This weekly round-up analytically summarises the key tax judgments of the Supreme Court and all High Courts reported at Taxscan.in during the previous week from August 5 to August 11, 2023.
The Supreme Court of India upheld the decision of the Kerala High Court in Shabu George vs State Tax Officer wherein it was held that Revenue Department cannot seize cash that does not form part of stock in trade in Goods and Service Tax (GST) case.
A Two-Judge Bench comprising of Justices BV Nagarathna and Ujjal Bhuyan observed that “We are not inclined to interfere with the judgment and order impugned in this petition. The special leave petition is, accordingly, dismissed.”
A Division Bench of the Supreme Court dismissed plea of Tamil Nadu Chief Minister V. Senthil Balaji against arrest in cash-for-jobs scam and allowed Enforcement Directorate (ED), interrogation in the money laundering case.
“The Registry is directed to place the matter before the Chief Justice of India for appropriate orders to decide the larger issue of the actual import of Section 167(2) of the CrPC, 1973 as to whether the 15 days period of custody in favour of the police should be only within the first 15 days of remand or spanning over the entire period of investigation – 60 or 90 days, as the case may be, as a whole” the Bench concluded.
The Punjab and Haryana High Court granted bail to Member of Legislative Assembly (MLA) Kushaldeep Singh Dhillon, the petitioner in the disproportionate assets charge in the Prevention of Money Laundering Act,2002 (PMLA) offence.
“Keeping in view the above said facts and circumstances, the present petition is allowed and the petitioner is ordered to be released on bail on his furnishing bail / surety bonds to the satisfaction of the concerned trial Court/ Duty Magistrate and subject to him not being required in any other case and subject to the condition that the petitioner would surrender his passport before the trial Court” the Court concluded.
The Karnataka High Court dismissed writ petition by a former Indian Forest Service (IFS) Officer in the alleged offence of transportation of iron ores without the payment of required royalty and Forest Development Tax.
“In the present case, it must also be kept in mind that any finding regarding mining operations in a forest area or in non-forest area would have implication as regards other criminal cases also pending and accordingly, it may not be appropriate to jeopardize the cases against other accused by recording a finding as against the petitioner alone. Accordingly, this Court does not find any scope for interference and the Writ Petitions are dismissed” the Court concluded.
The Calcutta High Court ordered to produce relevant records as reopening of assessment under Section 147 of the Income Tax Act, 1961 was made after quoting wrong PAN number.
A Single Judge Bench of Justice Md Nizamuddin observed that “Ms. Das De appearing for the respondent shall produce the relevant record particularly notice under Section 148A(b) of the Income Tax Act and order under Section 148A(d) of the Income Tax Act and all correspondences during the impugned proceeding. List this matter on 10th August, 2023 to enable Ms. Das De to produce the relevant records.”
The Jammu and Kashmir and Ladakh High Court observed that there is no obligation on the bank to deduct Tax Deduction at Source (TDS) from interests on fixed deposit (FD) paid to Jammu Development Authority.
“We further hold that the assessee was under no obligation to deduct TDS on interest payments made to the JDA on its fixed deposits in terms of Section 194A of the Income Tax Act. The JDA being a corporation established by the State Act. i.e the Development Act 1970 was, thus, outside the purview of sub-section (1) of Section 194A of the Income Tax Act” the Bench concluded.
The Calcutta High Court quashed an assessment notice under Section 154 of the Income Tax Act, 1961 issued against dead person.
A Single Bench of Justice Md Nizamuddin observed that “Considering the facts and circumstances of the case as appears from record and submissions of the parties, this writ petition is disposed of by quashing the aforesaid impugned notice under Section 154 of the Income Tax Act. However, quashing of the notice will not be a bar on the part of the respondent Income Tax Authority concerned to issue any fresh notice in future in accordance with law.”
The High Court of Andhra Pradesh has held that the time limit imposed on the claim of Input Tax Credit (ITC) under Section 16(4) of the Central Goods and Services Tax (CGST) Act, 2017 is not in violation of constitutional provisions.
In conclusion, the division bench comprising Justice U. Durga Prasad Rao and Justice T. Mallikarjuna Rao dismissed the writ petition and upheld the constitutionality of the time limit prescribed for claiming ITC under Section 16(4) of the CGST Act citing that the same is not violative of Articles 14, 19(1)(g) and 300-A of the Constitution of India.
The High Court of Andhra Pradesh has held that Section 16(2) of the Central Goods and Services Tax (CGST) Act, 2017 does not possess an overriding effect on Section 16(4), as both sections are considered mutually exclusive and independent in their operation.
In conclusion, the division bench comprising Justice U. Durga Prasad Rao and Justice T. Mallikarjuna Rao dismissed the writ petition emphasising the interpretation and application of Section 16(2) and Section 16(4) of the CGST Act and thus resolved the complexities surrounding these Sections.
The Supreme Court of India upheld the decision of the Kerala High Court in Shabu George vs State Tax Officer wherein it was held that Revenue Department cannot seize cash that does not form part of stock in trade in Goods and Service Tax (GST) case.
A Two-Judge Bench comprising of Justices BV Nagarathna and Ujjal Bhuyan observed that “We are not inclined to interfere with the judgment and order impugned in this petition. The special leave petition is, accordingly, dismissed.”
The Andhra Pradesh High Court has held that the acceptance of belated returns of the assessee by the department along with the late fee is not a valid ground to exonerate the assessee from the time limit for Input Tax Credit (ITC) claim under Section 16(4) of the Andhra Pradesh Goods and Services Tax (APGST) Act and Central Goods and Services Tax (CGST) Act, 2017.
In conclusion, the division bench comprising Justice U. Durga Prasad Rao and Justice T. Mallikarjuna Rao dismissed the writ petition filed by Thirumalakonda Plywoods against the Assistant Commissioner of State Tax and others.
In a major decision the Andhra Pradesh High Court condoned a delay of 25 days and noted that the mandatory 10% pre-deposit for filing Goods and Service Tax (GST) appeal is not possible if the bank account is freezed.
“We are not convinced with the reasons assigned by the learned Commissioner in rejecting the appeal. Since, it is within the condonable period of limitation as the cause for the delay is suffice to entertain the appeal. On appreciation of the language employed under Section 107 (4) of CGST Act and in the back drop the factual and legal background, we are of the view that the impugned order deserves to be set aside” the Court noted.
The Delhi High Court has held that Tax Deducted at Source (TDS) is not deductible on commission paid to non-resident agents overseas.
The division bench comprising of Justice Vibhu Bakhru and Justice Amit Mahajan observed that “there is no material on record to even remotely suggest that the non-resident, who had been paid the export commission had any permanent establishment in India; had carried on any business within the taxable territory in India; or had any business connection in India rendering them liable to pay tax under the Act.” While dismissing the appeal of revenue, the Court held that there is also no allegation that the payments made were not bona fide expenses.
The Delhi High Court directed Legal Metrology Department to refund compounding fee paid by Oil Marketing Companies and noted that compounding fee is not Tax or Duty.
The Bench concluded by noting that “In view of the aforesaid, we find merit in the challenge raised by the appellants and find ourselves unable to uphold the view taken by the Single Judge that the prayer for refund of compounding fee was liable to be refused.”
The Punjab and Haryana High Court granted bail in 4.61 crores revenue fraud case as there is no justification for further pre-trial incarceration.
The Court further noted that if the petitioners fail to comply with this condition, then on this ground alone, the bail might be cancelled, and the complainant may file any such application for the cancellation of bail, and State shall file the said application.
In a recent decision the Himachal Pradesh High Court ruled that the remedy for proceedings lies before the Debt Recovery Tribunal (DRT) on initiation of proceedings under Section 13(4) of the Securitization and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 (SARFAESI Act).
A Division Bench comprising Justices Tarlok Singh Chauhan and Ranjan Sharma observed that “The instant petition is not maintainable and is accordingly dismissed leaving open to the petitioner-firm to avail remedy under Section 17 of the SARFAESI Act as and when Section 13(4) thereof is invoked by the respondent-Bank. However, it is made clear that we have not expressed any opinion on the merits of the case and all issues are left open to be urged before the competent authority. Pending application(s), if any, also stands disposed of. The parties are left to bear their own costs.”
In a recent decision the Madras High Court directed the Goods and Service Tax (GST) Department to de-freeze bank account on payment of first instalment of tax portion in the matter of cancellation of GST registration.
A Single Bench of Justice S Srimathy observed that “Therefore, the petitioner is directed to pay the entire tax portion in four equal instalments. As far as the interest portion is concerned, that will be considered after the payment of the tax liability.” The Court further directed to pay the first instalment within a period of one week from the date of receipt of a copy of this order. On such payment the respondents are directed to de-freeze the petitioner’s bank account. The respondents were also directed to file counter affidavit.
In a recent case, the Delhi High Court has set aside the reassessment order since the Assessing Officer (AO) refused to consider the bank statement and D- MAT account of the assessee.
While allowing the appeal, the division bench comprising Justice Rajiv Shakdher and Justice Girish Kathpalia the AO passed a fresh order. However, before the AO proceeds to pass a fresh order, he will furnish the petitioner with the information/material that he has in his possession.
The Delhi High Court directed the Assessing Officer (AO) to refund the amount Delhi Value Added Tax (DVAT) Act since it was not recoverable.
A division bench comprising Justice Vibhu Bakhru and Justice Amit Mahajan directed the concerned authority to refund the remaining withheld amount of amount ₹10,43,918/- along with interest with effect from 01.06.2015 and recompute the interest for the amount of ₹44,14,979/- as refunded in terms of the order dated 01.02.2023 and refund the interest due after adjusting the amount of ₹7,983/- already disbursed.
In a recent case, the Delhi High Court directed the Goods and Service Authority to reconsider the matter since the GST refund was rejected based on a mismatch without considering the Reconciliation statement.
A division bench comprising Justice Vibhu Bakhru and Justice Amit Mahajan set aside the impugned Order and restored the petitioner’s applications for a refund before the Adjudicating Authority for determining the amount of refund payable to the petitioner after affording the petitioner an opportunity to be heard.
The Calcutta High Court was directed to file representation before the additional secretary since the execution of subsisting government contracts awarded in the pre or post-Goods and Service Tax (GST) regime without updating the Schedule of Rates(SOR).
After considering the issue, the single-judge bench of Justice Md. Nizamuddin directed the petitioner to file an appropriate representation before the Additional Chief Secretary, Finance Department, Government of West Bengal within four weeks from the date. “The Additional Chief Secretary, Finance Department shall take a final decision within four months from the date of receipt of such representation after consulting with all other relevant departments concerned.”, the bench added.
The Kerala High Court in a recent decision quashed cancellation of Goods and Service Tax (GST) Registration on absence of reasonable opportunity of being heard.
“The requirement that the succeeding Officer should put the assessee on notice is thus better emphasised by the usage of the words “proper Officer” in the proviso to Section 29(2) of the GST Act. The necessary implication is that the proper officer has to hear the concerned person before cancelling the registration, which would mean that the assessee is put on notice by the succeeding officer also” the Bench concluded.
In a recent decision the Orissa High Court ordered to deposit entire tax demand as interim measure after considering the fact of the non-constitution of Goods and Service Tax Appellate Tribunal (GSTAT).
A Division Bench of Justices BR Sarangi and MS Raman observed that “Since the petitioner wants to avail the remedy under the provisions of law by approaching 2nd appellate tribunal, which has not yet been constituted, as an interim measure subject to the Petitioner depositing entire tax demand within a period of four weeks from today, the rest of the demand shall remain stayed during the pendency of the writ petition.”
The Delhi High Court quashed income tax notice issued on mistaken belief that entire property is in ownership of alleged tax defaulter.
A Division Bench of Justices Girish Kathpalia and Rajiv Shakdher observed that “The respondents opted not to resist this writ action. Learned counsel for respondents who appeared in the High Court submitted on the basis of instructions that in the subject property, it is only the basement which is owned by Romesh Sharma and that Romesh Sharma has no right, title or interest in rest of the floors of the said property. That being so, the impugned notice issued by respondent no. 2 cannot survive.”
The Bench further noted that so far as the rejection order, impugned in the present writ petition is concerned, the petitioners have to initiate fresh steps. For, the impugned rejection order issued by respondent no. 3 was not premised on the notice issued by respondent no. 2. “In view of above discussion, the writ petition is disposed of, thereby quashing the impugned notice issued by respondent no. 2” the Bench concluded.
In a recent decision a division Bench of the Bombay High Court quashed a service tax notice issued after a span of 10 years.
“In our opinion, the directions as made in such order are required to be read in the facts and circumstances of the case before the Court. It also cannot be said that any concrete proposition of law has been laid down in the said order to the effect that even if there exists a gross, unjustifiable and inordinate delay in adjudication of the show cause notice, the Revenue could nonetheless proceed to adjudicate the same” the Court said.
In a major decision the Bombay High Court observed that the time limit under Section 153 of the Income Tax Act, 1961 prevails over assessment time limit prescribed under Section 144C of the Income Tax Act, 1961.
A Division Bench of Justices Firdosh P Pooniwalla and KR Shriram observed that “In our view, the assessment has to be concluded within twelve months as provided in Section 153(3) of the Income Tax Act when there has been remand to the AO by the ITAT under Section 254 of the Income Tax Act. Within this twelve-month prescribed, the AO has to ensure that the entire procedure prescribed under Section 144C of the Income Tax Act is completed and pass a final assessment order.”
The High Court of Gujarat has upheld the eligibility of M/S. FTA HSRP Solutions Pvt. Ltd. to avail the benefits under the Sabka Vishwas (Legacy Dispute Resolution) Scheme (SVLDRS), 2009 as the service tax liabilities were already admitted and paid before the cut-off date of 15th January 2020, as required by the scheme.
The division bench comprising Justice Biren Vaishnav and Justice Devan M. Desai ruled in favour of the assessee, quashing the two orders and directing the revenue authorities to accept the assessee’s declaration and close the matter.
The Delhi High Court dismissed the appeal of the Income Tax department since the Assessment was completed, the issue was resolved and Affirmed by Supreme Court.
The Court found that the above-said judgment has been affirmed by the Supreme Court in Principal Commissioner of Income Tax, Central-3 vs Abhisar Buildwell, 2023. Since no substantial question of law arises, the division bench comprising Justice Rajiv Shakdher and Justice Girish Kathpalia dismissed the appeal.
In a recent case, the Delhi High Court set aside the reassessment order passed without considering the reply of the assessee.
It was evident that the bank statement and the D-MAT for the concerned AY have not been noticed. set aside the impugned order dated 24.03.2023 passed under Section 148 A(d), and the consequent notice of even date, i.e., 24.03.2023 issued under Section 148 of the Act. While allowing the appeal, the division bench comprising Justice Rajiv Shakdher and Justice Girish Kathpalia has directed the AO to pass a fresh order, albeit after taking into account the reply filed by the petitioner.
The Delhi High Court has held that the Income Tax exemption under section 10(23C)(iiiac) of the Income Tax Act, 1961 is allowable only when 50% of total receipts of grants are received by the Institute of Liver and Biliary Sciences from Government.
A division bench comprising Justice Rajiv Shakdher and Justice Girish Kathpalia held that “If interest is included, then, grant-in-aid provided to the respondent/assessee is more than 50% of the total receipts.”
In a significant case, the Delhi High Court quashed the reassessment proceedings as the delay in issuance notice under section 148A(b) of the Income Tax Act, 1961 due to technical glitches on the Income Tax Business Application (ITBA).
A division bench comprising Justice Rajiv Shakdher and Justice Girish Kathpalia quashed the impugned notice under Section 148A(b) and the impugned order under Section 148A(d) of the Income Tax Act, 1961.
In a recent case, the Orissa High Court held that Goods and Service Tax (GST) appeal cannot be rejected on non-supply of certified copies.
A Division bench comprising Dr Justice B R Sarangi and Justice Murahari Sri Raman observed that nothing has been placed on record to that extent and mechanically the same has been rejected showing a non-supply of the certified copies. While allowing the petition the court set aside the order and remitted the matter back to the appellate authority to entertain the same.
The Himachal Pradesh Court recently observed that the consent of parties for extending arbitral period need not necessarily be in writing.
The Court of Justice Jyotsna Rewal Dua observed that “In view of above discussion on facts & law, it has to be held that consent of the parties envisaged under Section 29A(3) of the 2015 Arbitration & Conciliation Act for extending the arbitral period need not necessarily be either express or in writing. There can be a deemed consent, an implied consent of the parties, which can be gathered from their acts and conduct.”
The Bombay High Court lifted the travel ban on the assessee in the case of the Look Out Circular (LOC) issued by the Income Tax Department due to the lack of contact since she had to accompany her pregnant daughter-in-law to visit the doctor.
A division bench comprising Justice G.S. Patel & Justice Neela Gokhale stayed the LOC until 10th September 2023 since the Petitioner proposes to travel to Dubai to accompany her pregnant daughter-in-law to the doctor. The permission was subject to usual conditions. Further held that the immigration authorities at all ports of departure including all airports will permit the Petitioner passage and permit the Petitioner to take his flights out of the country irrespective of whether the Income Tax Department has notified them or not and irrespective of whether this suspension is noted in the immigration authorities’ systems or not.
The Bombay High Court stayed customs demand on pending of the review petition before the Supreme Court in Canon India case.
A Division Bench of Justices Jitendra Jain and GS Kulkarni observed that “After hearing learned counsel for the parties, it appears that the issues are not different from what the Court considered in the case of Idea Cellular Ltd., Viral Kanubhai Mehta and in the case of Irfan Hajiosman Nursumar. We accordingly pass similar orders on the present proceedings. Hence, Rule. Respondents waive service.”
The Court concluded by noting that “As and by way of ad-interim relief, we stay the impugned order, however, liberty to the respondents to make an application for vacating of the said order in the event the respondents are of the opinion that the same ought not to be continued and/or after the decision of the Supreme Court in the pending Review/Writ Petition in the case of Canon India Pvt. Ltd.”
In a recent decision the Gujarat High Court ordered the refund of Integrated Goods and Service Tax (IGST), with interest in an inadvertent tax case.
The Court further went on to note that the conditions mentioned in the aforesaid notification clearly envisages that all the conditions are not to be fulfilled or complied with by the petitioner but the conditions are to be complied with by the exporter. The petitioner uploaded the refund claim on 12.3.2021 however, the respondent on a technical ground did not grant the refund and passed the impugned order dated 22.6.2021.
“The order dated 22.6.2021 passed by the respondents is hereby quashed and set aside and the respondents are directed to refund the amount of 23,09,100/- with interest applicable as per law within reasonable time from the date of receipt of copy of this judgment. Rule is made absolute” the Bench concluded.
In a recent decision the Kerala High Court observed that the publishing of the Indian Directorate General of Foreign Trade (DGFT) Circular granting 4% of special additional duty (SAD) refund on an official website amount to public notice.
A Single Bench of Justice Dinesh Kumar Singh observed that “I do not find substance in the submission of the Counsel for the petitioner that the public notice was not issued regarding Circular No.18/2013-Cus. dated 29.04.2013. If the said Circular was published on the official website of the DGFT, it amounts that the public notice was given about the Circular.”
The Calcutta High Court in a recent decision observed that an application under Section 34 of the Arbitration Act remains ‘Stillborn’ for the purpose of stay without pre-deposit under Section 19 of the Micro, Small and Medium Enterprises Development Act, 2006.
For the second issue the Court of Justice Moushumi Bhattacharya observed that “Since the petitioner has admittedly not made the pre-deposit under section 19 of the MSMED Act, the section 34 application filed by the petitioner remains eclipsed in the eye of law as the foundation for a prayer for stay of the arbitral award under section 36(2) of the 1996 Act. Therefore, the present application for stay of the impugned award filed under section 36(2) of the 1996 Act cannot be entertained as the said application is foisted on a stillborn section 34 application.”
The Allahabad High Court has held that remedy against provisional attachment must be availed Rule 159(5) of the Central Goods and Service Tax Rules, 2017 before approaching court.
Since the bank account of the petitioner has remained attached since April 2022 a division bench comprising Pritinker Diwaker, Chief Justice and Ashutosh Srivastava, Justice directed the petitioner to approach respondent no. 1 within two weeks from today, under Rule 159 (5) by filing objections the respondent no. 1 shall make all endeavour to take a decision thereupon as per law expeditiously preferably within three weeks of filing such objection under Rule 159 (5) of the CGST rules, 2017.
In a recent case, the Patna High Court deprecates the conduct of state tax authorities in rejecting refund applications stating they can keep it in abeyance until an appeal is filed and restored application.
The Division bench comprising Chief Justice K. Vinod Chandran and Justice Partha Sarthy deprecated the conduct of the Officer in the strongest of terms and allowed the writ petition by setting aside the impugned order. Shri D.V. Pathy, counsel appeared for the petitioner and Shri Vikash Kumar, counsel appeared for the respondents.
The High Court of Karnataka has held that the Automated Teller Machine (ATM) Management Services provided by service provider companies to the banks are not liable to Value Added Tax (VAT) as there is no sale, transfer of ownership or possession involved in such transactions.
The bench cited relevant judgments, including those of the Supreme Court and the Andhra Pradesh High Court and established that the transaction did not involve a transfer of right to use goods, which is a prerequisite for levying VAT and held that ATM Management Services were not liable for VAT. In conclusion, the single bench of Justice S R Krishna Kumar allowed both writ petitions filed by the petitioner and quashed the re-assessment orders and demand notices issued by the respondent revenue authorities.
In a recent decision the Delhi High Court observed that mere use of word ‘arbitration’ or ‘arbitrator’ not enough to constitute an arbitration agreement.
A Single Bench of Justice Jyoti Singh concluded that “I am unable to discern an unambiguous, certain or unequivocal intent of the parties from a reading of Clause 15.7 to resort to arbitration as mode of settlement of their disputes arising out of Agreement. In fact, the plea of the Petitioner is further negated by incorporation of Clause 15.2 in the Agreement which is an exclusive jurisdiction Clause providing for adjudication of disputes through Courts at Delhi.”
In a plea before the Delhi High Court on the issue of communications to suppliers of assessee, Redamancy World without valid provisional attachment order and the GST Department ensured before the Delhi High Court to be “More Careful”.
A Division Bench comprising Justices Vibhu Bakhru and Amit Mahajan observed that “We do not find that there is any specific noting in the files, to the effect that such an action is necessary in the facts of the present case. Although, the files produced today indicate that there are allegations of wrongful availment of Input Tax Credit by the petitioner and the respondent authorities are also investigating the chain of suppliers; there is no order passed by the Commissioner recording his satisfaction that orders of provisional attachment are necessary to safeguard the interests of Revenue.”
Satish Aggarwala, counsel who appeared for the respondents assured before the Delhi High Court that respondents will be more careful in future in ensuring that orders such as attachment of the bank accounts or assets is issued strictly in accordance with the provisions of the CGST Act.
In a recent decision the Allahabad High Court held that goods in transit cannot be treated as non-traceable in presence of Tax Invoice, E-Way Bill and Bilty.
A Division Bench comprising of Justices Ashutosh Srivastava and Pritinker Diwaker observed that “The E-way Bills being the documents of title to the goods were accompanying the goods hence, the conclusion of the revenue that the petitioner was not the owner of the goods is patently erroneous. Consequently, the penalty proceedings were liable to be initiated under Section 129(1)(a) and not 129(1)(b) as has been done in the present case.”
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