This weekly round-up analytically summarizes the key stories related to the Supreme Court and High Court reported at Taxscan.in from May 25, 2024 to May 31, 2024.
SUPREME COURT
The Supreme Court ruled that the Enforcement Directorate ( ED )cannot directly arrest a person under the Prevention of Money Laundering Act ( PMLA ) once a special court takes cognizance of its complaint and the agency will have to approach the court if it wants custody of that person.
The two judge bench of Justices A S Oka and Ujjal Bhuyan held that “After cognisance is taken of the offence punishable under Section 4 of the PMLA based on a complaint under Section 44, the ED and its officers are powerless to exercise powers under Section 19 to arrest a person shown as accused in the complaint. If the ED wants custody of the accused who appears after service of summons for conducting further investigation in the same offence, ED will have to seek custody of the accused by applying to the special court.”
The Supreme Court has dismissed an appeal challenging the retrospective jurisdiction of the National Financial Reporting Authority ( NFRA ) in line with the earlier decision of the National Company Law Appellate Tribunal ( NCLAT ).
The appellants argued that the NFRA lacked the authority to investigate actions predating its formation in October 2018, as the alleged misconduct occurred in 2017-18. However, the NCLAT upheld the NFRA’s decision, affirming its jurisdiction over actions occurring before its establishment and asserting its authority over the Institute of Chartered Accountants of India (ICAI) in such matters.
“We do not find any good ground and reason to interfere with the order of the National Company Law Appellate Tribunal dated 01.12.2023 in Company Appeal (AT) No. 68 of 2023 and hence, the present appeal is dismissed”, the Supreme Court two-judge bench of Justice Sanjiv Khanna and Justice Dipankar Datta noted.
The Supreme Court issued notice on the application seeking condonation of delay and the Special Leave Petition filed by the Customs Department with respect to the Customs Export Promotion Capital Goods ( EPCG ) License.
In view of the decision of the Supreme Court in Sheshank Sea Foods Pvt. Ltd., Karnataka vs. Union of India & Ors reported in (1996), a division bench consisting of Justice Kapil Tandon and Justice Nidhi Wason has issued a notice regarding application seeking condonation of delay as well as on the Special Leave Petition.
The Supreme Court has issued notice after condoning the Income Tax Department’s delay in filing the Special Leave Petition against the Telangana High Court’s decision on the assessment order.
The division bench of the Supreme Court, comprising Justice Neethu Sachdeva and Justice Malekar Nagaraj, observed that the delay was condoned and issued notice on the prayer for interim relief as well as on the Special Leave Petitions
The Supreme Court disposed of the Special Leave Petition ( SLP) , granting liberty to file for an urgent hearing, considering the perishable nature of the seized areca nuts by Customs department. The division bench of Justice Radha Sharma and Justice Malekar Nagaraj disposed of this Special Leave Petition reserving liberty to the petitioner herein to seek an early hearing/advance the case/writ petition either for the purpose of seeking an interim relief or for final disposal of the matter.
The Supreme Court dismissed the civil appeal filed by the customs department, affirming that the Customs Excise and Service Tax Appellate Tribunal ( CESTAT ) did not commit any error in law or fact regarding the demand of differential customs duty.
The division bench of Justice Kapil Tandon and Justice Nidhi Wason noted that the CESTAT has not committed any error in law or fact.
According to the Chennai CESTAT order of this case, the facts states that the company (appellant in CESTAT order and respondent in this Supreme Court order) M/s. PPN Power Generating Co. Pvt. Ltd. (hereinafter referred to M/s.PPN or the importer) have registered themselves under the Project Import Regulations, 1986 to set up a power plant at Pillaiperumalnallur, Thirukadaiyur Post, Nagapattinam District on the recommendation of “Tamil Nadu Electricity Board”.
The Supreme Court of India refused to condone delay in filing review petition against income tax order since the revenue department failed to state reasonable cause of delay.
The Two judge bench of Justice B V Nagarathna and Justice Ujjal Bhuyan held that “there is no error apparent on the face of the record or any merit in the Review Petition, warranting reconsideration of the order impugned.” The Review Petition was dismissed.
The Supreme Court issued notice on application of condonation of delay in filing Special leave petition ( SLP ) by Income Tax Department which arose out of impugned final judgment and order passed by the Telangana High Court. Before the High Court it was challenged on the retrospective effect of Benami Transaction (Prohibition) Amendment Act of 2016 for the transactions in the year of 2011.
The three judge bench of Chief Justice, Justice J B Pardiwala and Justice Manoj Misra issued notice on the application for condonation of delay in filing the petition and on the Special Leave Petition.
In a recent case where the special leave petition ( SLP ) was filed against the Custom Excise Service Tax Appellate Tribunal ( CESTAT ) order, the Supreme Court listed the matter on a miscellaneous day, 26 November 2024. The Tribunal reduced the fines in lieu of confiscation under Excise Rules in the absence of evidence to prove the excessiveness of SSI Exemption limit.
Justice Abhay S Oka and Justice Ujjal Bhuyan listed the matter on non-miscellaneous day
HIGH COURTS
The Delhi High Court quashed the GST Demand order issued under Section 73 of the Central Goods and Services Tax ( CGST ) Act, 2017, directing the proper officer to consider the petitioner’s reply and provide them with an opportunity for a personal hearing.
The division bench, comprising Justices Sanjeev Sachdeva and Ravinder Dudeja, observed that the department simply stated the reply lacked merit without providing any specific reasons or justifications. The order upholding the demand without considering the reply was unsustainable.
A Single Bench of the Kerala High Court has ruled that Clause 16 of the Income Computation and Disclosure Standards ( ICDS ), which mandates the use of the first-in, first-out ( FIFO ) or weighted average cost for inventory valuation, cannot be applied to the opening stock valuation for the Assessment Year 2017-2018.
Justice Dinesh Kumar Singh observed that the retrospective amendment of Section 145A, effective from April 1, 2017, introduced by the Finance Act of 2018, aims to assist assessees who had used FIFO to value their stock in the 2017-18 assessment year, thus ensuring their returns remain valid. However, for those who did not use FIFO, as it was not mandatory, forcing them to adopt FIFO for that year would lead to unjust outcomes.
A Single Bench of the Kerala High Court has directed the Department to either accept the LIFO-based valuation for both opening and closing stock for the 2017-18 assessment year or allow the petitioner to use FIFO or the weighted average cost method for their stock valuation.
The Kerala High Court thus directed the Department to either accept the LIFO-based valuation for both opening and closing stock for the 2017-18 assessment year or allow the petitioner to use FIFO or the weighted average cost method for their stock valuation.
The Madras High Court set aside the GST ( Goods and Services Tax ) demand order passed by rejecting the Revision Petition filed by the petitioner under Section 54 of the TNGST Act, 2017 citing time barred by the limitation. The department was instructed to conduct an enquiry. The court took up the two writ petitions having the same issues.
The bench of Justice P B Balaji, on perusal of the impugned orders noted that despite granting the petitioner liberty to file revision petitions under Section 54 of the TNGST Act, 2006, within 30 days of receipt of a copy of a previous order, the impugned orders rejected the petitions as time-barred.
In a recent ruling, the Kerala High Court passed an interim order staying the recovery proceedings of income tax during the pendency of Condonation application.
The Single Bench of Justice Murali Purushothaman observed the petitioner’s appeal and upheld the petitioner’s plea against the assessment order and ordered the disposal of condonation for the delay and if the delay is condoned consider the stay expeditiously within one month of the date of judgment. The recovery proceedings shall be stayed till then.
The Madras High Court has set aside the Goods and Services Tax ( GST ) assessment order and recovery notice over denial of the Personal Hearing which is a mandatory under Section 75 (4) of the GST Act.
The single bench of Justice Senthilkumar Ramamoorthy invalidated the recovery notice associated with the impugned orders, noting that it also pertained to pending appellate proceedings. Given the compliance with pre-deposit requirements under Section 107 of applicable GST enactments, the stay of recovery remained in force for the appellate proceedings. Accordingly, the writ petition was disposed of.
The Kerala High Court directed to consider the request of supplementary claim against shipping bills as there was failure of Customs Department to amend shipping bills.
A Single Bench of Justice Dinesh Kumar Singh observed that “Considering the said stand of the Revenue the present writ petition is disposed of with direction to the 3rd respondent to consider the requests of the petitioner afresh and pass orders, in accordance with the law, expeditiously.”
In a recent ruling, the Kerala High Court passed an interim order staying the recovery proceedings of income tax during the pendency of Condonation application.
The Single Bench of Justice Murali Purushothaman observed the petitioner’s appeal and upheld the petitioner’s plea against the assessment order and ordered the disposal of condonation for the delay and if the delay is condoned consider the stay expeditiously within one month of the date of judgment. The recovery proceedings shall be stayed till then.
The Madras High Court has set aside the Goods and Services Tax ( GST ) assessment order and recovery notice over denial of the Personal Hearing which is a mandatory under Section 75 (4) of the GST Act.
Single bench of Justice Senthilkumar Ramamoorthy set aside the challenged orders and remanded the matters to the respondent for reconsideration. The respondent was instructed to afford the petitioner a reasonable opportunity, including a personal hearing, and to issue fresh orders within two months.
The Kerala High Court directed to consider the request of supplementary claim against shipping bills as there was failure of Customs Department to amend shipping bills.
A Single Bench of Justice Dinesh Kumar Singh observed that “Considering the said stand of the Revenue the present writ petition is disposed of with direction to the 3rd respondent to consider the requests of the petitioner afresh and pass orders, in accordance with the law, expeditiously.”
The Allahabad High Court has held that the burden to prove the double movement of goods based on the same documents lies on the department. The Court were deciding on the appeal against the seizure order imposing penalty under Section 129(3) of the Uttar Pradesh Goods and Service Tax Act, ( UPGST ) 2017.
A single bench of Justice Shekhar B. Saraf held that it is the duty of the authorities to ascertain whether the double movement of the goods has taken place actually.
The Kerala High Court has held that additional income of assessee cannot be treated as concealed income for the purposes of Section 271(1)(c) of the Income Tax Act, 1961. It was held that the honesty of an assessee cannot attract the penal provisions under the Income Tax Act, and the essential pre-conditions for the invocation of the provisions of Section 271(1)(c) of the Income Tax Act against the assessee were not established.
The division bench of Justice A.K. Jayasankaran Nambiar and Justice Syam Kumar V.M. has observed that a satisfactory explanation has been offered by the assessee, well before the issuance of a notice to him under Section 148 of the Income Tax Act, and the admission of additional income made by the assessee has been accepted by the department that completed the assessment under Section 143 read with Section 147 of the Income Tax Act.
In a significant case, the Sikkim High Court has directed Glenmark to follow the procedure prescribed under the Central Excise Act for claiming budgetary support. The court held that the petitioner is not entitled to any relief as sought in the writ petition.
The single bench of Justice Bhaskar Raj Pradhan has observed that when the petitioner was required by the authorities to modify their initial applications to a quarterly basis as required under the law, they had no choice but to reflect the balance of the ITC of CGST for the month of September 2017 as well. The court held that the petitioner is not entitled to any relief as sought in the writ petition.
The Kerala High Court stated that a Resolution Professional appointed under the Insolvency and Bankruptcy (IB) Code for carrying the Corporate Insolvency Resolution Process (CRIP) of the Company cannot be hauled up in a criminal case against the Company.
Justice Bechu Kurian Thomas directed that the Resolution Professional was not required to appear in person before the Special Court for PMLA cases, until further orders.
In a recent case, the Delhi High Court rejected the appeal against the Insolvency Bankruptcy Board of India ( IBBI ) as it was barred by the principle of resjudicata. It was observed that the appeal is not maintainable as the petitioner had challenged the very same through the Special Leave Petition ( SLP ) and had been dismissed as withdrawn unconditionally
The two judge bench of the Acting Chief Justice and Justice Manmeet Pritam Singh Arora held that “In view of the unconditional withdrawal of the SLP, the Court is of the view that the present appeal is not maintainable as it is barred on the principle of constructive res judicata.”
The Delhi High Court has held that ‘Co-Ordinated Investigation’ to avoid tax evasion is good ground for transferring the case from the Income Tax Officer ( ITO ) to the Deputy Commissioner of Income-tax ( DCIT ) and refused to interfere with the order of passed under section 127 of the Income Tax Act, 1961.
The Division Bench comprising Justice Yashwant Varma and Justice Purushaindra Kumar Kaurav observed that the administrative convenience of the Revenue and the need for ‘coordinated investigation’ would take precedence over the logistical difficulties faced by the Assessee, and reiterated. that Section 127, a machinery provision, the powers thereunder can be exercised for larger public interest and to fulfil the bona fide objectives of the Act
The Delhi High Court observed that winding up proceedings in nascent stage before the High Court (HC) can be transferred to the National Company Law Tribunal ( NCLT ).
A Single Bench of Justice Dharmesh Sharma observed that “In view of the above, while it is the opinion of this Court that the present winding up petition is maintainable against the respondent company, since these proceedings are still at a nascent stage and no substantive orders have been passed towards the winding up of the respondent company, it would be appropriate for the same to be transferred to the National Company Law Tribunal. “In this regard, it would be expedient to consider that during the pendency of the present petition the Insolvency and Bankruptcy Code, 2016 has been enacted, along with the introduction of Companies Act, 2013. It is necessary to consider Section 434 of the said Act, which provides for the transfer of proceedings relating to winding up, pending before High Courts, to the NCLT”
The Madhya Pradesh High Court held that the executing court can determine if stamping on arbitral award meets requirements under the Indian Stamp Act, 1899.
A Single Bench of Justice Duppala Venkata Ramana observed that “In the instant case the Executing Court had erred in rejecting the objections filed by the petitioner without holding whether the award is ‘adequately stamped’ as per the Indian Stamp Act Schedule-I-A, Article 12. The Executing Court ought to have decided whether the award is required to be stamped and registration under Schedule 1-A, Article 12. The Executing Court ought to have passed a reasoned order on the second objection i.e. the award is not adequately stamped”.
In a landmark decision, the Telangana High Court upheld the jurisdiction of Revenue Division Officer to issue Occupancy Rights Certificates in ‘Service Inam’ land cases.
The Division Bench of Chief Justice Alok Aradhe and Justice Anil Kumar Jukanti held that “Learned Single Judge has rightly held that the proviso to Section 4(1) of Inams Act, 1955 was inserted by 1994 Amendment Act and though the Statement of Objects and Reasons expressed the intention of the legislature to exempt the village service Inams and Inams held by religious and charitable institutions from abolition, in the face of this specific proviso introduced by way of the aforementioned proviso, it is not open to the appellant to plead exclusion of the jurisdiction of respondent No.2 to consider grant of ORC even in respect of Inams held by the institution
The Allahabad High Court imposed costs of Rs 50,000 for filing false affidavits before revenue authority to get widow’s property.
A Single Bench of Justice Manish Kumar held that “In view of the facts and circumstances of the present case, it is found that the petitioners had filed false affidavits before the courts just to grab the property of a widow lady and mislead the Courts at every stage, even in the present writ petition. The petitioners are not only cheating or deceiving the widow lady that is the wife of Late Ram Gopal but also misleading the Courts and concealed the relevant facts by not enclosing the copy of revision.”
In a recent judgement, the Kerala High Court ( HC ) upheld the validity of GST notifications which extended the timelines for passing order under section 73 of Central Goods and Services Tax Act, 2017 (CGST Act) for financial year 2017-18.
It was observed by the court that the Government is well within the power to extend the limitation for completing the proceedings and taking action under section 73 by issuing notification under Section 168A if there is force majeure.
The Orissa High Court has held that information related to the outcome of a tax evasion petition sought under the Right to Information Act cannot be provided. The court held that no illegality or irregularity had been committed by the authority in passing the orders.
The division bench of Justice B.R. Sarangi and Justice G. Satapathy has observed that the claim of the petitioner about the supply of information sought in the application filed under the Right to Information Act is not permissible in view of the provisions contained under clause (i) of Section 8(1) of the Right to Information Act. As per Section 8(1)(i), there shall be no obligation to give any citizen cabinet papers, including records of the deliberations of the Council of Ministers, Secretaries, and other officers.
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