On September 18, 2023, a crucial legal proceeding unfolded as the Supreme Court’s bench, comprising Justice Aniruddha Bose and Justice Bela Trivedi, convened to deliberate upon an appeal filed by the Tamil Nadu government. This appeal was lodged in response to the decision by the Madras High Court to nullify a law that imposed a ban on online gaming within the state. The Central Government has taken a momentous step in the taxation of online gaming services by establishing a GST rate of 28% for these services. This represents a noteworthy change in the tax framework and is slated to be put into effect as of October 2023.
In a civil appeal case, the Supreme Court has noted that there is no specific prohibition against pursuing the restoration of the appeal when the taxpayer is unsuccessful in benefiting from the Amnesty Scheme. This is because the appeal is a legally mandated recourse, and the appellant had initially pursued this statutory remedy but withdrew it solely as a prerequisite for availing remedy under the Amnesty Scheme. The Supreme Court set aside the orders of the High Court as well as the appellate authority on grounds that neither the appeal has been restored nor has he been heard on merits and further remedies have also been foreclosed. Thus, the appeal before the KVATA No.174/2019 which was pending before the Joint Commissioner of Appeals was restored on the file of the said authority. The apex court has listed the case on 04.10.2023 at 11.00 A.M for the final hearing and disposal. Additionally, it was instructed that the appellant has the liberty to request temporary relief from the appellate authority. If such a request is made, it should be quickly evaluated and handled in accordance with the law.
The Supreme Court bench of Justice Abhay S. Oka and Justice Sanjay Karol heard the Safari Retreats Case yesterday at 2:00 pm. This was the Second hearing of this month. The Additional Solicitor General (ASG) of India Venkataraman argued that “ITC neither vested nor statutory right”. After extensive discussions, the Orissa High Court concluded that it is permissible to claim ITC concerning the GST paid for the construction of immovable property that is intended for rental purposes. The next hearing of the case is scheduled on 31st August 2023.
The Supreme Court heard and listed the next hearing of the Case of M/s. Safari Retreats Private Limited & Ors. on 23rd August 2023 at 2:00 PM before the bench of Justice Abhay S. Oka and Justice Sanjay Karol. The apex court will determine the Goods and Services Tax (GST) implications of the immovable property in the next hearing. Relying on the VKC Footsteps case, the ASG contended that credits cannot be solely granted based on economic reasoning. He emphasized that such credit assertions were also prohibited during the period preceding GST implementation, and there exists no inherent entitlement to claim such credits.
In a recent case, the Supreme Court of India held that the manufacture of veterinary products which fall under the category of ‘intravenous fluid’ was eligible for exempt from excise duty under exemption notification. The two-member bench comprising B.V. Nagarathna and Ujjal Bhuyan upheld the decision of CESTAT and held that the respondent/assessee was eligible for exemption from excise duty under exemption notification while dismissing the appeal filed by the revenue.
The Supreme Court of India directed re-consideration to the Settlement Commission which passed the order under section 245(D)(1) of the Income Tax Act,1961 without giving sufficient opportunity to the assessee to disclose the undisclosed income. The two-member bench comprising B.V. Nagarathna and Ujjal Bhuyan set aside the order of the High Court as well as the order of the Settlement Commission and remanded the matter to the Settlement Commission for re-consideration while allowing the appeal filed by the assessee.
In a recent decision the Supreme Court of India has ruled that the Court is powerless to modify award, can only set aside partially or wholly award passed under Section 34 of the Arbitration and Conciliation Act, 1996. “In appeal, Section 37 of the Arbitration and Conciliation Act,1996 grants narrower scope to the appellate court to review the findings in an award, if it has been upheld, or substantially upheld under Section 34. It is important to notice that the old Act contained a provision14 which enabled the court to modify an award. However, that power has been consciously omitted by Parliament, while enacting the Act of 1996. This means that the Parliamentary intent was to exclude power to modify an award, in any manner, to the court” the Bench added.
The Supreme Court of India upheld the decision of the Kerala High Court in Shabu George vs State Tax Officer wherein it was held that Revenue Department cannot seize cash that does not form part of stock in trade in Goods and Service Tax (GST) case. A Two-Judge Bench comprising of Justices BV Nagarathna and Ujjal Bhuyan observed that “We are not inclined to interfere with the judgment and order impugned in this petition. The special leave petition is, accordingly, dismissed.”
A Division Bench of the Supreme Court dismissed plea of Tamil Nadu Chief Minister V. Senthil Balaji against arrest in cash-for-jobs scam and allowed Enforcement Directorate (ED), interrogation in the money laundering case. “The Registry is directed to place the matter before the Chief Justice of India for appropriate orders to decide the larger issue of the actual import of Section 167(2) of the CrPC, 1973 as to whether the 15 days period of custody in favour of the police should be only within the first 15 days of remand or spanning over the entire period of investigation – 60 or 90 days, as the case may be, as a whole” the Bench concluded.
The Supreme Court has held that no service tax is leviable on user development fees collected by Mumbai International Airport and Hyderabad Airport. It was noted that neither the imposition of development fees nor their collection is contingent on their deposit in the public coffers. In addition, it should be noted that UDF is a statutory charge and that no service is required for collection. It was further noted that legal oversight and regulations govern how money is used. It was decided that just because the money isn’t physically put in a government treasury, that doesn’t make it any less of a legal levy or obligatory exaction. The two-member bench comprising Justice S Ravindra Bhat and Justice Dipankar Datta upheld the order of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) wherein it was held that User Development Fee collected by Mumbai International Airport Pvt Ltd, Delhi International Airport Pvt Ltd and Hyderabad International Airport Pvt Ltd were not subject to Service Tax.
The issue concerning the applicability of the doctrine of legitimate expectation, where a tax holiday/sales tax exemption granted to the appellant-manufacturer was stopped pursuant to the amendments made to the West Bengal Sales Tax Act, 1994, has resulted in a split verdict from the Supreme Court bench comprising Justices M.R. Shah and Krishna Murari. Referring to the case’s facts, Justice Murari observed that the government had not offered an adequate defence for a change in policy that would have snatched away the reasonable expectation established in the appellant’s favour. “Neither the considerations of the injured party nor an appropriate justification for the amendment’s enactment have been discussed. My conclusion is that the government’s burden of proof cannot be satisfied by a simple assertion of a change in policy. In allowing the appeal, Justice Murari ruled that the government “must specifically demonstrate what the change of policy is, and why such a change of law is in furtherance of public policy, and the public good.”
In a recent ruling, a two-judge bench of Justice Abhay S. Oka and Justice Rajesh Bindal of the Supreme Court of India observed that the Adjudicating Authority is empowered only to verify the occurence of default in payment of debt. Following the ruling, the Insolvency and Bankruptcy Board of India (IBBI) issued notes on the Supreme Court of India’s findings that clarified the Adjudicating Authority’s function. The IBBI notice stated that it should not be used as a reference for taking or recommending any action or decision, whether commercial or otherwise. It was prepared by the Legal Affairs Division for the express aim of raising awareness. If someone wants to act on the information presented here, they must conduct their own study, read the original judgement, or consult a specialist.
The Supreme Court of India observed that the arrears of property tax and water tax until the date of confirmation of sale would qualify as the expenses for “preserving, realising or getting in” the assets of the company and thus, shall have to be paid in priority by the Official Liquidator. “The Company Court and then the Division Bench of the High Court have rightly underscored the faults on the part of the appellant OL and have rightly held that the liability on account of the property tax and water tax claimed by the respondent to the extent rejected by the official liquidator has been a post-liquidation liability, which the official liquidator was obliged to pay,” Justice Dinesh Maheshwari and Justice Aniruddha Bose wrote in their opinion.
In a major ruling the Supreme Court of India classified Aswini Homeo Arnica Hair Oil as ‘medicament’ under Central Excise Tariff Act, 1985 (CETA) and ruled that the classification of a product under the Central Excise Tariff Act, 1985, cannot be changed merely on the ground of change of tax structure or tariff entries, without showing a change in the nature and character of a product or a change in the use of the product. The Aswini Homeo Arnica Hair Oil “, merits classification as’medicament’ under Chapter 30 and not as ‘cosmetic or toilet preparations’ under Chapter 33 of the First Schedule to the Central Excise Tariff Act, 1985, and the change in tariff structure by way of amendment brought about in the year 2012 did not justify any re-look at the classification of the product in question.” The Bench came to the conclusion that the department was not justified in trying to reopen the agreed-upon position regarding the product in question, merely because of changes made to Chapters 30 and 33 of the Central Excise Tariff , changes that essentially broadened their ambit and scope and provided modified marginal notes and tariff entries with specific details. The Court also remarked that anything which is prepared for being used on the hair and carries the name “Hair Oil”, would not lose its character as medicament if otherwise it has been prepared for therapeutic or prophylactic uses.
The Supreme Court has declared that medicated prickly heat talcum powder ‘Nycil’ is a cosmetic and does not fall under the category of medicines or drugs, making its manufacturer Heinz India Ltd liable to pay a higher rate of tax. The Tamil Nadu General Sales Tax Act, which specifically included talcum powder, whether medicated or not, in the list of cosmetics, was cited by the Two-Judge Bench. Without leaving any room for interpretation, the court highlighted that all types of talcum powders containing medication, regardless of the amount or proportion, should be regarded cosmetics. As a result, the court rejected the arguments made by Heinz India Ltd. and Glaxo Smithkline Pharmaceuticals against the respective judgements of the governments of Kerala and Tamil Nadu to impose higher sales tax rates for Nycil. This ruling by the Supreme Court is expected to have significant implications for the manufacturers of medicated talcum powders, who may now face higher tax rates due to their products’ classification as cosmetics.
In the recent ruling in State of Himachal Pradesh and Others vs M/s A J Infrastructures Pvt. Ltd. and Another, a two-judge Bench of the Supreme Court of India held that Section 16B of the Himachal Pradesh General Sales Tax Act, 1968 (HP GST Act) is not in violation of any provision of law including the SARFAESI Act and the Constitution of India. The bench stated that since the writ petition was rendered infructuous before the High Court’s ruling, it was unnecessary for the High Court to determine the validity of Section 16B.
The Supreme Court has recently held that State cannot use the Himachal Pradesh Land Revenue Act, 1954 (HPLR Act) to recover sales tax dues as arrears of land revenue by creating a charge on the mortgaged property under Section 16B of the HP General Sales Tax Act. The Two-Judge Bench of Supreme Court Justices S Ravindra Bhat and Dipankar Datta noted that, “While adopting such a stand, the State and its department either overlooked or were ignorant of the requirement of law that section 16B would be attracted only after determination of the liability and upon any sum becoming due and payable; and that, it is only thereafter that the charge, if any, would operate.”
The Supreme Court, while considering an application filed by the Government of NCT of Delhi in a petition filed by M C Mehta, to utilise Rs. 500 Crores of Environment Compensation Charge (ECC) Fund towards the payment of Delhi -Meerut RRTS project, has held that the tax component of payment is refundable. The Apex Court Bench of Justices Sanjay Kishan Kaul and Ahsanuddin Amanullah directed the Delhi Government to contribute Rs. 500 Crores which includes tax liabilities from ECC fund within ten days.
The Supreme Court of India directed Income Tax Appellate Tribunal (ITAT) to ensure that the appeals are e- filed and not physically filed. The Coram comprising Chief Justice DY Chandrachud, Justice PS Narasimha, and Justice JB Pardiwala noted that “As regards the ITAT, it is incumbent on the tribunal to ensure that revenue appeals are filed only in the e-filing mode and a target date of 30 June 2023 should be set down. The Ministry of Finance shall depute a senior officer to engage with the Acting President of the ITAT. If the rules are required to be amended, they should be amended to incorporate e-filing requirements.”
In a major decision the Supreme Court of India ruled that the cooperative credit society is eligible for income tax exemption under Section 80(P)(2) of Income Tax Act, 1961. The Division Bench consisting of Justices MR Shah and CT Ravikumar observed that “Even otherwise, on merits also and taking into consideration the CBDT Circulars and even the definition of Bank under the Banking Regulation Act, the respondent/Assessee cannot be said to be Co-operative Bank/Bank and, therefore, Section 80(P)(4) shall not be applicable and that the respondent/Assessee shall be entitled to exemption/benefit under Section 80(P)(2) of the Income Tax Act.”
The Supreme Court has recently upheld the quashing of reassessment proceedings by the jurisdictional High Court and dismissed a bunch of appeals of the revenue in the absence of any incriminating evidence against the respondents. The Top Court thus held that the High Court has rightly set aside the Assessment Order(s) , refusing to interfere with the impugned judgement and orders passed by the High Court.
The Supreme Court of India has recently held that the assessee is not entitled to take the total contract value which includes both goods and services and remit service tax on the value as works contract service and, in the process, also entitled to avail the CENVAT Credit on the entire amount. In view of the above, the two-judge Supreme Court Bench of Justice M R Shah and Justice Krishna Murari quashed and set aside the impugned judgement and order passed by the CESTAT.
The Supreme Court of India has recently held that the provision for prosecution and punishment under Section 140(5) of the Companies Act, 2013 is neither discriminatory, arbitrary and/or violative of the Constitution of India. The Bench, in consideration of the contentions of the representatives, set aside the impugned judgement and order passed by the High Court quashing and setting aside the direction under Section 212(14) of the Companies Act, 2013 dated 29.05.2019 issued by the Union of India to SFIO.
In a recent decision the Supreme Court quashed the disallowance of rebate to a trust in spite of having valid registration in the previous years. The Two-Judge Bench consisting of Justices MR Shah and CT Ravikumar observed that “The Assessing Officer was justified in granting the benefit of exemption under Section 12A of the Income Tax Act for the assessment year 2010-2011. What was required to be considered was the relevant provision prevailing in the year 1987, namely, the day on which the assessee applied for the registration. At the relevant time there was no requirement of issuance of any certificate of registration.”
The Supreme Court has rejected the Special Leave Petitions (SLP) filed by the Gujarat Sales Tax Department against GAIL (India) Limited, ending a long-standing legal dispute. The court held that the price fixation was never under challenge before the Tribunal and that the question was answered in favour of the appellant and against the Revenue. As a result, the judgement of the Tribunal was reversed, and the appeal of the assessee was allowed.
The Supreme Court of India in its recent judgement gives a split Verdict directing to place the matter before the Chief Justice of India for appropriate orders since there was a divergence of opinion on the availability of settlement remedy to Non-Resident Indian (NRI) for misdeclaration of goods under Customs Act, 1962. It was observed that if a passenger opts for the green channel mode of entry, it implies that the passenger, by not opting for the red channel mode of entry, is stating that he has no goods that are liable to duty, and hence, it is deemed that they are making a declaration under Section 77 of the Customs Act of carrying “Nil” dutiable goods.
The Supreme Court has declared that medicated prickly heat talcum powder ‘Nycil’ is a cosmetic and does not fall under the category of medicines or drugs, making its manufacturer Heinz India Ltd liable to pay a higher rate of tax. The Two-Judge Bench referred to the Tamil Nadu General Sales Tax Act, which explicitly included talcum powder, medicated or otherwise, in the list of cosmetics. The court emphasised that all kinds of talcum powders containing medication, regardless of the amount or proportion, should be considered cosmetics, leaving no room for interpretation.
The Supreme Court Bench comprising Justice Krishna Murari and Justice Ahsanuddin Amanullah held that “pre-condition of furnishing bank guarantee imposed by the High Court is not liable to be sustained and is hereby set aside.” The Apex Court also upheld the rest of the conditions imposed for the grant of bail by the Chief Judicial Magistrate which were upheld by the High Court and directed to release the applicant on bail.
In a recent judgement, the Supreme Court of India held that confiscation of smuggled silver is not allowable as a’ business loss’. The Court viewed that the impugned judgement and order passed by the High Court quashing and setting aside the orders passed by the Assessing Officer, CIT(A) and the ITAT rejecting the claim of the Assessee to treat the silver bars confiscated by the customs authorities as a business loss and consequently value allowing the same as business loss is unsustainable. While allowing the appeal, the Court quashed and set aside the impugned judgement and the order passed by the High Court and restored the orders passed by the assessing officer, CIT(A) and the ITAT.
The Supreme Court of India in a recent judgement held that loss incurred for expenditure for an offence is not deductible tax and upheld the disallowance of smuggled silver as business loss. The two-judge Supreme Court Bench comprising Justices M R Shah and M M Sundresh observed that a penalty or a confiscation is a proceeding in rem, and therefore, a loss in pursuance to the same is not available for deduction regardless of the nature of business, as a penalty or confiscation cannot be said to be incidental to any business. The Apex Court thus set aside the judgement and order dated 22.11.2016 passed by the High Court of Rajasthan at Jaipur.
The Supreme Court of India, in a recent judgement held that the right of default bail under Section 167(2) of the Code of Criminal Procedure, 1973 (Cr. PC) is not a mere statutory right, but a fundamental right and upheld the interim bail order for arrest under the Prevention of Corruption Act, 1988. The two-judge Supreme Court Bench comprising Justice Krishna Murari and Justice C T Ravikumar held that the right of default bail under Section 167(2) of the CrPC is not merely a statutory right, but a fundamental right that flows from Article 21 of the Constitution of India. The reason for such importance being given to a seemingly insignificant procedural formality is to ensure that no accused person is subject to the unfettered and arbitrary power of the state. The Court upheld the interim order of bail passed in favour of the accused.
The Supreme Court in its recent judgement has held that the Commissioner or Assessing Officer has no discretionary powers on levying of penalty and interest leviable under Sections 45(6) and 47(4A) of the Gujarat Sales Tax Act, 1969 since those are statutory and mandatory sections. The two-judge bench of Justices M.R. Shah and B.V. Nagarathna held that the court cannot read anything into a statutory provision which is plain and unambiguous and on a strict interpretation of Section 45 and Section 47 of the Act, 1969, the only conclusion would be that the penalty and interest leviable under Section 45 and 47(4A) of the Act, 1969 are statutory and mandatory and there is no discretion vested in the Commissioner/Assessing Officer to levy or not to levy the penalty and interest other than as mentioned in Section 45(6) and Section 47 of the Act, 1969.
A two-judge bench of the Supreme Court on Tuesday granted leave to a Special Leave Petition challenging a judgement delivered by the Orissa High Court on the issue of levy of GST on rental/ lease payments. Disposing the writ petition, the High Court held that if the assessee is required to pay GST on the rental income arising out of the investment on which he has paid GST, it is required to have the input credit on the GST, which is required to pay under Section 17(5)(d) of the CGST Act.
As a relief to the Chemical and Petrochemical Manufacturer Association (CPMA), the Supreme Court of India directed the government to levy provisional anti-dumping duty on Low-Density Polyethylene (LDPE). A two-judge bench comprising Justice Krishna Murari and Justice Sanjay Karol observed that the petitioner is entitled to an interim order and directed the respondent to impose a provisional Anti Dumping Duty under Section 9A (2) of the Tariff Act at the rate determined by respondent No. 2 in its Final Finding vide Notification dated 31.03.2022 published in Extraordinary Gazette of India. The levy of such Anti Dumping Duty shall be subject to final adjudication in these proceedings.
Thus, it was observed and held that duty drawback receipts / DEPB benefits do not form part of the net profits of eligible industrial undertakings for the purpose of Section 80-IB of the Income Tax Act. The assessee is not entitled to a deduction under section 80IB of the Income Tax Act, 1961 for the profit generated by the Duty Entitlement Pass Book (DEPB) and Duty drawback, according to the two-judge bench of Justice M.R. Shah and B. V. Nagarathna of the Supreme Court of India. Thus, it was observed and held that duty drawback receipts / DEPB benefits do not form part of the net profits of eligible industrial undertakings for the purpose of Section 80-IB of the Income Tax Ac
The Supreme Court in its recent judgement has held that the same activity of drawing and design can be treated as goods & services provided the contract is indivisible and on the aspect of services there may be a levy of service tax and upheld the levy of service tax on ‘ Engineering Design & Drawings’. The Court quashed and set aside the impugned judgement and order passed by the CESTAT holding that the respondent is not liable to pay service tax as “design services” on importing various models of “Engineering Design & Drawings” for manufacturing of Wind Turbine Generator (WTG), as defined under Section 65(35b) r/w section 65(105)(zzzzd) of the Finance Act, 1994.
The Supreme Court has held that determining the residential status of a company under the Income Tax Act, 1961 lies in the de facto control and management of the company. The bench comprising Justices M.R. Shah and B.V. Nagarathna upheld the view taken by the AO, CIT(A) and the High Court on the issue of control and management of the affairs of the assessee companies by Rattan Gupta from Delhi and the applicability of the Income Tax Act, 1961. The Court dismissed the appeal.
The Supreme Court (SC) of India has held that the annual increment earned by govt servants for the past period can’t be denied merely because of retirement on the next day when it’s payable. The Court viewed that the increment can be withheld only by way of punishment or he has not performed the duty efficiently. Any interpretation which would lead to arbitrariness and/or unreasonableness should be avoided. A two-judge bench comprising Justice C T Ravikumar and Justice M.R. Shah held that “the Division Bench of the High Court has rightly directed the appellants to grant one annual increment which the original writ petitioners earned on the last day of their service for rendering their services preceding one year from the date of retirement with good behaviour and efficiently.”
The Supreme Court of India in its recent judgement has held that no deduction under section 80IB of the Income Tax Act, 1961 is allowable on profit from Duty Entitlement Pass Book Scheme (DEPB) / duty drawback schemes. In light of various precedents, the Coram comprising of Justice M R Shah and Justice B V Nagarathna held that, on the profit earned from DEPB/Duty Drawback Schemes, the assessee is not entitled to deduction under Section 80-IB of the Income Tax Act, 1961.
The Supreme Court (SC) of India has held that mere belated TDS remittance won’t attract a penalty under section 271C of the Income Tax Act, 1961. A Coram comprising Justice M R Shah and Justice C T Ravikumar held that the assessees remitted the TDS though belatedly and it is not a case of non deduction of the TDS at all they are not liable to pay the penalty under Section 271C of the Income Tax Act. The Court quashed and set aside the Impugned judgement(s) and order(s) passed by the High Court and held that on mere belated remitting of the TDS after deducting the same by the concerned person/assessee, no penalty shall be leviable under Section 271C of the Income Tax Act.
The Supreme Court in a recent case, held that Dettol is a medicine and therefore 4% Value Added Tax is applicable under the Kerala Value Added Tax Act, 2003. Siddharth Bawa, Advocate appeared for the appellant. C.K. Sasi, Advocate appeared for the respondent. Thereafter the bench observed that considering the dominant use of Dettol and the active ingredients of Dettol, it is used as an antiseptic and is used in hospitals for surgical use, medical use and midwifery due to therapeutic and prophylactic properties the same would fall under Entry 36(8) (h) (vi) as claimed by the appellant.
The Supreme Court has recently held that Harpic Toilet Cleaner and Lizol Floor Cleaner are not classifiable under insecticides and they should be taxable at 12.5%. The single bench of the Supreme Court considered the observation of the High Court that Harpic Toilet Cleaner” and “Lizol Floor Cleaner are used for cleaning the floor and toilet; also the two items are essentially used as stain removers and deodorants. Merely because they kill germs as well, the same cannot be said to be insecticides classifiable under Entry 44(5).
In a significant case, the supreme court held that mosquito mats, coils, vaporizers and Mortein are insect killers therefore it was subject to tax at the rate of 12.5%. Justice M. R. Shah confirmed the order passed by the high court in so far as the products Mosquito Mats, Coils and Vaporizers and Mortein Insect Killers. Thereafter the bench dismiss the appeal filed by the appellant and observed that Mortein Mosquito Coil, Mat and Liquid Vaporizer is classifiable under Entry 66 of Notification SRO 82/06 dated 21.01.2006 issued under Section 6(1)(d) of the Kerala VAT Act and Mortein Insect Killer is subject to tax at the rate of 12.5%.
The Supreme Court of India has held that commissioners can exercise revisional jurisdiction under Section 263 of the Income Tax Act, 1961 when the assessment order was erroneous and prejudicial to the interest of revenue. The Court quashed and set aside the impugned judgement and order passed by the High Court and the order passed by the Commissioner passed in the exercise of powers under Section 263 of the Income Tax Act was restored.
The Supreme Court of India upheld a 4% TDS deduction on sales tax in the transfer of the right to use vehicles as ‘deemed sale’. The Apex Court further observed that the High Court has fallen in error in misinterpreting Rule 3A(2) of the Tripura Sales Tax Rules and has fallen in error in declaring Rule 3A(2) of the Tripura Sales Tax Rules ultra vires to Tripura Sales Tax Act. The Supreme Court quashed and set aside the impugned common judgment and order passed by the Division Bench of the High Court and that of the common judgment and order passed by the Single Judge declaring Rule 3A(2) of the Tripura Sales Tax Rules, 1976 as ultra vires to the Tripura Sales Tax Act, 1976
In a significant case, the Supreme Court has held that the issuance of a corporate guarantee on behalf of group companies without consideration is not a taxable service and no need to levy service tax. The respondent-assessee contended that issuance of a corporate guarantee to a group company without consideration would not fall within the banking and other financial services and is therefore not a taxable service. He would also read Section 65B (44) of the Finance Act 1994 to point out that the definition of service indicates that it relates to only those services that are rendered for valuable consideration. The division bench of Justice Hrishikesh Roy and Justice Manoj Misra has observed that no service tax would be assessed on the corporate guarantees given by a parent company to its subsidiaries in absence of consideration.
The Supreme Court of India has held that a valid consideration is necessary for a service to be taxable as per section 65(44) of Finance Act, 1994 and dismissed the GST departments’ appeal. Any activity must, for taxability under the Finance Act, 1994, not only, about another, reveal a ‘provider’, but also the flow of ‘consideration’ for the rendering of the service. In the absence of any of these two elements, taxability under section 66B of the Finance Act, 1994 will not arise. There is no consideration insofar as the ‘corporate guarantee’ issued by respondents on behalf of their subsidiary companies is concerned. A Coram comprising of Justice Hrishikesh Roy and Justice Manoj Misra observed that since the assessee had not received any consideration while providing a corporate guarantee to its group companies and would not be a taxable service.
The Supreme Court of India in a recent ruling observed that the Date of Panchnama last drawn is Starting Point of Limitation of Two Years for completing Block Assessment Proceedings. The appellants in the present matter are Anil Minda and Others. A Division Bench of Justices MR Shah and CT Ravikumar ruled that “The date of the Panchnama last drawn can be said to be the relevant date and can be said to be the starting point of limitation of two years for completing the block assessment proceedings.” The Bench relied on the judgment in VLS Finance Limited, wherein it was held that the relevant date would be the date on which the Panchnama is drawn and not the date on which the authorization/s is/are issued.
In a major decision, the Supreme Court of India ruled that the Constitutional Bench Ruling that allows Circumstantial Evidence does not dilute the requirement of Proof Beyond Reasonable Doubt under the Prevention of Corruption Act, 1988. The Court further went on to observe that when reliance is placed on circumstantial evidence to prove the demand for gratification, the prosecution must establish each circumstance from which the prosecution wants the Court to draw a conclusion of guilt.
The Supreme Court (SC) has held that benefits under section 4A of the Central Excise Act, 1944 applicable only to retail sales. The Division Bench of Justice Krishna Murari and Justice Sudhanshu Dhulia has observed that the mere affixation of MRP does not make goods eligible to find refuge under Section 4(A) of the Act, and what is required along with such affixation is a mandate of law that directs the seller to affix such MRP.
The Supreme Court (SC) has held that rejecting the value at which goods were sold by treating assessee as related person under section 4(4)(c) of the Central Excise Act, 1944 in absence of proper test is erroneous. A Coram comprisJustice S. Ravindra Bhat, Justice Dipankar Datta observed that it could not have concluded that such a relationship, as is contemplated by Section 4(4)(c) could have been inferred, without applying the proper test. The SC concluded that the revenue’s decision in rejecting the value at which the goods were sold, by treating the assessee as a related person, was erroneous. The court further set aside the impugned order and allowed the appeal
In a major decision, the Supreme Court of India ruled that the Constitutional Bench Ruling that allows Circumstantial Evidence does not dilute the requirement of Proof Beyond Reasonable Doubt under the Prevention of Corruption Act, 1988 The Court further went on to observe that when reliance is placed on circumstantial evidence to prove the demand for gratification, the prosecution must establish each and every circumstance from which the prosecution wants the Court to draw a conclusion of guilt.
In Chief Commissioner of CGST vs M/s Safari Retreats Pvt Ltd, likely to be listed on March 22, 2023, the Supreme Court is set to decide the constitutional validity of Goods and Services Tax (GST ) Input Tax Credit ( ITC ) restrictions on immovable property. In a significant move earlier, the Supreme Court had admitted the appeal filed by the GST department against the order of the Odisha High Court wherein the High Court held that input tax credit is available in respect of GST paid while constructing the immovable property intending to let out for rent.
A two-judge bench of the Supreme Court has recently struck down the condition to deposit 70 Lakh Rupees, in bail granted to an accused allegedly involved in a GST scam of around 7 Crore Rupees. The bench of Supreme Court Justices Krishna Murari and B V Nagarathna observed that, “it cannot be presumed that the appellant is under a legal liability to pay the said amount.”The Supreme Court Bench held that the condition directing the appellant to deposit a sum of Rs. 70 Lakhs is not liable to be sustained and set aside the condition, leaving the other bail conditions intact, as per the facts and circumstances of the case.
The Supreme Court of India has upheld the order by the National Company Law Appellate Tribunal (NCLAT), in a major setback to Google LLC, in the Competition Commission of India (CCI) case about abusing the Android Platform and the dominant position in the market. The Competition Commission of India (CCI) had imposed a penalty of Rs. 936.44 crores on Google for abusing its dominant position with respect to its Play Store policies, apart from issuing a cease-and-desist order. The Commission also directed Google to modify its conduct within a defined timeline.
The two- judge Supreme Court bench of Justice M R Shah and Justice C.T. Ravikumar observed recently in a special leave petition filed by the State Of Punjab, Quashing section 130 of the Central Goods and Service Act, 2017 notices by High court through writ petition was inappropriate. The allegation in the present special leave petition was exercise of powers under Article 226 of the Constitution of India; the High Court entertained the writ petition against the show cause notice and set aside the show cause notice under Section 130 of the Central Goods and Service Act, 2017.
The Division Bench of the Supreme Court of Justice M.R. Shah and Justice Krishna Murari in a recent ruling has denied the trade tax exemption to “spun line crown cork” holding that the product manufactured on the use of modern advanced technology would not come under the purview of Manufacture. The goods manufactured on “diversification” must be a “different”, “distinct” and a “separate” good in nature. In the present case, the goods manufactured in use of advanced and/or modern technology, cannot be said to be a different commercial activity at all.
The Division Bench of the Supreme Court comprising Justice Sanjiv Khanna and Justice M.M.Sundresh has held that the special audit under Section 142(2A) of the Income Tax Act 1961 could be conducted by relying on earlier or fresh notice. The bench held that “If the assessing officer desires special audit under Section 142(2A) of the 1961 Act, he can either rely upon the earlier notice or issue a fresh notice. In case the assessing officer relies upon the earlier notice, it will be so indicated and communicated to the 2 appellant-assessee. In either case, hearing as per law will be given. Thereafter an order under Section 142(2A) of the 1961 Act if passed, will be communicated to the appellant-assessee, who will be at liberty to challenge the order in accordance with law.”
The Supreme Court of India has recently dismissed a petition seeking mandating Income Tax Returns (ITRs) for purchase of cars for personal use and introduction of cess levy on purchase of a second car. The two-judge bench of the Chief Justice Dr Dhananjaya Y Chandrachud and Justice Pamidighantam Sri Narasimha, upon hearing the counsel, disposed of the petition, holding that “The issues which are raised in the petition under Article 32 of the Constitution of India in the present case pertain to the policy domain. Hence, we are not inclined to entertain the Petition.”
A division bench of the Supreme Court has upheld the levy of special road tax on transport vehicle without permit under section 3-A introduced vide the Himachal Pradesh Motor Vehicles Taxation (Amendment) Act holding that the same was within the legislative limits of the State Government. Earlier, the High Court, though upheld the power of the State legislature to enact provisions for levy of special road tax under Sections 3-A(1)(2)(4), but at the same time erred in holding the provisions under Section 3-A(3) to be ultra vires being unconstitutional.
In a ruling striking down a part of section 10(26AAA) of Income Tax Act, 1961, the Supreme Court has held that denial of income tax exemption for “married Sikkimees women” is discriminatory as the provision states that the benefit shall be given to all individuals including both men and women. “The expression “individual” in the Explanation would exclude Sikkimese women. In my view, the proviso cannot be construed to be an exception to the Explanation which is in the nature of a definition clause as it would be inherently discriminatory to do so,” Justice B.V. Nagarathna said. The Court held that the expression “an individual” in the Explanation to Section 10 (26AAA) of the I.T. Act, 1961, must include all genders including Sikkimese women.
In a women-friendly ruling, the Supreme Court has struck down section 10(26AAA) of the Income Tax Act, to the extend the provision denies income tax exemption to old Indian settlers and sikkimese women who married non-sikkimese men. While terming the provision unconstitutional, Justice B.V. Nagarathna directed the Central Government to make an amendment to Explanation to Section 10 (26AAA) of I.T. Act, 1961, so as to suitably include aclause to extend the exemption from payment of income tax to all Indian citizens domiciled in Sikkim on or before 26th April, 1975. The reason for such a direction is to save the explanation from unconstitutionality and to ensure parity in the facts and circumstances of the case.
The Supreme Court of India held that additional special road taxes are regulatory and compensatory in nature and upheld the constitutional validity of the levy of the same under Section 3A(3) of Himachal Pradesh Motor Vehicles Tax, 1972. Goel Bus Service Kullu etc., the respondent and several other similarly situated public transport operators challenged the validity of Section 3-A, Section 3-C, Section 4-A, Section 5-A along with Schedule-III under Section 3-A introduced vide the Himachal Pradesh Motor Vehicles Taxation (Amendment) Act, 19991 to be held ultra vires the Constitution of India.
A two-judge Bench of the Supreme Court comprised of Justice M R Shah and Justice B V Nagarathna recently overruled a decision of the Allahabad High Court and held that assessee cannot be denied relief under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 for non-formation of committee. The Allahabad High Court had dismissed the said writ petition preferred by the appellant herein seeking direction to the respondents for consideration of the case of the petitioner under the scheme “Sabka Vishwas (Legacy Dispute Resolution) Scheme”, 2019.
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