This weekly round-up analytically summarizes the key stories related to the Supreme Court and High Court reported at Taxscan.in from July 27, 2024, to August 2nd, 2024.
SUPREME COURT
The Supreme Court has ruled that Vodafone India is not obligated to deduct income tax TDS ( tax Deduction at Source ) on payments made to the non-resident telecom operators. The bench also condoned the delay of 222 days in favour of the department.
In this Special Leave Petition ( SLP ) filed by the Income tax department, the Supreme Court stated that “During the course of submissions, we realised that this petition is covered by the judgment of this Court in Engineering Analysis Centre of Excellence Private Limited vs. Commissioner of Income Tax and Anr. reported in (2022) 3 SCC 321, which has been followed in other cases also. When this fact was brought to the notice of the learned senior counsel appearing for the petitioners, it was pointed out that in similar matters, this Court has issued notice.”
The bench, led by Chief Justice of India DY Chandrachud and Justices JB Pardiwala and Manoj Misra, ruled that enrollment fees cannot exceed Rs. 750 for general category advocates and Rs. 125 for those from SC/ST categories.
This judgement will have prospective effect, meaning Bar Councils are not required to refund excess enrollment fees collected so far. However, the court allowed SBCs to charge fees for services provided to advocates after enrollment.
The Supreme Court has clarified its stance on State Bar enrolment fees, ruling that any funds collected from lawyers as a prerequisite to enrolment must strictly adhere to the definition of ‘enrolment fee’.
The Court pointed out that Section 24(1) of the Advocates Act specifies the conditions under which advocates can be enrolled on State rolls, explicitly mentioning the permissible amount for enrolment fees.
The Supreme Court has ruled in favour of the PVR Cinemas that Entertainment Tax should be applied solely to the ticket price for cinema or theatre entry, excluding online booking charges. This decision reaffirms the earlier division bench ruling by the Madras High Court.
The Supreme Court upheld that the power to tax mineral rights is constitutionally entrusted to states and cannot be derived by widening the interpretation of Seventh Schedule entries. The MMDR Act does not limit this power, reinforcing the states’ authority to impose taxes on mineral rights and mineral-bearing lands under the relevant entries of List II.
In a significant ruling, the Supreme Court of India has granted state governments the authority to levy additional taxes on mining activities, which is being viewed unfavourably by mining companies. This verdict, delivered by a 9-judge Constitution Bench headed by Chief Justice of India DY Chandrachud, clarifies that states can impose taxes on mines and mineral-bearing lands under constitutional provisions. The ruling has already impacted the stock market, with shares of several leading mining companies experiencing declines.
HIGH COURTS
The Bombay High Court quashed a notice issued under Section 148 of the Income Tax Act, 1961, after discovering discrepancies in the interest income data provided by the electronic system.
The bench underscored the responsibility of the assessing officer to verify electronic information against taxpayer-provided data before issuing notices under Section 148. It criticized the reliance on defective data without thorough scrutiny, leading to the petitioner’s unwarranted ordeal
The Allahabad High Court has directed Amazing Security Services Pvt Ltd to file a bail application before the trial court in a case where criminal proceedings were initiated against them related to Goods and Services Tax ( GST ).
The Madras High Court directed the reconsideration of the matter involving the time of supply for road constructions in HAM model in light of GST ( Goods and Services Tax ) Circular No.221/2024. The court set aside the impugned order sent to the petitioner.
Justice Senthilkumar Ramamoorthy observed that the matter needs reconsideration in light of Circular No. 221/2024 and set aside the impugned order dated 28th February 2024. The state tax officer was directed to allow the petitioner to be heard and issue a fresh order within 4 months. The writ petition was disposed of based on the aforementioned terms.
The Bombay High Court quashed and set aside the order of the Labour Commissioner rejecting the wage claim application under Section 33-C (1) of the Industrial Disputes Act.
The Bombay High Court held that the Labour Commissioner’s rejection of the application was based on overly technical grounds, disregarding the established facts and the nature of a proprietorship concern.
The Delhi High Court upheld the powers vested in the Principal Additional Director General, Directorate General of GST Intelligence, Gurugram Zonal Unit in a case pertaining to mismatch in the Input Tax Credit ( ITC ) filed by the Petitioner company. The GST Commissioner proceeded to provisionally attach the Bank Account of the Petitioner Company under Section 83 of the Central Goods and Services Tax Act, 2017 ( CGST Act ) based on findings that the Petitioner had submitted fake amounts to avail ITC.
The Delhi High Court has set aside the GST ( Goods and Services Tax ) registration cancellation, ruling that there was no violation of Section 16 of the Central Goods and Service Tax ( CGST ) Act.
The Delhi High Court allowed the writ petition in favor of Mitsubishi Corporation and quashed the assessment order as the tribunal failed to consider the plenary powers conferred to it under Section 254 of the Income Tax Act of 1961, and the order was quashed to the extent that they negated consideration of the additional grounds that had been raised by the petitioners.
In a writ petition filed by a senior citizen seeking condonation of delay in filing Income Tax Returns ( ITR ), the Rajasthan High Court condoned the delay, citing genuine hardship undergone by the assessee, who is a senior citizen.
The Delhi High Court has ruled that a taxpayer engaged in educational charitable activities under Section 2(15) of the Income Tax Act is eligible for exemption, as the Assessing Officer, upon due examination of the activities undertaken by the assessee, concluded that they fell within the scope of Section 2(15), thereby entitling the assessee to deductions and exemptions under Sections 11 and 12 of the Income Tax Act, 1961.
In a matter, the Madras High Court ruled that the GST ( goods and Service Tax ) liability confirmed for non-furnishing of documents not requested in the SCN ( Show Cause Notice ) is invalid. The court remanded the matter for reconsideration.
The Madras High Court remanded the order confirming the GST liability due to failure to submit oral or document evidence. The matter was remanded for reconsideration on 10% pre-deposit.
The bench of Justice Senthilkumar Ramamoorthy noted that the order was confirmed as the taxpayer failed to respond or provide any evidence and it found merit in the assessee’s claim that they had not been properly notified of the proceedings and thus were not given a fair chance to contest the GST demand. Consequently, the impugned GST order was set aside.
The Gujarat High Court has stayed the Show Cause Notice (SCN) issued under the Goods and Services Tax (GST) regarding the transaction of assignment of long-term leasehold rights, citing a similar matter pending before the court.
The court also granted ad-interim relief, stating that no further proceedings shall continue pursuant to the impugned show-cause notice. The matter will be heard along with Special Civil Application and other related cases. Direct service via email is permitted. This stay provides temporary relief to the petitioner until the court reaches a decision on the pending matters.
The Delhi High Court has set aside the Integrated Goods and Service Tax (IGST) demand of ₹163, 91, 65,902/- due to the failure to address discrepancies in Malaysia Airlines’ GST returns and bank credits.
The division bench of Justice Vibhu Bhakhru and Justice Sachin Datta observed that the impugned order, being bereft of any reasons and failing to consider the contentious issues, is liable to be set aside and it was so directed.
The Delhi High Court has set aside an order imposing a tax demand of Rs.17,09,10,077/-, remanding the matter back to the adjudicating authority for fresh consideration due to the lack of reasons in the original order.
The bench of Justices Vibhu Bakhru and Sachin Datta found it appropriate to set aside the impugned order and remand the matter for fresh consideration. The court remanded the matter to the adjudicating authority, directing it to re-examine the reply filed by the petitioner to the impugned Show Cause Notice and to take an informed decision within eight weeks. The adjudicating authority was also directed to examine whether the order under Section 73 of the GST Act was barred by limitation.
The division bench of the Delhi High Court has set aside the cancellation of GST registration, asserting that there was no valid reason for the cancellation during the period when the petitioner had duly filed their returns.
The court found merit in the contention of the petitioner that the petitioner’s GST registration could not have been cancelled without affording the petitioner an opportunity of personal hearing to address the aspect of cancellation of GST registration with retrospective effect.
The Delhi High Court, comprising Justice Vibhu Bhakhru and Justice Sachin Datta, has set aside the Integrated Goods and Service Tax ( IGST) demand of ₹163,91,65,902/- against Malaysia Airlines, ruling that the company, with GST registrations in multiple states, is allowed to receive all ticket sale receipts in a single account.
The Madras High Court addressed a case involving discrepancies between the E-way bill portal and the GSTR 1 returns, which had not been properly considered by the GST department. The Court ordered a reconsideration of the matter without requiring a pre-deposit and lifted the attachment on the petitioner’s bank account.
The Delhi High Court has quashed the denial of deductions claimed for the payment of salaries to expatriate employees The writ petitioner impugns the order framed by the Assessing Officer1 dated 13 May 2022 to the extent that it denies a deduction of INR 9,62,39,916/-. The said order has come to be framed in order to give effect to the decision rendered by the Income Tax Appellate Tribunal for Assessment Year 1998-1999.
The Delhi High Court has held that the revoking suspension of license cannot restrict the customs department from inquiring for imposition of penalty. The bench of Justice Yashwant Varma and Justice Ravinder Dudeja has observed that the mere fact that the suspension of license had come to be revoked cannot possibly be viewed as restricting the respondents from proceeding further in accordance with Regulation 17.
The Andhra Pradesh High Court set aside the confiscation order under the Central Goods and Service Tax ( CGST ) Act, 2017 as the proposal of confiscation without mentioning detailed reason allows writ petitions and sets aside confiscation orders under CGST Act
The Kerala High Court deleted the penalty under Kerala Value Added Tax (KVAT) Act, 2003 as goods transported were for own use. It was viewed that there was no intention to evade tax.
The court noted that the finding of the Appellate Tribunal that there was no intention on the part of the assessee to evade payment of tax is legally sustainable. At the time of receipt of the consignment of goods from Bangalore, the respondent-assessee had also suffered the CST at a higher rate of 5.5%, which is applicable for unregistered dealers.
The Kerala High Court has held that refund due under the Kerala Value Added Tax Act ( KVAT ), 2003 can be adjusted towards the amount payable under the amnesty scheme. While allowing the Writ Appeal, the court set aside the judgment of the Single Judge and directed the department to deduct the amount of Rs. 1,60,465 from the amount of Rs. 5 lakhs that is due to the appellant by way of refund.
The Calcutta High Court held that extended limitation cannot be invoked in absence of ‘omission & suppression of material facts’ to evade tax. Further held that Service Tax will not be levied on activities such as cutting or mineral extraction which are part of mining operations, if mining operations are itself not subjected to service tax on the date of levy.
The Delhi High Court has set aside a retrospective GST registration cancellation order due to the petitioner’s failure to file the ‘Reply of ASMT-10’. The court directed the Appellate Authority to reconsider the petitioner’s appeal on its merits, ensuring that the issue of delay does not influence the decision
The Delhi High Court has set aside an order passed by the Adjudicating Authority under Section 73(9) of the Central Goods and Services Tax ( CGST ) Act, 2017 and the Delhi Goods and Services Tax Act ( DGST ), 2017 for not providing adequate reasons for rejecting the petitioner’s response to a Show Cause Notice ( SCN ).
The court set aside the impugned assessment order dated 24.03.2023 and disposed of the writ petition. The opposite parties included the Deputy Commissioner, CGST & Central Excise, Jharsuguda Division, and another party, represented by M. Agarwal, Jr. Standing Counsel for CGST.
In a recent ruling, the Delhi High Court dismissed an appeal, stating that income from agricultural land, which is exempt from tax, cannot be included in the book profits when calculating under Section 115JB of the Income Tax Act, 1961.
The Delhi High Court has permitted the petitioner to contest allegations of passing fake Input Tax Credit ( ITC ), despite the lack of receipt of the memo accompanying the GST Show Cause Notice ( SCN ).
The Orissa High Court directed the proper officer to consider a Goods and Services Tax ( GST ) revocation application on payment of default tax by the assessee.
The Andhra Pradesh High Court set aside demand orders for violating the 30-day notice requirement under Section 61 of the Goods and Services Tax ( GST ) Act, 2017.
The Delhi High Court has reinstated the Goods and Service Tax ( GST ) registration of a taxpayer despite non-compliance with Section 39 of the CGST Act and failure to file returns. The assessee, Rainbow Products has filed the present petition an order dated 19.12.2023, whereby the assessee’s GST registration was canceled and an order dated 27.05.2024, whereby the assessee’s application for condonation of delay in filing an application for revocation of the impugned cancellation order was rejected.
The Orissa High Court overturned the dismissal of the petitioner’s appeal and restoration petition, ordering a new hearing with proper consideration for all parties. This decision should not be treated as a precedent.
The court agreed with the petitioner’s argument and ruled that the Tribunal should not have dismissed the appeal without considering the merits. The writ petition was allowed, directing the Tribunal to restore the appeal and decide it on its merits, after giving both parties a chance to be heard.
The Allahabad High Court has held that when the appellant or his counsel is not present, the case may only be dismissed in default. It was viewed that the term “ex-parte” in Rule 63(4) of the Uttar Pradesh Value Added Tax Rules ( OVAT Rules ), 2008 can be interpreted as for want of representation of the defendant after service of notice.
The Madras High Court ordered reconsideration of the GST ( Goods and Services Tax ) liability confirmed on proceeding on the assumption that the sales turnover would be 110% of the purchase turnover.
The Delhi High Court set aside the service tax demand amounting to ₹20,74,77,321/- due to the failure to provide a copy of the Show Cause Notice ( SCN ), despite the assessee had requested for the SCN and certain other communications on at least three occasions.
In a significant ruling in the case of the Indian Medical Association ( IMA ), the Kerala High Court upheld the levy of Goods And Service Tax ( GST ) on the supply of goods and services by clubs, and associations to its members. The court held that the provisions of Section 7(aa) will have prospective operation with effect from 01.01.2022.
The High Court of Andhra Pradesh dismissed the petition against the challenge on the assessment order under Sales Tax not received due to a change in email id. The court found that it would be the duty of the assessee to inform the Assessing Officer of any change in the e-mail ID.
The Delhi High Court has directed the Commissioner of CGST, Delhi North, to verify whether the petitioner has been carrying on its business from its additional place of business within three weeks and, if verified, to restore the petitioner’s GST registration.
The Telangana High Court has permitted Standard Chartered Bank to file Goods and Service Tax ( GST ) returns on another state’s GST portal due to technical glitches, allowing the transfer of credit without any penalty or interest.
The court noted that If the portal was not functional or having technical glitch and because of that the petitioner was compelled to file return in the portal of Telangana, the petitioner cannot be saddled with demand, interest and penalty.
The Madras High Court accepted the discharge summary from the hospital as evidence for non-participation in the GST ( Goods and Services Tax ) proceedings and set aside the order on 10% pre-deposit condition.
he Court mandated that A B Impex remit 10% of the disputed GST demand and was allowed to submit a reply to the show cause notice within this period. Additionally, the bank attachment previously was lifted.
The Delhi High Court has set aside an unreasoned Goods and Service Tax ( GST ) registration cancellation order, which failed to disclose the grounds on which the Proper Officer canceled the assessee’s GST registration, thereby violating the principles of natural justice.
The Delhi High Court invalidated the suspension of the Customs Broker license and set aside the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) order on the grounds that suspension under the Customs Brokers Licensing Regulations ( CBLR ), 2018 is not a penalty.
The Orissa High Court has held that the High Court ( HC ) cannot sit as an appellate authority over an order in favour of Income Tax Dept passed by a coordinate Bench.
Chief Justice Chakradhari Sharan Singh and Justice Murahari Sri Raman held that since the order impugned is appealable one, the court refused to entertain the writ petition. It was observed that the High Court ( HC ) cannot sit as an appellate authority over an order in favour of Income Tax Dept passed by a coordinate Bench.
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