This weekly roundup analytically summarizes the key stories related to the Supreme Court and High Court reported at Taxscan.in from 3rd November 2024 to 9th November 2024.
The Supreme Court has rejected a petition by the Noida Special Economic Zone (NSEZ) contesting the National Company Law Appellate Tribunal’s (NCLAT) approval of a resolution plan that awarded Rs. 50 lakh to NSEZ, a significant reduction from its original claim of around Rs. 6 crore in the Corporate Insolvency Resolution Plan (NCLAT).
A bench consisting of Justices Abhay S. Oka and Augustine George Masih held that the Insolvency and Bankruptcy Code (IBC) holds precedence over the SEZ Act, as clarified under Section 238 of the IBC, thereby dismissing NSEZ’s argument for exemptions from payments.
In a significant case of cannon India, the Supreme Court ruled that the officers of the Directorate of Revenue Intelligence ( DRI ) have the power to exercise powers under the Customs Act, 1962 to issue show-cause notices and recover duties.
The Supreme Court held that only a “proper officer” under Section 28 can issue show cause notices related to duty demands. It ruled that the DRI officers were not “proper officers” for reassessment of duties because this designation is specific to the officers who initially assess the import duties. Therefore, the DRI could not issue the show cause notice in this case.
In a significant case, the Orissa High Court held that offence can be compounded under section 279 of Income Tax Act, 1961 as provision specified that it either before or after institution of proceedings. The Court further set aside the order rejecting the compounding of offence.
A division bench of Justice Arindam Sinha and Justice M.S. Sahoo ascertained that the proceedings are pending. It was observed that the provision says any offence in the Chapter, may either before or after institution of the proceedings, be compounded. The Court viewed that the petitioners are clearly entitled and thus had duly applied.
The Gauhati High Court held that proceedings under section 11A of Central Excise Act, 1944 cannot be initiated in absence of any deliberate or willful suppression or mis-statement of facts by the petitioner. The court set aside and quashed the impugned orders, further directed that the amount deposited by the petitioner to the tune of Rs. 2 Crore is permitted to be adjusted against the future duties as may be found to be payable by the petitioner company.
A single bench of Justice Soumitra Saikia concluded that there was no willful or deliberate suppression or mis-statement offered by the petitioner resulting in short levy or short paid Central Excise Duty. It was viewed that the invocation of jurisdiction under Section 11A in the absence of any deliberate or willful suppression or mis-statement of facts by the petitioner, no proceedings can be initiated under Section 11A as have been sought to be done.
In a recent ruling, the Patna High Court restored a dismissed appeal after the GST department forcefully recovered the entire disputed demand during an extended appeal period.
The bench comprising Chief Justice Krishnan Vinod Chandran and Justice Partha Sarathy referenced the Supreme Court’s ruling in In Re: Cognizance For Extension of Limitation, which extended limitation periods for legal filings due to the COVID-19 pandemic. The court acknowledged this extension applied to the petitioner’s case, granting additional time to file an appeal beyond the usual deadline.
The Madras High Court recently set aside a non-speaking order issued by the Goods and Services Tax ( GST ) department, which had rejected a 60-page detailed objection on demand order in a single line.
Justice Mohammed Shafeeq quashed the assessment order, treating it as a show cause notice, and directed the petitioner to submit objections on 03.10.2024. The respondent was instructed to issue a reasoned, speaking order after providing the petitioner an opportunity for a fair hearing
In a recent the Delhi High Court dismissed the challenge to the transfer pricing addition, citing that the assessee’s foreign associated enterprise had not been used as the tested party in previous years.
The division bench of Delhi High Court comprising Justice Vibhu Bakhru and Justice Swarana Kanta Sharma observed that TPO had rejected RPM as the most appropriate method, and had also rejected RPM as the most appropriate method and had used TNMM as the most appropriate method in both the AY’s 2004-05 and 2005-06.
Recently, the Bombay High Court rejected the Maharashtra State Tax Department’s attempt to offset a refund against earlier outstanding tax dues from prior years, ordering an immediate payout of Rs. 2.7 crore with applicable interest.
The High Court found that the review orders issued in July 2023 lacked jurisdiction and violated the intent of the Settlement Act. By making this retroactive adjustment, the tax authorities attempted to bypass the legislative intent behind the settlement framework, which was intended to expedite the resolution of tax disputes. The court observed that authorities administering the Settlement Act were acting outside their jurisdiction by invoking MVAT provisions, particularly in a manner that was not specified by the Settlement Act itself.
In a recent judgment, the Delhi High Court quashed a tax assessment order issued by the Sales Tax Department, ruling that it was a duplicate and invalid since it pertained to the same tax period already addressed in a prior final order.
The division bench, comprising Justice Yashwant Varma and Justice Ravinder Dudeja, concluded that the April 2024 order was unsustainable as it effectively duplicated the final order for the same tax period. Citing fairness and the need for administrative order, the court held that such duplicate orders could not be justified.
In a recent ruling, the Patna High Court allowed a 10% reduced pre-deposit to stay in recovery due to a delay in constituting the Goods and Services Tax Appellate Tribunal ( GSTAT ).
The bench comprising Chief Justice Krishnan Vinod Chandran and Justice Partha Sarathy recognized the delay in constituting the GST Tribunal and there was no possibility of an appeal being filed before 01.11.2024.
In a recent ruling, the High Court of Meghalaya dismissed a provident fund ( PF ) claim petition due to the petitioner’s failure to use the alternative remedy and directed that 25% of the PF should be deposited within 2 months of the judgement.
The High Court bench comprising Justice W. Diengdoh directed the school to deposit 25% of the demanded amount, totaling Rs. 4,63,871, within two months.
In the recent ruling, the High Court of Orissa, restored the tax appeal of assessee, citing his health-related inability to attend hearings.The court acknowledged that the assessee, who is a handicapped individual, faced significant challenges in participating in the proceedings due to his medical condition.
The Division Bench of Arindam Sinha (Judge ) and M.S.Sahoo ( Judge ) disposed of the writ petition, establishing clear directives for the assessee and the opposing party.
In the recent ruling,the Punjab and Haryana High Court, invalidated notices issued under Section 148 of the Income Tax Act,1961 for non-compliance with the faceless assessment procedure.
The division bench of Sanjeev Prakash Sharma ( Judge ) and Sanjay Vashisth ( Judge ) ruled in favor of the assessee, applying the principles from the previous cases and setting aside the notices issued under Section 148, along with any related proceedings. All pending applications were also resolved in line with this decision.
In the recent ruling,the Andhra Pradesh High Court, ordered a fair hearing for the assessee in a property tax dispute, upholding her right to due process after she contested the cancellation of her house tax assessment and the removal of her electricity service meters. The Court also mandated a decision within three months and prohibited coercive actions against her during the proceedings.
A single bench of K. Manmadha Rao ( Justice ) directed the second respondent to consider the assessee’s explanation regarding the show-cause notice and the related complaints. It emphasized the need for the assessee to be provided a fair opportunity to present her case before a reasoned decision was made. It mandated that the second respondent issue a decision within three months from the receipt of the Court’s order.
In a recent ruling, the Patna High Court upheld the cancellation of the Goods and Service Tax ( GST ) registration due to the non-filing of the Goods and Service Tax ( GST ) return for 6 consecutive months and no reasonable cause for delay in filing the appeal.
The bench, comprising Chief Justice Krishnan Vinod Chandran and Justice Partha Sarathy, observed that GST registration is conditional on adherence to compliance obligations, including timely filing of returns. Registration provides benefits, but the law permits cancellation for non-compliance, as clearly stipulated in Section 29(2) of the GST Act.
In a recent ruling, the High Court of Patna held that the demand order issued post resignation of directors lies against the company and not against the ex-directors.
The Patna High Court bench, comprising Chief Justice K. Vinod and Justice Partha Sarthy, dismissed the writ petition filed by the petitioners, leaving it open for the petitioners to further contest their liability with the AO if necessary.
In a recent ruling, the Madras High Court condoned a 285-day delay in filing the Goods and Service Tax (GST) Appeal considering that no physical notice was served.
A single bench led by Justice Krishnan Ramasamy noted the absence of a physical notification, which provided a “reasonable cause” for the delay. The court decided to condone the 285-day delay and directed the Deputy Commissioner to process the appeal as if it had been filed on time.
The Delhi High Court observed that the Depreciation can be calculated on Intangible Assets and also upheld the Depreciation claim as allowed by Commissioner of Income Tax (Appeals) [CIT(A)].
The Division Bench, which included Justice Vibhu Bakhru and Justice Swarana Kanata Sharma, noted that the Assessing Officer had completely disallowed the goodwill written off, arguing that it was not incurred wholly and exclusively for business purposes. However, they pointed out that there was no dispute regarding the ₹47,00,000 paid for the acquisition of assets of Nebula, and there was no indication that this amount was allocated for any other consideration or purpose.
The Delhi High Court dismissed the Writ filed seeking the Full Reward to the Petitioner, SC Gupta as the Informer’s Rewards Under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 qualified as an Ex-Gratia Payments.
Justice Sanjeev Narula observed that the Petitioner has already been awarded INR 25 lakhs by the Respondents. The appropriateness of this quantum of reward cannot be adjudicated by this Court in proceedings under Article 226 of the Constitution, since it involves substantial determinations as to how and to what extent was the information useful in apprehending the duty evasion and the key players in this regard.
In a recent ruling, the Madras High Court has quashed an Income Tax assessment order for failing to comply with prior court directions. The court emphasized that any order issued contrary to or in disregard of its direction cannot be sustained, as it is deemed jurisdictionally defective.
A single bench led by Justice Mohammed Shaffiq noted that the Income Tax Department did not adequately address whether the assessment complied with its previous directions regarding fair market valuation.
In a recent ruling, the Delhi High Court upheld the use of the Transactional Net Margin Method ( TNMM ) as the appropriate approach for calculating the arm’s length price ( ALP ) over the alternative “other method” suggested by Transfer Pricing Officer ( TPO ) in a transfer pricing dispute involving substantial adjustments.
The bench of Justice Vibhu Bakhru and Justice Swarana Kant Sharma sided with ITAT, upholding the importance of maintaining consistency in transfer pricing methodology unless strong reasons suggest otherwise. The court referenced previous Supreme Court rulings, highlighting that stability in tax assessments is essential for cultivating a predictable commercial environment.
In a recent ruling, the Madras High Court directed the Income Tax Department to refund the differential amount within two months in a dispute where the department had failed to grant the full TDS credit claimed by the petitioner.
Justice Senthilkumar Ramamoorthy observed that documentary evidence, particularly Form 26AS, supported the petitioner’s claim of Rs.18,53,863 in TDS. Since the respondents had credited only Rs. 10,88,863, the court observed that the petitioner was entitled to a refund of the differential amount of Rs. 7,65,000.
In the recent ruling, the High Court of Punjab and Haryana, invalidated tax notices issued to the assessee, emphasizing that circulars and instructions from tax authorities cannot override statutory provisions of the Income Tax Act, 1961.
The Division Bench of Sanjeev Prakash Sharma ( Judge ) and Sanjay Vashisth ( Judge ) applied the observations and conclusions from the Jasjit Singh decision, mutatis mutandis, to the present case, allowing the writ petition in favor of the assessee.
The direct suspension of Goods and Services Tax ( GST ) registration without invoking civil or criminal action for contravening the GST provisions directly hits the fundamental right of the petitioner to carry out trade and business.
The high court ruled that if the petitioner violated the GST Act, the department should have pursued civil and criminal actions, not suspended the GST registration. The suspension directly violates the petitioner’s fundamental right to trade and carry on business, making the impugned order unsustainable. It also noted that the reply of the petitioner was not considered by the department.
The Kerala High Court has reiterated that 30 November is a time limit for claiming Goods and Service Tax (GST) Input Tax Credit ( ITC) applicable retrospectively from 1 July 2017.
The single bench of Justice Dinesh Kumar Singh held that “the time limit for furnishing the return for the month of September is to be treated as 30th November in each financial year with effect from 01.07.2017, in respect of the petitioners who had filed their returns for the month of September on or before 30th November, and their claim for ITC should be processed, if they are otherwise eligible for ITC.”
In a recent ruling, the Madras High Court condoned a Singaporean Company’s income tax return delay for refund claims citing genuine hardship caused the delay, and ordered the petitioner to pay Rs. 50,000 for each petition to the Tamil Nadu State Legal Services Authority.
Justice Senthilkumar Ramamoorthy noted that Section 119(2)(b) of the Income Tax Act allows condonation of delay if it helps avoid genuine hardship. Given the substantial tax deductions made at the source and the petitioner’s refund claims, the court accepted that denying the condonation could result in financial hardship for the petitioner
In a recent ruling, the Orissa High Court condoned the delay in restoring the GST registration cancellation and allowed the petitioner to revive the Goods and Service Tax ( GST ) registration due to the willingness of the petitioner to settle the outstanding GST dues
The bench comprising Justice Arindam Sinha and Justice M.S. Sahoo observed the petitioner’s arguments. The court referred to the previous decision in the Mohanty Enterprises case, emphasizing that in similar circumstances, the delay in invoking Rule 23 of the Odisha Goods and Services Tax Rules ( OGST Rules ) had been condoned.
Recently, the Punjab & Haryana High Court has granted the bail to accused involved in raising fake invoices and wrongfully claiming GST ITC.The court held that grant of bail is a general rule and putting persons in jail or in prison or in correction home is an exception.
The single bench of Justice Sandeep Moudgil has observed that the petitioner has already suffered sufficient incarceration i.e. 3 years, 2 months and 16 days, similarly situated co-accused have already been granted concession of bail by the Court, and as per the principle of the criminal jurisprudence, no one should be considered guilty, till the guilt is proved beyond reasonable doubt.
The Jammu & Kashmir And Ladakh High Court has held that excise duty exemption is not taxable under Income Tax Act, 1961 as it amounts to capital receipt. The court held that whether an amount is to be considered as income or not is to be determined on the basis of the Income Tax Law and not on the basis of the entries made in the books of accounts.
The division bench of Chief Justice Tashi Rabstan and Justice M.A. Chowdhary has observed that the exemption from excise duty does not fall in the definition of income as envisaged under Section 2(24)(xviii) of the Income Tax Act and the amount is not an income but a capital receipt not taxable under the provisions of the Income Tax Act.
The Madras High Court has upheld a Goods and Services Tax ( GST ) demand order after the assessee failed to submit a reply within the 90-day extension granted by the GST authorities.
Justice Krishnan Ramasamy found that the petitioner had ample time and opportunity to respond but failed to take any action. The court concluded that the principles of natural justice were upheld as the petitioner was given due notice and an extended period to respond.
In a recent ruling, the Madras High Court directed an expedited refund of the redemption fine and penalty due to an unjustified delay on the part of the Additional Commissioner of Customs to consider the case de novo.
The High Court bench composed of Justice C. Saravanan, further held that “ Needless to state, refund is without prejudice to the rights of the respondent to levy any fine or redemption fine independently pursuant to the remand order. “
In a recent case, the Karnataka High Court has held that electronic credit ledger(ECL) cannot be blocked under Central Goods and Service Tax (CGST), 2017 without cogent reason. It was found that the blocking was immediately upon the receipt of copy of enforcement authority’s reports.
The single bench of Justice S.R.Krishna Kumar has observed that “since no pre-decisional hearing was provided/granted by the respondents before passing the impugned order, coupled with the fact that the impugned order invoking Section 86A of the CGST Rules by blocking of the Electronic credit ledger of the petitioner does not contain independent or cogent reasons to believe except by placing reliance upon the reports of Enforcement authority which is impermissible in law.”
In a recent case, the Orissa High Court disposed of Central Goods and Services Tax ( CGST ) Tax, 2017 case post-revision in monetary limit in appeal filing. The monetary limits for filing appeals by the tax authorities have been raised at various appellate levels, such as the Commissioner (Appeals), the Appellate Tribunal, and High Courts.
A division bench of Justice Arindam Sinha and Justice M.S. Sahoo observed that the application has been made pursuant to upward revision in monetary limit for filing appeal by the department. As such tax effect of the appeal is less than the raised limit. The application is allowed and disposed of. The appeal is dismissed.
In a recent ruling, the Patna High Court granted a stay on tax recovery for a pending appeal on a conditional deposit of 20% disputed tax due to the non-constitution of the Goods and Service Tax (GST) Tribunal.
The bench comprising Chief Justice of Patna High Court, K. Vinod Chandran and Justice Partha Sarthy observed both side’s arguments. The court recognized the petitioner’s inability to appeal due to the non-constitution of the tribunal and noted the respondents’ notification.
The Gauhati High Court has held that disciplinary action against CIT (A) could not be initiated for deleting Rs. 120.55 crore income tax addition in a hasty manner. The court held that the gravity of charge against the respondent has been diluted when the ITAT has remanded the matter to the Assessing Officer for deciding the issue afresh.
The division bench of Chief Justice Mr. Vijay Bishnoi and Justice N. Unni Krishnan Nair has observed that though the Department was aware about the alleged negligent act of the CIT(A)/respondent since the beginning but has not taken any action against the respondent till passing of a fresh order by the ITAT, pursuant to the direction issued by the High Court at Calcutta.
In a recent case, the Orissa High Court allowed the writ petition granting liberty to the petitioner to deposit the outstanding Motor Vehicle Tax as well as Additional Motor Vehicle Tax as on date and approach the authority with a reply/ explanation within a period of four weeks.
A single bench of Justice Murahari Sri Raman disposed of the writ petition granting liberty to the petitioner to deposit the outstanding Motor Vehicle Tax as well as Additional Motor Vehicle Tax as on date and approach the authority with a reply/explanation within a period of four weeks from today. On such deposit being made, the authority concerned shall consider such reply within a period of four weeks.
In a recent ruling, the Patna High Court upheld the cancellation of Goods and Service Tax ( GST ) registration due to non-compliance with the limitation of the GST appeal and failure to utilize the Amnesty Scheme.
The bench comprising Chief Justice of Patna High Court, K. Vinod Chandran and Justice Partha Sarthy observed both side’s arguments. The court observed that Section 107 of the Bihar Goods and Services Tax Act, 2017, sets strict deadlines for filing an appeal, which the petitioner missed.
In a significant case, the High Court of Orissa directed the petitioner to file a GST appeal under Section 112 of Central Goods and Service Tax ( CGST/OGST ) Act, 2017 for the challenge against the demand for short payment of tax.
A division bench of Justice Arindam Sinha and Justice M.S. Sahoo disposed of the as covered by M/s. Maa Tarini Traders (supra), as applicable in the facts.
The Bombay High Court has condoned the delay in filing ITR ( Income Tax Return ) by doctor Considering covid duty. It was found that the Petitioner faced various other problems due to the Covid-19 pandemic, and that was the reason why the Petitioner could not file her Return of Income within time.
The division bench of Justice G. S. Kulkarni and Justice Firdosh P. Pooniwalla has observed that not only was the Petitioner a doctor who was on covid duty but that the Petitioner faced various other problems due to the Covid-19 pandemic, and that was the reason why the Petitioner could not file her Return of Income within time.
The Karnataka High Court, setting aside the GST recovery proceedings, has emphasised that the objective of Section 75(4) of the Goods and Services Tax ( GST Act ), 2017 is to ensure that a fair opportunity for hearing must be provided before passing any adverse order.
Justice S. Sunil Dutt Yadadv heard both sides. The court noted that the order was issued ex-parte without the petitioner’s input. While acknowledging that electronic service of notice may generally suffice, the court determined that, in this case, substantive rights were at stake, warranting a remand to allow the petitioner another chance to respond to the show-cause notice dated September 27, 2023.
In a recent ruling of Bombay High Court it was clarified that receipts for property tax assessment do not necessarily indicate ownership rights to the property.
The single bench of Justice Sharmila U.Deshmukh observed that there was no encroachment by the petitioner or petitioner’s husband and there existed no record of continued occupation of the property and it was also decided that property tax Assessment Receipts Does not Necessarily Imply right to property.
In a recent ruling, the Karnataka High Court set aside a demand order related to service tax issued against an advocate providing legal services, reaffirming the exemption applicable to individual advocates. The matter was remitted for reconsideration.
Justice S. R. Krishna Kumar found that the petitioner’s submissions, including the Bombay High Court’s ruling, were indeed overlooked by the respondent. It stated that “A perusal of the material will indicate that apart from the fact that the petitioner had not submitted his reply/response to the notices issued by the respondent, the aforesaid contentions of the petitioner and the judgment of the Bombay High Court in Pooja Patil’s case supra have undisputedly not been considered by the respondent.”
In a recent ruling, the Patna High Court clarified that the Central Board of Direct Taxes ( CBDT ) guidelines for the compulsory selection of Income Tax Returns ( ITR ) for scrutiny do not restrict the Income Tax Department from conducting scrutiny on a discretionary or random basis.
The Bench, comprising Chief Justice of Patna High Court K. Vinod Chandran and Justice Partha Sarthy, observed that the CBDT guidelines only specify certain cases or categories that must be scrutinized. The court points out that these guidelines do not limit the Income Tax Department from choosing additional cases for scrutiny on a random or discretionary basis.
In a recent ruling, the Karnataka High Court quashed an order by the Principal Commissioner of Income Tax (PCIT) after finding that it failed to properly consider whether the tax demand imposed on the petitioner was unreasonably high or would cause genuine hardship.
A single bench led by Justice S Sunil Dutt Yadav observed that the Principal Commissioner’s order lacked a detailed examination of the petitioner’s claim regarding the high-pitched demand and genuine hardship.
In the recent ruling, the High Court of Bombay overturned the dismissal of a Maharashtra Value Added Tax ( MVAT ) appeal for non-attendance, directing that the appeal be decided on its merits as per the statutory mandate.
The Division Bench comprising M.S.Jawalkar(Judge) and Avinash G.Gharote(Judge) ruled that statutory provisions take precedence over rules, citing legal precedents that support this position. The court quashed the impugned order, ruling that the appeal should be decided on its merits.
In a recent ruling, the Karnataka High Court set aside an ex-parte order issued by the Joint Commissioner of Commercial Tax (Appeals) due to the department’s failure to notify the petitioner of personal hearing dates via email, despite a specific request. Instead, notifications were posted solely on the GST portal.
Justice S.R. Krishna Kumar heard the case and observed that by not adhering to the petitioner’s explicit request for email notifications, the respondent effectively denied the petitioner a fair opportunity to appear for the hearings.
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