Though many working days of the Supreme Court have lost due to continuous lockdown, the Supreme Court has pronounced some important Judgments in 2020.
Here is the Complete list of the Tax Judgments by Supreme Court in the Year 2020.
Skill Lotto Solutions Pvt. Ltd vs Union of India
The Supreme Court upheld the validity of imposing Goods and Service Tax (GST) on Lotteries and Gambling. The Court granted the petitioner the liberty to challenge notification by which rate of GST for lottery run by the State and lottery organized by the State have been made the same.
Union of India &Ors vs. M/s G S Chatha Rice Nills&Anr
The Supreme Court rescued importers who were required to pay an elevated customs duty of 200% on import of products from Pakistan due to the Centre’s unexpected tariff enhancement on imports after the 2019 Pulwama terror attack and directed them to pay the duty on import below the older tariff.
National Co-operative Development Corporation vs Commissioner of Income Tax, Delhi
The Supreme Court has recommended the Central Government to consider the efficacy of the advance tax ruling system and make it more comprehensive as a tool for settlement of disputes rather than battling it through different tiers, whether private or public sectors are involved.
The Apex court suggested that a council for Advance Tax Ruling based on the Swedish model and the New Zealand system may be a possible way forward.
M/s Bangalore Club vs The Commissioner of Wealth Tax &Anr.
The Supreme Court held that Bangalore Club is not liable to pay wealth tax under the Wealth Tax Act, 1957. The three-judge bench of Justice R.F. Nariman, Justice Navin Sinha, and Justice Indira Banerjee noticed that only three types of persons can be assessed for wealth tax under Section 3 i.e. individuals, Hindu undivided families, and companies. Hence, if Section 3(1) alone were to be looked at, the Bangalore Club neither being an individual, nor a HUF, nor a company cannot possibly be brought into the wealth tax net under this provision.
“Bangalore Club is an association of persons and not the creation, by a person who is otherwise assessable, of one among a large number of associations of persons without defining the shares of the members so as to escape tax liability. For all these reasons, it is clear that Section 21AA of the Wealth Tax Act does not get attracted to the facts of the present case,” the court said.
Commissioner of Service Tax, Ahmedabad vs M/s Adani Gas Ltd.
The Supreme Court held that gas regulating measuring equipment installed at customers’ sites is taxable service. The Supreme Court observed that Section 65(105)(zzzzj) of the Finance Act 1994 provides for taxability of supply of tangible goods for use, without transferring right of possession and effective control over such goods, as a ‘taxable service’.
The Supreme Court laid down detailed principles to keep in mind while determining the value of the Excisable Goods. The appeals were disposed of by the Supreme Court, confirming the impugned orders of CESTAT setting aside the Order in Original passed by the Adjudicating Authorities and remanding the matters back for readjudication.
Shree Choudhary Transport Company vs Income Tax Officer
The Supreme Court held that the individuals must deduct TDS on payments to contractors even in the absence of a contract.
The division bench of A.M. Khanwilkar and Justice Dinesh Maheshwari, while upholding the orders of AO, CIT(A) and the ITAT, held that truck operators/owners answered to the description of “sub-contractor” for carrying out the whole or part of the work undertaken by the contractor (i.e., the appellant) for the purpose of Section 194C(2) of the Act. “If a particular truck was not engaged, there existed no contract but, when any truck got engaged for the purpose of execution of the work undertaken by the appellant and freight charges were payable to its operator/owner upon execution of the work, i.e., transportation of the goods, all the essentials of making a contract existed; and, as aforesaid, the said truck operator/owner became a subcontractor for the purpose of the work in question,” the court observed.
Director of Income Tax vs M/s Samsung Heavy Industries
The Supreme Court while quashing the order of the ITAT, held that the office of Samsung Heavy Industries at Mumbai, India which is established merely for the sake of communication is not covered under the character of Permanent Establishment (PE) under India-Korea Double Taxation Avoidance Agreement (DTAA). The three-judge bench of Justice R. F. Nariman, Justice Navin Sinha and Justice B.R. Gavai concluded that no permanent establishment has been set up within the meaning of Article 5(1) of the Double Taxation Avoidance Agreement (DTAA), as the Mumbai Project Office cannot be said to be a fixed place.
Yum ! Restaurants (Marketing) Private Limited vs Commissioner of Income Tax, Delhi
The Supreme court of India held that excess of income over expenditure in the hands of a company is taxable. The division bench consisting of Justice A.M. Khanwilkar and Justice Dinesh Maheshwari upheld the impugned order passed by the High court and stated, “the questions posed for our consideration stand answered against the appellant (assessee company) and in favor of the Revenue and the appeal stands disposed of upholding the impugned judgment with the liberty to the appellant to pursue the remedy of rectification, as per law. There shall be no order as to costs. Pending interlocutory applications, if any, shall also stand disposed of.”
Union of India &Anr vs. U.A.E. Exchange Centre
A two-judge bench of the Supreme Court has granted relief to UAE Exchange by holding that its liaison office in India would not constitute a “Permanent Establishment” for the purpose of taxing the former as per the provisions of the Income Tax Act, 1961 and the relevant Double Taxation Avoidance Agreements (DTAAs). The bench comprising Justice A.M Khanwilkar and Justice Ajay Rastogi held that levying of tax from a UAE Company in India, when no trading, commercial or industrial activities took place is against Double Taxation Avoidance Agreement (DTAA), signed between India and UAE.
Internet and Mobile Association of India vs. Reserve Bank of India
The Supreme Court has set aside Reserve bank of India’s (RBI) 2018 Circular which had restricted banks from dealing with cryptocurrency such as bitcoins. The petition against the RBI curbs was filed by the Internet and Mobile Association of India (IAMAI) questioning the powers of the RBI to impose such a ban since the cryptocurrency wasn’t a “currency” in the legal sense. IAMAI had insisted that cryptocurrencies were more like a commodity.
Union of India vs. Adfert Technologies Pvt. Ltd
The Supreme Court of India has upheld the Punjab and Haryana High Court order directing the GST Department to Re-Open the facility to file or revise GST Tran-1 either electronically or manually. The Punjab and Haryana High Court had directed the Goods and Services ( GST ) department to file or revise Tran-1 either electronically or manually.
The State of Maharashtra &Ors vs. Pan India Paryatan Limited &Anr
The Supreme court ruled that amusement parks within limits of Greater Bombay would be entitled to only one benefit i.e. either under Section 3(2) or under Section 3(5)(a) of the Bombay Entertainment Duty Act.
Justice Deepak Gupta and Justice Hemant Gupta allowed the appeal against the High Court decision and held, “All amusement parks for all entertainment are not entitled to concessional duty in terms of Section 3(2) of the Act. Therefore, the writ petitioners cannot claim benefit under Section 3(2) of the Act. The argument is preposterous as the writ petitioners are firstly claiming the benefit under Section 3(2) of the Act and then under Section 3(5)(a) of the Act. The amusement parks would be entitled to only one benefit either under Section 3(2) or under Section 3(5)(a) of the Act. Since Section 3(2) is not applicable to all amusement parks duty act for all other activities, therefore, the entertainment duty in terms of Section 3(5)(a) of the Act alone would be leviable. The duty under Section 3(2) of the Act would be leviable only in respect of specified categories mentioned therein. Thus, we are unable to agree with the judgment of the High Court that in terms of Section 3(5)(a) of the Act, the entertainment duty is 50% of the duty payable under Section 3(2) of the Act. Consequently, the order passed by the High Court is set aside”.
Kishore JagjivandasTanna vs. Joint Director of Income Tax
The Supreme Court of India has held that when the liability to pay an erroneously withheld sum is acknowledged and accepted by the Revenue Department, then to deny relief by directing payment in terms of the order under Section 132(5) of the Act would be unjust, unfair and inequitable amount. Supreme Court says that penalty can’t be levied on Erroneously Seized Amount.
Maruti Suzuki India Ltd. vs. Commissioner of Income Tax, Delhi
The Supreme Court in the case of Maruti Suzuki India Ltd v CIT has held that MODVAT credit does not qualify as ‘any sum payable by the assessee by way of tax, duty, cess or fee’ u/s 43B of the Central Excise Act hence the unutilized credit under MODVAT scheme does not qualify for a deduction u/s 43B of the Income Tax Act.
The Bench constituting of Justices Ashok Bhushan and Navin Sinha held that the unutilized credit under the MODVAT scheme does not qualify for deductions u/s 43B of the Income Tax Act. The reason for the same is that the facility of credit is not as good as tax paid. The same was discussed as follows:
“The unutilized credit in the MODVAT scheme cannot be treated as sum actually paid by the appellant. The assessee when pays the cost of raw materials where the duty is embedded, it does not ipso facto mean that assessee is the one who is liable to pay Excise Duty on such raw material/inputs. It is merely the incident of Excise Duty that has shifted from the manufacturer to the purchaser and not the liability to the same.”
It further held that the deductions under Section 43B are allowable only when the sum is actually paid by the assessee. In the present case, the Excise Duty leviable on the appellant on the manufacture of vehicles was already adjusted in the concerned assessment year from the credit of Excise Duty under the MODVAT scheme. The unutilized credit in the MODVAT scheme cannot be treated as a sum actually paid by the appellant. The assessee when pays the cost of raw materials where the duty is embedded, it does not ipso facto mean that the assessee is the one who is liable to pay Excise Duty on such raw material/inputs. It is merely the incident of Excise Duty that has shifted from the manufacturer to the purchaser and not the liability to the same.
