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

Devaki Constructions vsTheDirector CITATION : 2025 TAXSCAN (HC) 2101

The Madras High Court recently dealt with the issue of whether a registered Government contractor could defer payment of differential Goods and Services Tax (GST) liability on the ground that the concerned Government department had not reimbursed the revised tax component. The case arose under the Central Goods and Services Tax Act, 2017, following the upward revision of GST rates on works contracts from 12% to 18%, effective July 18, 2022, as per the 47th meeting of the GST Council. The petitioner, M/s. Devaki Constructions, filed a writ petition seeking a Writ of Mandamus to restrain coercive action by tax authorities until the reimbursement was received from the Government department, arguing that the liability arose solely due to a policy change and should be borne by the department concerned.

The Bench of Justice Krishnan Ramasamy held that as per the terms of the Government contract, the liability to pay GST rests solely on the contractor, and the failure of the contracting department to release the differential amount cannot be a ground to defer statutory tax payments. The Court ruled that the petitioner must first discharge the tax liability under the CGST Act and thereafter pursue recovery of the differential component from the department separately.

Vilas Babanrao KalokhevsPrincipal Commissioner of Income Tax CITATION : 2025 TAXSCAN (HC) 2102

The Bombay High Court examined the scope of Section 276C(2) of the Income Tax Act, 1961, which deals with prosecution for willful attempts to evade payment of tax, and held that a delay in payment of self-assessment tax, if later discharged along with interest, does not constitute a willful attempt to evade tax. The case arose when Vilas Babanrao Kalokhe, the petitioner, challenged the order of the Judicial Magistrate First Class, Pune, which had issued process against him under Section 276C(2) for not depositing self-assessment tax while filing his return for the Assessment Year 2022-23.

The bench of Justice S. M. Modak ruled in favour of the petitioner, emphasizing that the term “willful” under Section 276C(2) implies deliberate and intentional conduct, not a mere procedural lapse or delay. The Court observed that since the petitioner had fully paid the self-assessment tax and interest, there was no element of willful evasion. It was further held that prosecuting an assessee who has already made payment would constitute an abuse of the process of law.

Prabhakar Nerulkar vsPrincipalCommissioner of Income Tax CITATION : 2025 TAXSCAN (HC) 2103

The Bombay High Court recently dealt with the legal issue of whether the Revenue can reopen an assessment once a valid Income Disclosure Certificate has been issued under the Income Disclosure Scheme (IDS), 2016, framed under Section 183 of the Finance Act, 2016. The case concerned Prabhakar Nerulkar, a real estate businessman from Goa, who had not filed income tax returns for six assessment years. Acting on professional advice, he availed of the IDS, 2016, disclosing his undisclosed income, which was duly accepted by the Principal Commissioner of Income Tax, Panaji, who issued a Certificate of Declaration (Form IV) under the scheme. A reassessment order was subsequently passed under Sections 147, 144, and 144B, adding ₹1.43 crore to his income.

The Division Bench comprising Justice Bharati Dangre and Justice Ashish S. Chavan held that once a valid IDS certificate is issued, the Revenue cannot reopen the assessment for the same income unless the certificate is cancelled for misrepresentation or fraud. The Court observed that the IDS, 2016, was introduced as a one-time opportunity for taxpayers to declare previously undisclosed income, pay tax at a prescribed rate of 45%, and obtain complete immunity from further proceedings. Relying on the provisions of the Finance Act and relevant CBDT circulars, the Bench clarified that information contained in a valid declaration is confidential and cannot be used for reassessment unless the declaration itself is invalidated.

ASHOK DRUGS vs DEPUTYSTATE TAXOFFICER CITATION : 2025 TAXSCAN (HC) 2104

The High Court of Kerala addressed the scope of Section 73 of the Central Goods and Services Tax Act, 2017, holding that proceedings under this provision cannot be initiated merely for adjustment of input tax credit (ITC) under a different tax head, as such an error does not constitute wrongful availment or utilization resulting in loss to the revenue. The case arose from a notice issued to M/s. Ashok Drugs (Wholesale), a registered dealer under the CGST/SGST Act, challenged an order dated 26 December 2023 passed by the DeputyState Tax Officer, Chalappuram, for the Assessment Year 2017-18. The department alleged that the petitioner had wrongly claimed IGST input credit in the GSTR-3B return for January 2018, despite not undertaking any interstate sales.

The bench of Justice Ziyad Rahman A.A. observed that the issue was squarely covered by the earlier precedent in Rejimon Padikapprambil Alex. The Court reaffirmed that Section 73 proceedings are maintainable only when there is wrongful availment or utilization of ITC causing a tangible loss to the exchequer, not in cases of mere misclassification or technical adjustment between CGST, SGST, and IGST heads.

GST Return Data Not Accessible under RTI unless Covered By S. 158(3) Or Supported By Larger Public Interest: Bombay HC

Adarsh S/o GautamPimpare vs TheState of Maharashtra CITATION : 2025 TAXSCAN (HC) 2105

The Bombay High Court examined the intersection between the Right to Information Act, 2005 (RTI Act) and the Goods and Services Tax Act, 2017 (GST Act), ruling that GST return data is confidential and cannot be disclosed under the RTI Act unless the case falls within the exceptions under Section 158(3) of the GST Act or involves a demonstrable larger public interest. The case arose from a writ petition filed by Adarsh S/o Gautam Pimpare, who had sought details of the GST submissions of six industries in Udgir, District Latur, for the financial years 2008 to 2023 through an RTI application.

The Bench of Justice Arun R. Pedneker upheld the confidentiality of GST data, observing that Section 158(1) of the GST Act expressly prohibits disclosure of returns and related particulars except in the specific circumstances outlined under Section 158(3). The Court held that, being a special and subsequent legislation, the GST Act overrides the RTI Act on issues of taxpayer confidentiality. The Court reiterated that third-party information must remain confidential unless a larger public interest clearly justifies disclosure. Accordingly, the Court held that the authorities acted correctly in denying the information and dismissing the writ petition, noting that the petitioner failed to establish any legal or factual basis for disclosure of third-party GST data.

Cae Simulation TrainingPrivateLimited vs Commissioner Of Cgst Greater Noida CITATION : 2025 TAXSCAN (HC) 2106

The Allahabad High Court dealt with the issue of GST applicability on DGCA-approved flying training organizations engaged in providing commercial pilot training. The case arose under the Central Goods and Services Tax Act, 2017, particularly concerning the interpretation of Serial No. 66(a) of Notification No. 12/2017–Central Tax (Rate) dated June 28, 2017, which exempts services provided by educational institutions offering courses leading to qualifications recognized by law.

The Bench of Justice Rohit Ranjan Agarwal observed that the Aircraft Act, 1934 and Aircraft Rules, 1937 empower the DGCA to approve training organizations and their courses, thus rendering such programs legally recognized. Referring to the clarificatory circular dated October 11, 2024, issued by the Ministry of Finance, which confirmed that DGCA-approved flight training institutions fall under the ambit of educational institutions exempt from GST, the Court held that the earlier orders of the Authority for AdvanceRuling (AAR) and the Appellate Authority for Advance Ruling (AAAR) were passed without considering this vital clarification.

License Fee Paid for Use of ‘Remfry & Sagar’ Goodwill Not Barred by Law, Allowable as Business Expenditure: Delhi HC

PR. COMMISSIONER OFINCOME TAXvs M/S. REMFRY AND SAGAR CITATION : 2025 TAXSCAN (HC) 2107

The Delhi High Court examined the legal question of whether the license fee paid for the use of goodwill and trade name by a law firm amounts to a legitimate business expenditure under Section 37(1) of the Income Tax Act, 1961. The matter arose from an appeal filed by the Principal Commissioner of Income Tax against the law firm Remfry & Sagar, challenging the Income Tax Appellate Tribunal’s (ITAT) decision that allowed the deduction of license fees paid for the use of the firm’s goodwill.

The Division Bench comprising Justice V. Kameswar Rao and Justice Vinod Kumar held that the license fee was paid for the commercial right to use the firm’s goodwill and trade name, not as a form of revenue sharing. The Court observed that the Bar Council of India Rules do not treat such payments as an offence and that the arrangement was a legitimate commercial transaction. It clarified that linking the license fee to a percentage of the firm’s revenue was only a method of computation and did not constitute prohibited sharing of professional income.

DIGANTA KUMAR DEKA vsTHE STATE OF ASSAM AND 2 ORS CITATION : 2025 TAXSCAN (HC) 2108

The Gauhati High Court addressed the legality of issuing a summary of a show cause notice in Form GST DRC-01 without serving a detailed and authenticated notice under Section 73(1) of the Goods and Services Tax Act, 2017. The case arose from a petition filed by Diganta Kumar Deka, who challenged an order passed by the Assistant Commissioner of State Tax, Guwahati under Section 73(9) for the period July 2017 to March 2018, alleging that no proper show cause notice or hearing opportunity had been provided.

The bench of Justice Sanjay Kumar Medhi held that the issuance of a proper show cause notice under Section 73(1) is a mandatory legal requirement and that a summary in Form GST DRC-01 cannot replace the notice itself. The Court noted that the documents uploaded on the GST portal were unsigned, incomplete, and failed to specify the date and venue for a personal hearing, thereby violating Section 75(4) of the Act.

Bombay HC Condones 447-Day Delay by Income Tax Dept in Filing Appeal Against Acquittal in Tax Evasion Case

THE INCOME TAX DEPT vsGREGORYLEWIS CITATION : 2025 TAXSCAN (HC) 2109

The Bombay High Court dealt with the issue of whether a substantial delay by the Income Tax Department in filing an appeal against an acquittal under the Income Tax Act, 1961 could be condoned on account of bona fide administrative mistakes and disruptions during the COVID-19 pandemic. The case arose from a criminal complaint filed against Gregory Lewis under Sections 276C(1) and 277 of the Act, alleging willful tax evasion and false verification of statements. The Chief Judicial Magistrate, Panaji, had acquitted the accused on 29 April 2019, following which the Department sought condonation of a 447-day delay in filing its appeal, citing procedural lapses, jurisdictional confusion due to faceless assessment reforms, and pandemic-related restrictions.

The bench of Justice Shreeram V. Shirsat held that the delay was caused by bona fide circumstances rather than negligence. The Court accepted that the Special Public Prosecutor’s mistaken assumption regarding the filing of his opinion, combined with internal jurisdictional changes and COVID-19 disruptions, constituted “sufficient cause” for delay. Observing that the Department acted promptly once jurisdiction was clarified, the Court condoned the delay of 447 days, directed the Registry to register the appeal, and allowed the application, ensuring that the case proceeds to be decided on its merits.

Harsh Wadhwani vsAdditionalDirector General Directorate General Of Gst I CITATION : 2025 TAXSCAN (HC) 2110

The Chhattisgarh High Court addressed the issue of coercive measures during a GST investigation into alleged fake Input Tax Credit (ITC) claims under the Central Goods and Services Tax Act, 2017. The case arose from a writ petition filed by Harsh Wadhwani, proprietor of Vijay Laxmi Trade Company, and his authorised representative, challenging proceedings initiated by the Directorate General of GST Intelligence (DGGI). The DGGI had issued summons under Section 70 of the CGST Act alleging that the petitioners had availed ITC on the basis of fake invoices issued by Taj Enterprises and Agastya Enterprises.

The bench of Justice Naresh Kumar Chandravanshi observed that while tax authorities possess the power to summon and record oral evidence, such powers must be exercised fairly and without coercion when taxpayers are cooperating in the investigation. The Court noted that the petitioners had already filed their written replies and expressed readiness to participate in the inquiry. It directed the petitioners to appear before the DGGI, Raipur on 28 October 2025 for recording statements and to comply with subsequent summons as required.

LAXMI MOTORS vs STATEOF M.P CITATION : 2025 TAXSCAN (HC) 2111

The Madhya Pradesh High Court addressed the issue of computation of limitation for filing an appeal under Section 107 of the Central Goods and Services Tax Act, 2017, holding that an appeal filed within the statutory period cannot be dismissed as time-barred.The case arose from a writ petition filed by Laxmi Motors challenging the order of the Appellate Authority and Joint Commissioner, State Taxes, Satna Division, which had dismissed the petitioner’s appeal as being filed two days late against a penalty order dated 26 July 2024.

The Division Bench comprising Justice Vivek Agarwal and Justice Avanindra Kumar Singh observed that when the word “from” is used to denote the commencement of a period, the first day is to be excluded, and the limitation must be counted by calendar months rather than by days. The court held that the appeal filed by the petitioner on 25 November 2024 was well within time. Consequently, the Bench set aside the appellate authority’s order dated 13 August 2025, directed that the petitioner’s appeal be decided on merits, and imposed a cost of ₹25,000 on the State, to be recovered personally from the responsible officer.

M/s.Growlam OfficePrivateLimited vs The Commissioner of Customs CITATION : 2025 TAXSCAN (HC) 2112

The Madras High Court dealt with the issue of provisional release of imported second-hand Digital Multifunction Print & Copy Machines (MFDs) seized by Customs under the Customs Act, 1962 and the Hazardous and Other Wastes (Management and Transboundary Movement) Rules, 2016 (HOW Rules). The petition was filed by M/s Growlam Office Private Limited, challenging the Customs’ withholding and proposed forfeiture of the goods imported via Bill of Entry dated 19 September 2025.

The bench of Justice N. Anand Venkatesh held that Rule 13(2) of the HOW Rules does not require prior clearance from the Ministry of Environment, Forest and Climate Change for imports listed in Part D of Schedule III. The Court directed the Customs authorities to provisionally release the seized MFDs within four weeks, subject to requisite conditions under the Customs Act. The Court clarified that this provisional release does not prevent Customs from reversing its decision in the final adjudication through appropriate orders under the law.

L S Mills Limited vsUnion ofIndia CITATION : 2025 TAXSCAN (HC) 2113

The Madras High Court addressed the issue of levy of Integrated Goods and Services Tax (IGST) on ocean freight under CIF (Cost, Insurance, and Freight) contracts. The petitioner, L S Mills Limited, challenged the validity of Sl.No.10 of Notification No.10/2017-Integrated Tax (Rate) and Sl.No.9(ii) of Notification No.8/2017-Integrated Tax (Rate) dated 28 June 2017, as well as the consequential Show Cause Notice No.04/2021-GST dated 15 December 2021, contending that the imposition of IGST on ocean freight under the reverse charge mechanism was ultra vires Sections 1, 5(3), and 7(4) of the IGST Act, 2017 and violated Articles 245 and 269A of the Constitution.

The Division Bench comprising Dr. Justice Anita Sumanth and Justice C. Kumarappan held that the levy of IGST on ocean freight was unsustainable in law, reaffirming the principle that CIF imports constitute a composite supply of goods, transportation, and insurance, and separate taxation of the freight component violates Section 8 of the CGST Act. The Court quashed the show cause notice dated 15 December 2021 and declared the impugned notifications null and void, allowing the writ petition. The Bench emphasized that the Supreme Court’s ruling in Mohit Minerals settled the matter, ensuring consistency in GST interpretation and protecting importers from unlawful double taxation, with no costs awarded and connected petitions disposed of.

BINU VINCENT vs THEFEDERAL BANKLTD CITATION : 2025 TAXSCAN (HC) 2114

The Kerala High Court addressed the legal issue of whether the limitation period prescribed under Rule 68B of the Second Schedule to the Income Tax Act, 1961 applies to recovery proceedings initiated under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (RDDB Act). The petitioners, who had defaulted on loans from Federal Bank, challenged a sale conducted pursuant to a Recovery Certificate issued by the Debt Recovery Tribunal (DRT), claiming that the sale was barred by the three-year limitation under Rule 68B. The Court examined the scope and applicability of Rule 68B in the context of RDDB Act proceedings and clarified that the rule, which regulates timelines in tax recovery, does not govern recovery actions by banks, as the RDDB Act operates under a distinct framework to facilitate expeditious debt recovery.

The Bench of Justice Mohammed Nias C.P held that the RDDB Act is a self-contained code and that Rule 68B’s timelines cannot be imported into its recovery mechanism. The Court emphasized that the procedural adaptations from the Income Tax Act under Section 29 of the RDDB Act are only to the extent necessary and do not impose substantive limitations on debt recovery.

APOLLO TYRES LTD vs THEASSISTANT COMMISSIONER OF INCOME TAX CITATION : 2025 TAXSCAN (HC) 2115

The Kerala High Court addressed the legal issue of whether the non-filing of Form 3CL by an assessee could be treated as suppression of material facts to justify reopening an assessment under Section 147 of the Income Tax Act, 1961. The case involved Apollo Tyres Ltd., which challenged the Income Tax Appellate Tribunal’s order upholding the reopening of its assessment for the assessment year 2009-10 beyond four years on the ground that Form 3CL, issued by the Department of Scientific and Industrial Research, was not produced during the original assessment. The Court examined the scope and relevance of Form 3CL and clarified that its non-production could not constitute deliberate suppression of material facts since the form merely reported approval of an in-house R&D facility and did not certify the quantum of deduction under Section 35(2AB).

The Division Bench of Justice A. Muhamed Mustaque and Justice Harisankar V. Menon held that, prior to the 2016 amendment to Rule 6(7A), it was the assessing officer’s responsibility to determine the allowable R&D expenditure, and the non-production of Form 3CL could not be treated as concealment by the assessee.

Ankit Singh S/o ShriBanbirSingh vs State Of Chhattisgarh CITATION : 2025 TAXSCAN (HC) 2116

The Chhattisgarh High Court dealt with the legal issue of grant of regular bail in a case involving alleged fraudulent availment of Input Tax Credit (ITC) under the Chhattisgarh SGST Act, 2017, specifically under Section 132(1)(b) and (c). The case concerned a complaint against Ankit Singh, director of M/s Mahavir Moulds India Pvt. Ltd., allegedly orchestrating a cluster of companies to claim fake or ineligible ITC totaling approximately ₹23.05 crore. The Court examined whether the statutory preconditions for invoking penal provisions, such as issuance of notice, assessment of tax liability, and recovery proceedings, had been completed before arrest and detention.

The bench of Chief Justice Ramesh Sinha, granted regular bail to the petitioner, observing that no statutory tax assessment or recovery action had been initiated and the investigation had been completed. The Court noted that offences under Section 132(1) are economic in nature and compoundable, and that continued detention served no useful purpose. The bail was allowed on a personal bond of ₹1,00,000, to remain in force until the final disposal of the case, without commenting on the merits of the allegations.

M/s.Maruti Enterprisesvs TheCommissioner of Customs (Chennai II) Import CITATION : 2025 TAXSCAN (HC) 2117

The Madras High Court addressed the legal issue concerning the import of used Digital Multifunction Print & Copy Machines (MFDs) under Part D of Schedule III of the Hazardous and Other Wastes (Management and Transboundary Movement) Rules, 2016 (HOW Rules) and the scope of Section 110A of the Customs Act, 1962. The Court clarified that the Customs cannot insist on prior clearance from the Ministry of Environment, Forest and Climate Change (MoEF) for such imports and that provisional release may be granted when the statutory requirements, including filing of documents under Schedule VIII, are complied with.

The bench of Justice N. Anand Venkatesh, directed the provisional release of 106 seized second-hand MFDs imported by M/s Maruti Enterprises, noting that the goods had been certified by a DGFT-approved Chartered Engineer and that all statutory formalities were met. The Court clarified that Rule 13(2) of the HOW Rules does not mandate prior MoEF approval. While granting provisional release, the Court clarified that this does not prevent Customs from taking appropriate action during the final adjudication under the Customs Act.

Sritharani InfraaDevelopersPvt. Ltd vs The Tax Recovery Officer CITATION : 2025 TAXSCAN (HC) 2118

The Madras High Court dealt with the legal issue concerning the continuation of attachment proceedings by a Tax Recovery Officer (TRO) under the Income Tax Act, 1961, after the subject matter had attained finality at the appellate level. The Court clarified that once the factual conclusions of an appellate authority such as the Income Tax Appellate Tribunal (ITAT) are rendered and given effect to, the TRO is obliged to lift attachment orders over the assessee’s property, and cannot sustain them merely in anticipation of further appeals.

The Division Bench of Justice Krishnan Ramasamy allowed the writ petition filed by M/s Sritharani Infraa Developers Pvt. Ltd. and directed the TRO, Central 2, Chennai, to lift the attachment within four weeks. The Court observed that once appellate orders are implemented, the TRO must amend or cancel the recovery certificate, while leaving the Department free to pursue recovery in any future proceedings if it succeeds.

VINEET POLYFAB PVT.LTD. &ANR. vs UNION OF INDIA & ORS. CITATION : 2025 TAXSCAN (HC) 2119

The Gujarat High Court addressed the legal issue of mandatory payment of interest on delayed GST refunds under Section 56 of the Goods and Services Tax Act, 2017. The Court clarified that when a refund of Integrated Goods and Services Tax (IGST) is delayed beyond sixty days from the date it becomes due, interest becomes automatically payable to the taxpayer. The case arose from a special civil application filed by Vineet Polyfab Pvt. Ltd., an exporter of polyester drawn texturised yarn, whose refund of ₹7,53,469 was delayed due to a technical glitch in the Indian Customs Electronic Data Interchange System (ICES).

The Division Bench of Justice Bhargav D. Karia and Justice Pranav Trivedi observed that the delay was attributable to administrative errors and not the petitioner. The Court held that the interest provision is compensatory and mandatory. The Bench directed the GST authorities to pay the interest on the delayed refund within twelve weeks from the date of receipt of the order.

DHIRGHAT HARDWARESTORES vs THE UNION OF INDIA CITATION : 2025 TAXSCAN (HC) 2120

The Gauhati High Court dealt with the issue of dropping GST registration cancellation proceedings under Section 29(2)(c) of the Central Goods and Services Tax Act, 2017. The case arose from a writ petition filed by Dhirghat Hardware Stores, challenging the cancellation of its GST registration for failure to file returns for six consecutive months. The Court considered whether a proper officer is obliged to reconsider cancellation proceedings if the taxpayer subsequently files all pending returns and pays the outstanding tax, interest, and late fees, as contemplated under the proviso to Rule 22(4) of the CGST Rules, 2017.

The bench of Justice Sanjay Kumar Medhi held that the proper officer must consider dropping the cancellation proceedings once the taxpayer complies with all pending obligations. The Court emphasized that cancellation has serious civil consequences and directed that the officer should process the taxpayer’s application for restoration by passing an order in Form GST REG-20. The petitioner was directed to approach the concerned authority within two months, and the writ petition was accordingly disposed of.

AXIS BANK LIMITED vsNATIONAL COMMISSION FOR SCHEDULED TRIBES & ORS CITATION : 2025 TAXSCAN (HC) 2121

The Delhi High Court addressed the legal issue of whether the Scheduled Castes and Scheduled Tribes (Prevention of Atrocities) Act, 1989 (SC/ST Act) can be invoked to obstruct a bank’s lawful exercise of security interest under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act). The case arose from a writ petition filed by Axis Bank challenging summons issued by the National Commission for Scheduled Tribes (NCST) to the Bank’s senior officers, following disputes over possession of a mortgaged property in Vasai, Thane.

A bench of Justice Sachin Datta stayed the NCST summons dated 29 July 2025 and 6 October 2025, observing that prima facie, Sections 3(1)(f) and (g) of the SC/ST Act were not attracted and could not prevent the exercise of the bank’s mortgage rights. The Court noted that the NCST lacked rationale and jurisdiction to summon the bank’s MD and CEO. The proceedings were stayed pending further orders, ensuring that Axis Bank could lawfully exercise its security interest without undue interference.

gannath CashewProcessing Unit vs Registrar, Debts Recovery Appellate Tribunal CITATION : 2025 TAXSCAN (HC) 2122

The Orissa High Court dealt with the legal issue of the validity of a bank’s auction conducted under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act), where the petitioners claimed the auction was illegal due to a purported status quo order and undervaluation of the mortgaged property. The writ petition was filed by Jagannath Cashew Processing Unit and its guarantor, challenging the DRAT, Kolkata’s order dated 15 November 2019, which had upheld the auction sale of the mortgaged property by State Bank of India following default on a cash credit facility.

The Division Bench of Justice S.K. Sahoo and Justice Sibo Sankar Mishra dismissed the petition, observing that the status quo order dated 12 May 2017 was never served on the bank prior to the auction, rendering that ground of attack invalid. The Court further held that the claim of undervaluation was baseless, noting the auction price of Rs. 29.04 lakhs far exceeded the Rs. 3 lakhs the guarantor had previously agreed to accept. The High Court emphasized the rights of the innocent third-party auction purchaser and upheld the DRAT’s decision, confirming the legality of the bank’s auction under the SARFAESI Act.

M/S LYTEBRICK BUILD LLPvsAUTHORIZED OFFICER OF BANK OF INDIA & ANR CITATION : 2025 TAXSCAN (HC) 2123

The Gujarat High Court addressed the issue of interim relief under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act), emphasizing that courts will not provide “breathing time” to litigants who fail to diligently pursue their remedies. The matter arose from a Special Civil Application filed by M/s Lytebrick Build LLP, seeking to restrain the Bank of India from taking physical possession of its properties pending an appeal before the Debt Recovery Appellate Tribunal (DRAT) against a DRT order dated 20 September 2025.

The Division Bench of Justice Niral R. Mehta dismissed the application, observing that while the appeal had been filed promptly, the petitioner had failed to clear procedural office objections necessary for listing the matter before the DRAT. The Court held that it would not extend indulgence to litigants “gone in slumber” after filing the appeal, stressing that the petitioner’s lack of diligence and vigilance barred any interference. Consequently, the bank was permitted to proceed with its possession and enforcement actions under the SARFAESI Act.

Juan Global Trading vsThePrincipal Commissioner of Customs CITATION : 2025 TAXSCAN (HC) 2124

The Madras High Court recently dealt with the question of whether goods merely transshipping through an Indian port constitute an “import” under Section 2(23) of the Customs Act, 1962. The matter arose from a writ petition filed by Juan Global Trading, seeking a direction to the Principal Commissioner of Customs, Mundra, to detain copper scrap goods en route from Georgia to UAE, alleging fraud by the supplier. The petitioner sought a mandamus to protect its alleged ownership rights over the goods.

The bench of Justice G.R. Swaminathan dismissed the petition, noting that the goods were merely in transit and not being “imported” into India. The Court emphasized that it lacked territorial jurisdiction as the goods were located in Gujarat while the petition was filed before the Madurai Bench. Relying on Section 54 (transhipment provisions) and the definition of “import” under Section 2(23), the Court held that a writ of mandamus could not be issued against Customs in this scenario. However, the petitioner was granted liberty to approach appropriate forums under admiralty law for relief.

M/S. MIDSEAINTERNATIONALPRIVATE LIMITED vs THE UNION OF INDIA CITATION : 2025 TAXSCAN (HC) 2125

The Andhra Pradesh High Court addressed the issue of expeditious disposal of show-cause notices issued by the Directorate of Revenue Intelligence (DRI) under the Customs Act, 1962, particularly in cases involving perishable goods. The matter arose from a writ petition filed by M/s Midsea International Private Limited, an importer of “Broken Cashew Nut Pieces and Residues” from Vietnam for cattle feed, whose consignment was detained by DRI after customs clearance. The petitioner challenged the detention as arbitrary and violative of their right to trade under Article 19(1)(g) of the Constitution.

The Division Bench of Justice Battu Devanand and Justice A. Hari Haranadha Sarma disposed of the petition by directing the petitioner to submit an explanation to the show-cause notice dated 19.09.2025 promptly, without waiting for the full statutory period. The Court further directed the Joint/Additional Commissioner of Customs, Kakinada, to consider the explanation and pass an appropriate order within two weeks, after affording a reasonable opportunity of hearing, emphasizing the need for a timely decision given the perishable nature of the goods.

M/s HidayatullahNational LawUniversity vs National Faceless Assessment Center CITATION : 2025 TAXSCAN (HC) 2126

The Chhattisgarh High Court addressed a procedural violation under the Income Tax Act, 1961, holding that an appellate order passed by the CIT(A) without affording a personal hearing or communicating the order to the assessee was unsustainable. The matter arose from an appeal filed by M/s Hidayatullah National Law University under Section 250(1) against an assessment order. Despite repeated requests for a hearing, the CIT(A) passed the order ex parte nearly six years after the appeal was filed without intimation to the petitioner, thereby violating Sections 250(1), 250(2), and 250(7) and the principles of natural justice.

The bench of Justice Arvind Kumar Verma quashed the ex parte appellate order, emphasizing that procedural compliance under Section 250 is mandatory and delays beyond a reasonable period, as contemplated under Section 250(6A), cannot be condoned without justification. The Court remanded the matter to the CIT(A) with directions to grant the petitioner a proper opportunity of personal hearing and to pass a reasoned order in accordance with law within a stipulated timeframe. The Court further clarified that the existence of alternative remedies, such as appeal before the ITAT or rectification under Section 154, does not bar the exercise of writ jurisdiction when natural justice is violated.

Confiscation of 699.310 Grams of Gold Valued at Rs. 27.90 Lakh: Gauhati HC Rules Customs Appeal Not Maintainable as Value Below Rs. 1 Crore

COMMISSIONER OF CUSTOMSvs SHRIPRAHLAD KUMAR DAS CITATION : 2025 TAXSCAN (HC) 2127

The Gauhati High Court dealt with the issue of whether the Customs Department could file an appeal in a gold confiscation case under the Customs Act, 1962, where the value of the seized goods was below Rs. 1 crore. The case concerned 699.310 grams of gold, valued at approximately Rs. 27.90 lakh, which had been confiscated and a penalty imposed under Section 110 of the Customs Act. The legal question revolved around the applicability of the Ministry of Finance’s Standing Instruction dated 22.08.2019, which bars appeals in High Courts by the Customs Department for cases involving goods valued at less than Rs. 1 crore.

The Division Bench comprising Justice Michael Zothankhuma and Justice Mitali Thakuria, who applied their previous rulings, including Cus.Ref. 3/2024, to hold that the appeal was not maintainable. The Court observed that the gold did not meet the statutory conditions for confiscation, and the value being below the Rs. 1 crore threshold precluded the Customs Department from approaching the High Court. Accordingly, the Bench dismissed the appeal, upholding the Tribunal’s order that had set aside the confiscation and penalty.

Chhattisgarh HC dismisses Chaitanya Baghel's Plea against ED Arrest in Money Laundering Case

Chaitanya Baghel vsDirectorateof Enforcement CITATION : 2025 TAXSCAN (HC) 2128

The Chhattisgarh High Court addressed the legality of the arrest of Chaitanya Baghel, son of the former Chief Minister of Chhattisgarh, in connection with a money laundering case under the Prevention of Money Laundering Act, 2002 (PMLA) relating to the Liquor Scam. The petitioner challenged his arrest by the Enforcement Directorate (ED), contending that there was no necessity for arrest, no summons under Section 50 of the PMLA were issued despite a three-year investigation, and that the grounds of arrest were mechanical and procedurally flawed.

The bench of Justice Arvind Kumar Verma, who distinguished between procedural irregularities and illegality. The Court held that the ED had complied with mandatory requirements under Section 19 of PMLA, including recording reasons to believe and furnishing written grounds for the arrest. Observing that the issues raised were more suitable for a bail application than a writ petition, the Court dismissed the petition while granting liberty to the petitioner to approach the trial court for appropriate relief.

M/S Dabur India Ltd vsUnion OfIndia And 5 Others CITATION : 2025 TAXSCAN (HC) 2129

The Allahabad High Court recently addressed a dispute involving Dabur India Ltd. concerning the classification and applicable GST rate on “Hajmola Candy,” in a matter where the tax authorities had issued a show-cause notice under the GST regime demanding ₹110 crore.

The Division Bench comprising Justice Saumitra Dayal Singh and Justice Indrajeet Shukla, observed that the issues raised required consideration of limitation and judicial discipline. The Court granted four weeks to the respondents to file a counter affidavit and allowed two weeks thereafter for the petitioner’s rejoinder. Pending further hearing, the High Court stayed all proceedings arising from the impugned show-cause notice.

COMMISSIONER OF CUSTOMSvsPRIMUS LOGISTICS PVT. LTD CITATION : 2025 TAXSCAN (HC) 2130

The High Court of Delhi examined the legality of proceedings under the Customs Act, 1962 in a Customs Broker Licence revocation matter involving Primus Logistics Pvt. Ltd. The dispute arose from an appeal filed by the Revenue under Section 130G of the Act, challenging a CESTAT order which had set aside the revocation of licence and penalty imposed under the Customs Brokers Licensing Regulations, 2018. The core legal issue before the High Court concerned whether the Show Cause Notice dated 9 August 2023 issued for alleged violations of Regulations 10(a), 10(d), 10(e) and 10(n) was vague and failed to specify the precise charges against the customs broker.

The Division Bench of Justice Prathiba M. Singh and Justice Shail Jain found that the CESTAT had set aside the Order-in-Original dated 29 January 2024 without adjudicating the matter on merits. Holding that such an approach was unsustainable, the High Court set aside the Tribunal’s order and remanded the matter to the CESTAT for fresh consideration, directing that the proceedings be concluded by 15 December 2025. The appeal was disposed of along with all pending applications.

Faiz Ahmed vs The Stateof AP CITATION : 2025 TAXSCAN (HC) 2131

The Gauhati High Court considered the legality of arrest proceedings in a major GST fraud case involving alleged fake Input Tax Credit (ITC) worth ₹199.31 crores. The present petition for anticipatory bail was filed by applicant-assessee Faiz Ahmed in connection with Itanagar P.S. Case No. 182/2024, registered for offences under Sections 120B, 420, 467, 468, 471, 473, and 474 of the Indian Penal Code. The case stems from allegations that a fictitious entity, M/s Siddhi Vinayak Trade Merchants, fraudulently secured a GST registration using forged documents and issued fake invoices amounting to ₹658.88 crores to pass on wrongful ITC benefit.

The Single Bench of Justice Kardak Ete noted that the applicant had fully cooperated with the investigation, had no prior criminal record, and his statement under Section 180 of the Bharatiya Nagarik Suraksha Sanhita, 2023 was corroborated by bank transactions and WhatsApp communications. Observing that custodial interrogation was not required and that interim bail had already been granted, the Court made the interim protection absolute and allowed the anticipatory bail application, while disposing of all pending matters.

Nurul Hasan Khan vsUnion ofIndia CITATION : 2025 TAXSCAN (HC) 2132

The Patna High Court adjudicated on the legality of pre-trial disposal and auction of a vehicle seized in connection with a narcotics case, specifically concerning compliance with Section 60(3) of the Narcotic Drugs and Psychotropic Substances (NDPS) Act, 1985, which governs confiscation of conveyances alleged to be used for transporting contraband. The case related to the petitioner’s crane, seized by the Directorate of Revenue Intelligence (DRI) after ganja was recovered from a Bolero pickup van it was towing, despite investigation findings that neither the owner nor his employees had knowledge of the contraband.

The Single Bench of Justice Sandeep Kumar held that the crane was auctioned in complete violation of due process, as no notice or opportunity of hearing was provided to the petitioner before the order for disposal was passed. Noting that the petitioner was not an accused and the DRI itself admitted the absence of his involvement in the offence, the Court declared the Special Court’s order unsustainable. Since the auction could not be reversed, the Court directed compensation of ₹3,00,000 along with 8% interest from the date of seizure and imposed costs of ₹1,00,000 on the authorities for arbitrary action.

M/S ANJANI TECHNOPLASTLTD vsTHE PRINCIPAL COMMISSIONER OF CUSTOMS CITATION : 2025 TAXSCAN (HC) 2133

The Delhi High Court was called upon to decide whether a customs demand for non-fulfilment of export obligations under the Advance Authorization Scheme could survive once the Directorate General of Foreign Trade (DGFT) confirmed compliance through a redemption certificate. The issue arose under the Foreign Trade Policy and the Customs Act, relating to an Order-in-Original dated 10 October 2014 that had confirmed a demand of ₹5.96 crore against Anjani Technoplast Ltd. for alleged failure to fulfil export obligations after importing goods duty-free under Advance Authorization.

The Division Bench comprising Justice Prathiba M. Singh and Justice Shail Jain observed that subsequent developments including extension of the export obligation period to 133 months by the Policy Relaxation Committee and DGFT’s certificate dated 9 March 2022 confirming full discharge of obligations rendered the demand unsustainable. The Court set aside the Order-in-Original, noting that the basis for recovery no longer existed, and directed refund of any pre-deposit within two months. Both the appeal (CUSAA 178/2022) and the writ petition (W.P.(C) 4339/2024), along with pending applications, were accordingly disposed of.

Gauhati HC Grants Bail to Businessman Accused of ₹3 Crore GST Credit Misuse After 15 Days in Judicial Custody

UJJAWAL KUMAR AGARWALvs THE STATE OF ASSAM AND 2 ORS CITATION : 2025 TAXSCAN (HC) 2134

The Gauhati High Court considered the legality and necessity of continued detention under Section 132(5) of the Assam Goods and Services Tax Act, 2017 in a case concerning alleged wrongful availment of Input Tax Credit (ITC) worth approximately ₹3 crore. The primary issue was whether the alleged offence, being below the ₹5 crore threshold and largely documentary in nature, required further custodial interrogation of the accused, Ujjawal Kumar Agarwal, proprietor of BKS Enterprises.

The single judge bench of Justice N. Unni Krishnan Nair granted regular bail, noting that the petitioner had already been in custody since 8 October 2025 and that no substantial justification was provided for his continued detention. Finding that the allegations were document-based and custodial interrogation was not necessary, the Court ordered release on a bail bond of ₹25,000 with conditions to cooperate with the investigation, refrain from influencing witnesses, and not leave the jurisdiction without permission. The bail application was accordingly disposed of.

M/S Rupam Jewelleryrep. byBikash Ranjan Kamilya vs The Union of India and Others CITATION : 2025 TAXSCAN (HC) 2135

The Calcutta High Court examined the maintainability of a writ petition filed against reassessment proceedings initiated under Sections 147 and 148 of the Income Tax Act, 1961 for the assessment year 2005-06. The key legal issue was whether a writ petition challenging a reassessment notice could survive once a final assessment order had already been passed, especially when questions of fact existed and an alternative statutory remedy was available under the Act.

The single judge bench of Justice Ajay Kumar Gupta held that the writ petition had become infructuous as the Department had already passed the final assessment order dated 31 December 2009 assessing taxable income at ₹38,46,690. The Court refused to interfere under its writ jurisdiction, emphasizing that disputed factual issues and availability of appellate remedies precluded such intervention. While dismissing the writ petition, the Court clarified that the petitioner remained free to challenge the final assessment order before the appropriate appellate authority, which must decide the matter independently and in accordance with law.

ARCELORMITTAL NIPPONSTEEL INDIALIMITED vs NATIONAL COMPANY LAW TRIBUNAL CITATION : 2025 TAXSCAN (HC) 2136

The Gujarat High Court examined the legal issue concerning the scope of administrative powers vested in the President of the National Company Law Tribunal (NCLT) under the NCLT Rules, 2016 specifically Rules 16 and 62. The primary question before the Court was whether the President of the NCLT could alter or extend the territorial jurisdiction of a particular Bench to entertain matters arising from another jurisdiction, particularly in an ongoing insolvency dispute involving ArcelorMittal Nippon Steel India Ltd.

The single judge bench of Justice Niral R. Mehta held that the President’s authority is confined to transfers within the same territorial jurisdiction and does not permit expanding the jurisdictional boundaries of a Bench. The Court found that the recusal orders by the Ahmedabad Bench and subsequent administrative transfer of the matters to the Mumbai Bench were legally unsustainable and influenced by extraneous factors. Consequently, the High Court quashed the recusal and transfer orders and directed that the matters be heard by a duly constituted Ahmedabad NCLT Bench or virtually to ensure prompt adjudication.

M/s.Unik Traders vsTheCommissioner of Customs CITATION : 2025 TAXSCAN (HC) 2137

The Madras High Court dealt with the legal issue concerning the proper classification of imported areca nuts under the Customs Tariff Act, specifically whether consignments with moisture content below 10% should be treated as “roasted areca nuts.” In the writ petition filed under Article 226 of the Constitution of India, the petitioner, M/s. Unik Traders, challenged the detention of 19 consignments by Customs authorities on allegations of mis-declaration. The petitioner relied upon a binding precedent affirmed by the Supreme Court, which held that areca nuts with less than 10% moisture content must be classified as roasted, and argued that the Customs Department had no authority to contradict the certification issued by FSSAI.

The single judge bench comprising Justice N. Anand Venkatesh directed the provisional release of 17 of the 19 consignments after observing that the Central Revenues Control Laboratory (CRCL) report itself reflected moisture levels below 10% in most cases, thereby attracting the earlier binding ruling. The Court rejected the Customs’ reliance on an unenforceable Notification and the CRCL’s fresh categorization, holding that the goods were perishable and similarly situated consignments had already been cleared. The Court ordered release subject to payment of declared duty and execution of a bond for the differential duty of ₹2,24,33,60,198/-, leaving the final adjudication to the Customs authorities.

SREI Equipment FinanceLimited vs Rajesh Bajirao Khandewar CITATION : 2025 TAXSCAN (HC) 2138

The Bombay High Court adjudicated a writ petition concerning the bar on continuation of legal proceedings during Corporate Insolvency Resolution Process (CIRP) under Section 14 of the Insolvency and Bankruptcy Code, 2016. The case arose from the initiation of consumer proceedings and consequential recovery action by the District Consumer Dispute Redressal Commission, Akola, against Srei Equipment Finance Limited despite the imposition of a statutory moratorium after commencement of CIRP. The central legal issue before the Court was whether the Consumer Commission’s order, which directed the return of a JCB machine against payment of dues, along with enforcement steps including bailable warrants, could legally continue in view of the IBC moratorium and the later approval of the resolution plan by the NCLT under Section 31 of the Code.

A Single Bench of Justice M.M. Nerlikar held that the Consumer Commission’s actions were in contravention of Sections 14 and 31 of the IBC, observing that the direction for return of the machine amounted to enforcement of a monetary claim and therefore constituted proceedings against the corporate debtor's property. The Court ruled that such proceedings could not survive the moratorium and declared the actions taken by the Consumer Commission, including the order dated 20.07.2022 and subsequent recovery measures, as “non-est in law.” Accordingly, the High Court quashed the Consumer Commission’s order and all enforcement action including issued bailable warrants, thereby upholding the paramountcy of the insolvency framework during CIRP.

M/s. NationalAssociation ofContainer Freight Stations vs The Joint Commissioner of Customs CITATION : 2025 TAXSCAN (HC) 2139

The Madras High Court examined the legality of a Public Notice issued by the Customs Department that directed Container Freight Stations (CFS) not to levy Goods and Services Tax (GST) on the auction of uncleared cargo under Section 48 of the Customs Act, 1962. The dispute centered on whether the Customs authorities had the jurisdiction to issue directions pertaining to the levy and collection of GST, a tax governed by the Central Goods and Services Tax Act, 2017, including Sections 3, 7(1) and 9(1) relating to the levy of IGST and GST on supply.

The Single Bench of Justice N. Anand Venkatesh held that the Public Notice was issued without jurisdiction, noting that customs-related communications cannot extend to clarifying or regulating tax obligations under the CGST Act. The Court distinguished between IGST payable upon import and GST payable upon subsequent supply through auction, emphasizing that CFSs act as suppliers in such transactions. Finding the Public Notice inconsistent even with the CBIC circular relied upon by the respondents and contrary to provisions of both the Customs Act and the CGST Act, the Court quashed the Public Notice dated 12.02.2021 and the consequential notice dated 22.12.2021, allowing the writ petitions with no order as to costs.

LILIAN NYAMBURA vs AIRCUSTOMS CITATION : 2025 TAXSCAN (HC) 2140

The Delhi High Court refused to grant bail to Lilian Nyambura, a Kenyan national accused of smuggling 789 grams of cocaine, which constitutes a commercial quantity under the Narcotic Drugs and Psychotropic Substances Act, 1985. The petitioner was intercepted at the Indira Gandhi International Airport, where she admitted to having ingested narcotic capsules and later excreted them, leading to her arrest on 06.01.2024 for offences under Sections 8/21/23 of the NDPS Act. The defence argued procedural lapses, including alleged non-compliance with Sections 103 and 50 of the Customs Act, 1962, and Section 52A of the NDPS Act, seeking her release on bail owing to extended custody.

The Single Bench of Justice Amit Mahajan, relying on Section 37 of the NDPS Act, held that bail in cases involving commercial quantities can only be granted where both twin statutory conditions are satisfied that the accused is prima facie not guilty and is unlikely to commit any offence while on bail. The Court observed that the concealment of contraband through ingestion showed conscious possession and that prolonged custody alone could not relax the statutory embargo. Stating that alleged procedural irregularities are triable issues, the Court dismissed the bail application, emphasizing the seriousness of the allegations and the legislative intent to curb narcotics offences, while clarifying that observations made would not prejudice the trial.

BUCKEYE TRUST vsREGISTRARHON’BLE ITAT CITATION : 2025 TAXSCAN (HC) 2141

The High Court of Karnataka at Bengaluru has disposed of a writ petition filed by Buckeye Trust, which had challenged the continuation of proceedings before the Income Tax Appellate Tribunal (ITAT) on grounds of apprehended bias. The Trust alleged that an earlier ITAT order—since recalled—appeared to be “artificial intelligence driven,” and expressed concern that the same Judicial Member, who had recused himself, was inclined to hear the matter again. Arguing through counsel Sri A. Mahesh Chowdhary, the petitioner sought a deferment of proceedings in ITA No. 1051/2024 pending a decision on its transfer application, citing the foundational principle that justice must also appear to be done.

The Single Bench of Justice M. Nagaprasanna noted that, pursuant to the Court’s interim direction dated 19 August 2025, the ITAT President had administratively reassigned the matter to a different Bench. Since the grievance no longer survived, the petitioner submitted that the writ petition be closed while reserving liberty to seek appropriate remedies if required in future. Observing that the relief sought stood satisfied and no further interference under Articles 226 and 227 of the Constitution was warranted, the Court disposed of the writ petition as infructuous, acknowledging the administrative steps taken by the Tribunal.

M/S Viable VenturePrivateLimited vs State of U.P. and Another CITATION : 2025 TAXSCAN (HC) 2142

The Allahabad High Court granted interim protection against coercive proceedings under the Uttar Pradesh Goods and Services Tax Act, 2017 (UPGST Act), holding that a lease agreement executed before the GST regime prima facie could not attract GST liability. The issue arose in Writ Tax No. 4870 of 2025 filed by Viable Venture Pvt. Ltd., which challenged a notice dated 04.03.2025 issued by the State GST authorities. The petitioner argued that the lease deed, executed on 07.06.2017, predated the enforcement of the UPGST Act and therefore could not be subjected to retrospective taxation.

The Division Bench of Justice Saumitra Dayal Singh and Justice Indrajeet Shukla noted that a similar question concerning pre-GST leases was already pending consideration in Srigarv Infratech Pvt. Ltd. v. State of UP. Granting time for the State to file its counter affidavit, the Court directed that the present writ be listed along with that matter and stayed further proceedings pursuant to the impugned notice until further orders. By extending interim relief, the High Court safeguarded the petitioner from GST recovery actions in relation to the pre-GST lease transaction, underscoring judicial scrutiny of retrospective implications under the GST regime.

Riswana Begam vs TheSeniorIntelligence Officer CITATION : 2025 TAXSCAN (HC) 2143

The Madurai Bench of the Madras High Court considered a bail application in a gold smuggling case registered under Section 135 of the Customs Act, 1962, relating to the alleged illegal import of gold valued at ₹2.58 crore. The petitioners, Riswana Begam and Mohammed Nabeen, were arrested on 23.09.2025 for allegedly smuggling 2299.920 grams of gold from Singapore to Madurai via Colombo and had been in judicial custody since their arrest. They sought release on the ground of prolonged incarceration and willingness to comply with bail conditions.

The single judge bench of Justice S. Srimathy, considering the duration of custody and the circumstances of the case, granted bail subject to strict conditions. These included execution of a ₹10,000 bond with two sureties, surrendering of passports, daily reporting to DRI at 10:30 a.m. for four weeks, and a prohibition on leaving India without prior approval. The Court also directed verification of sureties and cautioned the petitioners against absconding or tampering with evidence, thereby balancing personal liberty with the interests of investigation

KMG Wires PrivateLimited vs TheNational Faceless Assessment Centre CITATION : 2025 TAXSCAN (HC) 2144

The Bombay High Court examined the legality of an income tax assessment passed under Section 143(3) read with Section 144B of the Income Tax Act, 1961, in a case highlighting improper reliance on Artificial Intelligence (AI) during tax adjudication. The writ petition filed by KMG Wires Pvt. Ltd. challenged the assessment for AY 2023-24, alleging breach of the principles of natural justice after the National Faceless Assessment Centre ignored crucial evidence and relied on nonexistent judicial precedents, thereby making additions without due opportunity.

The Division Bench of Justice B.P. Colabawalla and Justice Amit S. Jamsandekar found the order to be passed in gross violation of natural justice, criticizing the blind reliance on AI-generated case law and failure to consider the supplier’s reply to a Section 133(6) notice. The Court set aside the assessment order, the consequential demand under Section 156, and the penalty show cause under Section 274 read with Section 271AAC, and remanded the matter to the Assessing Officer for fresh adjudication. The AO was directed to issue a proper show-cause notice, ensure a meaningful opportunity of hearing, and pass a speaking order by 31 December 2025, without being influenced by the earlier decision.

M/S WELCUT INDUSTRIESvsCOMMISSIONER CITATION : 2025 TAXSCAN (HC) 2145

The Delhi High Court examined whether recovery proceedings could be initiated against a taxpayer in the absence of a functional Goods and Services Tax Appellate Tribunal (GSTAT), particularly when the taxpayer was willing to comply with the mandatory pre-deposit requirement under Section 112(8) of the Central Goods and Services Tax Act, 2017. The matter arose from a petition filed by M/s Welcut Industries, which challenged an Order-in-Appeal confirming a demand of ₹27,000, arguing that the appellate remedy under Section 112 was not effectively available due to the non-operational status of the GSTAT.

The Division Bench comprising Justice Prathiba M. Singh and Justice Shail Jain held that no recovery action can proceed when the statutory appellate forum is unavailable, provided the taxpayer deposits the requisite pre-deposit amount. The Court directed the petitioner to deposit 10% of the disputed demand by 15 November 2025, after which recovery of the remaining demand would remain stayed until the GSTAT becomes functional. It was further clarified that the deposited amount shall be treated as the statutory pre-deposit for the appeal once the Tribunal starts functioning, and the writ petition was accordingly disposed of with the stay continuing subject to compliance.

GEOFIN COMTRADE LIMITEDvsASSTT. CIT CITATION : 2025 TAXSCAN (HC) 2146

The Kerala High Court addressed the issue of whether an assessee is required to close individual debtor accounts in order to claim a deduction for bad debts under Section 36(1)(vii) of the Income Tax Act, 1961. The appeals were filed by Geofin Comtrade Limited challenging the disallowance of bad debt deductions upheld by the Income Tax Appellate Tribunal (ITAT), Cochin Bench, for AYs 2013-14 and 2014-15. The ITAT had taken the view that unless each debtor’s account was individually closed, the write-off could not be regarded as complete for the purpose of Section 36(1)(vii).

The Division Bench comprising Justice A. Muhamed Mustaque and Justice Harisankar V. Menon held that closing individual debtor accounts is not a statutory requirement for claiming bad debt deduction, reaffirming the legal position laid down by the Supreme Court in Vijaya Bank v. CIT (2010). The Court observed that the department’s apprehension of possible double deduction is addressed by Section 41(4), which mandates taxation of any subsequent recovery. Accordingly, the ITAT’s ruling was set aside, and the matter was remanded to the Assessing Officer for fresh examination based on the correct legal principles, thereby allowing the appeals.

M/S. RANI ENTERPRISESvsPRINCIPAL COMMISSIONER OF CUSTOMS CITATION : 2025 TAXSCAN (HC) 2147

The Delhi High Court dealt with a challenge to the jurisdiction of officers of the Directorate of Revenue Intelligence (DRI) to act as “proper officers” under the Customs Act, 1962, in relation to the issuance of a Show Cause Notice under Section 28. The writ petition under Article 226 of the Constitution of India was filed by Rani Enterprises, contesting the seizure of goods and the SCN dated 25 October 2021 issued by the DRI, Lucknow Zonal Unit, on the ground that DRI officials lack jurisdiction as per the initial Supreme Court ruling in Canon India Pvt. Ltd. v. Commissioner of Customs (Canon-I).

The Division Bench comprising Justice Prathiba M. Singh and Justice Rajneesh Kumar Gupta observed that the petitioner’s reliance on Canon-I was misplaced because the Supreme Court, in its review decision Commissioner of Customs v. Canon India Pvt. Ltd. (Canon-II), has already clarified that DRI and similarly placed preventive officers are competent “proper officers” to issue notices under Section 28 of the Customs Act. Holding that the jurisdictional objection no longer survives, the Court disposed of the writ petition, permitting the show cause proceedings against the petitioner to continue in accordance with law.

Union of India vsM/s.IndraIndustries CITATION : 2025 TAXSCAN (HC) 2148

The Madras High Court adjudicated multiple petitions filed under Section 34 of the Arbitration and Conciliation Act, 1996, concerning the applicability of the Statutory Variation Clause (SVC) in contracts, in light of the statutory increase in GST rates from 5% to 12% on the final product. The litigation arose between Integral Coach Factory (ICF) and various contractors, including Indira Industries, over whether the contractors were entitled to reimbursement of the increased tax or whether additional Input Tax Credit (ITC) benefits neutralized the tax burden as argued by ICF.

The single bench of Justice Abdul Quddhose upheld the arbitral awards that favored the contractors, holding that the SVC under Clause 3.0 of the Purchase Orders clearly required reimbursement of statutory tax increases, and that the General Conditions of Contract (Clauses 2.8 and 2.9) were not attracted in the absence of proof of additional ITC benefits. The Court dismissed ICF’s petitions and recognized the arbitral view as a legally sustainable one, while setting aside the solitary conflicting award (Arb.O.P. No. 128 of 2024) for misapplication of contractual terms. The contractor in that case was granted liberty to initiate fresh arbitration, thereby resolving the conflict in favour of consistent application of the SVC.

M/S. LOTUSPHARMACEUTICALS vsTHE ASSISTANT STATE TAX OFFICER CITATION : 2025 TAXSCAN (HC) 2149

The Kerala High Court examined the legality of a demand imposed under the Central Goods and Services Tax Act, 2017, focusing on whether a bonafide typographical error in Form DRC-03 could invalidate a voluntary payment made to reverse wrongly availed Input Tax Credit (ITC) for the financial year 2018-19. The matter involved Section 161 of the CGST/SGST Act, which deals with rectification of mistakes apparent on the face of the record, after tax authorities rejected a rectification plea and imposed a liability of over ₹6.88 crore on Lotus Pharmaceuticals.

The single bench of Justice Bechu Kurian Thomas held that the tax department ought not to penalize a taxpayer for a clear inadvertent error, especially when the substantial voluntary payment made had no connection to the financial year mistakenly mentioned. Finding the rejection of rectification contrary to Article 265 of the Constitution, the Court set aside the impugned order and directed the Deputy Commissioner to reconsider the rectification application afresh, after granting an opportunity of hearing, within a period of three months. The writ petition was accordingly allowed.

VIKAS NARESH CHANDRAKANSAL vsSTATE OF GUJARAT & ANR CITATION : 2025 TAXSCAN (HC) 2150

The Gujarat High Court dealt with a bail application involving alleged GST evasion of ₹9.34 crore, concerning offences under Sections 132(1)(a), (b), and (c) of the Central Goods and Services Tax Act, 2017. The accused, Vikas Naresh Chandra Kansal, a partner of Universal Enterprises, sought regular bail under Section 483 of the Bharatiya Suraksha Sanhita, 2023, after being arrested by the Directorate General of GST Intelligence (DGGI). The prosecution alleged wrongful availment and non-payment of GST by Universal Enterprises and VNG Packaging Pvt. Ltd., triggering searches, seizure of documents, and eventual arrest under Section 69 of the CGST Act.

The single bench of Justice R.T. Vachhani observed that major investigation steps had already been completed, the applicant had no criminal antecedents, and there was no risk of absconding or tampering with evidence. Taking note of the applicant’s cooperation and partial deposit of dues, the Court allowed regular bail, directing his release on execution of a ₹10,000 bond with one surety, subject to conditions including surrender of passport, cooperation in investigation, and restriction on travel outside India without prior permission. The Court clarified that these observations were prima facie and that the trial court would proceed independently, uninfluenced by the bail order.