Annual Tax and Corporate Law Digest 2025: High Court Cases [Part XLII]

The Allahabad High Court has ruled that a registered dealer’s failure to carry an e‑way bill cannot attract a penalty under Section 129(1)(b) of the U.P. Goods and Services Tax Act, 2017, which applies to unregistered persons. The case arose when the petitioner’s goods were intercepted during transport, accompanied by a valid tax invoice showing full ownership details, yet a penalty under Section 129(1)(b) was erroneously imposed. The legal issue centered on the proper application of statutory provisions distinguishing between registered and unregistered taxpayers.

The Division Bench of Justice Saumitra Dayal Singh and Justice Indrajeet Shukla allowed the petition, holding that the penalty should be levied only under Section 129(1)(a) applicable to registered dealers. The Court quashed the impugned order, directed recomputation of the penalty based on invoice value within three weeks, and ordered release of the goods upon deposit of the revised amount. It further clarified that any remaining disputes may be pursued through statutory remedies under the law.

The Allahabad High Court has held that a penalty imposed under Section 48(5) of the UP VAT Act based solely on presumption, without verifying the assessee’s books of account, is unsustainable. The case arose when a consignment of iron ingots was intercepted and seized on the allegation of reuse of the official control (OC) stamp and handwritten invoice numbers under Rule 44(6) of the VAT Rules. The authorities initiated penalty proceedings of ₹5.48 lakh, creating a demand of ₹4.38 lakh, without inspecting the business premises or verifying transaction records, raising the legal question of whether suspicion alone can justify a penalty.

The bench of Justice Piyush Agrawal quashed the penalty, observing that while the OC stamp irregularity and handwritten invoice numbers may justify seizure, they cannot sustain a penalty under Section 48(5) unless corroborated by definite findings of non-recording of transactions in books of account. The Court emphasized that intention to evade tax must be established. The High Court set aside the impugned orders of the Tribunal and lower authorities, allowed all three revisions, and ruled in favor of the assessee against the Revenue.

TheAllahabad High Court has held that proceedings under Section 129 of the GST Act, 2017 cannot be initiated unless the Revenue establishes mens rea, i.e., an intention to evade tax. The case arose when the petitioner, Kamla Machines, faced a penalty after the expiry of an e-way bill during the transport of machinery parts from Mumbai to Muzaffarnagar, U.P. The goods were part of a recognized bill-to-ship supply, accompanied by a valid tax invoice, goods receipt, and e-way bill, and the delay was caused by the driver’s sudden illness. The key legal question was whether the mere expiry of an e-way bill, without any other adverse material, could justify invoking Section 129 proceedings and imposing a penalty.

The bench of Justice Piyush Agrawal quashed both the penalty and the appellate orders, observing that the transaction was genuine, fully documented, and traceable on the GST portal. The Court emphasized that the burden of proving intention to evade tax lies on the Revenue, and in the absence of any evidence of wrongdoing, the expiry of an e-way bill alone cannot trigger Section 129 action. Relying on precedents such as M/s Trimble Mobility Solutions India Pvt. Ltd. v. State of U.P. (2025) and A.A. Plastics Pvt. Ltd. v. Additional Commissioner (2024), the Court held that the driver’s illness constituted a credible explanation for the delay, and the penalty was therefore unsustainable.

M/s.CorroHealthInfotech Private Limited vs Assistant DirectorGeneral of Foreign Trade forZonal Additional Director General of Foreign Trade CITATION : 2025 TAXSCAN (HC) 2404

The MadrasHigh Court has clarified that a communication issued by the Directorate General of Foreign Trade (DGFT) regarding alleged excess duty credit under the Service Exports from India Scheme (SEIS) does not constitute a formal show-cause notice. The petitioner, CorroHealth Infotech Private Limited, had contended that the letter challenged SEIS benefits claimed for the years 2015 to 2020, without specifying the statutory provisions, thereby rendering it invalid. The issue before the Court was whether a preliminary communication from DGFT could be treated as a show-cause notice triggering adjudication proceedings.

The bench of Justice M. Dhandapani held that the communication was merely a preliminary letter seeking a reply and was not a formal show-cause notice. The Court directed the petitioner to file its response within two weeks, after which the DGFT may either close the matter or issue a formal show-cause notice specifying the relevant legal provisions. The writ petition was disposed of as premature, and the connected miscellaneous petition was also closed, without costs.

The Allahabad High Court has ruled that a transporter cannot be held liable for discrepancies in goods during transit when ownership rests with the consignor, and there is no evidence of intent to evade tax or trading activity. The matter involved seizure and penalty proceedings under Section 129(3) of the GST Act, initiated against Anish Transport Company following a shortfall in goods declared on the e-way bill. The Court examined whether a carrier could be penalized when the goods’ ownership and any discrepancy are traced to the consignor rather than the transporter.

The bench of Justice Piyush Agrawal observed that the shortfall in goods was admitted by the consignor to be due to human error during loading, and no adverse finding was made against the transporter. Since the transporter had produced all required documents and was engaged solely in transportation, the Court held that liability could not be shifted onto it. The seizure and proceedings against the petitioner were thus legally unsustainable, leading the Court to quash the impugned order, allow the writ petition, and direct a refund of the amounts deposited.

The Allahabad High Court has upheld the seizure of goods under Section 129(3) of the GST Act, ruling that failure to generate or produce an e-way bill prior to the commencement of movement of goods justifies action by the authorities. The matter involved M/s Birds RO System Private Limited, a trader of RO/water purifier systems, whose transporter moved goods without an e-way bill despite the petitioner’s instructions. The case examined whether the absence of an e-way bill due to alleged technical glitches could exempt a registered dealer from seizure and penalty under the GST provisions.

The bench of Justice Piyush Agrawal observed that no e-way bill was available before the commencement of transport, and production of the e-way bill after interception could not cure the initial non-compliance. Citing precedents such as M/s Aysha Builders & Suppliers v. State of U.P. (2025) and M/s Mohini Traders v. State of U.P. (2025), the Court held that the seizure was lawful. The High Court dismissed the challenge, affirming the appellate authority’s order under Section 129(3), and concluded that transporting goods without a valid e-way bill constitutes a violation warranting seizure irrespective of intent to evade tax.

The Orissa High Court has refused to interfere with a GST appellate order under Section 107(6) of the Odisha Goods and Services Tax Act, 2017, which had dismissed an appeal both on technical grounds of non-payment of the mandatory 10% pre-deposit and on merits. The petitioner, M/s Digambar Road Lines, argued that portal issues prevented the online deposit of the pre-deposit, making the appeal invalid. The Court examined whether a writ petition could be entertained when an appeal is rejected for procedural non-compliance alongside substantive findings.

The bench comprising Chief Justice Harish Tandon and Judge M.S. Raman observed that while one ground for dismissal might be questionable, the appellate authority had separately decided the matter on its merits. The High Court held that a writ court should be cautious in interfering with such orders unless findings are illegal, irrational, or perverse. Reasoning that the merits-based decision was reasonable and justified, the Court dismissed the writ petition, affirming that the technical ground, even if debatable, did not invalidate the overall decision.

The Delhi High Court dealt with a batch of petitions challenging Provisional Attachment Orders (PAOs) issued under Section 5 of the Prevention of Money Laundering Act, 2002 (PMLA). The legal issue before the Court was whether writ jurisdiction under Article 226 of the Constitution could be invoked to quash the PAOs, despite the existence of a statutory appellate remedy under the Act. The petitioners, M/s Krrish Realtech Pvt. Ltd. and Amit Katyal, contended that the attachments were invalid, citing quashed FIRs, alleged violation of Supreme Court orders, and questioning the authority of a single-member Adjudicating Authority.

The Division Bench comprising Justice Sachin Datta held that the PMLA provides a complete and efficacious statutory remedy through the Appellate Tribunal and that the High Court ordinarily should not interfere under Article 226 where such remedies exist. The petitions were dismissed, with the Court directing the Tribunal to dispose of the pending appeals preferably within six months. The judgment reaffirmed that matters including validity of the ECIR, effect of quashed FIRs, and composition of the Adjudicating Authority must be adjudicated by the statutory forum and not through writ proceedings.

The Bombay High Court dealt with writ petitions challenging the continuation of criminal proceedings in Special CBI Case Nos. 47 and 48 of 2007, relating to alleged manipulation of IPO shares through benami accounts. The legal issue before the Court was whether criminal proceedings could continue despite the petitioner having settled the dispute with SEBI under a consent order. The allegations involved opening Demat accounts in fictitious names, making 192 IPO applications in the Yes Bank issue, cornering 14,000 shares, and earning profits of Rs. 1.98 lakh.

The bench of Justice V.G. Bisht, dismissed the writ petitions observing that the dispute was predominantly commercial with minimal criminal overtones, and relied on Supreme Court precedents, including Parbatbhai Aahir v. State of Gujarat, holding that criminal proceedings in such matters may be quashed where disputes are settled. Since the petitioner had paid a settlement amount of Rs. 2,25,70,864 and public interest was secured, the Court held that continuing the proceedings would amount to an abuse of process and dismissed the petitions.

The Allahabad High Court addressed a disciplinary proceeding against Ritesh Barnawal, Assistant Commissioner of State Tax, concerning allegations of a bogus GST registration issued to Rajdhani Enterprises. The legal issue before the Court was the obligation of the disciplinary authority to examine the petitioner’s detailed reply to the inquiry report and show cause notice, and to pass a reasoned order in accordance with law. The charges related to alleged administrative lapses, including the granting of ineligible ITC, and raised questions of procedural fairness and competence of the Inquiry Officer.

The bench Justice Vikas Budhwar, directed the disciplinary authority to conclude the proceedings within one month of receiving the certified copy of the judgment. The Court emphasized that the authority must examine every contention raised by the petitioner, including objections to the timing and scope of the charges, and pass a reasoned decision strictly in accordance with law. The Court declined to interfere with the suspension itself, noting that it falls within the domain of the competent authority.

The Allahabad High Court addressed a case concerning M/s Om Enterprises, engaged in trading TMT iron bars, where goods were intercepted during transit. The legal issue involved the validity of seizure and penalty orders under Section 129(3) of the GST Act when the petitioner had already generated an e-way bill prior to detention. The Court examined whether the authorities could draw an adverse inference against the dealer when no intention to evade tax was established and a valid e-way bill existed.

The bench of Justice Piyush Agrawal, held that since the e-way bill was generated at 10:59 AM, prior to the interception at 11:29 AM, and was produced along with the petitioner’s reply, the seizure and penalty were illegal. The Court quashed both the original and appellate orders, emphasizing that the mechanical imposition of penalty without evidence of intent to evade tax cannot be sustained.

The Kerala High Court dealt with a bail application concerning Sachria Titus, who was arrested for alleged possession of 2.4 kg of ganja under the Narcotic Drugs and Psychotropic Substances (NDPS) Act. The legal issue centered on whether the petitioner could be granted bail considering the stage of investigation and the period already spent in judicial custody. The Court examined whether continued detention was necessary when the investigation was nearly complete.

The bench of Justice K. Babu granted bail to the petitioner with conditions. The Court observed that the petitioner had no prior criminal antecedents and that the investigation was in its final stages. Bail was allowed on execution of a bond for ₹50,000 with two sureties, along with strict conditions including regular reporting to the investigating officer, restrictions on travel outside the district, surrender of passport, and a prohibition on influencing witnesses or committing similar offences while on bail.

The Gujarat High Court dealt with a case concerning customs duty exemptions on imported crude palm kernel oil, examining whether the Directorate of Revenue Intelligence could impose end-use conditions through circulars. The legal issue centered on the interpretation of Customs Notification No. 12/2012, specifically whether “edible grade” oil had to be fit for immediate human consumption to qualify for exemption, or whether quality standards alone sufficed.

The bench comprising Justice Bhargav D. Karia and Justice Pranav Trivedi quashed the show cause notice issued to VVF India Ltd, emphasizing that the oil met the technical definition of “edible grade” under the Food Safety and Standards Regulations. The Court reaffirmed the established principle that revenue authorities cannot add conditions to exemption notifications via circulars when such conditions are not explicitly mentioned. Consequently, the writ petition was allowed, and the notice demanding 100% customs duty was set aside.

Sanjiv Malik vs StateOf U.P. CITATION : 2025 TAXSCAN (HC) 2414

The Allahabad High Court addressed a case concerning the expeditious disposal of a representation filed with the Uttar Pradesh Pollution Control Board (UPPCB) regarding alleged unauthorized operation of a brick kiln. The legal issue involved the petitioner seeking cancellation of the Air Pollution Control clearance obtained by other partners without his knowledge, following an internal partnership dispute and alleged fraudulent GST registration in the District of Shamli.

The Division Bench comprising Justice Mahesh Chandra Tripathi and Justice Kunal Ravi Singh directed that the UPPCB take a final decision on the petitioner’s representation within six weeks, observing that the Regional Officer had already forwarded his recommendation to the Chairman. The Court disposed of the writ petition with a time-bound directive, without expressing any opinion on the merits of the partnership dispute or the alleged fraud.

The Kerala High Court dealt with a writ petition challenging the confiscation of 329.37 grams of gold by the Customs authorities. The petitioner sought to either quash the confiscation order or be permitted to file a delayed appeal, contending that his lawyer had failed to file the appeal within the statutory period. The legal issue centered on whether the petitioner could claim relief despite missing the appeal deadline due to the lawyer’s negligence.

The single judge bench of Justice Ziyad Rahman A.A. dismissed the petition, noting that the petitioner’s own lack of diligence waiting nine months after receiving the demand notice to approach the Court was fatal to his claim. The Court emphasized that appeals must be filed within 90 days, with a maximum 30-day grace period, and held that no exceptional circumstances justified condoning such a delay. The writ petition was therefore rejected.

The Allahabad High Court admitted three connected appeals concerning the classification of cash seized during a departmental raid as benami property under the Prohibition of Benami Property Transactions Act, 1988, specifically Section 2(9)(A). The appellants had ₹1,23,63,000 recovered from their residence, which they claimed represented proceeds from the sale of gold and silver obtained through a 2008 family settlement and duly disclosed in their Income Tax Returns for the A.Y. 2009-10 and 2017-18. The Adjudicating Officer had rejected this explanation, relying heavily on a handwritten “kachcha paper” allegedly documenting amounts received from transporters, a finding affirmed by the Appellate Tribunal.

The Single Judge Bench of Justice Kshitij Shailendra observed that the matter required detailed scrutiny and admitted all three appeals. The Court emphasized that authorities cannot rely solely on suspicion or loose papers to classify the cash as benami property. It framed key questions of law regarding whether the seized cash constituted a benami transaction, whether reliance on the “kachcha paper” rendered findings perverse, and whether adverse inferences could be drawn without evidence linking the appellants as benamidar. The Court granted interim protection, directing that no coercive action be taken pending further orders.

The Bombay High Court addressed the issue of whether maintenance payable under a Family Court order constitutes a “debt” for the purposes of insolvency under the Presidency Towns Insolvency Act, 1909. The petitioner, Mehul Jagdish Trivedi, sought to declare himself insolvent over arrears of ₹22,30,000 payable to his wife, arguing that his monthly income of ₹12,000-15,000 triggered the statutory conditions under Sections 14(1)(a), 9(1)(f), and the Explanation to Section 10 of the Act. The Court examined whether a maintenance obligation under Section 125 of the Code of Criminal Procedure qualifies as a “debt” capable of forming the basis for an insolvency petition.

The Bench of Justice Jitendra Jain dismissed the petition, noting that Section 11(a) of the Presidency Towns Insolvency Act precludes insolvency proceedings where the petitioner is not in custody for non-payment, and that maintenance obligations are moral and legal duties arising from the marital relationship rather than debts under insolvency law. The Court held that insolvency proceedings cannot be used to evade Family Court orders. Observing contradictions in the petitioner’s claims regarding income and loans, the Bench emphasized that the proceedings were an improper attempt to circumvent ongoing Family Court litigation, and dismissed the insolvency petition.

The Orissa High Court dealt with the legal issue of administrative delay in the sand quarry tender process under the Odisha Minor Minerals Concession Rules, 2016, as amended by the Second Amendment Rules, 2022. The Court addressed the failure of the Tahasildar, Jharbandh, to act on the tender despite receiving clear clarifications regarding the petitioner’s Income Tax Return (ITR) for 2021-22 filed as an HUF, VAT/GST compliance, and necessary GST documentation. The Court noted that such inaction not only frustrates public tenders but also causes financial loss to the government and delays utilization of public resources.

The Division Bench comprising Chief Justice Harish Tandon and Judge M.S. Raman directed that all relevant records, including the clarification letter, be immediately transferred to the Mining Officer within two weeks, and emphasized that the Mining Officer must take prompt action in accordance with law. The Court disposed of the writ petition with this time-bound directive, underlining that administrative authorities cannot remain idle after receiving statutory clarifications and that delays in public tender processes are impermissible.

The Kerala High Court addressed the issue of statutory compliance under the CGST Act in relation to the cancellation of GST registration. The Court considered whether a writ petition under Article 226 of the Constitution could be entertained when the petitioner had failed to pursue the statutory remedies within the prescribed timelines.

The bench of Justice Ziyad Rahman A.A. observed that the petitioner had not filed an application for revocation within the two-month window allowed under the CGST Act and had filed an appeal more than a year after the cancellation order, exceeding the statutory three-month limit. The Court held that procedural lapses and inordinate delay rendered the writ petition unsustainable and dismissed the petition, emphasizing that courts will not intervene when statutory remedies are not availed within the prescribed time, without addressing the merits of the original cancellation.

The Chhattisgarh High Court addressed whether Tax Collected at Source (TCS) under Section 206C(1C) of the Income Tax Act, 1961 applies to compounding fees paid by illegal miners. The Court considered the legal issue of whether penal payments made under Section 23A of the MMDR Act and Rule 71(5) of the Chhattisgarh Minor Mineral Rules, 2015 could be treated as taxable receipts attracting TCS, as alleged by the Income Tax Department following a survey in 2018. The Department had treated the Mining Officer as an “assessee in default,” imposing tax, interest, and penalty, and the ITAT had upheld this view.

The Division Bench of Justice Rajani Dubey and Justice Amitendra Kishore Prasad clarified that TCS under Section 206C(1C) applies only to payments made by lawful leaseholders or licensees, and does not extend to offenders paying compounding fees for illegal mining. The Court held that compounding fees are penal in nature and do not arise from any transfer of rights or lawful mining activity. Consequently, the High Court quashed the ITAT order dated 21.07.2023, set aside the disputed TCS demand, interest, and penalty, and allowed the appeals filed by the Deputy Director (Geology and Mining), as there is no legislative mandate to collect TCS on such penal payments.

The Bombay High Court dealt with the interpretation of Rule 41D of the Bombay Sales Tax Rules, 1959, concerning the entitlement of M/s Borosil Glass Works Ltd. to set-off of sales tax on furnace oil purchased for manufacturing goods that were partly sold locally and partly transferred to branches outside Maharashtra. The legal issue centered on whether full set-off was available under the main provision of Rule 41D or whether a mandatory reduction of 6% under Sub-Rule 3(a) applied to the portion of goods dispatched to branches outside the State.

The Division Bench of Justice M.S. Sonak and Justice Advait M. Sethna upheld the Revenue’s position, holding that furnace oil, although a consumable, has a nexus with the goods dispatched to branches and is therefore subject to the 6% reduction under Sub-Rule 3(a). The Court clarified that the expression “goods which are dispatched” must be read in context with goods manufactured for sale outside the State. Consequently, the Court dismissed the assessee’s reference, confirming that the set-off is available only after reducing 6% of the purchase price for goods transferred outside Maharashtra.

The Delhi High Court addressed a GST dispute involving A & T Security Services Pvt. Ltd., concerning penalties imposed under Section 122 of the CGST/SGST Acts. The legal issue revolved around whether the petitioner could approach the GST Appellate Tribunal (GSTAT) without making any fresh pre-deposit, given that the company had previously deposited ₹2.01 crore during an earlier GST registration cancellation proceeding, which had not been considered in the subsequent adjudication.

The bench of Justice Prathiba M. Singh and Justice Shail Jain observed that both the adjudicating authority and the Commissioner (Appeals) had failed to account for the earlier deposit. The Court held that the petitioner should be allowed to file appeals before GSTAT without any further pre-deposit, directing that the Tribunal must entertain the appeals on merits, consider all evidence of prior payments, and ensure the matter is adjudicated holistically. The High Court set a deadline for filing before GSTAT by 25.12.2025.

The Allahabad High Court addressed a challenge to a show cause notice and seizure order issued under Section 130 of the Uttar Pradesh Goods and Services Tax Act, 2017 (UPGST Act). The legal issue revolved around whether confiscation proceedings under Section 130 could be initiated for alleged non-compliance with Section 35 of the UPGST Act, which mandates maintenance of accounts.

The bench of Justice Shekhar B. Saraf and Justice Prashant Kumar held that the show cause notice and seizure were indeed without jurisdiction. The Court emphasized that confiscation under Section 130 cannot be invoked solely for accounting lapses under Section 35, without first determining any tax liability. Consequently, the High Court quashed the show cause notice and seizure order, while allowing the department to proceed under the appropriate provisions of the UPGST Act and permitting the petitioner to pursue the refund in accordance with law.

The Delhi High Court dealt with the validity of an income tax reassessment notice issued under Sections 148 and 148A of the Income Tax Act. The legal issue was whether a notice generated and digitally signed on 30 June 2025, but sent to the assessee only after midnight on 01.07.2025, could be considered “issued” within the limitation period.

The bench of Justice V. Kameshwar Rao and Justice Vinod Kumar, who held that “issuance” under the Act requires the notice to leave the control of the tax authorities and reach the assessee before the expiry of limitation. Mere generation or digital signing of the notice does not satisfy this requirement. The Court observed that technical delays on the Department’s portal cannot validate late issuance. Consequently, the High Court set aside the reassessment notice, holding the proceedings for A.Y. 2019-20 to be time-barred, and allowed the writ petition.

The Allahabad High Court examined whether a penalty under Section 129 of the Central Goods and Services Tax Act, 2017 (CGST Act) could be imposed for a mere mismatch in the delivery location of goods when valid invoices, railway receipts, and e-way bills were produced. The petitioner had purchased MS Bars from Chhattisgarh and due to a technical glitch in generating a fresh e-way bill after changing the delivery destination, the goods were intercepted during unloading. The authorities imposed tax and penalty under Section 129(3), which was upheld by the first appellate authority. The key legal question was whether a delivery mismatch, without evidence of intent to evade tax, could justify penal action.

The bench of Justice Piyush Agrawal noted that the original e-way bill remained valid, all import documents were genuine, and the delivery change followed standard commercial practice. The Court held that the authorities had failed to consider the subsequent production of the correct e-way bill and that no “mens rea” existed. Consequently, the High Court quashed both the original and appellate orders and directed the authorities to refund any amount deposited by the petitioner within two months, emphasizing that procedural discrepancies alone cannot trigger penalties under Section 129.

The Allahabad High Court held that reassessment proceedings under Section 29 of the U.P. Value Added Tax Act, 2008 (U.P. VAT Act) cannot be initiated solely to reverse Input Tax Credit (ITC), as ITC does not form part of turnover and its reversal cannot be treated as escapement of turnover for reassessment purposes. The petitioner engaged in manufacturing and trading mentha oil derivatives, had their ITC claims for raw materials used in SEZ supplies accepted during regular assessments for A.Y. 2014-15, 2015-16, and 2016-17. Subsequent reassessment notices were issued alleging failure to reverse ITC on SEZ transactions.

The bench of Justice Indrajeet Shukla and Justice Saumitra Dayal Singh observed that reversal of ITC is governed exclusively under Section 14 of the U.P. VAT Act and occurs only during regular assessment proceedings. Since ITC is independent of turnover or tax rate, reassessment under Section 29, which applies only where turnover has escaped assessment or incorrect tax rates are applied, was without jurisdiction. The Court therefore quashed the reassessment authorisations and notices, ruling that authorities cannot reopen assessments solely to redetermine or reverse ITC.

The Allahabad High Court granted conditional bail to Siddhant Rana, who was facing prosecution under Sections 132(1)(b), (c), (d), (f), and (i) of the Central Goods and Services Tax Act, 2017, for alleged ineligible Input Tax Credit claims through creation of fictitious firms. The Court noted that the appellant had already been in judicial custody since 18 June 2025, and the investigation had been concluded with the complaint filed before the trial court.

The bench comprising Justice Sameer Jain observed that the alleged offences, though involving GST evasion exceeding ₹35 crore, were triable by a Magistrate and carried a maximum sentence of five years. Given that the prosecution primarily relied on documentary and electronic evidence, and the trial was expected to take considerable time, the Court held that continued detention was unnecessary. Bail was therefore granted subject to conditions, including regular appearance before the trial court, non-interference with witnesses or evidence, and refraining from committing any criminal acts.

The Allahabad High Court dealt with a legal issue concerning the applicability of exemption under Section 28(ii)(2) of the Uttar Pradesh Value Added Tax Act, 2008 (UP VAT Act). The case involved cotton-filled khadi rajai and khadi gaddey, where the appellant contended that these products were exempt as khadi garments and khadi made-ups under Schedule I, Entry 11. The Assessing Officer, however, imposed a 14% tax under Schedule II-A, Entry 107, treating the filled rajai as taxable, and the matter was subsequently affirmed by the Commercial Tax Tribunal.

The bench comprising Justice Piyush Agrawal examined whether the exemption for khadi goods extended to filled rajai and gaddey. The Court noted that the appellant’s own submissions confirmed that the goods sold were cotton-filled rajai, whereas the statutory exemption applied only to unfilled khadi products. Consequently, the Court held that the tax levy was valid and dismissed the revision petition, thereby upholding the 14% VAT imposed by the authorities.

The Allahabad High Court addressed the legal issue of whether a penalty under Section 48(5) of the U.P. Value Added Tax Act, 2008 (U.P. VAT Act) can be imposed solely based on suspicion or the seizure of goods, without verification of business records to establish intent to evade tax. The appellant had transported scrap metal worth ₹29,922 along with Central Tax of ₹5,980, but the vehicle was intercepted and the goods were allegedly misdeclared. A penalty of ₹1,22,400 was imposed after the seizure, and subsequent appeals before the Commercial Tax Tribunal were dismissed.

The bench of Justice Piyush Agrawal held that penalties under Section 48(5) require a definite finding of intentional omission from books of account with intent to evade tax. The Court noted that entries were recorded in the appellant’s books after the seizure, and the authorities failed to verify their correctness through survey or assessment. Observing that the penalty was imposed merely on suspicion arising from the seizure, the Court set aside all penalty orders and allowed the revision, holding that mere suspicion without verification is insufficient to levy a penalty.

The Delhi High Court addressed the legal issue regarding the effective date of cancellation of GST registration under the CGST Act, specifically examining whether retrospective cancellation was justified when there was no allegation of fraudulent Input Tax Credit (ITC) availment. The petitioner had voluntarily applied for cancellation of registration in October 2021 due to age and health reasons, but the Department had issued an order cancelling the registration retrospectively from 11 July 2017, which adversely impacted its customers and was beyond the petitioner’s intended effective date.

The Division Bench of Justice Prathiba M. Singh and Justice Shail Jain, who noted that the Show Cause Notice (SCN) did not propose retrospective cancellation and there was no evidence of fraudulent ITC. Considering that the retrospective effect caused undue hardship to customers, the Court modified the effective date of cancellation, holding that the GST registration would be deemed cancelled only from 14.12.2021, the date of the SCN. The writ petition was disposed of accordingly, ensuring that the petitioner’s customers were not unfairly penalized.

The Delhi High Court dealt with the legal issue of whether writ jurisdiction under Article 226 of the Constitution could be invoked in cases involving alleged fraudulent Input Tax Credit (ITC) under the CGST Act, 2017. The petitioner challenged an Order-in-Original dated 21.01.2025, demanding ₹1,11,41,684 on allegations of fraudulent ITC transfers through multiple non-existent firms. The issue centered on whether the High Court could entertain the writ petition given the complexity of the factual matrix and the statutory framework providing for appellate remedies.

The Division Bench of Justice Prathiba M. Singh and Justice Shail Jain, who noted that the allegations involved intricate transactions spanning over 1,155 taxpayers and multiple shell entities. Observing that the petitioner had received notices, filed replies, and participated in the adjudication process, the Court declined to exercise writ jurisdiction. The Bench directed the petitioner to pursue the statutory remedy under Section 107 of the CGST Act, permitting the appeal to be filed by 5.01. 2026 with the requisite pre-deposit, and emphasized that the appeal would be considered on merits rather than being dismissed on procedural grounds.

The Bombay High Court addressed a sales tax reference concerning the 1996 sale of the ‘Crocin’ trademark by M/s Duphar Interfran Ltd. to SKB Play PLC, a UK-based company, under Section 5(1) of the Central Sales Tax Act, 1956. The legal issue revolved around whether the transaction constituted a local sale in Maharashtra, attracting 4% sales tax, or a sale in the course of export, which would be exempt. The question primarily involved the determination of the situs of an intangible asset (trademark) and whether assignment of ownership outside India could qualify the sale as an export.

The bench of Justice M.S. Sonak and Justice Advait M. Sethna, who ruled in favor of the Applicant. The Court held that the Brand Acquisition Agreement dated 18 January 1996 was an Agreement to Sale and that the trademark’s rights and situs effectively transferred to the UK-based entity upon assignment. Relying on the principle of “mobilia sequuntur personam”, the Court concluded that the sale constituted an export under the CST Act and was not taxable within Maharashtra. The judgment clarified that the location of registration does not determine the situs of an intangible asset, and title passes upon assignment, not registration.

The Punjab & Haryana High Court addressed the scope of anticipatory bail under the Bharatiya Nyaya Sanhita, 2023, in a case involving a serious cyber-fraud and financial offence. The legal issue pertained to whether custodial interrogation could be bypassed through anticipatory bail when the investigation involved layered transactions and tracing of siphoned funds totaling ₹33,16,700, allegedly routed through multiple bank accounts.

The bench of Justice Surya Partap Singh observed that anticipatory bail is an extraordinary remedy, as reiterated in Srikant Upadhyay v. State of Bihar (2024), and cannot be claimed as a matter of right. The Court held that the petitioner could not be granted anticipatory bail since his custodial interrogation was essential to uncover the truth behind the transactions, verify his connection to the bank accounts, and understand his alleged role in the cash withdrawals.

Statutory Appeal Remedy u/s 112 of CGST Act Bars Writ: Chhattisgarh HC Declines to Interfere in ₹3.38 Cr GST Demand Against Petitioner

Shri Swastik TradersShop vs State Of Chhattisgarh CITATION : 2025 TAXSCAN (HC) 2435

The High Court of Chhattisgarh examined a writ petition challenging a demand order of ₹3,38,75,200 issued under Section 73(8) of the Central Goods and Services Tax (CGST) Act, 2017 against a partnership firm, Shri Swastik Traders. The legal issue revolved around whether the Court could interfere with an ex‑parte demand order when the petitioner had a statutory remedy available under Section 112 of the CGST Act to approach the appellate authority, despite prior ex‑parte proceedings and non-responsiveness due to illness.

The bench of Justice Naresh Kumar Chandravanshi held that the writ petition was not maintainable in view of the available statutory remedy. The Court observed that although the GST Appellate Tribunal was not yet fully functional, the Government had issued notifications enabling taxpayers to file appeals with pre‑deposit and obtain statutory stay under Section 112(9). Accordingly, the Court dismissed the petition but granted liberty to Shri Swastik Traders to file an appeal before the Tribunal within the stipulated period, subject to pre-deposit compliance, clarifying that recovery would remain stayed once the appeal is filed, and allowing the State to proceed with recovery if the requirements were not met.

The Delhi High Court considered a petition challenging the freezing of a bank account under Section 83 of the Central Goods and Services Tax Act, 2017 (CGST Act), in connection with alleged fraudulent Input Tax Credit (ITC) amounting to ₹19.39 crore. The legal issue concerned whether the petitioner, Aashish, could seek de-freezing of his IndusInd Bank account despite concealment of ongoing DGGI investigations under Sections 67 and 74 of the CGST Act, and whether the provisional attachment exceeded the statutory period or was misused.

The Division Bench comprising Justice Prathiba M. Singh and Justice Shail Jain, which observed deliberate concealment of material facts by the petitioner and confirmed that the entity ‘M/s Steelmart India’ was non-existent at its declared address. The Court held that there was no basis to exercise writ jurisdiction under Article 226 to de-freeze the account, directed the petitioner to follow Rule 159(5) of the CGST Rules to file objections if aggrieved, imposed costs of ₹1 lakh, and permitted the DGGI and GST authorities to continue proceedings in accordance with law.

The Kerala High Court addressed the scope of the Income Tax Appellate Tribunal’s (ITAT) jurisdiction under Section 263 of the Income Tax Act, 1961, ruling that the Tribunal cannot uphold a Commissioner’s revision order on grounds not originally raised by the Commissioner. The legal issue concerned whether the ITAT could sustain a tax revision order for the A.Y. 2014-15 based on reasons independent of those cited in the Commissioner’s original revision order.

The Division Bench comprising Justice A. Muhamed Mustaque and Justice Harisankar V. Menon allowed the appeal filed by the charitable trust, Save A Family Plan (India), and set aside the ITAT’s order. The Court observed that the ITAT overstepped its jurisdiction by upholding the revision on a new ground relating to the trust’s objects, which was not invoked by the Commissioner. Relying on precedent, the Court held that the Tribunal’s role is confined to examining the grounds specifically relied upon by the Commissioner under Section 263. Consequently, the original assessment in favor of the trust was restored, and both the ITAT and Commissioner’s revision orders were nullified.

The Gujarat High Court addressed the exercise of revisional powers under Section 264 of the Income Tax Act, 1961, in a case involving an 82-year-old senior citizen, Shushilaben Jayantibhai Patel, who had paid her due taxes despite missing her income tax return for A.Y. 2017-18. The legal issue concerned whether the Commissioner could reject a revision application solely on the ground of non-filing of return when the assessee had paid the requisite tax and demonstrated overall compliance, particularly considering her advanced age and medical condition.

tHE Division Bench comprising Justice Pranav Trivedi and Justice A.S. Supehia set aside the Commissioner’s order and remanded the matter for fresh consideration. The Court observed that Section 264 confers broad discretionary powers to prevent miscarriage of justice, and the Commissioner’s outright rejection without judicial consideration of the assessee’s tax payment, audit compliance, and health-related circumstances was arbitrary. The High Court directed the Commissioner to re-examine the matter and pass an appropriate order within 12 weeks, ensuring that discretion is exercised in accordance with law.

The Kerala High Court addressed a dispute between Metro Aggregates and Sand India Private Limited and the Income Tax Department concerning recovery of a tax demand, focusing on the legal issue of whether recovery proceedings can continue while a statutory appeal and stay petition are pending. The matter involved the assessment order for A.Y. 2015‑16, and the petitioner sought protection from coercive recovery actions until the appellate authority decided on the stay petition accompanying their appeal.

The single bench of Justice Ziyad Rahman A.A. stayed all recovery proceedings initiated under the impugned assessment order and directed the Commissioner of Income Tax (Appeals)-III to decide the stay petition within two months. The court observed that pursuing recovery while the appeal and stay petition remain pending would cause undue hardship to the assessee. By granting this interim relief, the High Court ensured that Metro Aggregates and Sand India Private Limited would not be subjected to enforcement measures before the appellate authority had an opportunity to consider the merits of their stay application.

The Kerala High Court addressed a tax recovery dispute, staying proceedings based on a demand notice and directing the assessee to file a stay petition. The matter concerned K.B. Raghuraman, who had a statutory appeal pending against an assessment order, challenged the Income Tax Department’s coercive recovery actions initiated while the appeal remained undecided. The legal issue revolved around whether the department could pursue recovery before the appellate authority had an opportunity to consider a stay application.

The single bench of Justice Ziyad Rahman A.A. disposed of the writ petition by ordering the petitioner to file a stay petition within two weeks. The court directed the Commissioner of Income Tax (Appeals) to consider the stay application and pass an appropriate order within two months of filing. In the meantime, all coercive recovery proceedings were stayed, ensuring that the assessee would not face enforcement action until the appellate authority determined the stay petition. This interim relief safeguards the petitioner from undue hardship while his statutory appeal is under consideration.

The Kerala High Court addressed a writ petition challenging a penalty imposed under Section 271(1)(c) of the Income Tax Act, 1961 for the A.Y. 2006-07, involving the legal heirs of the deceased assessee, M.J. George. The dispute arose from a penalty levied on a substantial addition of ₹9.68 crore as Long Term Capital Gains from a land sale. The key legal issue was whether a writ petition under Article 226 could be entertained where the central question involved a factual dispute concerning the service of a purported 2008 show-cause notice, which the Income Tax Department relied upon to initiate penalty proceedings in 2024.

The single bench of Justice Ziyad Rahman A.A. disposed of the petition, holding that the alleged 2008 notice’s existence and service constituted a disputed question of fact unsuitable for adjudication via a writ petition. The court directed the legal heirs to pursue the matter through the statutory appeal process, granting them one month from receipt of the judgment to file the appeal, and instructed the appellate authority to decide the matter independently. The interim stay granted by the court was extended for three months to allow the petitioners to avail of this statutory remedy.

The Calcutta High Court exercised its writ jurisdiction to set aside an order rejecting a rectification request under Section 107 of the West Bengal Goods and Services Tax Act, 2017 read with the Central Goods and Services Tax Act, 2017 (CGST Act). The legal issue concerned the entitlement of M/s Svaksha Distillery Limited to claim retrospective Input Tax Credit (ITC) for the F.Y. 2018-19 and 2019-20 in its GSTR-3B return for January-March 2020-21. The Court examined the applicability of Section 16(5) of the CGST Act, 2017, which permits taxpayers to claim ITC for earlier years within the prescribed period, and whether the Appellate Authority was obliged to reconsider the rectification plea in light of this updated legal framework and the Notification dated 8.10.2024 issued under Section 148 of the CGST Act.

The single Judge Bench of Justice Om Narayan Rai held that the Appellate Authority had failed to apply the amended statutory provisions and consider the rectification request in accordance with the special procedure mandated by the Notification. The Court observed that the appellant had filed its ITC claim within the time allowed under Section 16(5), and thus was entitled to relief. Consequently, the Court set aside the order rejecting the rectification request and remanded the matter to the Appellate Authority for fresh consideration in accordance with law, permitting the appellant to also claim a refund of any amounts already recovered.

The High Court of Karnataka addressed the legality of cancelling a Goods and Services Tax (GST) registration under Section 29 of the Karnataka Goods and Services Tax Act, 2017 (KGST Act), where the show-cause notice (SCN) did not specify the date and time for a personal hearing. The Court examined whether such omission violated the statutory safeguard provided under the proviso to Section 29(2), which mandates that a personal hearing must be granted before cancellation of registration. The legal issue centered on whether proceeding with cancellation without providing this opportunity deprived the assessee of the statutory right to be heard.

The Single Judge Bench comprising Justice M. Nagaprasanna held that the SCN’s failure to mention a specific date and time for personal hearing rendered the cancellation order unsustainable. The Court observed that compliance with the proviso to Section 29(2) is a statutory right, not a discretionary formality, and the cancellation order did not demonstrate that the assessee was provided a meaningful hearing.

The High Court of Karnataka addressed the validity of an ex-parte adjudication order issued under the Central Goods and Services Tax Act, 2017 (CGST Act) and the Karnataka Goods and Services Tax Act, 2017 (KGST Act), in a matter where the petitioner had been denied a personal hearing and the statutory limitation relied upon was under challenge before the Supreme Court. The legal issue revolved around whether an adjudication order passed without granting a hearing and based on notifications whose validity was sub judice could be sustained.

The Single Judge Bench of Justice M. Nagaprasanna set aside the ex-parte order issued against M/s. Siri Kanakadurgaha Agencies and directed that fresh adjudication be conducted only after the Supreme Court concludes its examination of SLP (C) No. 4240 of 2025 concerning the limitation-extension notifications. The Court observed that passing adjudication while the Apex Court is seized of the matter could lead to conflicting legal positions, and reiterated that the petitioner is entitled to a personal hearing as per principles of natural justice.

Delhi HC Remands Ex-Parte GST Demand as Petitioner Claimed Inability to Access Portal, Imposes ₹10K Costs Payable to STBA

M/S WALSONS SERVICESPVT. LTD. vs SALES TAX OFFICER/CLASS II(STO), DGST & ANR CITATION : 2025 TAXSCAN (HC) 2445

The Delhi High Court addressed a case concerning an ex-parte demand order under the Goods and Services Tax (GST) regime, focusing on whether the assessee was afforded an adequate opportunity to respond to a show-cause notice (SCN). The issue arose under the GST framework, where principles of natural justice require that a taxpayer be given proper access to the portal and an opportunity to be heard before an adjudication confirming a demand is passed.

The Division Bench comprising Justice Prathiba M. Singh and Justice Shail Jain set aside the ex-parte demand order issued against M/s Walsons Services Pvt. Ltd. for F.Y. 2019-20, amounting to ₹44,84,321 in tax and ₹86,63,462 including interest and penalty. The Court noted that the petitioner had missed the original SCN due to lack of portal access and inadvertent oversight, and that the impugned order was non-speaking and passed without due process. The matter was remanded to the Adjudicating Authority to permit the petitioner to file a reply by 15.12.2025, grant a personal hearing, and ensure notice is served via registered email and mobile. Portal access was also directed to be restored within one week. Costs of ₹10,000 were imposed on the petitioner, while the issue regarding the validity of certain GST notifications remains pending before the Supreme Court.

The High Court of Karnataka addressed a service tax dispute under the Finance Act, 1994, concerning the validity of a show cause notice, Order-in-Original, and Order-in-Appeal issued against Shafiqahmed Dongarkhe. The legal issue revolved around whether the assessee was liable to pay service tax, considering factors such as classification of services, applicability of the negative list, exemptions under relevant notifications, and limitations under law.

The Single Judge Bench comprising Justice M. Nagaprasanna quashed the show cause notice and both the original and appellate orders, remanding the matter to the Assistant Commissioner for fresh adjudication. The Court directed the adjudicating authority to reconsider the matter from the stage of filing the reply, applying parameters laid down in Karnataka Chinmaya Seva Trust v. Joint Commissioner of Central Tax (2024), including determination of whether the assessee qualifies as a service provider, whether the services are exempt or fall under the negative list, and whether any claims are barred by limitation. The petitioner was instructed to file a fresh reply within four weeks, and the authority was required to pass orders in accordance with law.

The Allahabad High Court addressed the legal issue of whether municipal corporations retain the authority to levy advertisement tax following the implementation of the Goods and Services Tax (GST) regime under the 101st Constitution Amendment and the U.P. GST Act, 2017. The dispute arose under the U.P. Municipal Corporation Act, 1959, where the petitioner, Saffron Communication, had paid advance advertisement tax for placing advertisements on public hoardings and signage. The key legal question was whether such a levy post-GST was valid, given that the GST framework subsumed the power to collect indirect taxes, including those previously imposed by local authorities.

The Division Bench of Justice Saumitra Dayal Singh and Justice Indrajeet Shukla ruled in favor of the petitioner, holding that municipal corporations no longer possess legislative competence to levy advertisement tax independently.

The Delhi High Court dealt with the legal issue concerning the violation of Section 16 of the Central Goods and Services Tax (CGST) Act, 2017, arising from non-disclosure of turnover and questionable availing of Input Tax Credit (ITC) by the petitioner, Lakdhatar Enterprises. The writ petition challenged inaction on a show cause notice (SCN) issued by the GST authorities, with the petitioner claiming undue delay in adjudication. The Court noted serious non-disclosures in the petition, including turnover exceeding ₹17.5 crore during the period of GST registration and purchases from cancelled dealers, which cast doubt on the genuineness of ITC claims.

The Division Bench of Justice Prathiba M. Singh and Justice Shail Jain directed the petitioner to file a reply to the SCN and comply with the earlier court directive to disclose business details, turnover, and ITC availed. The Court allowed the GST authorities to proceed with adjudication in accordance with law and disposed of the writ petition, emphasizing that the petitioner cannot evade statutory proceedings by withholding material facts.

The Bombay High Court addressed a criminal revision application concerning the rejection of a discharge plea in a bribery case against Vijaykumar Raut, a Superintendent of CGST. The legal issue involved whether the material on record was sufficient to constitute a prima facie case under Section 7 of the Prevention of Corruption Act, 1988, read with Section 120-B of the IPC, thereby justifying the continuation of the trial for allegedly demanding a bribe of ₹1,000. The applicant contended that he was falsely implicated, highlighting issues with the evidence, including the absence of an electronic evidence certificate under Section 65B of the Evidence Act and the alleged invalidity of the sanction.

The bench of Justice Abhay S. Waghase held that the trial court had correctly assessed the matter at the discharge stage under Sections 227 and 228 of the Cr.P.C., which requires only a determination of prima facie material and not a detailed examination of evidence. The High Court observed that the complaint and verification report sufficiently named the applicant and his subordinate, establishing a prima facie case.