscribers of the e-journals. All that the respondent/assessee did was to sell the copyrighted publication to the concerned entities, without conferring any copyright in the said material.”

Writ Jurisdiction cannot be Invoked to Consider Second Rectification Application as Order u/s 154 of IT Act is Appealable: Calcutta HC S.P. Paper Packaging Pvt. Ltd vs Union of India & Anr. CITATION: 2023 TAXSCAN (HC) 1097

The Calcutta High Court has held that the Writ jurisdiction cannot be invoked to consider rectification application since an order passed under section 154 of the Income Tax Act, 1961 is appealable.
While dismissing the petition, in view of the existence of the appeal provision under section 246 sub-section ( c ), the Court granted liberty to prefer an appeal against the order dated 25th November 2020 before the appellate authority.

Dispute in Fact about Payment of Income Tax Dues Cannot be Decide by Writ Court: Orissa HC directs to approach AO MMTC Ltd. vs Deputy Commissioner of Sales Tax and others CITATION: 2023 TAXSCAN (HC) 1101

The Orissa High Court directed to approach the Assessing Officer(A0) since the dispute in fact about payment of income tax dues cannot be decided by the writ court. A division bench comprising Dr Justice B R Sarangi and Justice Murahari Sri Raman has held that since there are disputed questions of fact, the Court cannot resolve the dispute involved in the writ petition. Therefore, the Court permitted the petitioner to approach the Assessing Officer ventilating its grievance, which shall be considered by law.

Threatening Emails to State Tax Commissioner to Comply Court Order: Calcutta HC orders to Ignore Adverse Remarks from Service Record Sanpak Business Solutions And Trade LLP & Ors vs Assistant Commissioner CITATION: 2023 TAXSCAN (HC) 1097

The Calcutta High Court ordered to ignore adverse remarks from service records since the act of petitioner in sending threatening emails to State Tax Commissioner to comply with the Court order.
It was clarified by the court that the officer concerned will apply his judicious mind in passing the final order based on the aforesaid impugned show-cause-notice, strictly on merit.

Non-Constitution of GST Appeal: Orissa HC directs to Pay Entire Tax Demand before Availing Second Appeal M/s. Biswal Sales vs Commissioner of CT & GST CITATION: 2023 TAXSCAN (HC) 1104

The Cuttack bench of the Orissa High Court directed the petitioner to pay the entire tax demand before availing a second appeal.
The two-member bench comprising B.R Sarangi and M.S Raman held that the petitioner had to pay the entire demand of tax before availing the second appellate tribunal.

AO Fails to Clarify Concealment of Particulars of Income or Furnished Inaccurate Particulars: Delhi HC quashes 300% Penalty PR. COMMISSIONER OF INCOME TAX vs GOPAL KUMAR GOYAL CITATION: 2023 TAXSCAN (HC) 1110

The Delhi High Court quashed the 300% penalty imposed under Section 271(1)(c) of the Income Tax Act, 1961 on grounds that the Assessing Officer (AO) failed to clarify the concealment of particulars of Income or furnished inaccurate particulars.
The bench of Justice Rajiv Shakhder and Justice Girish Kathpalia, relying on the ECS Ltd.’s case, observed that the Assessing Officer has not recorded his satisfaction in explicit terms, the assessment orders should indicate that the Assessing Officer had arrived at such a satisfaction. Thus, the bench opined that no substantial question of law arises for our consideration and closed the appeal.

Calcutta HC Upholds Assessment Order on ground of Passing of Order with approval of ‘Specified Authority’ u/s 151(ii) of Income Tax Act GIRIRAJ COMMERCIAL PRIVATE LIMITED vs UNION OF INDIA AND ORS CITATION: 2023 TAXSCAN (HC) 1107

The Calcutta High Court upheld the assessment order passed under section 148A(d) of the Income Tax Act, 1961 on the ground of passing of order with the approval of specified authority which was defined under section 151(ii) of the Income Tax Act. A single-member bench comprising Nizamuddin. J held that the approval for passing the order under Section 148A(d) of the Income Tax Act was legal and valid and the aforesaid impugned order does not call for any interference by the writ petition and dismissed the writ petition filed by the petitioner.

Supreme Court holds Two Extension of Tenure to ED Director Sanjay Kumar Mishra as Illegal: Can Continue in Post only Till July 31st DR. JAYA THAKUR vs UNION OF INDIA & ORS CITATION: 2023 TAXSCAN (SC) 196

The Supreme Court of India held that two extensions of tenure to Enforcement Directorate director Sanjay Kumar Mishra as illegal and directed him to continue in the post only till July 31 st
The impugned orders dated 17th November 2021 and 17th November 2022 granting extensions to the tenure of respondent No.2- Sanjay Kumar Mishra for a period of one year each are held to be illegal. The writ petitions are partly allowed to that extent. However, respondent No.2- Sanjay Kumar Mishra is permitted to continue to hold office till 31st July 2023.”, the Coram held.

Dues Payable to Secured Creditors are at Higher Footing Than Electricity Dues: Supreme Court PASCHIMANCHAL VIDYUT VITRAN NIGAM LTD vs RAMAN ISPAT PRIVATE LIMITED & ORS CITATION: 2023 TAXSCAN (SC) 196

The Supreme Court has held that dues payable to secured creditors are at a higher footing than electricity dues and ruled that Section 238 of the Insolvency and Bankruptcy Code overrides the provisions of the Electricity Act, 2003.
While dismissing the appeal, the bench comprising Justices S. Ravindra Bhat and Dipankar Datta directed the liquidator to decide the claim exercised by PVVNL in the manner required by law.

Relief to Zee Entertainment Enterprises: Calcutta HC Quashes Investigation proceedings filed u/s 385 of IPC on ground of No Dishonest Intention for Collecting Subscription Fee from DPO Zee Entertainment Enterprises Ltd. & Ors vs State of West Bengal & Anr CITATION: 2023 TAXSCAN (HC) 1127

The Calcutta High Court quashed the investigation proceedings under section 385 of the Indian Penal Code,1860 on the ground of no dishonest intention for collecting the subscription fee from the Distribution Platform Owners (DPO).
A single-member bench comprising Shampa Dutt held that petitioners acted as per the agreement between the parties to demand their legitimate dues and there was also no dishonest intention on the part of the petitioner and quashed the investigation proceedings filed under section 385 of the Indian Penal Code.

Order passed U/s 148 A(d) of Income Tax Act without providing a copy of Evidence and Denying Opportunity to Cross Examination is invalid: Calcutta HCHOWRAH GASES LIMITED vs ASSISTANT COMMISSIONER OF INCOME TAX CITATION: 2023 TAXSCAN (HC) 1120

In a recent case, the Calcutta High Court held that an order passed under section 148 A(d) of the Income Tax Act, 1961 without providing a copy of the evidence and denying the opportunity for cross-examination is invalid.
Considering the facts and circumstances of the case, Justice Md. Nizamuddin set aside the impugned order under Section 148A(d) of the Act and subsequent notice under Section 148 of the Act and remanded the matter back to the assessing officer concerned to pass a fresh order.

The assessment order passed is not Legal as Approval u/s 153D was Given Mechanically: Delhi HC PR. COMMISSIONER OF INCOME TAX vs ANUJ BANSALCITATION: 2023 TAXSCAN (HC) 1134

The Delhi High Court in a recent ruling held that the assessment order passed is not legal as approval under section 153D of the Income Tax Act, 1961 was given mechanically.
A division bench comprising Justice Rajiv Shakdher and Justice Girish Kathpalia upheld the order of the Tribunal and held that there was the absence of application of mind by the ACIT in approving under Section 153D of the Income Tax Act, 1961.

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