This weekly round-up analytically summarizes the key tax judgments of the Supreme Court and all High Courts reported at Taxscan.in during the previous week from March 2nd to March 9th of 2024.
The Delhi High Court remitted the matter to the file of the Proper Officer as no opportunity was granted by the GST Proper Officer to furnish requisite details.
A Division Bench of Justices Ravinder Dudeja and Sanjeev Sachdeva observed that “Proper officer had to at least consider the reply on merits and then form an opinion whether the explanation was sufficient or not. He merely held that no proper reply/explanation has been received which ex-facie shows that proper officer has not even looked at the reply submitted by the petitioner. Further, if the Proper Officer was of the view that reply is incomplete and further details were required, the same could have been sought from the petitioner, however, the record does not reflect that any such opportunity was given to the petitioner to clarify its reply or furnish further documents/details.”
In a recent decision, a division bench of the Delhi High Court observed that Proper Officer should reach objective satisfaction before cancelling GST Registration retrospectively.
The counsel for petitioner submitted that the petitioner submitted an application seeking condonation of delay in filing the application seeking revocation of cancellation of registration whereby the Petitioner stated that he was not well and his tax consultant did not inform him of filing the said returns, however, he was ready to file the returns and pay the tax liability including the payment of penalty. The Court of Justices Ravinder Dudeja and Sanjeev Sachdeva observed that “In terms of Section 29(2) of the Central Goods and Services Tax Act, 2017, the proper officer may cancel the GST registration of a person from such date including any retrospective date, as he may deem fit if the circumstances set out in the said sub-section are satisfied. The registration cannot be cancelled with retrospective effect mechanically. It can be cancelled only if the proper officer deems it fit to do so. Such satisfaction cannot be subjective but must be based on some objective criteria.”
A Division Bench of the Kerala High Court held that affording personal hearing is mandatory prior to issuance of an order Section 148A(d) of the Income Tax Act. The Revenue preferred the appeal before the Division Bench impugning the judgment of the Single Judge.
It was observed that the question whether affording a personal hearing to the assessee is mandatory in an enquiry under Section 148A(b) of the IT Act came up for consideration recently before the Division Bench of this Court in Income Tax Officer v. Asamannoor Service Co-operative Bank Limited. The Bench noted that, “It was held that Section 148A of the IT Act contemplates that the assessee should be granted an opportunity of being heard and that opportunity must include the right of personal hearing as well.”
A Division Bench of the Kerala High Court emphasized the mandatory nature of providing a personal hearing before issuing an order under Section 148A(d) of the Income Tax Act. The Revenue appealed the Single Judge’s decision, challenging it before the Division Bench.
The court observed that the necessity of providing a personal hearing to the assessee in an inquiry under Section 148A(b) of the IT Act had recently been considered by the Division Bench in the case of Income Tax Officer v. Asamannoor Service Co-operative Bank Limited. The Bench concluded that Section 148A of the IT Act mandates granting the assessee an opportunity of being heard, including the right to a personal hearing.
Rejecting the bail plea of the petitioner, A Single Bench of Rajasthan High Court held that, “the Court has to keep the nature of evidence and accusation in mind and then decide the bail applications accordingly”. Counsel for the petitioner submitted that the petitioner has been impleaded as accused in the instant case on the basis of his confessional statement recorded under Section 70 of the Goods and Services Tax Act, 2017.
The Bench observed that, “The economic offence, having deep rooted conspiracies and involving huge loss of public exchequer, needs to be viewed seriously and considered as grave offence, affecting the economy of the Nation as a whole and thereby posing serious threat to the financial health of the Country. Economic offence is always committed by a person with calculated design profiting himself regardless of the consequences to the community.”
In a recent decision, the Delhi High Court observed that the GST registration cannot be cancelled with retrospective effect mechanically. The petitioner impugned the order of cancellation of registration dated 10.06.2022 whereby the GST registration of the Petitioner has been cancelled retrospectively with effect from 01.07.2017 and the Show Cause Notice dated 18.11.2021.
The Show Cause Notice dated 18.11.2021 was issued to the petitioner seeking to cancel its registration on the ground “Collects any amount as representing the tax but fails to pay the same to the account of the Central”. However, no details were mentioned in the Show Cause Notice about the tax collected but not deposited. Further, said Show Cause Notice also does not put the petitioner to notice that the registration is liable to be cancelled retrospectively. Accordingly, petitioner had no opportunity to even object to the retrospective cancellation of the registration.
The Delhi High Court quashed the show cause notice ( SCN ) as there was no specific mentioning of retrospective cancelling of GST Registration in it.
The counsel for the petitioner submitted that the registration of the petitioner was cancelled by Impugned Order dated 11.08.2021 with effect from 30.06.2020. Pursuant to the said impugned order, an application seeking revocation of cancellation dated 01.09.2021 was filed by the petitioner whereby the registration was restored.
A Division Bench of Justices Sanjeev Sachdeva and Ravinder Dudeja observed that “We notice that the impugned Show Cause Notice and the impugned order are also bereft of any details and accordingly the same cannot be sustained. Neither the impugned Show Cause Notice, nor the impugned order spell out the reasons for retrospective cancellation.”
The Calcutta High Court has held that the City Civil Court and Commercial Division Court have Concurrent Jurisdiction on petition filed under section 9 of the Arbitration Conciliation Act, 1996.
Section 12(2) of The Commercial Courts Act, which deals with the determination of specified value, further takes into account the aggregate value of the claim and counter-claim as set out in the Statement of Claim and Counter-Claim in an arbitration of a commercial dispute as the basis for determining whether the arbitration is subject to the jurisdiction of a Commercial Division, Commercial Appellate Division or Commercial Court, as the case may be. Further, section 2(1)(e)(i) of The Arbitration and Conciliation Act, 1996, does not envisage any form of conflict between the Principal Civil Court of Original Jurisdiction in a District and the High Court exercising its Ordinary Original Civil Jurisdiction in the same District. Section 2(1)(e)(i) is inclusive and treats the High Court also to be a principal Civil Court in a District which is empowered to decide the questions forming the subject matter of the arbitration in exercise of its Ordinary Original Civil Jurisdiction, in the same manner as in a suit. Section 2(1)(e)(i) of the 1996 Act may be contrasted with section 10(3) of The Commercial Courts Act, 2015 which expressly excludes a High Court where an application under the 1996 Act has been filed before any principal Civil Court of Original Jurisdiction in a District where the Commercial Court having territorial jurisdiction over the arbitration would be the proper Court.
Justice Moushumi Bhattacharya observed that the petitioner has not been able to establish any facts which would attract the jurisdiction of the Calcutta High Court.
In a ruling in favour of Mitsubishi Corporation India P Ltd, the Delhi High Court held that disallowance under section 40(a)(i) of the Income Tax Act, 1961 is not applicable in view of the provision of Double Taxation Avoidance Agreements (DTAAs) entered into by India with Japan and the USA.
The Court observed that it was not obliged to deduct TAS from payments made to MC Metal (Thailand) and Metal One (Singapore). Chargeability to tax is the paramount condition for triggering the obligation to deduct TAS. The plain language of sub-section (1) of Section 195 brings this aspect of the matter to the fore.
In a recent development, the Calcutta High Court has disposed of a writ petition, instructing the concerned assessee to initiate the application process for the refund of an amount purportedly forcibly recovered under the Goods and Services Tax ( GST ) Act.
In light of this submission, the Single Bench of Justice Md. Nizamuddin directed the petitioner to submit an application under Section 54 of the CGST Act within ten days from the date of the order.
The Delhi High Court directed re-adjudication in the case of GST registration cancellation based on allegations of tax evasion, as there was material available to establish the petitioner firm’s involvement in a significant tax evasion scam.
Mr. Rajeev Aggarwal representing the respondent observed that there was material available to establish that the petitioner firm was involved in a big scam of evasion of tax. However, it was considered that the said material has not been provided to the petitioner in support of the show cause notice.
In a recent ruling, the Delhi High Court emphasized the importance of due consideration of petitioner responses by Goods and Service Tax ( GST ) Proper Officers before forming opinions. The court directed the officer to intimate the petitioner about any required details or documents and ensure their fair assessment.
A division bench comprising Justice Sanjeev Sachdeva and Justice Ravinder Dudeja observed that the impugned order merely stated that the petitioner had not provided the necessary details. Consequently, the court directed the Proper Officer to promptly inform the petitioner about any required documents or information within one week.
In a significant case the Delhi Court held addition should not be made towards the income without reacting to the books of accounts. Therefore the bench dismissed the appeal file dby the revenue. The respondent-assessee Forum Sales Pvt. Ltd is a company which deals in gift items and novelties, pet treat products, market survey and research and commission business and is engaged in providing corporate gifting solutions to various companies.
A search, seizure and survey operation under Section 132/133A of the Act was conducted on the AMQ group of companies including the office premises of the respondent-assessee. Consequently, a notice under Section 153A of the Act was issued to the respondent-assessee for filing its income tax return Accordingly, the respondent-assessee filed its ITR declaring income of Rs.66,53,882/- for AY 2014-15. Thereafter, the Assessing Officer passed an order under Section 143(3) of the Act, assessing the income of the respondent-assessee at Rs.11,11,66,320/- by making the additions.
The Delhi High Court in a significant case directed to furnish documents required to the commissioner of GST for cancelling GST registration. The court observed that the petitioner has failed to submit the documents required by the GST department.
According to the respondent counsel each time the petitioner applied for cancellation, the petitioner was required to furnish further details. However, since the details were not furnished, applications were rejected. Further the respondent counsel submitted that petitioner was not found functioning at the registered address of the petitioner as given by the petitioner in GST registration. Since the petitioner has already shut his business and intimated the Department of the closure of his business, the petitioner could not have been found functioning at the given address.
The Delhi High Court recently held that interest of IGST refund could not be denied under section 56 of DGST/CGST Act, 2017,even if it was not claimed in the refund application.
It was observed that Section 56 of the CGST/DGST Act provides that “if any tax ordered to be refunded under sub-section (5) of Section 54 is not refunded within 60 days from the date of receipt of application under sub-section (1) of that Section, interest at the rate of 6% shall be payable in respect of such refund from the date immediately after the expiry of 60 days from the date of the receipt of the application till the date of refund of such tax”.
In a significant case the Delhi High Court held that inadequacy of enquiry by the AO with the certain claims would not in itself be a reason to invoke the powers enshrined in Section 263 of the Income Tax Act,1961
After analyzing the facts and submissions the division bench of Justice Sanjeev Sachdeva and Justice Ravinder Dudeja, observed that inadequacy of enquiry by the AO with respect to certain claims would not in itself be a reason to invoke the powers enshrined in Section 263 of the Income Tax Act.
A Single Bench of the Calcutta High Court has quashed an order issued under Section 73(9) of the Goods and Services Tax Act, 2017, for non-consideration of hearing extension/adjournment application submitted by the petitioner.
The Bench of Justice Raja Basu Chowdhury observed that, “Although, the discretion to grant an adjournment vests in the authority, in my view such discretion must be exercised judiciously. The manner in which the respondent no.1 has proceeded to pass the final order without granting extension to the petitioner either to file its response or to be offered personal hearing, despite the petitioner showing sufficient cause, appears to be a colorable exercise of power by the said authority.”
The Telangana High Court set aside the proceedings initiated under Section 73 of the Goods and Services Tax Act, for not being sustainable as tax and interest were remitted by the petitioner as per audit before the issuance of the Show Cause Notice.
The Bench observed that, “Section 74 would get attracted only in the event of there being strong materials available on record to show that the petitioner had played fraud or there was any misstatement made by him and there being any suppression of fact.” It was also noted that, “Further, keeping in view the provisions of Sub-Sections (5) and (6), it will go to establish that once having discharged their tax liability also by paying interest on the said tax payable, then no further proceedings could be drawn for the same tax any further.” The Bench also added that, “This view of the Bench stands further fortified from reading of Sub-Section (8) as well which again gives an indication that if necessary compliance in respect of tax as is stipulated under Sub-Sections (1) and (3) is paid along with interest even after issuance of show cause notice, even then the penalty cannot be levied and the notice proceedings shall be deemed to have been concluded.”
A Single Bench of the Madras High Court has held that PayPal is a valid mode for receipt of foreign export proceeds under Foreign Exchange Management Act and Goods and Services Tax Act.
The Single Bench also remarked that, “As per Section 16(2) of the Integrated Goods and Services Act, 2017, a supplier effecting ‘zero rated supply’ is entitled to avail Input Tax Credit notwithstanding such supply are exempt from payment of tax. Reason for such refund is to reduce the burden of tax on exports to make exports competitive.” It was noted that, “There is no dispute that the petitioner is providing services of its clients through its online portal to customers/client. The payments for the services provided by the petitioner are routed through an intermediary namely Paypal with whom the petitioner has an arrangement.” The Bench further observed, “As an intermediary, Paypal directly credits the amounts received in Indian currency directly into the petitioner’s account. As far as export proceeds, the amounts are received in convertible foreign exchange by the said intermediary namely Paypal. The amounts are first credited into its account with CITI Bank of the said intermediary namely Paypal. Thereafter, amounts in Indian currency are transferred from the intermediary’s CITI Bank account to the petitioner’s account with HDFC Bank after deduction of its service charges.”
The Delhi High Court in a significant case directed to consider the date of show cause notice for canceling the Goods and Service Tax ( GST ) registration of Household trading.
The bench observed that In terms of Section 29(2) of the Central Goods and Services Tax Act, 2017, the proper officer may cancel the GST registration of a person from such date including any retrospective date, as he may deem fit if the circumstances set out in the said subsection are satisfied. Registration cannot be canceled with retrospective effect mechanically. It can be canceled only if the proper officer deems it fit to do so. Thus Merely, because a taxpayer has not filed the returns for some period does not mean that the taxpayer’s registration is required to be canceled with retrospective date also covering the period when the returns were filed and the taxpayer was compliant.
In a recent case, the Delhi High Court restored the Canceled Goods and Service Tax ( GST ) registration by a proper officer without applying the mind. The petitioner Euro Pvc Fabric filed the writ petition against the cancellation of GST registration. The respondent canceled the GST registration of the petitioner with effect from 31.12.2020.A show cause notice issued to the petitioner. However petitioner failed to reply or to appear for personal hearing on the appointed date and time, the case would be decided ex parte.
It was observed by the court that The reason for cancellation of registration did not mention the cancellation order dated 18.10.2021. The order records that the amount payable by the petitioner based on the computation is shown as “0.0” i.e. Nil. Counsel for the respondent argued that the order is a mere system generated order.
In a recent case, the Delhi High Court directed re-adjudication towards the Show Cause Notice issued in respect of wrongly claimed Goods and Service Tax Credit.
It was observed by the court that the order dated 22.12.2023 recorded “Since, no payment has been made within 30 days of the issue of the notice by you; therefore, on the basis of documents available with the department and information furnished by you, if any, demand is created for the reasons and other details attached in annexure” After determining the order the bench observed that the proper officer merely held that “ since no payments has been made within 30 days of the issue of notice by you and no proper reply/explanation has been received”
The Allahabad High Court upheld the penalty under Section 129(3) of the Goods and Services Tax Act, 2017 ( GST Act ) for late production of E-way bill.
A Single Bench of Justice Shekhar B. Saraf observed that “The petitioner, in the present case, could not explain the absence of invoice and e-way bill with a proper and reasonable explanation. Ergo, he has not been able to rebut the presumption of evasion of tax. Mere furnishing of the documents subsequent to the interception can not be a valid ground to show that there was no intention to evade tax. There must be some reasonable grounds to justify the non-production of documents at the proper time.”
The Delhi High Court determined that the representation of the company in the case must be undertaken by the Provisional Liquidator rather than the former chairman who had resigned. However, the charges framed against the petitioner in his individual capacity have not been interfered with by the Court.
The bench of Justice Navin Chawla observed that “In terms of Section 457 of the Companies Act, 1956 (as was then applicable), it is only the Provisional Liquidator or person authorized by the Provisional Liquidator, who could represent the Company in the trial. The petitioner, therefore, cannot be said to be representing the Company. It is another thing to say that he would face the trial in his individual capacity as an accused, but another thing to say that he would also face the trial as a representative of the Company.”
The Allahabad High Court quashed penalty under Section 129(3) of the Uttar Pradesh Goods and Service Tax Act, 2017 ( UPGST Act ) imposed on slow movement of truck shown which occurred due to mechanical issues in engine.
A Single Bench of Justice Shekhar B. Saraf observed that “The goods were accompanied by the relevant documents and the explanation of the petitioner with regard to slow movement of the goods coupled with GPS tracking system clearly indicate that the truck was moving slowly due to mechanical fault in the engine of the vehicle. This factual aspect should be considered by the authorities below. The breach committed by the petitioner with respect to not extending time period of the e-way bill is only a technical breach and it cannot be the sole ground for penalty order being passed under Section 129(3) of Act. 6. In light of the above, I am of the view that the finding of the authorities with regard to intention to evade tax is not supported by the factual matrix of the case.”
The Jammu and Kashmir and Ladakh High Court ruled that leasehold interest in land is asset of company and capable of valuation. The Assessing Officer adopted the indexed cost of 7150 shares at Rs.2,33,23,300/-, instead of Rs.14,48,59,000/-. As such, the Assessing Officer was of the view that out of rupees ten crore being the sale price, there was a capital gain of Rs.7,66,76,700/- as having been received by the assessee.
A Division Bench of Justices Puneet Gupta and Tashi Rabstan observed that “We are in agreement with the Tribunal that the lease hold interest in the land is an asset of the company and is capable of valuation; as such the same is to be included in the value of asset of M/s. Jyoti Private Limited so as to determine the fair market value of shares held by the assessee as well as other shareholders.”
The Delhi High Court recently decided to cancel Goods and Service Registration of copper business on which the date of application was submitted. The Fact of the case is that the petitioner Laxmi Jain was engaged in the wholesale business of trading and manufacturing of copper and possessed GST registration. Petitioner submitted an application seeking Cancellation of Registration Certificate on 16.05.2019.
It was observed by the court that a taxpayer’s registration can be canceled with retrospective effect only where such consequences are intended and are warranted. Hence the bench observed that Petitioner does not seek to carry on business or continue the registration, the impugned order dated 26.09.2020 is modified to the limited extent that registration shall now be treated as canceled with effect from 16.05.2018 i.e., the date when the application of cancellation of GST registration was submitted. Petitioner shall comply with the requirements of Section 29 of the Central Goods and Services Tax Act, 2017.
The Allahabad High Court ruled that Section 5 of the Limitation Act, 1963 applies to rectification of orders under Section 31 of the Uttar Pradesh Value Added Tax Act, 2008 ( UPVAT Act ). The writ petition is filed under Article 226 of the Constitution of India, wherein the petitioner is aggrieved by the order dated April 6, 2022 passed by the Commercial Tax Tribunal refusing to entertain the rectification application of the petitioner on the ground that the same was time barred.
A Single Bench of Justice Shekhar B. Saraf observed that “Without going into hyper technicality with regard to period of limitation, this Court keeping in mind the Supreme Court judgment for extension of period of limitation and the fact that Section 5 of the Limitation Act would apply to Section 31 of the UPVAT Act is of the view that the delay in filing the rectification application should be condoned. In light of the same, the order dated April 6, 2022 passed by the Tribunal is quashed and set aside with a direction upon the Tribunal to hear the rectification application of the petitioner on merit and decide the same within four months from date.”
The Allahabad High Court has quashed the penalty under Section 129 of the Goods and Services Tax ( GST ) Act stating that the breach committed by the petitioner by not extending the E- way bill is technical and cannot be considered as a sole ground for imposing penalty.
The Court referenced previous judgments, including M/s Hindustan Herbal Cosmetics v. State of U.P. and M/s Falguni Steels v. State of U.P., emphasising the necessity of mens rea to justify tax evasion penalties. It concluded that the factual circumstances of the case did not indicate any intent to evade taxes. Rather, the slow movement of the vehicle stemmed from a mechanical fault in the engine, rendering the breach of the e-way bill’s time extension a technical matter.
The Bombay High Court recently ruled that actual agricultural operation is not necessary condition to qualify as agricultural land and directed to pass fresh assessment order.
A Division Bench of Justices Dr Neela Gokhale and KR Shriram observed that “It is obvious that the matter has been restored to the AO only to examine the evidence filed by petitioner and conducting enquiry, if necessary, with the concerned authorities of the Government to find out the true nature and character of the land sold and only if, the AO comes to a conclusion on the basis of material brought on record that the lands sold by petitioner are not in the nature of agricultural land, can he come to conclusion that the land would come within the purview of “capital asset” as defined under Section 2(14) of the Income Tax Act.”
In a major relief to Shell India Markets Private Limited, the Bombay High Court ruled that no TDS deductible on Business Support Services and it is not taxable as fees for technical services ( FTS ).
A Division Bench of Justices Dr Neela Gokhale and KR Shriram observed that “Even if it is fees for technical or consultancy services, it can be only where fees are paid in consideration for making available technical knowledge, experience etc. Thus the view of the AAR that SIPCL works closely and advises the employees of Petitioner and hence makes available the services is not correct. This view in fact suffers from fallacy since the agreement continues to operate till date. If the view of AAR is to be held as correct then the contract must stand concluded as once the services and the know how, skill etc is transferred to Petitioner, the need of continuing to render said services must end. This is factually not so as the CCA is in effect till date.”
In a significant case, the Delhi High Court while observing the cancellation of GST registration of V-Belt trading modified the retrospectively cancelled the GST registration. The petitioner Shibendra Narayan Guha was engaged in the business of trading of V-Belt (Motor Parts) and possessed GST registration. The petitioner’s GST registration has been cancelled retrospectively with effect from 01.07.2017 due to failure to furnish returns for a continuous period of six months”.
Furthermore the division bench observed that both the Petitioners and the department want cancellation of the GST registration of the Petitioner, though for a different reason. The Petitioner does not seek to carry on business or continue the registration Therefore the division bench of Justice Sanjeev Sachdeva and Justice Ravinder Dudeja, held that the cancelation order dated 11.11.2022 is modified to the limited extent that registration shall now be treated as canceled with effect from 07.10.2022.
The Delhi High Court recently directed the Commissioner, Value Added Tax to consider interest payable towards interest on VAT refund to the petitioner. The petitioner’s plea highlighted the absence of interest despite the credited refund. According to the counsel for the petitioner, the refund amount has been successfully credited to the petitioner’s account following the filing of the petition.
The Delhi High Court ruling affords the petitioner the right to explore further legal remedies in case of disagreement with the speaking order provided. The entire petition was resolved in adherence to the aforementioned terms.
The Delhi High Court modified the retrospective cancellation of GST registration in the case of Gaurav Bansal, who challenged the order dated July 28, 2021, which canceled the GST registration retrospectively from November 15, 2017.
The Division Bench of Justice Sanjeev Sachdeva and Ravinder Dudeja observed that, “a taxpayer’s registration can be canceled with retrospective effect only where such consequences are intended and are warranted.” It was also noted by the Delhi High Court bench that, “according to the respondent, one of the consequences for canceling a tax payer’s registration with retrospective effect is that the taxpayer’s customers are denied the input tax credit availed in respect of the supplies made by the tax payer during such period.”
A Single Bench of the Allahabad High Court granted bail to the applicant, accused of availment of excess input tax credit ( ITC ).
The prosecution story as set up in the FIR filed by the Incharge Inspector, Special Task Force ( S.T.F. ) is that the applicant has availed the input tax credit of more than Rs. 4,28,37,362/- for the period of 2017-18 to 2022-23 without actual movement of goods on the basis of forged and fictitious documents of supplies were procured from various non-existing firms.
A Single Bench of Justice Piyush Agrawal observed that “The department has already issued notice under Section 70 and 74 of the GST Act against the firm of the applicant. Further the record reveals that till date no adjudication order has been passed by the competent authority quantifying the excess availing the input tax credit. The record further reveals that neither any order has been passed by the competent authority cancelling the registration of selling dealer in question nor the registration of the applicant’s firm has been cancelled.”
The Delhi High Court sets aside arbitral awards containing contradictory findings. The court held that the impugned award is liable to be set aside on the ground of being perverse and being vitiated by patent illegality for the reason that there is a direct contradiction between the findings rendered in the impugned arbitral award vis-a-vis claims.
The Court is conscious of the limited scope of interference with arbitral awards in exercising jurisdiction under Section 34 of the Act. The law is well settled that an arbitrator is the final arbiter on factual issues. Further, the interpretation of the terms of the contract between the parties is within the domain of the arbitrator. While examining an arbitral award on the touchstone of Section 34 of the Act, it is impermissible for this Court to embark upon reappraisal of the factual and evidentiary aspects.
In light of the aforementioned inherent inconsistency and internal contradiction within the award, the Court is constrained to set aside the award qua claim. Another important change that has been made because of the provisions of the 1996 Act is that, unlike the 1940 Act, the arbitrator is required to assign reasons in support of the award. A question may invariably arise as to what would be meant by a reasoned award.
The Allahabad High Court recently held that stay applications must be decided within reasonable time on filing of statutory and compliance of condition for pre-deposit.
A Division Bench of Justices Manjive Shukla and S.D. Singh observed that “It is necessary to observe, where statutory appeals are filed after making due compliance of pre deposit condition, it is incumbent on the learned court below to pass appropriate orders on the stay application within a reasonable time. Passing of routine orders requiring the stay application to be put up on the date fixed do not serve the cause of justice.”
The Kerala High Court held that tax dues can be recovered from directors of private company under Section 39 of the Kerala Value Added Tax Act, 2003 ( KVAT Act ).
Section 39 of the Kerala Value Added Tax Act, 2003, reads as “Where any tax or other amount recoverable under this Act from any private company, whether existing or wound up or under liquidation, cannot be recovered for any reason whatsoever, every person who was a director of such company at any time during the period for which the tax or other amount is due under this Act shall be jointly and severally liable for the payment of such tax or other amount unless he proves that the non-recovery cannot be attributed to any negligence, misfeasance or breach of duty on his part in relation to the affairs of the company.”
The Patna High Court observed that differentiation made by State between Central and State Government employees under Section 10 (10 AA) of the Income Tax Act, 1961 is not discriminatory and not violative of Article 14 of the Constitution of India.
The Apex Court has recently observed that if there is equality and uniformity in each group, the law will not become discriminatory, though due to some fortuitous circumstance arising out of peculiar situation, some included in a class get an advantage over others so long as they are not singled out for special treatment A Division Bench of Chief Justice K. Vinod Chandran and Justice Rajiv Roy observed that “The legislature must have the freedom to select and classify persons, properties and income which it would tax and/or not tax. Thus, the differentiation made by the State between the employees of the Central and State Governments on the one hand and the other employees on the other in Section 10 (10 AA) of ‘the Act’ in our view is neither discriminating nor violative of the Article 14 of the Constitution of India.”
The Jharkhand High Court upheld the income tax addition on failure to prove genuineness of creditors. The case of both the assessee’s were selected for scrutiny and statutory notices were issued during the course of assessment proceeding. In the case of Harmeet Singh; the assessee filed copy of deed, profit and loss account, capital account, balance-sheet and computation of income for the Assessment Year 2012- 13 and 2013-14.
A Division Bench of Justices Rongon Mukhopadhyay and Deepak Roshan observed that “Even assuming the contention of the petitioner that passbook cannot be treated as part of Books of Accounts to be true; admittedly, the source of income in the case of both the assesses has not been proved; inasmuch as, both the assesses have failed to prove the identity/creditworthiness/genuineness of the creditors, who have given cash loan as claimed by them. Further, the assessee has submitted the balance-sheet, profit and loss account, Bank account and computation of income and other details before the Assessing Officer.”
A Single Bench of the Gujarat High Court granted regular bail to the accused in 67.72 crores GST fraud. The Applicant has filed the Application under Section 439 of the Code of Criminal Procedure for enlarging the Applicant on Regular Bail for the offences punishable under Sections 132(1)(b), 132(1) (c) and 132(1)(1) of the Central Goods and Service Tax Act, 2017.
The Court of Justice MR Mengdey observed that “Having heard the learned Advocates for the parties and perusing the record produced in this case as well as taking into consideration the facts of the case, nature of allegations, gravity of accusation, availability of the Applicant Accused at the time of Trial etc. and the role attributed to the present Applicant accused, the present Application deserves to be allowed and accordingly stands allowed. This Court has also gone through the FIR and police papers and also the earlier order passed by the Sessions Court where the Sessions Judge has disallowed the bail Application at initial stage.”
The Gujarat High Court directed to follow Court orders in Integrated Goods and Services Tax ( IGST ) refund cases and observed that directions given by High Courts should be followed by Authorities. It is the case of the petitioner that as the GST Act was introduced newly in the year 2017, the petitioner erroneously selected the option of export without payment of tax by filing shipping bills for exports even though the petitioner did not have the letter of undertaking and also claimed higher rate of duty drawback under the Customs Act, 1962.
A Division Bench of Justices Bhargav D Karia and Niral R Mehta observed that “The respondent-authorities and the respondent-authorities had no reason to take a different view than the directions issued by this Court while exercising the powers under Article 226 of the Constitution of India. The respondent-authorities are bound by the directions issued by this Court and therefore, the impugned order is hereby, quashed and set aside. The respondent-authorities are directed to comply with the directions issued by this Court while sanctioning the refund of IGST after deducting the differential duty drawback with 7% simple interest.”
The Madras High Court noted that the Section 116 A of the Tamil Nadu Urban Local Bodies Act, 1998 mandates that 15 days’ time should be provided to the property tax assessee to respond to the notice before taking action. Also ordered the authorities to reopen the sealed restaurant.
The Senior counsel for the petitioners argued that the demand notices were not in accordance with the Tamil Nadu Urban Local Bodies Act, 1998, citing a short notice period and procedural irregularities. It was pointed out that the notice period for one of the notices was only three days, whereas the Act mandates a minimum period of 15 days for the petitioner to respond.
The Delhi High Court Validity of Arbitration Notice under section 21 of the Arbitration & Conciliation Act, 1996 cannot be challenged when providing the wrong address during proceedings. It was observed that once the respondent himself provided his address wrongly, then he cannot be permitted to urge that the invocation notice was not served at the correct address
A single bench of Justice Rekha Palli viewed that once the respondent himself provided his address at Village Bharola, New Subzi Mandi, Azadpur, Delhi-110033 in OMP ( COMM ) 34/2021, filed in December 2021, he cannot be permitted to urge that the invocation notice was not served at the correct address.
The Madras High Court quashed classification of Harpic and Lizol under 28% GST Slab Rate and held that duty is cast on Assessing Authority to apply its mind to objections.
The writ petition was filed challenging the impugned orderinsofar as it treats “Harpic Disinfectant Toilet Cleaner” and “Lizol Disinfectant Toilet Cleaner” under Item 31 of the Fourth Schedule to the Tamil Nadu Goods and Services Tax Act, 2017 thereby levying tax at the rate of 14% under the TNGST Act, while rejecting the classification made by the petitioner that the above products viz., “Harpic Disinfectant Toilet Cleaner” and “Lizol Disinfectant Toilet Cleaner” are disinfectants liable to tax at 9% in terms of Item 87 of the Third Schedule to the TNGST Act for the period 01.07.2017 to 13.11.2017.
In a significant case the Madras High court disposed of writ petition by directing to reply to GST DRC-01 with respect to the HSN classification of electrical lighting. The above writ petitions are filed by the M/s.SL Lumax Limited. The petitioner is engaged in the business of manufacturing and supplying electrical lighting or signaling equipment used in motor vehicles.
The single bench during the proceedings observed that “In multiple judgments of this Court and the Supreme Court, the HSN Explanatory notes have been referred to and relied upon as an authoritative guide to issues relating to classification.”
In a major ruling the Delhi High Court observed that ‘cash’ excluded from definition of ‘goods’ cannot be seized. A search and seizure operation were carried out at the premises of the petitioner (i.e. the residential premises as well as shop of the petitioner) and cash in a sum of Rs. 65,00,000/- and Rs. 7,00,000/- was seized from the residential premises and office of the petitioner respectively.
The Court has further held that since cash is not goods, it could not have been seized under the provision of the Act, as seizure is limited to the goods liable for confiscation.
The Delhi High Court has held that Application under section 29 A of Arbitration & Conciliation Act, 1996 seeking extension of mandate would not amount to express waiver in writing to challenge arbitrator’s ineligibility.
The primary ground for challenge pressed by the petitioner is the de jure ineligibility of the learned Sole Arbitrator to be appointed as an arbitrator being hit by the Seventh Schedule of the A&C Act. It is contended that in terms of Section 12(5) of the Act, the petitioner’s participation in the arbitral proceedings will not preclude it from challenging the proceedings conducted by an inherently ineligible arbitrator, since only an express agreement in writing between the parties after the occurrence of dispute, could waive off the party’s right to challenge the appointment, which did not happen in this case.
The Bombay High Court ruled that storage tanks not classifiable as land or building and that TDS is deductible on storage charges.
A Division Bench of Justices KR Shriram and Sharmila U Deshmukh observed that “In our view, the storage tanks in question do not qualify either as land or as building within the meaning of Section 194I of the Income Tax Act. In terms of Section 194I of the Income Tax Act, there has to be a lease, sub-lease or tenancy or any other agreement involving land or any building excluding factory building. It is not the case of the Revenue that the storage tank was taken on lease or sub-lease or tenancy.”
The Guwahati High Court observed that the two parallel proceedings in respect of same period not permissible under the Central Goods and Service Tax Act, 2017 ( CGST Act ).
A Single Bench of Justice Manish Choudhury observed that “Having regard to the provisions contained in Section 6 of the CGST/SGST Act, more particularly, Section 6[2] which inter alia indicates that once a proceeding is initiated either of the above two Acts, another proceeding for the same period under the other Act is not to be initiated, the operation of the Order-in-Original passed by the respondent no. 3 shall remain suspended till the returnable date.”
The Rajasthan High Court stayed the demand order and noted that the time of accrual for taxing income postpones till adjudication of dispute by the civil court.
A Division Bench of Justices Munnuri Laxman and Dr Pushpendra Singh Bhati observed that “Issue notice to the respondents. Mr. Gajendra Chauhan appearing on behalf of Mr. K.K. Bissa accepts notice. An advance copy has already been served upon him. Service is complete. In the meanwhile, effect and operation of the orders dated 21.09.2023 and 21.09.2023 shall remain stayed. The respondents shall be at liberty to file an application for vacation of the interim order.”
In a major ruling the Delhi High Court has directed re-adjudication after the Goods and Service Tax ( GST ) Proper Officer failed to consider the taxpayer’s detailed reply.
The counsel for the petitioner Mr. Abhishek Garg, submitted that Show Cause Notice dated 24.09.2023 was received by the petitioner to which a detailed point-wise reply was submitted. It was noticed that the order dated 31.12.2023 records that no proper reply/explanation has been received from the tax-payer despite sufficient and repeated opportunities which indicates that the taxpayer has nothing to say in the matter.
The proper officer had to at least consider the reply on merits and then form an opinion whether the explanation was sufficient or not. He merely held that no proper reply/explanation has been received which shows that the proper officer has not even looked at the reply submitted by the petitioner.
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