Supreme Court & High Courts Weekly Round-up

This weekly round-up analytically summarizes the key stories related to the Supreme Court and High Court reported at Taxscan.in during the previous week 4th January 2025 to 10th January 2025)

GST not leviable on Assignment/Transfer of Leasehold Rights to third party: Gujarat HC GUJARAT CHAMBER OF COMMERCE AND INDUSTRY & ORS vs UNION OF INDIA & ORS. CITATION:   2025 TAXSCAN (HC) 116

The Gujarat High Court in a recent ruling held that Goods and Service Tax (GST) is not leviable on assignment/transfer of leasehold rights to third party. The bench quashed the notices issued by the GST department that sought to recover tax on the transfer of GIDC plots to third parties from their original allottees.

The division bench of the High Court held that the transfer of leasehold rights to third party would be transfer of immovable property and therefore question of ITC would not arise.

Service Tax Refund Claims by Aviation Students: Allahabad HC Directs Academy to Address Matter Abhinav Pratap Raju vs Indira Gandhi Rashtriya Uran Akademi CITATION: 2025 TAXSCAN (HC) 107

The Allahabad High Court has directed the Indira Gandhi Rashtriya Uran Akademi, which is an aviation academy, to address the service tax refund claims made by its students.

The High Court, comprising Justice Manish Mathur, granted liberty to the petitioners to file a fresh application or representation either physically or by email, for a refund of the service tax. The respondents were directed to decide the matter within two months of receiving the representation, along with a copy of this order, particularly examining whether the tax was included in the petitioners’ fees, in line with the Delhi High Court judgment.

Madras HC Orders Re-Credit of RCM Payment Made during GST Transition as ITC in Electronic Credit Ledger, Declines Cash Refund M/s.SRC Projects Private Limited vs The Assistant Commissioner of GST and and Central Excise CITATION: 2025 TAXSCAN (HC) 108

In a recent ruling, the Madras High Court directed the GST department to allow the re-credit of taxes paid under the reverse charge mechanism ( RCM ) during the transition to the GST regime. The court allowed the petitioner to transfer this tax credit into their electronic credit ledger but declined their request for a cash refund.

The court ordered the GST department to allow the petitioner to take re-credit of the amount paid under RCM on 30.12.2017. The court clarified that the petitioner was not entitled to a cash refund as the law does not provide for such refunds in this situation. The writ petition was allowed.

Allahabad HC upholds ITC reversal on Lubricants for Traders under UP VAT Act M/S SBW Udoyg Ltd. VS The Commissioner Commercial Tax CITATION: 2025 TAXSCAN (HC) 108

The Allahabad High Court Upholds ITC reversal on lubricants for traders under the Uttar Pradesh Value Added Tax Act ( UP VAT ), 2008.

The bench also observed that the revisionist has not challenged the validity of the circular dated 17.01.2014 before any competent court, and under the revisional jurisdiction, the validity of the circular cannot be tested. Justice Piyush Agarwal dismissed the revision petition.

Mismatch in GST Returns between GSTR 3B, 1 and 9: Madras HC Grants final Opportunity for Hearing to LPG Cylinder Distributor M/s.David Raja Bharatgas Agency VS The Deputy State Tax Officer CITATION: 2025 TAXSCAN (HC) 110

The Madras High Court has granted a final opportunity for hearing to the LPG Cylinder distributor in the mismatch of Goods and Services Tax ( GST ) returns between GSTR 3B, GSTR 1 and GSTR 9 for FY 2018-19.

The court directed the petitioner to deposit 25% of the disputed tax within four weeks. It further instructed that any amounts already recovered or paid, including pre-deposits, be adjusted against this 25% requirement. The assessing authority was directed with verifying the payments and intimating the petitioner of any remaining balance within one week of the court order.

Supplier Liquidation Triggers GST Demand alleging ITC Claim from GST Return defaulters & Tax Non-Payers: Madars HC allows to Explain Matter Tvl.Sri Renga Steels vs The Assistant Commissioner (ST) CITATION:   2025 TAXSCAN (HC) 112

In a recent ruling, the Madras High Court granted the steel dealer an opportunity to explain discrepancies in their GST returns, specifically related to excess claims of Input Tax Credit (ITC) from cancelled dealers, return defaulters, and tax non-payers as the supplier undergone liquidation.

The court further directed that the entire process, including verification and balance payment, should be completed within four weeks and failure to comply would result in the restoration of the original order. Additionally, the court clarified that if any bank account attachments or garnishee proceedings were in place, they would be lifted upon compliance with the payment of 10% of the disputed taxes.

Amount Recovered or Paid including GST Pre-deposit in Appeal can be Reduced/Adjusted towards 10% Pre-deposit to be Paid: Madras HC Tvl.Sri Vasupujya Jewels Rep. by its Proprietor vs State Tax Officer CITATION: 2025 TAXSCAN (HC) 111

In a recent ruling, the Madras High Court held that amounts recovered or paid, including pre-deposits made in Goods and Services Tax ( GST ) appeal, can be reduced or adjusted against the mandatory 10% pre-deposit requirement.

The court directed that any bank account attachments or garnishee proceedings be lifted once the petitioner complies with the order. It also stated that the disputed order would act as a show-cause notice, and the petitioner must submit objections within four weeks. If they fail to do so, the assessment order will be reinstated.

Lack of Mens Rea u/s 10(d) of CST Act: Allahabad HC Quashes Penalty on Bajaj Hindusthan Sugar LtBajaj Hindusthan Sugar Ltd. Thru. Its Authorised Signatory vs Commissioner Commercial Tax U.P. Lucknow And Anr. CITATION: 2025 TAXSCAN (HC) 113

The High Court of Allahabad quashed the penalty imposed on Bajaj Hindusthan Sugar Ltd. under Section 10(d) of the Central Sales Tax (CST) Act due to lack of mens rea.

The HC further observed that “even otherwise on the plain 11 reading of Section 10(d) the phrase “reasonable cause” has been duly discharged by the revisionist by producing the certificate of an Engineer, thus necessary ingredient for levy of penalty have neither been alleged established or proved in the present case.”

TNVAT Exemptions Applicable to Interstate Transactions in Absence of CST Notifications u/s 8(5): Madras HC Grants Exemption to Interstate Sales of Gloriosa Superba Natesan vs The State Tax Officer CITATION: 2025 TAXSCAN (HC) 114

In a recent judgment, the Madras High Court ruled that exemptions under the Tamil Nadu Value Added Tax (TNVAT) Act apply to interstate transactions in the absence of specific notifications under Section 8(5) of the Central Sales Tax (CST) Act and granted relief to interstate sales of Gloriosa Superba.

The court quashed the impugned revision order dated 22.04.2022 and granted the petitioner the benefit of the TNVAT notification providing full exemption from tax on interstate sales of Gloriosa Superba. The writ petition was allowed with consequential relief granted to the petitioner.

GST Appeal Authority does not have Powers to Remand Proceedings: Allahabad HC Quashes Order due to violation of Natural Justice Principles Ms Sri Ganesh Sales vs State of U.P. and Another CITATION: 2025 TAXSCAN (HC) 115

The High Court of Allahabad held that the GST appeal authority does not have powers to remand proceedings and quashed the order passed under Section 74 of the Uttar Pradesh Goods and Services Tax Act, 2017 as the same was passed by grossly violating the principles of natural justice.

The High Court, composed of Justice Vipin Chandra Dixit and Justice Shekhar B. Sraf, set aside the impugned order emphasizing the importance of following the principle of natural justice.

No Action against ‘Tax Arrears’ once Settlement Certificate u/s 5(1) of Vivad Se Vishwas is Issued: Delhi HC S A N GARMENTS MANUFACTURING PRIVATE LIMITED vs PR COMMISSIONER OF INCOME TAX 7 AND ANR CITATION: 2025 TAXSCAN (HC) 117

The Delhi High Court in a significant judgment has held that no action may be initiated against ‘tax arrears’ once a full and final settlement certificate under Section 5(1) of the Direct Tax Vivad Se Vishwas Act, 2020 ( DTVSV Act ) is issued.

The two-member Bench of the Delhi High Court proceeded to set aside the impugned Form No.3 certificate, stating that the issuance of a final certificate under Section 5(1) of the DTVSV Act concludes all disputes regarding the ‘tax arrears’.

No Income Tax Reassessment on Incidental or Tangential Findings w/out fulfilling S.150 conditions: Delhi HC THE PR. COMMISSIONER OF INCOME TAX VS CAPITAL POWER SYSTEMS LTD. CITATION:   2025 TAXSCAN (HC) 118

A Division Bench of the Delhi High Court recently held that no income tax reassessment may be initiated on the basis of mere ‘incidental’ or ‘tangential’ findings without the fulfilment of due conditions stipulated by Section 150 of the Income Tax Act, 1961.

Referencing multiple Supreme Court decisions, the Bench held that Section 150 of the Income Tax Act, 1961 requires strict and cautious application for invocation and may not be done on the basis of findings or directions that are only incidental, tangential, or beyond statutory authority. Observing no infirmity in the ITAT order, the Bench proceeded to dismiss the appeal, answering in favour of the Assessee.

Personal Delivery or E-mail Notice of GST order should be Provided before issuing in GST Portal or News paper: Madras HC Udumalpet Sarvodaya Sangham vs The Authorit CITATION: 2025 TAXSCAN (HC) 120

The personal delivery or e-mail notice of the Goods and Services Tax ( GST ) order should be provided before issuing in the GST portal or newspaper, ruled the Madurai bench of Madras High Court. It ruled that without such personal delivery, it violates the provision Section 169 of the GST Act, 2017.

Consequently, it set aside the impugned assessment orders and directed the petitioners to file replies to the show-cause notices by January 31, 2025. The authorities were instructed to provide a hearing opportunity and pass fresh orders in accordance with the law.

No provision u/s 130 of GST Act prohibits interim release of goods seized pending adjudication of show cause notice: Kerala HC Directs to release Seized Gold Jewellery SHISH JEWELS PRIVATE LIMITED vs THE INTELLIGENCE OFFICER CITATION: 2025 TAXSCAN (HC) 121

In a recent case, the Kerala High Court held that there is no provision in Section 130 of the Goods and Sevice Tax Act ( GST ), 2017 which prohibits interim release of goods seized pending adjudication of show cause notice under the said section. The court directed the GST authority to release the seized gold Jewellery.

Further directed the 1st respondent to release the goods seized to the petitioner pending adjudication of show cause notice on the petitioner depositing a sum of Rs.2,93,71,666/- (Rupees two cores ninety three lakhs seventy one thousand six hundred and sixty six only), being the penalty and fine quantified in lieu of confiscation of goods and on execution of bond for the value of goods.

“Any new liability after approval of Resolution Plan will go beyond Lakshman Rekha of IBC”: Allahabad HC M/S NS PAPERS LIMITED AND ANOTHER vs UNION OF INDIA THROUGH SECRETARY CITATION: 2025 TAXSCAN (HC) 119

The Allahabad High Court in a recent case ruled that any new liability being fastened after the approval of the Resolution Plan would inherently and palpably be illegal and go beyond the Lakshman Rekha of the Insolvency Bankruptcy Code ( IBC ), 2016.

The court quashed the impugned assessment order dated April 28, 2021 and held that in the event any penalty proceedings have been initiated by the department, the writ petitioner shall be at liberty to challenge the same in accordance with law.

Telangana HC upholds GST notifications extending notice deadlines M/s.Brunda Infra Pvt. Limited vs The Additional Commissioner of Central Tax CITATION: 2025 TAXSCAN (HC) 122

The Telangana high court in a recent ruling upheld the notifications issued by GST authorities, extending the timeframe for issuing show-cause notices related to tax recovery and input tax credit matters for the financial year 2019-20.

In this batch of matters, admittedly, the petitioners have a statutory efficacious alternative remedy of appeal. The court held that the petitioners may avail the statutory remedy of appeal.

Fraudulent GST ITC Claim via Bogus Invoices found during Inspection: Madras HC directs Department to Grant Personal Hearing Tvl.J.S.Enterprises vs The Deputy State Tax Officer-I CITATION: 2025 TAXSCAN (HC) 123

The Madras High Court, addressing a case involving the fraudulent claim of Goods and Services Tax ( GST ) Input Tax Credit ( ITC ) based on bogus invoices discovered during an inspection, directed the GST department to provide the petitioner with a personal hearing.

The assessing authority was directed to verify the payments and notify the petitioner of any remaining balance within one week of receiving the order. The petitioner was required to clear the balance within three weeks of such intimation.

Amount Recovered by GST Authorities can be adjusted towards 25% Pre-deposit: Madras HC Subramani Babu vs The Assistant Commissioner (ST), Deputy Commissioner (ST), Axis Bank, HDFC Bank CITATION: 2025 TAXSCAN (HC) 124

In a notable decision, the Madras High Court has observed that the amount recovered by the Goods and Services Tax ( GST ) authorities can be adjusted towards 25% pre-deposit. The bench set aside the impugned order concerning the Assessment year 2018-19.

Justice Mohammed Shaffiq set aside the impugned order, stipulating that the petitioner must deposit the balance of 25% disputed taxes, if any, within the specified timelines. It further instructed the GST department to verify payments, intimate any remaining amounts, and lift bank attachments or garnishee proceedings upon compliance.

GST ITC Denied due to Delayed Claim: Madras HC directs to Re-do Assessment following recent Amendment Saritha Impex & Marketing Private Limited vs Superintendent of CGST & Central Excise CITATION: 2025 TAXSCAN (HC) 125

The Madras High Court set aside a Goods and Services Tax ( GST ) order, which disallowed Input Tax Credit ( ITC ) for the assessment year 2019-20 on the ground that the claims were filed beyond the prescribed time limit under Section 16(4) of the GST Acts.

Justice Mohammed Shaffiq, considering the submissions, the Court instructed the petitioner to submit objections within three weeks, along with relevant details, and directed the respondent to pass a revised order after providing a reasonable opportunity for a personal hearing. While the ITC issue was remanded, other aspects of the impugned order remained unaffected.

Gujarat HC Orders Refund of Rs. 40 Lakh Voluntary GST Payment, Rules S. 54 Limitation Inapplicable MESSRS AALIDHRA TEXCRAFT ENGINEERS & ANR vs UNION OF INDIA & ORS CITATION: 2025 TAXSCAN (SC) 102

The Gujarat High Court directed the refund of Rs. 40 lakh paid voluntarily as GST by the petitioner, declaring that the limitation under Section 54(1) of the GST Act, 2017 was inapplicable in this case.

The bench, comprising Justice Bhargav D. Karia and Justice D.N. Ray, held that the refund claim should not be rejected due to the timeline prescribed in Section 54( 1 ) of the GST Act, as the amount was not deposited towards any tax, interest, or penalty but due to a mistaken belief.

Service of Customs Notices, Communications and Orders to be made through Email and on Common Portal, Alongside Traditional Methods: Delhi HC BONANZA ENTERPRISES VS THE ASSISTANT COMMISSIONER OF CUSTOMS & ANR. CITATION: 2025 TAXSCAN (HC) 126

In a landmark judgment, the Delhi High Court pointed at the need for modernizing the methods of serving customs notices, communications, and orders. The decision came in response to a writ petition filed against the Assistant Commissioner of Customs and others, challenging the non-receipt of a show cause notice ( SCN ) and subsequent ex-parte proceedings.

The court ordered the Chairman of the Central Board of Indirect Taxes and Customs (CBIC) to ensure compliance with the mandate of Section 153 of the Customs Act for serving notices via email and the common portal.

No Extended Period to Reopen Income Tax Assessment after 10 months from Limitation: Bombay HC Wavy Construction LLP vs Asst. Commissioner of Income-tax CITATION: 2025 TAXSCAN (HC) 127

In a notable judgment, the Bombay High Court held that the extended period for reopening of Income Tax Assessment cannot be done following a period of 10 months from the expiry of the statutory period of limitation for the reopening.

The notice for reassessment under Section 148 was issued on March 29, 2019. Under Section 153(2) of the IT Act, the Assessing Officer was required to complete the reassessment within nine months from the end of the financial year in which the notice was served. Even after accounting for the exclusion of the period during which proceedings were stayed by the court between December 13, 2019 and September 21, 2021, the reassessment order dated September 30, 2022, was issued nearly 10 months beyond the extended deadline. In light of such observations, the Bombay High Court allowed the Petition granting relief to Wavy Construction LLP.

ITC Availed under Wrong Head in GSTR 3B: Madras HC Grants Assessee Opportunity to Rectify Clerical Error Tvl.Thendral Electricals vs The Commissioner of Commercial Taxes CITATION: 2025 TAXSCAN (HC) 128

In a recent ruling, the Madras High Court has allowed the assessee to rectify the clerical error which ultimately denied the Input Tax Credit ( ITC ) under Goods and Services Tax ( GST ) Act.

The petition was directed to file the rectification petition within two weeks from the receipt of the order, and the court emphasized that failure to do so would result in the revival of the impugned order.

GST Not Demandable in absence of any supply of goods/services: Kerala HC M/S.ASWATHY GAS AGENCIES vs INDIAN OIL CORPORATION LTD CITATION: 2025 TAXSCAN (HC) 129

In a recent case, the High Court of Kerala has held that Goods and Service Tax ( GST ) is not demandable in absence of any supply of goods/services.While confirming the findings in the impugned orders, the court declared that the respondent Corporation would not be entitled to collect tax under the provisions of the CGST Act 2017/SGST, Act 2017 from the petitioners.

A single bench of Justice Harisankar V. Menon held that the respondents are not entitled to collect GST from the petitioners. While confirming the findings in the impugned orders, it is declared that the respondent Corporation would not be entitled to collect tax under the provisions of the CGST Act 2017/SGST, Act 2017 from the petitioners.

Relief to Shri Sai Baba Sansthan Trust: Bombay HC halts Reopening Income Tax Assessment of A.Y. 2014-15 The Shri Saibaba Sansthan Trust (Shirdi) vs The Union of India CITATION: 2025 TAXSCAN (HC) 130

The Bombay High Court granted relief to the The Shri Saibaba Sansthan Trust – Shirdi (Saibaba Trust), preventing the Revenue from reopening the assessment of the Trust for the Assessment Year (A.Y.) 2014-15.

The Bench further affirmed the charitable status of the trust noting that the Section 80G certificate had been valid during the relevant period and that the original assessment had rightfully recorded the disclosures including anonymous donations and donations in kind received by the Trust. In light of the observations, the Bench proceeded to allow the petition impugning the reassessment Orders purported by the Revenue.

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