Annual Tax and Corporate Law Digest 2025: High Court Cases [Part XLVIX - Final Part]

CLEARMEDI HEALTHCAREPRIVATE LIMITED vs DEPUTY COMMISSIONER OFINCOME-TAX CITATION : 2025 TAXSCAN (HC) 2801

The Delhi High Court ruled that Assessing Officers cannot mechanically refuse stay applications under Section 220(6) of the Income Tax Act, 1961 solely for non-payment of 20% disputed demand, as CBDT office memos do not mandate such pre-deposit.

Justice V. Kameswar Rao and Justice Vinod Kumar held that Section 220(6) confers discretionary power requiring consideration of prima facie merits, financial hardship, and revenue protection, rather than rigid administrative instructions. The court set aside the AO's rejection order against Clearmedi Healthcare Private Limited for A.Y. 2023-24, remanding for fresh adjudication per settled law, as the mechanical approach demonstrated non-application of mind.

VDR COLORS ANDCHEMICALS PVT vs COMMISSIONER OF DELHI CITATION : 2025 TAXSCAN (HC) 2802

The Delhi High Court held that absence of documentary proof for dispatching personal hearing notices does not automatically violate natural justice principles in fraudulent Input Tax Credit (ITC) cases, where petitioners VDR Colors and Chemicals Pvt. Ltd., A.V. Metals Marketing Pvt. Ltd., and Surender Kumar Jain were aware of proceedings via Show Cause Notice and filed replies.

Justice Prathiba M. Singh and Justice Shail Jain observed petitioners' vague replies failed to address DGARM-reported bogus transactions through non-existent Paramount Enterprises chain availing Rs. 18.24 crore ITC without goods movement, despite recorded hearing opportunities and recorded statements (later retracted). The court declined writ jurisdiction for complex factual ITC fraud matters appealable under Section 107 CGST Act, directing appeals with pre-deposit by 31.01.2026 to avoid limitation dismissal, disposing petitions while preserving all rights and contentions.

BHUTANI AUTOMOBILES LLPvs UNION OF INDIA & ORS. CITATION : 2025 TAXSCAN (HC) 2803

The Delhi High Court declined to adjudicate the validity of GST Notifications No. 09/2023 (Central/State Tax) issued under Section 168A of the CGST Act extending adjudication timelines, noting the issue pending before the Supreme Court in Bhutani Automobiles LLP's challenge to an order against a show cause notice for F.Y. 2017-18.

Justice Prathiba M. Singh and Justice Shail Jain observed the adjudication order appeared issued without adequate personal hearing opportunity despite petitioner's prior show cause notice reply, rendering it suitable for appellate remedy under Section 107. The court directed that appeals filed by 31.01.2026 with requisite pre-deposit would not face limitation dismissal and must be decided on merits, disposing the writ petition while preserving all rights and contentions.

MKU LIMITED AND ANR vsUNION OF INDIA CITATION : 2025 TAXSCAN (HC) 2804

The Delhi High Court dismissed writ petitions by MKU Limited challenging its technical disqualification from Army tenders for ballistic helmets, bullet-proof jackets, and night-vision equipment, ruling that an Export Oriented Unit (EOU) licence from the Department of Commerce (DoC) does not equate to a Department for Promotion of Industry and Internal Trade (DPIIT) industrial licence required under tender conditions.

Chief Justice Devendar Kumar and Justice Tushar Rao Gedela Upadhyaya held that despite both issuing under the Industries (Development and Regulation) Act, 1951 within the Ministry of Commerce and Industry, DoC EOU licences and DPIIT defence licences operate under distinct regulatory frameworks involving different processes, committees, and security vetting including Ministry of Home Affairs involvement absent in EOU approvals. The court found no arbitrariness in bid rejection as tenders explicitly mandated DPIIT licences, which MKU lacked, rejecting claims of DoC acting as DPIIT delegate for EOUs or absence of statutory distinction under IDRA, 1951 or Defence Acquisition Procedure 2020.

M/S PATANJALI FOODSLIMITED vs UNION OF INDIA CITATION : 2025 TAXSCAN (HC) 2805

The Karnataka High Court declared Section 25(4) of the Customs Act, 1962, as amended by the Finance Act, 2016, unconstitutional and arbitrary, ordering ₹3.40 crore refund to Patanjali Foods (formerly Ruchi Soya Industries) for differential basic customs duty on crude palm oil reassessed post-Notification No. 29/2018-Cus dated 01.03.2018 raising rate from 30% to 44%.

Justice S.R. Krishna Kumar applied Supreme Court precedent in Union of India v. G.S. Chatha Rice Mills (2021) and High Court rulings from Andhra Pradesh, Gujarat, Delhi, and Madras, holding notifications effective only upon electronic Gazette publication on 06.03.2018, not issue date, as bills of entry submitted 01.03.2018/02.03.2018 crystallised duty at prior 30% rate. The court quashed reassessments under Section 25(4) for violating publication requirements under Sections 25(1)/(2A), rule of law principles from Harla v. State of Rajasthan (1952), and Information Technology Act, 2000 e-publication mandates, directing refund with interest within three months.

S.K.M. Timber vsSuperintendent CITATION : 2025 TAXSCAN (HC) 2806

The Calcutta High Court quashed a GST registration cancellation order under Section 29(2) of the CGST/WBGST Act, 2017 passed against S.K.M. Timber Private Limited following a show cause notice holding that the order violated natural justice principles.

Justice Om Narayan Rai ruled that the final cancellation order issued by the Superintendent after personal hearing by the Assistant Commissioner defied the principle that the authority hearing must decide, constituting a non-speaking order lacking reasons or application of mind. The court rejected the GST department's post-decisional hearing proposal as impermissible for orders passed without reasoning, directed fresh hearing based on petitioner's SCN reply, and set aside the impugned order as arbitrary and void.

Ram Narayan Singh vsThe State of Bihar CITATION : 2025 TAXSCAN (HC) 2807

The Patna High Court upheld the conviction and sentence of Income Tax Assistant Ram Narayan Singh under Sections 7 and 13(2) read with Section 13(1)(d) of the Prevention of Corruption Act, 1988, for demanding and accepting a ₹600 bribe in 2011 to process a ₹5,826 income tax refund for Sahara India field worker.

Justice Alok Kumar Pandey confirmed prosecution proof beyond reasonable doubt through consistent witness testimonies (12 including complainant, shadow witness, trap team, IO), phenolphthalein-treated currency recovery, chemical tests, and Section 20 presumption unrebutted despite defence claims of non-entitlement to refund processing. The court affirmed concurrent rigorous imprisonment sentences six months plus ₹2,500 fine under Section 7; one year plus ₹2,500 under Section 13(2) cancelled bail, and directed immediate surrender after 14-year proceedings originating from March 2011 CBI complaint and trap, rejecting inconsistencies arguments as untenable.

PHOENIX IMPEX vs SALESTAX OFFICER CLASS II AVATO & ANR. CITATION : 2025 TAXSCAN (HC) 2808

The Delhi High Court directed GST authorities to credit Phoenix Impex's sanctioned refund of Rs. 25,16,760 for unutilised Input Tax Credit (ITC) from November 2023, filed January 15, 2024 under ARN No. AA0701240394778, along with statutory interest due to delayed processing beyond Section 54 CGST Act timelines.

Justices Prathiba M. Singh and Justice Shail Jain noted the September 19, 2025 refund order omitted interest despite prior show cause notice on August 21, 2025 regarding supplier M/s Garg Enterprises' Rule 86B compliance, following petitioner's reliance on Suraj Mangar precedent mandating timely processing. The court ordered payment within one month, disposed of the writ petition keeping the refund order subject to final proceedings outcome after personal hearing directions and departmental reply.

CLYDE PUMPS PRIVATELIMITED vs UNION OF INDIA & ORS. CITATION : 2025 TAXSCAN (HC) 2809

The Delhi High Court ruled that Input Service Distributors (ISDs) like Clyde Pumps Private Limited cannot be denied transitional Input Tax Credit (ITC) of ₹99,18,972 from eligible CENVAT credit for March-June 2017 merely due to GST portal glitches preventing TRAN-1 filing during the initial transition.

Justices Prathiba M. Singh and Justice Shail Jain held Sections 20 and 140(7) of the CGST Act explicitly recognise ISD rights to carry forward and distribute pre-GST credits, rejecting departmental claims that ISDs lack Electronic Credit Ledger (ECL) maintenance or TRAN-1 filing ability. The court directed crediting recorded TRAN-1 ITC to ECL within three months, subsequent distribution to units within one month, and GSTN-Delhi GST coordination, applying precedents like Vision Distribution (2019) and Dell International (2025)against penalising taxpayers for systemic failures, disposing the petition.

RAMESH KUMAR JANGIR vsCOMMISSIONER OF CUSTOMS CITATION : 2025 TAXSCAN (HC) 2810

The Delhi High Court directed the Customs Department to implement an Order-in-Original permitting release of seized gold items: a chain as personal effects without duty and two pieces upon customs duty payment for passenger Ramesh Kumar Jangir arriving from Kuwait via IGI Airport in February 2024.

Justices Prathiba M. Singh and Justice Shail Jain held that once the Department accepted the adjudication categorizing items under Baggage Rules, 2016 with no penalty, implementation must occur within two weeks without warehousing charges post-July 29, 2025, though prior period charges apply. The court ordered petitioner appearance before Customs nodal officer for compliance, immediate release upon duty fulfilment, and disposed of the petition affirming voluntary red channel declaration warranted no undue detention post-adjudication.

SUHEL KHAN vsCOMMISSIONER OF CUSTOMS CITATION : 2025 TAXSCAN (HC) 2811

The Delhi High Court directed Customs authorities to release Suhel Khan's detained 116.60-gram gold bar from Saudi Arabia arrival on May 19, 2024 at IGI Airport upon payment of applicable customs duty, redemption fine, and penalty, despite no Show Cause Notice under Sections 110 and 124 of the Customs Act, 1962.

Justice Prathiba M. Singh and Justice Shail Jain noted petitioner's personal hearing undertaking on May 15, 2025 to pay dues, Supreme Court precedent in Union of India v. Jatin Ahuja required SCN within six months or written extension, and absent formal notice rendering continued detention unlawful absent payment agreement. The court waived warehousing charges, appointed a nodal officer for compliance, required petitioner appearance before Customs, and disposed of the writ petition affirming release post-financial fulfilment per recorded commitments.

HKX LOGISTICS INDIAPRIVATE LIMITED vs SALES TAX OFFICER CITATION : 2025 TAXSCAN (HC) 2812

The Delhi High Court set aside an ex-parte GST adjudication order passed against HKX Logistics India Private Limited for FY 2019-20 pursuant to a show cause notice holding that notices uploaded solely under the GST portal's "Additional Notices" tab failed to provide effective hearing opportunity.

Justices Prathiba M. Singh and Justice Shail Jain ruled the order unsustainable per Sugandha Enterprises v. Commissioner, Delhi GST (2025), despite constitutional challenges to Notification No. 56/2023 (Central Tax) extending limitation periods pending Supreme Court adjudication following divergent High Court views including Telangana's invalidity finding. The court imposed ₹20,000 costs, granted time till January 15, 2026 for comprehensive SCN reply, directed fresh personal hearing notice, and clarified any new order subject to Supreme Court outcome on notifications' validity, disposing the petition restoring merits contestation rights.