This Annual Case Digest analytically summarizes the key stories related to Tax judgements of various High Courts in India reported in Taxscan.in during the year 2023. These stories include judgements and observations of High Courts related to Income Tax, Goods and Service Tax(GST), Excise Duty, Service Tax, Customs Duty, etc.
In a recent case, the Delhi High Court, while allowing the writ petition, held that the cancellation of Goods and Service Tax registration would be effective from the closing date of the petitioner’s firm. The writ petition was filed by the petitioner, R.K Metal Industries, challenging the order as the petitioner’s GST registration was canceled with retrospective effect. The order did not record any reason for canceling the petitioner’s GST registration.
In the present case, the only reason for proposing to cancel the petitioner’s GST registration was that the petitioner had not filed the returns for a continuous period of six months. However, the registration has also been canceled for a period during which the petitioner had filed the GST returns.
The Kerala High Court directed to take decision after hearing the Official Liquidator in the matter of claim for unpaid service tax and central excise dues.
The said contention was not, however, accepted by the Single Judge, who was of the view that there was no bar for finalization of assessment and adjudication proceedings merely upon the ground that a reference on the insolvency resolution process had been admitted and there was a consequent moratorium for recovery of tax.
The Kerala High Court upheld the assessment order passed under the Income Tax Act, 1961 and observed that the assessee cannot go on asking for time one after another in response to the show cause notice (SCN).
A Single Bench of Justice Dinesh Kumar Singh observed that “The petitioner did not file a reply and therefore, the Authority was well within its power not to grant further time for the petitioner. Therefore, I do not find much substance in the submission that there is violation of the principles of natural justice. Petitioners cannot go on asking for time one after another in response to the show cause notice issued one after another. Therefore I do not find any ground to interfere with the impugned order or notice.”
The Delhi High Court has held that the mere fact that an employee’s efficiency improves with learnings acquired through seminars cannot be treated as such expenses as c ital expenditures.
A two-member bench comprising Justice Rajiv Shakdher and Justice Girish Kathpalia observed that the mere fact that employees’ efficiency improves with learnings acquired through seminars, conferences, and other forms of training, cannot be the reason to treat such expenses as “c ital” expenditure.
The Delhi High Court allowed Amandeep Singh Dhall to undergo physiother y treatment at Safdarjung hospital.
A Single Bench of Justice Swarna Kanta Singh observed that “Considering that at this stage, no immediate arrangement can be made by the jail dispensary for ensuring propriate medical care. of the plicant, this Court deems it fit, for the purpose of ensuring that a balance is struck between the right of the prisoners to propriate medical care and the right of the State to ensure rule of law, to allow the request of plicant to get the required physiother y treatment at the Safdarjung Hospital, Delhi.”
“The Courts cannot allow inadequate prison health care system to violate a prisoner’s right to timely and adequate medical health care. Preserving the health of the prisoners would require a mechanism to monitor and promote the health care system available in the prisons. In face of increased health vulnerabilities, many prisoners have heightened risk of permanent damage to their bodies” the Court commented.
In a major relief to Pankajakasthuri Herbals, the Kerala High Court ruled the last date mentioned under Section 245C of the Income Tax Act, 1961 to file a SetCom (Settlement Commission) plication is to be read as 31st March, 2021.
A Single Bench of Justice Dinesh Kumar Singh observed that “As the issue is covered by the judgment of the Division Bench of the Madras High Court, in the judgment, M/s Jain Metal Rolling Mills, the present writ petitions are allowed and the aforesaid impugned orders are set aside. The cases are remitted back to the competent respondent for taking fresh decisions on the plications in the light of the judgment as aforementioned.”
The Kerala High Court directed the Income Tax Commissioner to decide peal expeditiously as there was non-compliance of conditions in the stay order.
A Single Bench of Justice Dinesh Kumar Singh observed that “The Authority is free to recover the amount as there is no interim order operating in favour of the petitioner. Be that as it may, according to the petitioner, the peal filed by the petitioner against the assessment order has remained pending since 2018. Considering the long pendency of the peal against the assessment order, it would be propriate to dispose of this writ petition with direction to the 3rd respondent to decide the peal expeditiously preferably within a period of two months in accordance with the law.”
The Delhi High Court has directed the Assessing Officer (AO) to accept the returned income for 12 years even after the limitation period to pass a fresh assessment order has expired. It was observed that the time limit fixed as per Section 153(2)(A) of the Income Tax Act had expired.
A division bench comprising Justice Rajiv Shakdher and Justice Girish Kathpalia observed that “whichever regime we take into account, i.e., the time limit fixed as per Section 153(2)(A) of the Act or the time limit fixed by the amended provision i.e., Section 153(3) of the Act, as of today the AO is bereft of jurisdiction and hence, would have no legal locus to pass assessment order(s). Therefore, the prayers made in the writ petition are allowed. “
The Delhi High Court recently observed that the electricity distribution utilities are not entitled to collect gst from their customers.
A Division Bench of Justices Vibhu Bakhru and Amit Mahajan observed that “Since the impugned circular has been set aside and it is clarified that the supplies mentioned in the impugned circular are bundled supplies and form an integral part of the supplies of distribution of electricity, the said supplies are not chargeable to GST. Consequently, the petitioners are also not entitled to collect such charges from their customers. In this view, we consider it opposite to direct that any GST collected by the petitioners after 08.11.2023, be refunded to customers from whom the said GST has been collected.”
The Delhi High Court directed to progress the matter under the Direct Tax Vivad Se Vishwas Act, 2020 (DVCV Act) as there was refund of money after giving credit.
A Division Bench comprising Rajiv Shakdher and Girish Kathpalia observed that “Therefore, the writ petition is disposed of with a direction that the concerned authority will progress the matter under the 2020 Act, as per law, from the stage at which it is presently positioned. In so far as correction of the challan is concerned, steps in that behalf will be taken by the respondents/revenue and consequential refund of Rs.25 lakhs would be made. This exercise will be completed within three (3) weeks of the receipt of a copy of the order passed today.”
The Madras High Court has quashed the assessment order passed without considering the assessee’s request for a personal hearing through video conference. The bench directed to provide personal hearing through video conferencing.
A single bench of Justice S Srimathy observed that since it was a high-pitched assessment, the petitioner had sought a video conference hearing and it was not considered by the respondent to amount to a clear violation of the principles of natural justice.
The Kerala High Court confirmed the relegation to file peal before the Income Tax pellate Tribunal (ITAT) as there was no violation of natural justice as notice regarding hearing issued to the Chartered Accountant (CA).
A Division Bench comprising Justice Dr AK Jayasankaran Nambiar and Justice Kauser Ed pagath observed that “On an overall consideration of the facts and circumstances of the case, we are of the view that the impugned judgment of the Single Judge that relegates the pellant to the alternate remedy of filing an peal before the Income Tax pellate Tribunal need not be interfered with. At the same time, we find that the learned Single Judge had not protected the pellant against a possible demand arising consequent to the dismissal of the first peal.”
The Karnataka High Court has held that the civic body would not be exempted from the payment of service tax made for availing third-party services. The civic body Bruhat Bengaluru Mahanagara Palike (BBMP) availed the service of a third party to impart free computer education to persons belonging to economically weaker sections of the Society.
A single judge bench of Justice Suraj Govindaraj allowed the petitions and held that “the Corporation availing the services of the petitioners to render computer education to persons belonging to economically weaker section as regards which the Corporation has made the payment of monies to the petitioners would be amenable to service tax, that is to say, it is not exempted from service tax.”
The Jharkhand High Court held that initiating reassessment proceedings after 10 years post-search is valid on Taking Previous Sanction from a Competent Authority. The two-judge bench viewed that there is no illegality to the initiation of reassessment proceeding by issuing notice under Section 148 of the Income Tax Act, 1961.
A division bench of Justice Rongon Mukhopadhyay and Justice Deepak Roshan held that A.O was justified in reopening the assessment for A.Y.13-14 in the case of both the Assessees for 10 years as they have rightly taken previous sanction of the competent authority.There is no illegality, whatsoever, about initiation of reassessment proceeding by issuing notice under Section 148 of the Income Tax Act.
In a recent decision the Delhi High Court ruled that there is no permission to purchase raw material from the open market for exports when advance authorization is issued to allow duty free import.
“A perusal of the Order challenged in the present Writ Petition indicates that the DGFT has given a proper opportunity of hearing to the other sides and, therefore, this Court is of the opinion that the decision making process is fair. Further, even on merits, the learned Counsel for the Petitioner has not been able to establish as to why the Order is contrary to the law or that any provisions of the Foreign Trade Policy or the handbook of procedures has been violated. Resultantly, this Court finds no reason to interfere with the present Writ Petition” the Court concluded.
The Rajasthan High Court in a significant case directed the Goods and Service Tax(GST) Department to allow the refund as the act of requiring the Requiring Solvent Security and Bank Guarantee are beyond the scope of Section 54(11) of Rajasthan GST Act, 2017.
A division bench of Justice Arun Bhansali and Justice Ashutosh Kumar observed that the indication made that the bank guarantee needs to be taken from the petitioner by way of solvent security by itself is contradictory since the term ‘solvent security’ essentially means that the person who is providing the security should not have been declared bankrupt by the court and he has to produce documents to indicate that he owns some movable/immovable property, which is equivalent to the amount for which the said security is being provided.
It was observed that the action of respondent no.1 in seeking bank guarantee from the petitioner is ex-facie contrary to the directions of respondent no.2 and, therefore, the same cannot be sustained.
The issue to be decided was whether the officer responsible for issuing the impugned order failed to grant the petitioner an opportunity for a personal hearing. Denying the petitioner a chance to present their case in person undermines the principles of natural justice, which mandate a fair and unbiased procedure.
The Delhi High Court Division Bench of Justice Vibhu Bhakaru and Amit Mahajan granted proval to the current petition, nullifying the contested order in a Delhi Value Added Tax (DVAT) case.
The Kerala High Court dismissed a review petition as there was deposit of 20% of GST demand assessed as per the assessment order.
A Single Bench of Justice Dinesh Kumar Singh observed that “This Court finds there is no error parent on the face of the record to review this order and therefore, the review petition is hereby dismissed. However, the petitioner may move an plication for modification of the same, if it is so advised.”
The Kerala High Court dismissed the writ petition as there was clear examination of undisclosed income to returned income in the assessment order.
A Single Bench of Justice Dinesh Kumar Singh observed that “The assessment order would disclose that not only the statements of the Director and Managing Director were taken into consideration but the other incriminating material including the excel sheets and digital data maintained in the computers and l tops had also been examined before adding the undisclosed income to the returned income of the petitioner. Therefore, I do not find much substance in the present writ petition that the merit of the assessment orders have not been considered while passing the impugned order granting conditional stay.”
The Kerala High Court quashed show cause notice (SCN) issued without giving proper opportunity of hearing in the matter of GST demand.
A Division Bench comprising Justice Dr AK Jayasankaran Nambiar and Justice Kauser Ed pagath observed that “However, it pears that the 1st respondent issued the order finalizing the demand without referring to reply or granting the pellant an opportunity for personal hearing. Thus, the impugned order clearly violates the principles of natural justice. Hence, we are of the view that the show cause notice cannot be sustained and it is liable to be set aside.”
The Delhi High Court directed the Income Tax department to grant hearing to Ester industries in a case related to claim of c ital loss. The Court directed the Income Tax department to correct its mistake in taking action in favor of the assessee in accordance with section 154 of the Income Tax Act.
The division bench of the Delhi HC comprising Justice Rajiv and Justice Girish Kathpalia held that ”The plication of the assessee has been examined and found correct. On perusal of the tax computation for AY 2005-06, it is observed that the AO has taken income of Rs. 18,30,.23,363/-but had not set off it against the available unabsorbed depreciation of Rs.18,30,23,363/-. The mistake mentioned above being parent from records is hereby rectified u/s 154 of the Income Tax Act, 1961.” The court directed the Income Tax department to grant hearing to the petitioner and pass a speaking order concerning the issue involving short-term c ital loss.”
The Bombay High Court ruled that the agreement to provide manpower for maintenance is contract of service, not sale under the Maharashtra Value Added Tax Act, 2002 (the MVAT Act).
“In the present case, there is no saleable medium as the work has been carried out on the original software itself which exists only on the US servers of QAD. As stated above, even if there were no bugs reported during a month, QAD would be liable to pay pellant under the agreement at the rate of US $ 4200 per month. This itself shows that this was not a contract of sale but was a contract for service” the Court noted.
The Supreme Court in a recent decision observed that the arrested person, if informed or made aware orally about grounds of arrest within 24 hrs of arrest is sufficient compliance of Section 19 of the Prevention of Money Laundering Act (PMLA), 2002.
A Two-Judge Bench comprising Justice Bela M Trivedi and Justice Satish Chandra Sharma observed that “The only contention raised by the learned Senior Counsel, Mr. Singhvi is not furnishing a copy of the document containing the grounds of arrest at the time of arrest. Since the pellant was indisputably informed about the grounds of arrest and he having also put his signature and the endorsement on the said document of having been informed, we hold that there was due compliance of the provisions contained in Section 19 of PMLA and his arrest could neither be said to be violative of the said provision nor of Article 22(1) of the Constitution of India.”
The Bombay High Court observed that the customs assistant commissioner in selling seized gold jewelry of assessee without reasons is illegal.
“It is declared that the action on the part of the Assistant Commissioner of Customs in disposing of / selling the gold jewelry belonging to the petitioner’s subject matter of the present proceedings, is illegal and unconstitutional. The respondents are directed, to restore to the petitioners, an equivalent amount of gold namely 1028 gms. and / or to compensate the petitioners by making payment of amounts equivalent to the market value of the said gold, as on date” the Court noted.
The Delhi High Court in a ruling in favour of Canara Bank Relief Welfare Society has held that Revised Form 10 can be filed during reassessment proceedings.
A division bench of Justice Rajiv Shakdher and Justice Girish Kathpalia observed that the respondent/assessee is not precluded from filing a revised Form No. 10 during reassessment proceedings.
The Delhi High Court has held that income received by GoDaddy.Com as consideration for providing domain name registration services amounts to ‘Royalty’ under section 9(1)(vi) of the Income Tax Act, 1961.
A division bench of Justice Rajiv Shakdher and Justice Girish Kathpalia observed that “the respondent/assessee before us has succeeded in the peals, the penalty imposed in the instant peal cannot be sustained. Therefore, the impugned order, in our opinion, requires no interference.”
In a recent judgment, the Delhi High Court upheld the deduction of liquidated damage based on evidence. The liquidated damage arises from the delayed supply of service to BSNL and MTNL adjusted with the purchase amount.
A division bench comprising Justice Rajiv Shakdher and Justice Girish Kathpalia held that “there is nothing brought on record to suggest that the findings returned by the CIT(A) are perverse. Thus, having regard to the orders passed by the CIT(A) and the Tribunal, according to us, no substantial question of law arises for our consideration.”
A single bench of the Andhra Pradesh High Court denied anticipatory bail to the petitioner on the grounds that anticipatory bail petition lacks reasonable grounds under the requirements for plication of such petition.
The court denied the anticipatory bail petition filed by the petitioner. Justice Mallikarjuna observed that “that the anticipatory bail is not to be granted as a matter of routine, and it has to be granted when the Court is convinced that exceptional circumstances exist to resort to that extraordinary remedy.”
The Madhya Pradesh High Court slammed the action of the Commercial Tax Commissioner as withholding 10% pension is unjustified as no departmental or criminal proceedings are pending.
A Single Bench of Justice Vivek Rusia observed that “Even otherwise, since 2016 enquiry has not been concluded till date and no report has been filed, therefore, withholding of 10% pension is unjustified as no departmental or criminal proceedings are pending against the petitioner, hence, his pension cannot be withheld under the Pension Rules.”
The Rajasthan High Court stayed recovery as the payment was made through the banking channel.
A Division Bench of Justices Ashuthosh Kumar and Arun Bhansali observed that “In view of the submissions made by counsel for the petitioner and on perusal of the order impugned, passed by the authority, the matter requires consideration. Issue notice of the stay plication as well. As the respondents are represented through their counsel, notice need not to be issued. The counsel for the respondents are directed to file reply to the petition on or before the next date of hearing.” “In the meanwhile and till further order, further recovery from the petitioner, pursuant to the order dated 16th August, 2023 shall remain stayed. As interim order, in favour of the petitioner, has been passed in the presence of learned counsel for the respondents, they would be free to file an plication seeking vacation of interim order after filing reply to the petition” the Court concluded
The Delhi High Court granted permission to travel to Dubai and noted that prior permission of the trial court is necessary to travel abroad after filing the charge sheet.
A Single Bench of Justice Swarna Kanta Sharma observed that “In such circumstances, this Court deems it propriate to modify the condition (i) of order dated 07.07.2022 to the extent, that instead of prior permission to be obtained from the I.O., the same be read as “prior permission of the Trial Court”. The counsel pearing on
The Punjab and Haryana High Court granted bail to the accused in the matter of fraudulent procurement of Rs 29 lakhs value added tax (VAT) refund by the use of false and fabricated documents.
A Single Bench of Justice Deepak Gupta observed that “At the same time, it is not disputed even by the ld. State counsel that FOR pertains to the bogus refund of input tax credit in respect of Assessment Year 2011-12, in which the alleged loss of `29,29,359/- to the State exchequer was finalized at least on 11.11.2014 in revision order, as is mentioned in the FIR itself. No explanation is given in the FIR about the delay of more than 5 years so as to write a letter to the Superintendent of Police, Sirsa on 11.12.2019 to take action against the culprits and then another proximately one year for getting the FIR registered on 24.10.2020.”
As a relief to HDFC Bank Limited, the Delhi High Court has held that non-payment of tax on the sale of repossessed vehicles on assertion on tax exemption under Delhi Value Added Tax (DVAT) Act, 2004 does not amount to concealment.A division bench of Justice Yashwant Varma and Justice Ravinder Dudeja observed that the non-payment of tax on the sale of repossessed vehicles is not alleged even by the respondents as being an outcome of concealment, omission or a failure to disclose all material particulars. The pellant chose not to deposit any tax in respect of the subject transactions proceeding on the assertion that the revenues obtained therefro were not exigible to tax under the provisions of the Act.
In a recent decision the Madhya Pradesh High Court ruled that the income tax notice issued to dead persons for reopening of assessment of dead persons is null and void.
A Division Bench of Justices SA Dharmadhikari and Pranay Verma observed that “Various High Courts have observed that the notice issued to a dead person for reopening of assessment of a dead person is null and void, this Court holds that the notice and all consequential proceedings arising therefrom in the name of the deceased assessee are not sustainable.”
The Bombay High Court directed the State to ensure spending sanctioned budget after the unspent healthcare budget was brought to the notice of the Court.
A Division Bench of Chief Justice Nitin Madhukar Jamdar and Justice Arif S Doctor observed that “We, thus, expect that adequate and propriate steps shall be taken to spend the budgetary allocation in its entirety otherwise after sanctioning the amount, if it is not used, the same gets l sed at the cost of the healthcare system.”
“We direct that an affidavit shall be filed by the MPSC as well giving a timeline for completion of the process of recruitment against posts which fall within its purview. We direct the Secretary and the Chairman of the MPSC to consider as to how the timeline, as indicated by the Advocate General, for completion of process of recruitment can be shortened further” the Court concluded
The Delhi High Court directed the Principal Chief Commissioner of Income Tax to decide plication in the matter of plication for condonation of delay for filing the income tax returns (ITR).
In a recent ruling the Bombay High Court has held that the debt owed to financial institutions under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act), is arbitrable.
A Single Bench of Justice Manish Pitale observed that “In the present case, the mechanism and
machinery under the RDDB Act is not plicable and available to the petitioner, and therefore,the exercise of determining and resolving disputes pertaining to the debt due, falls within the process of arbitration to which the parties have agreed by incorporating arbitration clauses in the said agreements. In this context, Section 37 of the SARFAESI Act assumes significance, as it provides that the plication of other laws is not barred.”
The Delhi High Court reserved order on habeas corpus petitions of Lava MD, Chinese national in Vivo money laundering probe.
“To our mind, the answer is in negative, as in such a situation, the custody of accused is continuum and there is no “break” in the custody of such an accused. The position, however, will be different when the accused is not produced before such a Court on the date of hearing and no production warrant is issued for the said accused on the same date of hearing but is issued subsequently. In such a situation, the custody of the accused will not be in continuum and for the break period, it may be illegal” the Bench.
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