This weekly roundup analytically summarizes the key stories related to the Supreme Court and High Court reported at Taxscan.in from October 27th, 2024, to, 2nd November 2024.
The Supreme Court of India while jointly adjudicating two matters against besieged Ed-Tech mammoth Byju’s, emphasized the need to follow the legal framework laid down by statutory provisions for the withdrawal of petitions and settlement of claims in a Corporate Insolvency Resolution Process (CIRP).
The Bench observed that CoC had only been constituted during the pendency of the instant case before the Supreme Court and reiterated the liberty of the parties to seek a withdrawal or settlement of claims in compliance with the legal framework governing the withdrawal of CIRP.
Concludingly, the Bench issued directions for the escrowed Rs 158 crore, along with accrued interest to be deposited with the CoC, who is to maintain the same in a separate escrow account until further developments in light of directions issuable by the NCLT.
The Supreme Court has granted bail to an accused linked to a large-scale fraud involving 2600 fake firms, through which Input Tax Credit ( ITC ) exceeding Rs. 40,000 crore was allegedly claimed fraudulently.
The bench, consisting of Justice Abhay S. Oka and Justice Augustine George Masih, noted that the charges against the appellants are all triable by a Magistrate. Furthermore, a charge sheet has been filed, and no prior criminal history for the appellants was mentioned in the counter.
The Trial Court was permitted to impose stringent conditions to mitigate any potential influence on the case.
In light of the differing views held by the Delhi and Madhya Pradesh High Courts, the Supreme Court is now set to examine whether authorities can lawfully seize “cash” under Section 67 of the Central Goods and Services Tax ( CGST ) Act, 2017.
This issue has been brought to the forefront as a bench comprising Justices PS Narasimha and Sandeep Mehta recently issued a notice in response to a petition by tax authorities challenging the Delhi High Court’s order, which directed the authorities to refund seized cash to the respondents.
Section 67 of the Central Goods and Services Tax Act allows a proper officer to seize any goods, documents, or other items deemed relevant to proceedings under the Act if there is reason to believe they may be used or are hidden to avoid detection.
The Bombay High Court recently allowed Pepperfry Limited to submit a delayed response to a Goods and Services Tax ( GST ) Show Cause Notice (SCN), imposing a Rs. 50,000 cost for the delay.
The Court instructed the tax authorities to expeditiously consider the response and finalise the matter within eight weeks from the date of receiving the reply. Importantly, the judgment clarified that all contentions from both sides would remain open during subsequent proceedings, enabling a fair and comprehensive review.
The grant of relief, however, came with a stringent condition that Pepperfry was to pay a sum of Rs. 50,000 to the Prime Minister’s Relief Fund within two weeks. The payment was not merely punitive but served as a necessary condition for activating the benefits of the High Court order.
In a recent decision, the Bombay High Court maintained that Rent Income from the profit and gains of a leasing company derived through the lease of its owned properties can be assessed as ‘income from profits and gains of business’.
The Division Bench of the Bombay High Court comprising Justice G. S. Kulkarni and Justice Firdosh P. Pooniwalla observed that “it is a settled principle of law that the Assessing Officer, in assessing the income of assessee, is required to be conscious about the nature of the assessee’s business and apply his mind to the source of income, for the income being taxed as the law mandates.”
The Bench noticed that the AO had not made any contravening observations regarding change in the nature of income derived by the Assessee by course of its main business.
In a recent ruling, the Gujarat High Court quashed the summary order, which was issued without accompanying detailed order under Sections 73 and 74 of the Goods and Service Tax ( GST ) Act, 2017 and directed the respondents to pass orders for lifting attachment of the bank accounts of the petitioner.
The High Court bench, comprising of Justice Bhargav D. Karia and Justice Niral R. Mehta, further directed the respondents to pass appropriate orders for lifting attachment of the bank accounts of the petitioner.
The Bombay High Court has directed the Maharashtra government to establish a three-member committee by December 14, 2024, to prevent misuse of public funds in government-sponsored advertisements, including the Bombay Municipal Corporation ( BMC ), Maharashtra Industrial Development Corporation ( MIDC ), and City and Industrial Development Corporation ( CIDCO ).
In court, Advocate S.B. Talekar represented the Editors’ Forum, while Additional Government Pleader Abhay Patki appeared for the Maharashtra state. Representatives from other involved parties, including BEST, BMC, and MIDC, were also present.
In a recent ruling, the Gujarat High Court remanded the Goods and Service Tax ( GST ) registration back to the Assessing Officer ( AO ) at Show Cause Notice ( SCN ) stage as the registration was canceled by the department without providing any reason.
The Gujarat High Court bench, comprising of Justice Bhargav D. Karia and Justice Niral R. Mehta, directed the respondent-authorities to pass an appropriate order in accordance with law after providing detailed reasons and an opportunity of hearing to the petitioner.
In a notable ruling, the Delhi High Court issued directions to the Revenue Department to refund Value Added Tax with 6% Interest thereof, paid in excess by Ashok Leyland against demand order for the Assessment Year ( A.Y. ) 2011-12.
The Division Bench of the Delhi High Court comprising Justice Yashwant Varma and Justice Ravinder Dudeja observed that the Respondent Commissioner shall be liable to process and refund excess amount within one or two months in the event that the Assessee does not opt to carry forward the refund amount towards the next period under Section 38(3)(b) of the DVAT Act, 2004.
In a recent case before Delhi High Court the condonation of delay appeal filed by revenue was dismissed on grounds of unreasonable delay of 880 days in submitting the appeal.
The division bench of Justice Vibhu Bakhru and Justice Swarana Kant Sharma observed that the appeal lacked substantial question of law.
In a recent ruling, the Madras High Court instructed the Goods and Services Tax ( GST ) department to initiate steps to revoke the cancellation of GST registration, conditional upon certain requirements.
The Court ordered that failure to comply with any of these conditions would lead to the immediate cessation of benefits granted under this order. Accordingly, the writ petition was disposed of.
In a recent ruling, the Gujarat High Court ruled that the Goods and Services Tax ( GST ) credit ledger cannot be blocked without sufficient balance. The court ordered to unblock of Rs. 2.44 crore GST ITC
The High Court bench, comprising Justice Bhargav D. Karia and Justice Niral R. Mehta directed the respondents to withdraw the negative block of the electronic credit ledger at the earliest to the extent of Rs. 2,44,05,567.
In a recent ruling, the Madras High Court quashed the income tax assessment due to order issuance against deceased and insolvent individuals. The court directed the tax authorities to proceed through an official assignee.
A single bench led by Justice Krishnan Ramasamy noted that after the petitioner’s husband passed away, he was declared insolvent, and an Official Assignee had taken over his estate. The court observed that the Income Tax Department’s orders were not legally sustainable, as any claims or demands should have been directed to the Official Assignee managing the deceased’s assets.
The Orissa High Court Directs Designated Committee to conduct personal hearing for the purpose of the Department/Designated Committee to conclude on petitioner’s assertion that 50% or more of the demand was paid and it is entitled to relief against the balance, under the scheme.
A division bench of Justice Arindam Sinha and Justice M.S. Sahoo directed that the personal hearing will be for the purpose of the Department/Designated Committee to conclude on petitioner’s assertion that 50% or more of the demand was paid and it is entitled to relief against the balance, under the scheme.
In a recent case, the Punjab and Haryana High Court has set aside the notice issued under section 148 of the Income Tax Act, 1961 which was issued without conducting faceless assessment.
A division bench comprising Justice Sanjeev Prakash Sharma and Justice Sanjay Vashisth allowed the Writ Petition in the view of observation made under the case and set aside the notice issued by the Jurisdictional Assessing Officer u/s 148 of the Income Tax Act, 1961.
The Madras High Court recently ruled that the Goods and Services Tax ( GST ) department is not at fault for failing to provide a physical copy of a Show Cause Notice ( SCN ) once it has been uploaded on the common GST portal.
The Madras High Court also observed that, while it was ultimately the petitioner’s responsibility to respond to the notice, the petitioner’s plea that their accountant had failed to inform them or appear before the authority was taken into consideration. This failure resulted in an ex-parte order against the petitioner.
In a recent case, the Orissa High Court directed the scrutiny committee to review matter regarding the claim of exemption to Micro, Small, and Medium Enterprises ( MSME ) Unit to file an audit report under section 44 AD of Income Tax Act, 1961.
Single bench of Justice K.R. Mohapatra found that the Petitioner being a MSME Unit is entitled for certain exemptions/relaxations as per the letter and notification as well as Memorandum. The plea taken by the State of Odisha-Opposite Party Nos.1 & 2 that the case of the Petitioner could not have been considered, as the notification was issued on the date of sitting of the Scrutiny Committee is not sustainable.
In a recent case, the Orissa High Court dismissed the writ petition on availability of alternative remedy on challenge against late fee payment under Central Goods and Service Tax Act, 2017 (CGST).
A division bench comprising Justice Arindam Sinha And Justice M.S. Sahoo dismissed the petition as the petitioner has alternative statutory remedy of appeal.
In a significant case, the Kerala High Court stated that an application for condonation of delay should focus on whether there was sufficient reason to condone the delay under Section 119(2)(B) of the Income Tax Act, rather than on the merits of the assessee’s claim.
The single bench of Justice Gopinath P. observed that the Principal Commissioner of Income Tax had considered the merits of the claims raised by the assessee instead of assessing whether there was sufficient reason to condone the delay or extend time as per the provisions in Section 119(2)(b) of the Income Tax Act, 1961.
In a recent judgment, the Kerala High Court sets aside an assessment order under Central Goods and Service Tax ( CGST) Act, 2017 passed before expiry of time to file reply. The court found that the fact that the assessee had filed an appeal against the assessment order is no ground to refuse relief to the assessee as the order was clearly issued in violation of principles of natural justice.
The single bench of Justice Gopinath P. observed that .the assessee had filed an appeal against the order is no ground to refuse relief to the assessee as the original order was clearly issued in violation of principles of natural justice. The bench allowed the petition and set aside the assessment order.
In a recent case, the Punjab And Haryana High Court has held that absence of faceless assessment envisaged under section 144B of Income Tax Act, 961 invalidates Show Cause Notice ( SCN ).
While allowing the Writ Petition, the division bench of Justice Sanjeev Prakash Sharma and Justice Sanjay Vashisth set aside the notice dated 15.03.2024 issued by the Jurisdictional Assessing Officer under Section 148 of the Income Tax Act, 1961 and all consequential proceedings. Mr. Varun Issar, Senior Standing Counsel, accepts notice on behalf of the respondents/Income Tax Department.
In the case of failure to participate in personal hearings or participate in adjudication proceedings as outlined in the DRC-01 notice, the Madras High Court ruled partly in favor of the petitioner. It directed for reconsideration of matter on pre-deposit of 25% from the Electronic Cash Register.
Justice C. Sarvanan found merit in the petitioner’s case and partially ruled in their favor by setting aside the impugned order, directing the respondent to reassess the case on its merits. However, this decision is conditional upon the petitioner depositing 25% of the disputed tax amount from their Electronic Cash Register (ECR) within 30 days of receiving the order. The quashed order will serve as an addendum to the original show-cause notices.
In a recent ruling, the Kerala High Court declared Rule 96(10) of the Central Goods and Services Tax ( CGST ) Rules ultra vires to Section 16 of the Integrated Goods and Services Tax ( IGST ) Act, providing major relief to exporters by upholding their right to Integrated Goods and Services Tax ( IGST ) refunds on exports.
A single bench led by Justice Gopinath P. examined Section 16 of the IGST Act, both before and after its amendment in October 2023, finding no restrictions within the IGST Act on the right to claim a refund for IGST paid on exports.
The Kerala High Court has dismissed the petition moved by a husband who transferred a portion of his residential building to his wife’s name to secure an exemption from payment of luxury tax under Section 5A of the Kerala Building Tax Act, 1975. The Court observed that the act amounts to tax evasion and it was held that while tax planning is permissible in law, evasion of tax is not permissible in law.
The Single bench of Justice Gopinath P viewed that the residential building of the petitioner as it originally stood had an area in excess of the limits specified in Section 5A of the 1975 Act, and thus it was liable to the levy of luxury tax under that provision. The building was also duly assessed to luxury tax.
The Madras High court considered the auditor’s certificate submitted by the petitioner particularly showing the turnover in Tamil Nadu state when they raised the GST ( Goods and Services Tax ) demand based on ‘All India Turnover’ and set aside the order on 10% pre-deposit condition.
Justice Senthilkumar Ramamoorthy observed that imposing GST on the entire differential turnover seems prima facie unjustifiable. However, the assessing officer must verify this by closely examining all relevant documents.
In the recent ruling, the Orissa High Court, dismissed a writ petition challenging a manual assessment conducted under Section 143(3) of the Income Tax Act,1961 for the assessment year(AY) 2021-22.The court found that there was no Board specification requiring a faceless assessment for this case.
A coram of Arindam Sinha(Judge) and M.S Sahoo(Judge) dismissed the writ petition, declining to interfere with the assessment order.
The Gauhati High Court has held that Assesee is entitled to take Input Tax Credit ( ITC ) in any return under section 39 of the Goods and Service Tax Act, 2017. As per section 16(5), in respect of an invoice or debit note for supply of goods or services or both pertaining to the Financial Years 2017-18, 2018-19, 2019-20 and 2020-21, the registered person shall be entitled to take input tax credit in any return under Section 39 which is filed upto the thirtieth day of November, 2021.
A single bench of Justice Soumitra Saikia held that in view of the amendments brought in, the petitioner is entitled to get the claim of the input tax credit subject to the conditions prescribed in the newly inserted Section 16(5) and Section 16(6) of the CGST Act, 2017 [inserted by Finance (No.2) Act, 2024].
In the recent ruling the Orissa High Court, disposed of the writ petition by granting the petitioner, the opportunity to challenge the Goods and Service Tax(GST) demand until the Appellate Tribunal is constituted.
A coram of Arindam Sinha(Judge) and M.S.Sahoo(Judge) emphasized that failure to file the appeal within the specified timeframe after the Tribunal’s establishment would allow the department to proceed with recovery actions.
In a significant case, the High Court Of Orissa allowed the assessee 30 days time to file return after unblocking input tax credit ( ITC ) which was blocked due to wrongful availment. It was held that the proper officer has exercised discretion in intimating petitioner that ITC has wrongly been availed by him and therefore there will be determination and recovery of tax.
Justice Arindam Sinha and Justice M.S. Sahoo directed that petitioner will have 30 days to file return commencing from date of communication of decision taken on his representation for unblocking his ITC.
The Punjab and Haryana High Court has held that date of submission of claim would be recognized under income tax on accrual of cash incentive.
A division bench of Justice Sanjeev Prakash Sharma and Justice Sanjay Vashisth observed that while on facts, it would be for the concerned officer to examine as to what are the cash incentives allowed in each quarter, held that it is on the date of submission of claim that the accrual of cash incentive would be recognized and not from the date of submission or receipt of cash incentive.
The Delhi High Court in a recent Income Tax Appeal against Sahara India Financial Corporation held that no disallowance of any expenditure under Section 14A of the Income Tax Act, 1961 is permissible in the event that the Assessee does not gain any tax-exempt income under statutory provisions.
The Division Bench of the Delhi High Court constituted by Justice Vibhu Bakhru and Justice Swarana Kanta Sharma referred to the Decision of the Delhi High Court in Principal Commissioner of Income – tax v. Era Infrastucture (India) Ltd. (2022) to observe that the explanation to Section 14A of the Income Tax Act, 1961 shall only be applicable prospectively and thus not apply to the financials of the Assessee for A.Y. 2016-17.
The Delhi High Court in a recent Income Tax Appeal directed the exclusion of Tata Consultancy Services ( TCS ) E-Serve International Ltd., TCS E-Serve and Infosys BPO Limited from the list of comparables for the purposes of undertaking the Arm’s Length Price ( ALP ) for Assessment Year (A.Y.) 2010-11 for Cadence Design Systems.
The Division Bench of the Delhi High Court constituted by Justice Yashwant Varma and Justice Ravinder Dudeja referred the decision of the same Court in PCIT v. Evalueserve Sez (Gurgaon) Pvt. Ltd (2018) wherein it was held that the comparables i.e., M/s. TCS E-Serve Limited; M/s. TCS E-Serve International Limited and M/s. Infosys BPO Ltd possessed very high brand value, commanded greater profits and operated on economic upscale.
The Delhi High Court remanded the Income Tax Matter to the Appellate Tribunal stating that Section 153C of the Income Tax Act, 1961 is also applicable to Searches Prior to Finance Act, 2015.
The Division Bench Comprising Justice Vibhu Bakhru and Justice Swarana Kanta Sharma held that the impugned order is set aside and the appeals are restored before the Tribunal for consideration of the remaining grounds raised by the assessee.
In a recent ruling, the Delhi High Court set aside two Show Cause Notices and allied Orders issued by the Commissioner of Central Goods and Services Tax, propounding that a mere allegation of non-existence of an entity is not enough reason to call for the cancellation of its Goods and Services Tax ( GST ) Registration.
The Division Bench of the Delhi High Court comprising Justice Yashwant Varma and Justice Ravinder Dudeja observed that Section 29(2) of the CGST Act, 2017 permits the proper officer to cancel GST Registration from any retrospective date as he seems fit, but the registration cannot be canceled with retrospective effect.
In a recent ruling, the Gujarat High Court ruled that fly ash bricks and blocks are subject to a 5% GST rate, as specified in Notification No. 24/2018, overturning the previous classification that imposed an 18% GST rate.
The High Court bench comprising of Justice Bhargav D. Karia and Justice Mauna M. Bhatt allowed the petition and quashed and set aside the orders passed by the AAR and the Appellate Authority.
In a significant decision the Delhi High Court absolved foreign entities including Sony India Pvt. Ltd. of liability to pay Goods and Services Tax ( GST ) on the salaries paid to seconded employees, in light of a circular released by the Central Board of Indirect Taxes and Customs ( CBIC ).
The Delhi High Court Division Bench of Justice Yashwant Varma and Justice Ravinder Dudeja observed that the statutory position of the matter is to be decided in terms of Circular No. 210/4/2024-GST dated 26.06.2024 issued by the CBIC. Para 3.7 of the Circular clarifies that if the domestic entity of the foreign corporation does not raise invoice in respect of services rendered by its foreign affiliate, the value of such services would be deemed to “Nil”, with the market value of such services rendered also deemed to be “Nil” for the purposes of second proviso to Rule 28 of the CGST Rules, 2017.
The Gauhati High Court in a recent case has held that the Summary of Show Cause Notice ( SCN ) in GST DRC-01 is not same as the Show Cause Notice to be issued in terms with Section 73 [1] of the Central Goods and Service Tax Act, 2017 as well as the State Act.
A single bench of Justice Manish Choudhury quashed and set aside the impugned Order. Furtherviewed that “non-issuance of a proper and prior Show Cause Notice, as contemplated under sub-section [1] of Section 73 of AGST Act, 2017 and issuance of only Summary of Show Cause Notice and Attachment to Determination of Tax cannot be said to be in compliance with subsection [1] of Section 73 and sub-rule [1] and Rule 142 of the AGST Rules, 2017, a Summary of Show Cause Notice is held to be not a substitute of a Show Cause Notice, contemplated by the provisions of sub-section [1] of Section 73 to set the proceeding in motion.”
The Patna High Court has dismissed a petition contesting the 6 Goods and Services Tax ( GST ) assessment orders in one petition citing lack of jurisdiction and natural justice without substantiation. It was ruled that an assessee must present strong and compelling grounds when approaching the High Court directly without first availing the appellate remedy under the GST Act.
The Court observed, could have been more appropriately addressed through the appellate process rather than a writ petition. The Court also noted that challenging multiple assessment orders within a single petition was procedurally improper, as each assessment constitutes a separate cause of action.
In a recent ruling, the Patna High Court restored a previously time-barred GST appeal, referencing a notification from the Central Board of Indirect Taxes and Customs ( CBIC ) that extended the appeal deadline.
The bench comprising the Chief Justice of Patna, Krishnan Vinod Chandran, and Justice Rajiv Roy observed that although Section 107 of the BGST Act provides a specific timeline for filing an appeal, Notification No. 53/2023 allows for an extended filing period under certain conditions.
In a recent ruling, the Patna High Court dismissed the petition against the Goods and Services Tax ( GST ) registration cancellation due to the petitioner’s continuous failure to use available remedies within limitation.
The court dismissed the writ petition, stating that the petitioner could not claim a remedy after disregarding available legal procedures.
Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
