Supreme Court & High Courts Weekly Round-up

This weekly roundup analytically summarizes the key stories related to the Supreme Court and High Court reported at Taxscan.in from October 12th, 2024, to October 19th, 2024.

SC grants Bail to Hyderabad Businessman in Money Laundering Case tied to Delhi Excise Policy Scam Today ABHISHEK BOINPALLY vs DIRECTORATE OF ENFORCEMENT CITATION: 2024 TAXSCAN (SC) 271

The Supreme Court of India has granted bail to Hyderabad businessman Abhishek Boinpally in connection with the Delhi excise policy money laundering case. The bench comprising Justices MM Sundresh and Aravind Kumar ruled in favor of the Businessman stating that “We are inclined to grant him bail”

The court noted that the Enforcement Directorate did not oppose the bail plea during the hearing, which likely contributed to the decision. The Supreme Court granted him bail noting that all other accused in the case had already been granted bail and saw no reason to treat Boinpally differently. The court directed the petitioner to surrender his passport and not to leave Delhi except for a visit to his hometown ( Hyderabad ).

No Jurisdiction to AO for considering Claim by Assessee in Revised Return filed after Time Prescribed u/s 139(5) of Income Tax Act: Supreme Court Shriram Investments vs Commissioner of Income Tax CITATION: 2024 TAXSCAN (SC) 272

In a significant case, the Supreme Court while upholding the order of the Madras High Court held that the Assessing Officer ( AO ) had no jurisdiction to consider the claim by Assessee in revised return filed after time prescribed under section 139(5) of Income Tax Act, 1961.

The two Judge bench of Justice Abhay S. Oka And Justice Augustine George Masih found that the Tribunal had not exercised its power under Section 254 of the IT Act to consider the claim. Instead, the Tribunal directed the assessing officer to consider the appellant’s claim. The assessing officer had no jurisdiction to consider the claim made by the assessee in the revised return filed after the time prescribed by Section 139(5) for filing a revised return had already expired.

Suspicion of Speedy Loan Sanction alone not enough to Credit Misuse: Supreme Court discharges Ex-Central Bank Chairman Central Bureau of Investigation vs Srinivas D. Sridhar CITATION: 2024 TAXSCAN (SC) 273

In a recent ruling, the Supreme Court of India ruled that mere suspicion of speedy loan sanction alone was insufficient proof of credit facility misuse and ordered the discharge of the Ex-Chairman of the Central Bank.

The court noted that the Loan Advisory Committee and other senior officials had already approved the credit facilities before the matter reached Respondent. It noted that there wasn’t sufficient evidence that the respondent personally conspired or benefited from the loans.

Broken Period Interest on Securities Considered as Stock-in-Trade is Revenue in Nature: Supreme Court allows Income Tax Deduction Bank of Rajasthan Ltd vs Commissioner of Income Tax CITATION: 2024 TAXSCAN (SC) 274

The Supreme Court has recently held that broken period interest incurred on securities treated as stock-in-trade is in the nature of revenue expense and that Income Tax Deduction can be allowed on the same.

The Court held that when securities are held as stock-in-trade, any income generated, including interest income, forms part of business income. Consequently, the broken period interest paid during the purchase of securities is considered a revenue expenditure, not a capital expenditure, which qualifies for deduction from business income under Section 28 of the Income Tax Act.

Royalty imposed on Advertisement Hoardings by Municipal Corporations not Tax: Supreme Court THE PATNA MUNICIPAL CORPORATION & ORS. vs M/S TRIBRO AD BUREAU & ORS. CITATION: 2024 TAXSCAN (SC) 275

The Supreme Court has held that the “royalty” charged by municipal corporations to advertising companies for installing hoardings and advertisements cannot be classified as a “tax.”

The Court clarified that royalty and tax are not synonymous terms. Consequently, the corporation’s authority to impose royalty cannot be challenged on the basis that it lacks explicit provision in the Act or relevant regulations, as the issue of royalty being a tax does not arise. Section 431 of the Act, therefore, is not applicable when royalty is levied through agreements or understandings.

Delhi HC upholds Tribunal’s decision on Profit Attribution to PE in India Due to Lack of New Evidence
GE NUOVO PIGNONE S.P.A (NOW KNOWN AS NUOVO PIGNONE INTERNATIONAL SRL) vs COMMISSIONER OF INCOME TAX (INTERNATIONAL TAXATION) CITATION:   2024 TAXSCAN (HC) 2134

In the recent ruling, the Delhi High Court upheld the decision of the Income Tax Appellate Tribunal (ITAT) regarding the attribution of profits to a Permanent Establishment (PE) in India.

It upheld the tax authorities’ approach in attributing a portion of offshore sales to the appellant’s PE in India and confirmed the validity of the reassessment proceedings. The findings of the ITAT and the AO were sustained, and the appellant’s arguments were ultimately rejected.

Musician’s Status as ‘Service’ u/s 65 B(44) of Finance Act: Madras HC rejects Harris Jayaraj’s Plea to quash Service Tax Notice, remands Matter Harris Jayaraj vs The Joint Director CITATION:   2024 TAXSCAN (HC) 2135

In a recent judgment, the Madras High Court rejected Harris Jayaraj’s plea that Musician’s status does not fall under the definition of “service” as defined under Section 65B(44) of the Finance Act, 1994, and sought to quash the service tax notice.

The court emphasized that the adjudicating authority would consider the petitioner’s objections and decide the matter independently and without being influenced by any court observations. Therefore, the court dismissed the writ petition, allowing the adjudication process to proceed.

SCN issued to Cancel GST Registration without Providing Details: Allahabad HC directs Authorities to Provide Supporting Documents M/S Baba Industries vs Union Of India Thru CITATION:   2024 TAXSCAN (HC) 2136

In a recent ruling, the Allahabad High Court directed the tax authorities to provide supporting documents to the petitioner. This decision was made due to tax authorities issuing a Show Cause Notice on the cancellation of GST registration without proper details.

The court observed that despite the claims made in the notice, the respondent failed to supply the necessary documents referred to in the notice. Therefore, the court directed the respondent to provide all relevant documents mentioned in the show-cause notice within ten days. The petitioner’s writ petition was disposed of with directions.

Assessee Not Required To Produce Documents When AO Accepted Co-Owner’s Indexed Renovation Expenses in Income Tax Assessment order: Gujarat HC SURAT TRADE AND MERCANTILE LIMITED vs PRINCIPAL COMMISSIONER OF INCOME TAX SURAT 1 & ANR CITATION:   2024 TAXSCAN (HC) 2137

The Gujarat High Court in a recent case has held that the assessee is not required to produce documents when the Assessing officer ( AO ) accepted co-owner’s indexed renovation expenses in income tax assessment order.

The division bench of Justice Bhargav D. Karia and Justice Mauna M. Bhatt has observed that the assessee should not produce documents to prove his share of the indexed renovation expenses because in the assessment order passed under Section 143(3) of the Income Tax Act in the case of Ravi R Agarwal, the other co-owner of the flat, the assessing officer has accepted the amount of Rs.2,95,859/- as the cost of renovation of indexation. Therefore, this figure has to be accepted as correct and suitable allowance should be made while arriving at the long term capital gain.

S.81 CGST Act Not Invokable to Declare Transfer Of Property Void Without Determining ‘Nature Of Transaction’: Andhra Pradesh HC Velagala Lakshmi vs State of Andhra Pradesh CITATION:   2024 TAXSCAN (HC) 2138

The Andhra Pradesh High Court has held that section 81 of the central goods and service tax ( CGST ) Act , 2017 is not  invokable to declare transfer of property void without determining ‘nature of transaction’. Section 81 provides that where a person parts with his/her property after any amount has become due from him under the Act, with the intention of defrauding the Government revenue, such transfer shall be void.

Accordingly, it stayed the provisional attachment order issued against the Petitioner and posted the matter to October 23. Meanwhile, the Petitioners are also restrained from alienating the property.

Reassessment Proceedings under Income Tax Act Can’t Be Initiated Against Deceased Assessee: Kerala HC SMT. CELIN THOMAS vs THE INCOME TAX OFFICER CITATION:   2024 TAXSCAN (HC) 2139

In a significant case, the Kerala High Court ruled that reassessment proceedings under the Income Tax Act, 1961 cannot be initiated against a deceased assessee. Section 148A of the Income Tax Act allows the Income Tax officers to initiate reassessment proceedings when they suspect that a taxpayer may have concealed income during any assessment year.

The single Bench of Justice Gopinath P. observed that “the procedure contemplated by Section 148A of the Income Tax Act, 1961 contemplates the issuance of a show cause notice etc., before reassessment proceedings are commenced. This cannot be a mere formality.” Section 148 of the Income Tax Act, 1961 addresses the notice that the income tax department may send regarding any income that may have escaped assessment in prior assessment years.

No Blocking of GST ITC w/o ‘Reasons to Believe’ and Opportunity for Hearing: Karnataka HC M/S TRAVACORE MINERALS AND TRANSPORT COMPANY vs STATE OF KARNATAKA THROUGH ADDL CITATION:   2024 TAXSCAN (HC) 2140

In a significant ruling, the Karnataka High Court has quashed the blocking of Input Tax Credit ( ITC ) by the tax authorities without providing a proper hearing or establishing concrete reasons.

The court emphasised the draconian nature of Rule 86A, which can severely impact businesses by restricting their ability to utilise tax credits. Therefore, strict adherence to procedural safeguards and the presence of objective reasons are mandatory. As a result, the Karnataka High Court ordered the tax authorities to unblock the petitioner’s ITC immediately, allowing them to file returns and continue their business operations.

Non-submission of Reply to SCN cannot be a Ground for Cancellation of GST Registration: Allahabad HC M/S Laxmi Traders Thru. Proprietor Mr. Jagbir Singh vs Addl. Comm. Grade 2 (Appeal) State Tax Judicial Division 3 Lko. And Another CITATION:   2024 TAXSCAN (HC) 2141

In a recent ruling, the Allahabad High Court ruled that the non-submission of the reply to the Show Cause Notice ( SCN ) cannot be a ground for the cancellation of Goods and Services Tax ( GST ) registration. The court set aside the orders.

Thus, the court found merit in this argument, granting the petitioner relief by setting aside the cancellation and appellate orders. The petitioner has been allowed to submit a reply to the SCN within three weeks, and the authorities are instructed to issue a fresh order in accordance with the law.

S. 74 of CGST Act invokable if assessee fails to Report Actual Sales to Evade Tax: Kerala HC AYYAPPAN PILLAI vs THE STATE TAX OFFICER CITATION:   2024 TAXSCAN (HC) 2142

The Kerala High Court held that provisions of section 74 of CGST Act can be invoked if assessee fails to report actual sales to evade tax. While dismissing the appeal, the bench opined that the department is also right in contending that the Officer did not invoke the extended period of limitation on the ground that the assessee was an unregistered person but on the ground of suppression of sales willfully for the purpose of evasion of tax.

While dismissing the appeal, the bench opined that the department is also right in contending that the Officer did not invoke the extended period of limitation on the ground that the assessee was an unregistered person but on the ground of suppression of sales willfully for the purpose of evasion of tax.

₹54 Crore Fake ITC: Jharkhand HC grants Bail Granted in GST Case due to Lack of Evidence Gyaan Chandra Jaiswal vs Union of India represented by Shri Dinesh Kumar CITATION:   2024 TAXSCAN (HC) 2143

In a notable decision, the Jharkhand High Court has granted bail to the accused in a case involving an alleged ₹54.33 crore fraudulent Input Tax Credit ( ITC ) scam under the Goods and Services Tax ( GST ) regime.

Bail granted in this high-profile GST case aligns with the undeniable importance of concrete evidence in financial fraud investigations. While the prosecution alleged a massive ITC fraud involving multiple shell companies, the lack of documentary proof ultimately led the court to favour the bail.

Challenge against Genuineness of Transaction not raised before ITAT does not survive before HC: Karnataka HC PR. COMMISSIONER OF INCOME TAX-4 vs M/S JUPITER ENTERAINMENT VENTURES (P)LTD. CITATION: 2024 TAXSCAN (HC) 2144

In a recent ruling, the Karnataka High Court dismissed a revenue appeal upholding the Income Tax Appellate Tribunal ( ITAT ) decision, which did not accept the revenue’s argument about the genuineness of a particular transaction.

The Division Bench of the Karnataka High Court observed that no substantial question of law arose from the tribunal’s order, as the issue was primarily factual and had already been settled by the ITAT. The High Court upheld this view, noting that no appeal had been filed by the revenue at the tribunal level challenging the genuineness or nature of the transaction as a colorable device.

Delhi HC dismisses Petition against Reopening of Assessment u/s 148, affirms Validity of Notice R P FOAM HOME (P) LTD vs ASSISTANT COMMISSIONER OF INCOME TAX CITATION: 2024 TAXSCAN (HC) 2145

In the recent ruling, the High Court of Delhi,affirmed the validity of a notice issued under Section 148 of the Income Tax Act,1961,dismissing the petition filed by the petitioner against the reopening of its assessment for the Assessment Year (AY) 2011-12.

The court, however, noted that the reopening was not without basis. It observed that the reassessment was prompted by findings from a search operation involving a third-party entity, M/s Spaze Group. During investigations, it was discovered that M/s JMD International, which had financial dealings with the petitioner, was engaged in issuing accommodation entries and providing false billing.

Declaration of Consignment in Form 8FA under KVAT Act is Mandatory: Kerala HC upholds Rs. 1 Lakh Penalty KIRAN JEWELS (INDIA) vs STATE OF KERALA CITATION: 2024 TAXSCAN (HC) 2146

In a significant case, the Kerala High Court has upheld the1 Lakh penalty under Kerala Value Added Tax Act ( KVAT Act ), 2005 for Non-Declaration in Form 8FA as it is mandatory under Act.The court set aside the order of the Appellate Tribunal and confirmed the penalty on the petitioner only in an amount of Rs.1 lakh which would be sufficient taking note of the infringements occasioned by the petitioner of the provisions of the Kerala Value Added Tax Rules.

The division bench of Justice A.K. Jayasankaran Nambiar and Justice Syam Kumar V.M. has observed that the petitioner/assessee failed to cover the consignment that was brought by him from Mumbai to Cochin by a valid Form 8FA declaration as mandated under the Kerala Value Added Tax Rules, the Commercial Tax Authorities in the State were perhaps justified in assuming that but for the detection, the petitioner might have well evaded his tax liability by clandestinely selling the consignment of jewellery within the State of Kerala.

CENVAT Credit on GTA Services applicable on Services availed up to Place of Removal: Kerala High Court TRANSFORMERS AND ELECTRICALS KERALA LTD vs THE COMMISSIONER OF CENTRAL TAX AND CENTRAL EXCISE CITATION: 2024 TAXSCAN (HC) 2147

The Kerala High Court in a recent case has held that the CENVAT credit on GTA services ( Goods Transport Agency ) applicable on services availed up to place of removal. The court viewed that permitting the appellant to avail input tax credit in such circumstances would militate against the very Scheme of CENVAT credit, which is designed to avoid the cascading effect of tax and an ultimate burden on a consumer.

While dismissing the appeal, the division bench of Justice A.K. Jayasankaran Nambiar and Justice Syam Kumar V.M. has observed that the appellant did not include the transportation costs in the assessable value of the goods for the purposes of payment of Central Excise duty. The appellant can claim input tax credit in respect of the transportation services availed by it for the purposes of transporting the goods from the place of removal to the buyer’s premises.

Summons issued u/s 70 Of CGST Act doesn’t Initiate Proceedings u/s 6(2)(B) Of the Act: Kerala HC K.T. SAIDALAVI vs THE STATE TAX OFFICER CITATION: 2024 TAXSCAN (HC) 2148

In a recent case, the Kerala High Court held that summons issued under section 70 of Central Goods and Service Tax Act (CGST) , 2017 does not initiate proceedings under section 6(2)(b) of the act. Section 70 of the Central Goods and Services Tax Act, 2017 lays down the law regarding the power of the officer to summon any person before them to provide evidence in the form of documents regarding any specific matter. Section 6(2)(b) of the Central Goods and Services Tax Act, 2017 prohibits separate initiation of proceedings on the same subject-matter by the proper officer under the C.G.S.T. Act.

The bench after referring to Section 6(2) of the CGST Act, observed that where a proper officer under the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act has initiated any proceedings on a subject matter, no proceedings shall be initiated by the proper officer under the CGST Act on the same subject matter.

Claims Before Approval of Resolution Plan Extinguished on Approval of Plan u/s 31 of IBC: Orissa HC Orissa Manganese & Minerals Limited vs State of Odisha CITATION: 2024 TAXSCAN (HC) 2149

The Orissa High Court held that claims before approval of resolution plan were extinguished on approval of plan under section 31 of the Insolvency and Bankruptcy Code ( IBC ), 2016. The court held that the resolution plan was approved on June 22, 2018 extinguished all liabilities predating the date of approval of resolution plan therefore the claims of the state with respect to the period prior to the approval date cannot be entertained.

The division bench of Mr. Justice D.Dash and Mr. Justice V. Narasingh upheld the contention of the petitioner and observed that once a resolution is approved, it binds all the stakeholders as per section 31 of the IBC. The court referred to the Supreme Court judgment in CoC of Essar Steel India Ltd. v. Satish Kumar Gupta & Ors.(2019) wherein it was held that approval of resolution plan is binding on all the stakeholders under section 31 of the IBC.

Patna HC Condones Delay in filing Income Tax appeal Due to Medical Grounds directs to Deposit Rs. 5,000 to BSLSA Jyotindra Prasad Singh vs The Union of India CITATION: 2024 TAXSCAN (HC) 2150

In a recent ruling, the Patna High Court condoned delay in filing the tax appeal due to medical grounds and directed the petitioner to deposit Rs. 5000 to the Bihar State Legal Services Authority.

To ensure the end of justice, the court ordered that the delay in filing the appeal would be condoned if the petitioner paid a cost of Rs. 5,000 to the Bihar State Legal Services Authority within one month. If the payment was made, the earlier dismissal of the appeal would be set aside and the appeal would be restored for consideration on merits. If the petitioner failed to pay the cost, the original assessment would be revived.

GST Dept. Issued Registration Cancellation Order Without Stating Reason: Allahabad HC Quashes Order Jai Nath Rai Construction vs State Of Up And 3 Others CITATION: 2024 TAXSCAN (HC) 2151

In a recent ruling, the Allahabad High Court quashed the Goods and Services Tax ( GST ) registration cancellation order due to issuance without stating specific reasonings for the cancellation.

A single bench led by Justice Piyush Agrawal, J. reviewed the impugned order and observed that the order of cancellation was devoid of any specific reasoning. The court referred to previous rulings by the same court, where similar orders were quashed for lack of reasoning and violation of natural justice.

Gujarat High Court directs to Avoid Pedantic Approach while considering Petition u/s. 119(2)(b) Income Tax Act, Condones 1 Year Delay in Filing Return NIRZARI AMITBHAI MEHTA vs PR. COMMISSIONER OF INCOME TAX-1 CITATION: 2024 TAXSCAN (HC) 2152

In a recent case, the Gujarat High Court directed to avoid pedantic approach while considering petition under section 119(2)(b) Income Tax Act, 1961 and condoned one year delay in filing return.

A division bench of Justices Bhargav D. Karia and Mauna M. Bhatt criticised the “pedantic approach” in deciding Petitioner’s application under section 119(2)(b) of the Income Tax Act, 1961. The provision empowers Central Board of Direct Taxes ( CBDT ) to direct Income Tax authorities to allow refund/ deduction claims or any other relief under the Act, even after the expiry of prescribed limitation period.

Calcutta HC Stays Notice Issued u/s 148 of Income Tax Act Till Disposal of Writ Petition MORTEX INDIA PRIVATE LIMITED vs ASSISTANT COMMISSIONER OF INCOME TAX CITATION: 2024 TAXSCAN (HC) 2153

In a recent case, the Calcutta High Court stayed the notice issued under section 148 of Income Tax Act , 1961 till the disposal of Writ Petition challenging the jurisdictional issue relating to issuance of notice.Since the above writ petition raises a jurisdictional issue, the same shall be heard, the Court directed to file affidavit-in-opposition to the present writ petition within a period of eight weeks after the annual vacation.

Taking into consideration the prima facie case as has been made out by the petitioner and the judgement of the Division Bench of this Court presided over by the Chief Justice in the case of Girdhar Gopal Dalmia vs. Union of India & Ors., where the Division Bench while considering the competence of the jurisdictional assessing officer to issue a notice under Section 148 of the said Act, consequent upon publication of the Scheme vide Notification dated 29th March, 2022, and while admitting the appeal had stayed the said notice.

AC Rejected GST Refund on Limitation: Punjab & Haryana HC directs Commissioner to take Action and imposes Penalty Proxima Steel Forge Pvt. Ltd vs Union of India CITATION: 2024 TAXSCAN (HC) 2154

In a recent case, the High Court Of Punjab And Haryana directs commissioner to take action and imposes penalty as the Assistant Commissioner ( AC ) rejected the goods and Service Tax Refund solely on the ground of limitation. The Court set aside the order of Assistant Commissioner and directed the Commissioner to appoint another officer to deal with the application relating to refund of the petitioner, who would decide it purely on merits within a stipulated period of two months.

It was observed that “If subordinate officers do not comply with the appellate orders, it would be something sort of administrative chaos. Such officers are required to be dealt with by the Department in a strict manner, so that they may not create a precedent for others to start insubordination. It also reflects in general public faith in filing appeals, which would be wavered if the appellate orders are not complied with. Litigation is also forced unnecessarily before this Court. Such insubordination requires to be dealt with more strictness.”

Demand Order issued due to GST ITC claimed under wrong GSTIN by Suppliers: Allahabad HC orders fresh decision as per Circular No. 183/15/2022-GST M/S My Auto World (Kanpur) Pvt. Ltd. vs Union Of India And 5 Others CITATION: 2024 TAXSCAN (HC) 2155

In a recent ruling, the Allahabad High Court quashed the Goods and Service Tax ( GST ) demand order against a taxpayer for claiming Input Tax Credit ( ITC ) under an incorrect GSTIN. The court directed the tax authorities to pass a fresh decision following Circular No. 183/15/2022-GST.

The bench comprising Justice Shekhar B. Saraf, J. and Justice Manjive Shukla, J. observed that Circular No.183/15/2022-GST was directly applicable to the petitioner’s case. The petitioner’s issue of incorrect ITC reporting between two GSTINs falls within the scope of the Circular.

Cost of Free Fuel cannot be added to Account of Taxable Supply by GTA: Uttarakhand HC New Jai Hind transport Service vs Union of India CITATION: 2024 TAXSCAN (HC) 2156

In a recent ruling, the Uttarakhand High Court held that the cost of free fuel provided by a service recipient cannot be added to the value of taxable supply by a Goods Transport Agency (GTA) for GST purposes. The dispute arose over whether the value of this fuel should be included in the calculation of GST.

The bench of Justices Ritu Bahri and Rakesh Rakesh Thapliyal reviewed Section 15 of the Central Goods and Services Tax (CGST) Act, 2017, particularly focusing on Section 15(1) and 15(2)(b), which detail how the value of taxable supply should be determined. According to the ruling, the value of any amount incurred by the recipient but not included in the price of the service may be added to the taxable value. However, the court found that in this case, the agreement clearly specified that the cost of fuel was the responsibility of the service recipient and was not part of the service provider’s obligations or charges. Therefore, the cost of free fuel did not constitute “consideration” for the service and could not be taxed under GST.

GST SCN Must Specify Fraud or Misstatement for initiating S. 74 Proceedings: Allahabad HC Hcl Infotech Ltd vs Commissioner CITATION: 2024 TAXSCAN (HC) 2157

In a recent ruling, the Allahabad High Court held that a Goods and Services Tax ( GST ) Show Cause Notice must specify allegations of fraud, willful misstatement, or suppression of facts to invoke Section 74 of the Central Goods and Services Tax ( CGST ) Act.

The bench comprising Justice Shekhar B. Saraf and Justice Manjive Shukla observed both sides’ arguments and emphasized that Section 73 deals with non-fraudulent errors in tax claims, while Section 74 requires fraud or willful misrepresentation.

Simply Citing ‘Delay in Submission of Appeal’ Insufficient for Rejecting GST Appeals: Allahabad HC New Shanti Restaurant vs State Of Up And 2 Others CITATION: 2024 TAXSCAN (HC) 2158

The Allahabad High Court ruled that simply mentioning ‘Delay in Submission of Appeal’ is not sufficient for rejecting the GST ( Goods and Services Tax ) appeals. While quashing the order, it stated that ‘An order without valid reasons cannot be sustained’.

The High Court quoted the Supreme Court ruling in the cases of Assistant Commissioner, Commercial Tax Department, Works Contract & Leasing, Kota Vs. Shukla & Brothers, M/s Travancore Rayon Ltd. v. Union of India have observed that the administrative authority and the tribunal are obliged to give reasons, absence whereof would render the order liable to judicial chastisement.Once the reason has not been assigned by the competent authority for levying the penalty then on this ground alone, the impugned orders cannot be sustained.

Budgetary Support Scheme 2018 Withdrawal For Reimbursement Of IGST To Manufacturing Units: J & K HC Upholds UT Govt’s Decision Sudhir Power Limited vs Union Territory of Jammu and Kashmir CITATION: 2024 TAXSCAN (HC) 2159

The Jammu and Kashmir and Ladakh High Court has upheld the UT government’s decision to withdraw the ‘Budgetary Support Scheme’, notified in the year 2018 for providing budgetary support to manufacturing units in the UT, by reimbursement of Integrated Goods and Service Tax.

The High Court observed that promissory estoppel operates even in the legislative field and applies against the Government, even when acting in exercise of its sovereign or executive functions. A division bench of Justices Sanjeev Kumar and Rajesh Sekhri observed that the Scheme did not create any legitimate expectation in the units nor did it attract promissory estoppel on the government.

Anonymous Hundi Donations received by Sai Baba Trust eligible for S. 115BBC(2)(b) Income Tax Exemption: Bombay High Court Commissioner of Income Tax (Exemptions) vs Shree Sai Baba Sansthan Trust – Shirdi CITATION: 2024 TAXSCAN (HC) 2160

In a significant ruling, the Bombay High Court has held that anonymous donations received through the Hundi by the Shree Sai Baba Sansthan Trust, Shirdi, are eligible for exemption from tax under Section 115BBC(2)(b) of the Income Tax Act, 1961.

The Court also took note of the Sai Baba Trust Act, 2004, which reconstituted the Trust as a religious and charitable organisation, thus further affirming its dual status. It was observed that, “From a cumulative reading of the objects of the assessee, read with the provisions of the Sai Baba Trust Act which is a special legislation promulgated by the State Legislature reflecting the objects and activities of the assessee, as also, considering the provisions of the Bombay Public Trusts Act, we are of the clear opinion that the assessee certainly is a religious and charitable trust, hence, the assessee rightly and legitimately claimed an entitlement under sub-section 2(b) of Section 115BBC of the Act. Such entitlement of the assessee is rightly recognized by the CIT(A) and the Tribunal.”

“Appellant wasted public money and time of courts”: Bombay HC slaps Exemplary Costs of ₹5 Lakh in Writ against GST SCN, Demand Viswaat Chemicals Ltd. & anr vs Union of India CITATION: 2024 TAXSCAN (HC) 2161

The Bombay High Court recently dismissed a writ petition filed by Viswaat Chemicals Ltd. challenging a Show Cause Notice ( SCN ) issued by the tax authorities under the Central Goods and Services Tax ( CGST ) Act. The court not only dismissed the petition but also imposed exemplary costs of ₹5,00,000 on the petitioner for attempting to bypass the proper legal process.

The court emphasised that filing writ petitions to challenge Show Cause Notices should not be done routinely unless there is a clear violation of principles of natural justice or the notice is wholly without jurisdiction. The Bench noted that the petitioners had not raised any substantial grievance regarding the SCN in their initial responses and only brought up the vagueness argument after the adjudication process was completed.

Punjab & Haryana HC Orders Departmental Action against Income Tax Dept for Bouncing of Cheque for Refund Issued SUVIDHI UDYOG PRIVATE LIMITED vs NATIONAL FACELESS ASSESSMENT CENTRE AND OTHERS CITATION: 2024 TAXSCAN (HC) 2162

In a significant case, the Punjab and Haryana High Court has directed to take the departmental action against the income tax officials as the cheque for refund issued by income tax dept. bounced despite the court’s clear directions.

The court observed and considered that the deponent-Ms. Jeotsnaa Johri has joined only on 17.09.2024 as the Principal Commissioner of Income Tax, Rohtak, proposed not to take any action against her personally, however, the court expected her to be careful and vigilant in future. Further remarked that once the Officer assumes charge of any office, he or she is required to have full information relating to the pending cases in the Court, orders passed by the Court and whether they have been complied with or not.

Credit Cannot Be Blocked In Electronic Credit Ledger in Absence of Availability of Sufficient Balance: Gujarat HC PMW METAL AND ALLOYS PVT. LTD. vs UNION OF INDIA & ORS. CITATION: 2024 TAXSCAN (HC) 2163

The Gujarat High Court in a recent case ruled that there cannot be any blocking of the credit in electronic credit ledger if there is no sufficient balance available. The Division Bench ruled as above while hearing a case where the assessee contested the blocking of Input Tax Credit ( ITC ) amounting to ₹2,44,05,567 in its electronic credit ledger.

The bench comprising Justices Bhargav D. Karia and Niral R. Mehta observed that if there is Nil or insufficient balance in a particular tax head in the Electronic Credit Ledger, then the balance in another tax head can be blocked only if the cross-utilization from such head is permissible in law.

Non Mentioning of issuance of Notice u/s 148A (d) of Income Tax Act in Portal: Orissa High Court stays Proceedings Initiated Nirmal Kumar Kar vs Income Tax Officer Ward-1 CITATION: 2024 TAXSCAN (HC) 2164

In a recent case, the Orissa High Court stayed the Income Tax proceedings initiated due to failure in mentioning issuance of notice under section 148A (d) of Income Tax Act, 1961 in Goods and Services Tax ( GST ) Portal.

Section 148A of the Income Tax Act, empowers Income Tax officers to initiate reassessment proceedings when they suspect that a taxpayer may have concealed income during any assessment year. While allowing the tax authorities to reopen cases, also emphasizes the importance of providing taxpayers with an opportunity to present their side of the story.

Challenge against Income Tax Order directing Re ajudication by AO: Orissa HC dismissed Petition in Absence of Substantial Question Of Law Biswajit Behera vs Income Tax Officer CITATION: 2024 TAXSCAN (HC) 2165

The Orissa High Court in a recent case dismissed the petition in absence of substantial question of law. The Writ petition was on challenging the Income Tax Order which directs reajudication by Assessing Officer (AO).

A division bench of Justice Arindam Sinha And Justice Sanjay Kumar Mishra found that the Tribunal in following the declaration of law made by the Supreme Court, directed the AO to re-adjudicate upon first dealing with the objection. Further held that “in event, consideration of the objection renders satisfaction to the AO that the reopening does not result in enhancement, the proceeding will be appropriately closed.”

Calcutta HC stays Notice issued by Jurisdictional AO in contravention to provisions u/s 151A of Income Tax Act VINDYA AGENCIES PRIVATE LIMITED vs ASSISTANT COMMISSIONER OF INCOME TAX CITATION: 2024 TAXSCAN (HC) 2166

The Calcutta High Court stayed the notice issued by the Jurisdictional Assessing Officer ( AO ) in contravention to provisions under section 151A of Income Tax Act,1961. It was viewed that no further steps should be taken by the respondents on the basis of the notice issued under Section 148 of the said Act dated 22nd April, 2024 for assessment year 2017-18 till the disposal of the writ petition.

Taking into consideration the prima facie case as has been made out by the petitioner and the judgement of the Division Bench of the Court presided over by the Chief Justice in the case of Girdhar Gopal Dalmia vs. Union of India & Ors., whereby the Division Bench while considering the competence of the jurisdictional assessing officer to issue a notice under Section 148 of the said Act, consequent upon publication of the Scheme vide Notification dated 29th March, 2022, and while admitting the appeal had stayed the said notice.

Relief to OLA, DGGSTI is not Adjudicating authority: Orissa HC Stays Proceedings M/s. Ani Technologies Pvt. Ltd. vs Additional Commissioner of Commercial Taxes and GST Officer CITATION: 2024 TAXSCAN (HC) 2167

In a recent case, the Orissa High Court stayed the proceedings initiated against OLA under Central Goods and Service Tax ( CGST ) and held that Directorate General of GST Intelligence ( DGGSTI ) is not an adjudicating authority.

“we have not been told of a point in time where adjudication commences after issuance of show cause notice. In the circumstances, petitioner’s reliance on clause (b) under sub-section (2) in section 6 renders prima facie satisfaction for staying, at this stage, impugned order till next date of hearing. Mr. Mishra protests on submission that no adjudication will be done pursuant to said show cause notice dated 31st March, 2022 issued by the DGGSTI. Issuance of impugned show cause notice and order are the action taken pursuant to said show cause notice.”, the division bench of Justice Arindam Sinha And Justice M.S. Sahoo held.

S. 68 of Income Tax Act not Invokable in absence of unexplained Amount in Bank Statement: Gujarat HC NAVNIDHLAL PAREKH vs INCOME TAX OFFICER WARD CITATION: 2024 TAXSCAN (HC) 2168

In a recent case, the Gujarat High Court stated that there cannot be any income escapement by the assessee if there is no unexplained amount in the bank statement on record. The Court found that the reason given by the Assessing Officer for alleged escapement of Rs.3,25,00,000/- is not sustainable since there is no unexplained amount in the bank statement on record.

The division bench of Justice Bhargav D. Karia and Mauna M. Bhatt observed that there is no escapement of income since the amount was received by the late father of the assessee on 04.09.2014 from Mr. Hardik Parekh and was paid by NEFT to Ms. Darshana Doshi on the same day. Similarly, the amount was received back on 19.09.2015 from Ms. Darshana Doshi and returned to Mr. Hardik Parekh. In such circumstances, there is no escapement of income of the late father of the assessee is concerned.

Revenue Counsel admits Genuinity of Unexplained Investment Later: Madras HC refuses Remand Request as Transaction Proven Genuine Sundarapandian vs Assessment Unit CITATION: 2024 TAXSCAN (HC) 2169

The Madras High Court, in its recent ruling, refused to remand the matter as the transaction of the unexplained investment proved genuine. The income tax department’s counsel admitted the genuinity in the later stage of the adjudication and requested the remand.

Justice Krishnan Ramasamy, after examining the evidence, agreed that the transaction was genuine and found no need for remand. It observed that once the genuineness of the transaction was established before the court, sending the matter back to the authorities was unnecessary.

Non-discharge of Onus of Proof by AO: Bombay HC quashes treatment of Purchase Expenses as Bogus Ashok Kumar Rungta vs Income Tax Officer CITATION: 2024 TAXSCAN (HC) 2170

The Bombay High Court ( Bombay HC ) recently set aside an order by the Income Tax Appellate Tribunal ( ITAT ) and Revenue Department, ruling that the purchase expenses claimed by the petitioner could not be treated as ‘bogus’ due to the failure of the Revenue Department to discharge the onus of proof required to purport such an allegation.

The Coram of the Bombay High Court constituted by Justice G.S. Kulkarni and Justice Somasekhar Sundaresan observed that the ITAT had returned a firm finding citing the lack of incriminatory material against the Appellant in the Assessment Order; in the event a quasi-judicial authority finds the lack of cogent or convincing evidence against the Assessee, it would be wrong to expect the Assessee to still prove its innocence.

GST Dept admits Violation of Personal Hearing mandated u/s 75(4): Madras HC Quashes Assessment Order Signet Industries Limited vs The State Tax officer CITATION: 2024 TAXSCAN (HC) 2171

In a recent ruling, the Madras High Court quashed the Goods and Service Tax ( GST ) assessment order after the Goods and Service Tax ( GST ) department agreed that they indeed passed the order without providing a personal hearing opportunity which is mandatory under Section 75(4) of the Goods and Service ( GST ) Act, 2017

The court observed that Section 75(4) mandates a personal hearing, which was not provided in this case. The court found that since the assessment order was set aside, the attachment of the bank account could not be sustained.

Relief to Ashok Leyland Ltd: No Denial/Delay of ₹3.5 Cr VAT Refund merely for Deposit being Voluntary, rules Delhi HC ASHOK LEYLAND LTD vs THE COMMISSIONER VALUE ADDED TAX CITATION: 2024 TAXSCAN (HC) 2172

In a major decision, the Delhi High Court provided relief to Ashok Leyland Ltd, asserting that the denial of a ₹3.5 crore VAT refund based on the claim that the deposit was voluntary was unjustified.

Justice Ravinder Dudeja and Justice Yashwant Varma, presiding over the case, highlighted several key points. The court ruled that whether the deposit was made under coercion or voluntarily was irrelevant to the claim for a refund.

Ashok Leyland Ltd is expected to receive the ₹3.5 crore refund along with accrued interest within four weeks of the decision.

Madras HC Halts TN Govt from Collecting Omni Bus Taxes for COVID Period All Omni Bus Owners Association vs The State of Tamil Nadu CITATION: 2024 TAXSCAN (HC) 2173

In a recent ruling, the Madras High Court ordered the Tamil Nadu Government to refrain from collecting road taxes from omni buses for the period affected by the COVID-19 lockdown. The court stated that the operators cannot be taxed for vehicles that were not in operation due to pandemic-related restrictions.

After reviewing the case, the Madras High Court agreed with the bus operators. The court ruled that the government cannot demand taxes for the period when omni buses were not operating due to COVID-19 restrictions. The court pointed out that taxes are based on the use of public infrastructure, and if buses were not on the roads, no tax could be justified.

Relief to Patanjali Foods, Claim Arising out of AP VAT Act or GST Act Extinguished on Approval of Resolution Plan: Andhra Pradesh HC Patanjali Foods Limited vs The Assistant Commissioner St Fac and Others CITATION: 2024 TAXSCAN (HC) 2174

In the case of Patanjali Foods Limited, the Andhra Pradesh High Court held that claim arising out of Andhra Pradesh Value Added Tax Act or Goods and Service Tax Act extinguished on approval of resolution plan

A division bench of Justice R Raghunandan Rao and Justice Harinath.N held that the liability of the petitioner, arising out of the AP VAT Act or the GST Act stands extinguished to the extent of its liability up to 4th September, 2019. It was observed that the contention of Government Pleader for Commercial Taxes that the order of NCLT is not binding on the State of Andhra Pradesh in view of Section 88 of the GST Act would have to be negatived in as much as Section 238 of the Insolvency and Bankruptcy Code provides for a non-obstante clause overriding all other laws.

Recovery impermissible for Refunded Cess merely on Overruling of Refund Order by SC: Sikkim HC warns of Rs. 20K Cost on Central GST Commissioner Commissioner of Central Goods and Services Tax and Central Excise vs Alkem Laboratories Ltd CITATION: 2024 TAXSCAN (HC) 2175

The Sikkim High Court recently held that cess priorly refunded cannot be recovered in light of change in law owing to an overruling decision passed by the Supreme Court while warning the Central Goods and Services Tax Commissioner (CGST) of cost of Rs.20,000/- for initiating baseless matters before the Court.

The High Court held that the Excise Officer had accurately passed the Order laying down the then-existent law in light of the Apex Court’s decision in SRD Nutrients and that any subsequent change in the law would not permit the Excise Officer to invoke revisionary powers to reopen a closed matter.

CA’s Office on Fire: Bombay HC Condones 2-Day Delay in Income Tax Return Filing M/s. Neumec Builders Pvt. Ltd. vs The Central Board of Direct Taxes CITATION: 2024 TAXSCAN (HC) 2176

The High Court of Judicature at Bombay recently allowed a Petition seeking a delay condonation of 2 days in filing Income Tax Returns on account of bonafide reasons, including a fire at the office of the concerned Chartered Accountant (CA).

The Bombay High Court Bench constituted by Justice G.S. Kulkarni and Justice Firdosh P. Pooniwalla observed the contentions raised by the Petitioner in light of the Bombay High Court’s decision in Jyotsna M. Mehta v/s. Principal Commissioner of Income Tax (2024) that, the two-delay may be condoned by the Court upon certainty that the cause is wholly bonafide and aligns with principles that are paramount and jurisprudentially accepted.

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