Annual Tax & Corporate Law Digest 2025: Complete Supreme Court Cases [Part V]

M/S MHJ METALTECHS PVT.LTD vsCENTRAL GOODS AND SERVICES TAX CITATION: 2025 TAXSCAN (SC) 311

The Supreme Court addressed the legal issue concerning the interpretation of Section 75(5) of the Central Goodsand Services Tax Act, 2017 (CGST Act), specifically whether the provision mandates the grant of three personal hearings or adjournments in adjudication proceedings. The case arose from a writ petition filed by M/s MHJ Metaltechs Pvt. Ltd. before the Delhi High Court, challenging an order dated 3rd February 2025 issued by the CGST Delhi South Commissionerate alleging fraudulent availment of Input Tax Credit (ITC) amounting to ₹7.08 crore. The High Court ruled that the provision merely sets an upper limit of three adjournments and does not impose an obligation to provide all three opportunities.

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The matter was heard by a Bench comprising Justice Pankaj Mithal and Justice Prasanna B. Varale, which dismissed the Special Leave Petition (SLP) filed by the assessee and upheld the Delhi High Court’s ruling. The Supreme Court observed that there was no violation of the principles of natural justice since the taxpayer had been afforded one effective hearing and had failed to substantiate its claims. The Bench further held that there was no ground to invoke the Court’s discretionary jurisdiction under Article 136 of the Constitution of India, emphasizing that Section 75(5) operates as a ceiling on adjournments rather than a guarantee of multiple hearings. While dismissing the SLP, the Apex Court granted liberty to M/s MHJ Metaltechs Pvt. Ltd. to file an appeal under Section 107 of the CGST Act and extended the time to do so until 15th October 2025.

COMMISSIONER OF CGST& ETCvs BHARAT PETROLEUM CORPORATION LTD CITATION: 2025 TAXSCAN (SC) 312

The Supreme Court adjudicated upon the legal issue of excise duty applicability on the intermixing of petroleum products during transportation, specifically concerning the exemption granted to Superior Kerosene Oil (SKO) cleared for Public Distribution System (PDS) use. The case involved the interpretation of exemption notifications issued under the Central Excise Act, 1944, and particularly considered the scope of Section 11A(4), which pertains to the extended period of limitation in cases involving suppression or willful misstatement. The Court upheld the order of the Mumbai Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), which ruled in favor of Bharat Petroleum Corporation Ltd. (BPCL), holding that the intermixing of SKO with other fuels such as High-Speed Diesel (HSD) and Motor Spirit (MS) during pipeline transportation is an inevitable technical process and does not revoke the duty exemption originally granted to SKO.

The matter was heard by a Bench comprising Justice Aravind Kumar and Justice N.V. Anjaria affirmed the decision of the Mumbai CESTAT Bench, which was constituted by Dr. Suvendu Kumar Pati (Judicial Member) and Anil G. Shakkarwar (Technical Member). The Tribunal had relied on precedents such as State of Haryana v. Dalmia Dadri Cement Ltd. (2004) and Nizam Sugar Factory v. CCE (2008) to interpret the phrase “for use” in exemption notifications as “intended for use.” It was concluded that the intermixing of petroleum products post-clearance was both unavoidable and beyond the control of BPCL. Consequently, no excise duty liability arose from such intermixing, and there was no evidence of diversion or mala fide intent by the PSU. The Supreme Court endorsed the CESTAT’s findings, holding that there was no ground to interfere with the “detailed and well-reasoned” judgment, thereby granting full excise duty relief to BPCL.

PRINCIPAL COMMISSIONEROF CUSOMTS ACC (IMPORT) vs INTERGLOBEAVIATION LTD CITATION: 2025 TAXSCAN (SC) 313

The Supreme Court issued notice to InterGlobe Aviation Ltd., the parent company of IndiGo Airlines, in a matter involving the levy of Integrated Goods and Services Tax (IGST) on re-imported aircraft parts sent abroad for repairs. The legal issue arises from the Customs Department's challenge to a Delhi High Court judgment dated March 2024, which struck down the imposition of IGST on such re-imports. The High Court found the levy unconstitutional, holding that taxing repair services abroad and then again taxing the parts upon re-importation amounted to double taxation, in violation of established tax principles. The case also involves the validity of Notification No. 36/2021 issued by the Central Board of Indirect Taxes & Customs (CBIC), which sought to impose IGST and cess on such transactions under the Customs Act, 1962 and IGST Act, 2017.

The matter was heard by a Bench comprising Justice B.V. Nagarathna and Justice R. Mahadevan heard the Customs Department’s special leave petition against the Delhi High Court's ruling and issued notice to InterGlobe Aviation. The Delhi High Court had provided substantial relief to airlines by holding that re-imported parts sent overseas solely for repairs could not be subjected to IGST on components such as repair charges, insurance, and freight. It was concluded that the 2021 CBIC notification was not clarificatory but rather a substantive change aimed at expanding the tax base, which could not override the original exemption.

Income tax Reopening Notice Issued within Limitation: Supreme Court Refuses to Interfere with Patna HC Order Dismissing Petition

CHANDRA SHEKHAR vsPRINCIPAL COMMISSIONER OF INCOME TAX 1 & ANR. CITATION: 2025 TAXSCAN (SC) 314

The Supreme Court declined to interfere with a Patna High Court judgment that upheld the validity of a reopening notice issued under Section 148 of the Income Tax Act, 1961 for Assessment Year 2020-21, holding that it was issued within the statutory limitation period prescribed under Section 149(1)(a). The petitioner, Chandra Shekhar, had challenged the notice dated 30.04.2024, contending that it was time-barred and without jurisdiction. However, the High Court held that the relevant date for limitation was the earlier notice dated 28.03.2024 issued under Section 148A(b), which was within the permissible three-year window.

The matter was heard by a Bench comprising Justice Aravind Kumar and Justice N.V. Anjaria, which dismissed the Special Leave Petition (SLP) filed by the petitioner against the High Court’s ruling. While condoning the delay in filing, the Supreme Court found no grounds to interfere, stating that the High Court’s reasoning was sound and based on a correct interpretation of the statutory framework. The Court held that the notice under Section 148A(b) was validly issued, and the subsequent reassessment proceedings could lawfully proceed.

DEPUTY COMMISSIONER ST&ORS. vs WINGTECH MOBILE COMMUNICATIONS CITATION: 2025 TAXSCAN (SC) 315

The Supreme Court upheld the Andhra Pradesh High Court’s interpretation of Section 107 of the GST Act, ruling that once a taxpayer deposits 10% of the disputed tax while filing an appeal, tax authorities cannot attach or restrain the assessee’s funds. The case arose when Wingtech Mobile Communications challenged a recovery notice under Section 79(1)(c) of the APGST Act, issued by the Deputy Commissioner of State Tax, Tirupati, to recover ₹244.63 crore. Following provisional attachment orders in July 2025, ₹170 crore was debited from the company’s HSBC Bank account.

The Andhra Pradesh High Court Bench of Justice R. Raghunandan Rao and Justice T.C.D. Sekhar held that no provision in Section 107 permits authorities to restrain a taxpayer’s funds once the 10% pre-deposit is made. While directing a refund of the attached amount (except the pre-deposit), the Court required the petitioner to maintain the refunded funds in its account until the appeal’s resolution. The Revenue Department’s challenge to this ruling was dismissed by a Supreme Court Bench of Justice Pamidighantam Sri Narasimha and Justice Atul S. Chandurkar, which recorded the assessee’s undertaking and affirmed that no further attachment could be enforced once the statutory pre-deposit is fulfilled.

THE COMMISSIONER TRADEAND TAXDELHI vs M/S SHANTI KIRAN INDIA (P) LTD. CITATION : 2025 TAXSCAN (SC) 316

The Supreme Court under the Delhi Value Added Tax Act, 2004 (DVAT Act), has held that Input Tax Credit (ITC) cannot be denied to registered purchasing dealers merely because the selling dealer failed to deposit the Value Added Tax (VAT) collected with the government. The Court clarified that the fault lies with the defaulting selling dealer, not with a bona fide purchaser who has paid the tax in good faith against valid tax invoices. The issue arose under Section 9(2)(g) of the DVAT Act, which had earlier been interpreted by the Delhi High Court in On Quest Merchandising India Pvt. Ltd. v. Government of NCT of Delhi (2017) to ensure that genuine purchasers are not penalised for the seller’s non-compliance. The apex court examined this provision and reaffirmed the principle that denial of ITC in such bona fide cases would offend Article 14 of the Constitution.

The Bench comprising Justice Manoj Misra and Justice Nongmeikapam Kotiswar Singh, upheld the Delhi High Court’s decision, observing that the selling dealers were duly registered at the time of transactions and that there was no evidence indicating any collusion or irregularity in the invoices. Finding no reason to interfere with the High Court’s directions granting ITC to genuine purchasers, the Supreme Court dismissed the Department’s appeals in full.

THE COMMISSIONER TRADEAND TAXDELHI vs M/S SHANTI KIRAN INDIA (P) LTD CITATION : 2025 TAXSCAN (SC) 317

The Supreme Court under Section 9(2)(g) of the Delhi Value Added Tax Act, 2004 (DVAT Act) ruled concerning the eligibility of Input Tax Credit (ITC) where a selling dealer fails to deposit the tax collected with the Government. The case, Commissioner, Trade and Tax, Delhi v. Shanti Kiran India (P) Ltd., revolved around whether a bona fide purchasing dealer, who had paid tax to a registered selling dealer under valid invoices, could still claim ITC despite the selling dealer’s default in remitting the tax. The issue called for an interpretation of the statutory provision in light of constitutional protections under Article 14, as previously discussed in On Quest Merchandising India Pvt. Ltd. v. Government of NCT of Delhi (2017), where the Delhi High Court had “read down” Section 9(2)(g) to protect bona fide dealers.

A Bench comprising Justice Manoj Misra and Justice Nongmeikapam Kotiswar Singh, upheld the Delhi High Court’s interpretation and dismissed the Department’s appeals. The Court observed that the selling dealers were duly registered at the time of the transactions and that there was no material evidence suggesting collusion, fraud, or false invoicing. The Court reaffirmed that the appropriate remedy for the tax authorities lies in proceeding against the defaulting selling dealer rather than depriving the purchaser of ITC. Consequently, the Supreme Court upheld the High Court’s ruling, allowing the respondent’s ITC claims after due verification and directing the disposal of any pending applications.

DEPUTY COMMISSIONER ST& ORSvs WINGTECH MOBILE COMMUNICATIONS CITATION : 2025 TAXSCAN (SC) 318

The Supreme Court dealt with the issue of whether the GST Department can continue to attach a taxpayer’s bank accounts or restrain funds once a statutory pre-deposit of 10 percent of the disputed tax under Section 107(6) of the Andhra Pradesh Goods and Services Tax Act, 2017 has been made. The case arose from a special leave petition filed by the Deputy Commissioner of State Tax against the Andhra Pradesh High Court’s judgment in Wingtech Mobile Communications (India) Pvt. Ltd. v. Deputy Commissioner of State Tax & Ors., which had set aside recovery and attachment orders issued against the petitioner despite the statutory pre-deposit.

The Bench comprising Justice Pamidighantam Sri Narasimha and Justice Atul S. Chandurkar, which observed that once the statutory pre-deposit is made, recovery proceedings are automatically stayed, and the GST authorities cannot continue to restrain funds. The Supreme Court upheld the High Court’s directions, including the refund of excess amounts recovered from the petitioner’s bank accounts while retaining 10 percent as pre-deposit, and noted that the undertaking to maintain funds in India sufficiently protected revenue interests. The special leave petition was accordingly disposed of in favor of Wingtech Mobile Communications.

Pride Foramer S.A.vsCommissioner of Income Tax & Anr CITATION : 2025 TAXSCAN (SC) 319

The Supreme Court addressed whether a temporary lull in business activity amounts to cessation of business under the Income Tax Act, 1961, allowing a non-resident company to claim deductions. The legal issue involved Pride Foramer S.A., a French company engaged in offshore oil drilling, which sought to claim business expenditure deductions under Section 37 and carry forward unabsorbed depreciation under Section 32(2) for the period 1993-1998, when no active contract with ONGC was in operation. The Assessing Officer and the Uttarakhand High Court had denied these claims, holding that the company was not carrying on business in India during the interim period.

The Division Bench comprising Justice Manoj Misra and Justice Joymalya Bagchi, held that the absence of a permanent establishment or active contract does not imply cessation of business. The Court observed that continuous correspondence and efforts to secure contracts with ONGC demonstrated the company’s intent to carry on business in India, constituting sufficient business activity. The Supreme Court set aside the Uttarakhand High Court order, restored the ITAT’s findings, and directed the Assessing Officer to pass fresh assessment orders allowing the claimed deductions and depreciation carry-forward for the relevant assessment years.

ARHAM INFRA DEVELOPERSAOP vsUNION OF INDIA & ORS CITATION : 2025 TAXSCAN (SC) 320

The Supreme Court dealt with the legal issue of whether a Joint Development Agreement (JDA) executed between a developer and a landowner constitutes a taxable “supply” under the Central Goods and Services Tax Act, 2017, specifically arising under Section 107 relating to the statutory appellate remedy. The matter arose out of a challenge to a CGST assessment order that had treated the JDA as eligible for GST, with the petitioner asserting that no taxable supply took place between the parties to the agreement.

The Bench comprising Justice Aravind Kumar and Justice R. Mahadevan stayed the operation of the Assistant Commissioner’s order dated 27 January 2025 and issued notice to the Union of India, returnable within four weeks. By granting interim relief, the Supreme Court has presently protected the developer, Arham Infra Developers AOP from recovery proceedings while the issue remains under consideration, pending further hearing once the Union files its response.

COMMISSIONER OF CUSTOMSvs LULUINTERNATIONAL SHOPPLING MALLS PVT. LTD CITATION : 2025 TAXSCAN (SC) 321

The Supreme Court has taken up a civil appeal filed by the Commissioner of Customs, Kochi, challenging the decision of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) in a dispute concerning the classification and valuation of imported “trampolines and tag arenas” under the Customs Tariff Act, 1975 and the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. The appeal arises from a detailed order of the Tribunal that rejected the Department’s stand on misclassification under Tariff Item 9506 99 90 and undervaluation through addition of installation charges under Rule 10(1)(e), upholding Lulu International Shopping Malls Pvt. Ltd.’s classification under Tariff Item 9506 91 90 as equipment for general physical exercise and gymnastics.

The Bench of Justice Pankaj Mithal and Justice Prasanna B. Varale with Senior Advocate Arvind P. Datar representing Lulu International and no appearance for the Revenue. The Supreme Court directed that the appeal be listed again on October 31, 2025, for further hearing, thereby keeping the challenge to the CESTAT’s findings on both classification and valuation open for adjudication.

ASSISTANT COMMISSIONER,CGST& ANR vs M/S NOVELTY REDDY AND REDDY MOTORS PRIVATE LIMITED CITATION : 2025 TAXSCAN (SC) 322

The Supreme Court considered the legal issue concerning the validity of GST proceedings issued without a Document Identification Number (DIN), specifically relating to a summary show-cause notice in Form GST DRC-01 and a consequential assessment order under the CGST Act, 2017. The case arose from action initiated by the Assistant Commissioner, Eluru CGST Division against M/s Novelty Reddy and Reddy Motors Pvt. Ltd. for the tax period April 2020 to March 2021, where the assessee had successfully challenged the unsigned SCN and assessment order before the Andhra Pradesh High Court on the ground that the absence of DIN rendered the orders invalid.

The Bench of Justice J.B. Pardiwala and Justice K.V. Viswanathan, which issued notice on the special leave petition filed by the Revenue and stayed the operation of the High Court’s order, subject to the condition that no coercive action shall be taken against the assessee. The Supreme Court’s interim relief has kept the issue open on whether omission of DIN renders GST proceedings “non est,” leaving the controversy to be adjudicated in the upcoming hearings.

COMMISSIONER OF CUSTOMSvsRELIANCE RETAIL LTD CITATION : 2025 TAXSCAN (SC) 323

The Supreme Court has taken up a significant customs classification dispute involving telecom products imported by Reliance Retail Ltd., concerning the applicability of duty exemption under the Customs Tariff Act, 1975. The Department has challenged the CESTAT’s ruling which upheld Reliance Retail’s classification of products such as routers, Wi-Fi mesh extenders, HDMI dongles and Small Form Pluggable (SFP) modules under Tariff Heading 8517, enabling them to claim exemption as telecom equipment.

The Bench comprising Justice Aravind Kumar and Justice N.V. Anjaria issued notice to Reliance Retail Ltd., observing that the matter warranted further examination, and directed listing of the appeal on 10 November 2025. With the Supreme Court now seized of the issue, the final determination will clarify whether the imported networking devices qualify as telecom apparatus eligible for customs duty exemption, or whether the Department’s alternate classification should prevail.

M/S ELENTEC INDIAPRIVATELIMITED vs COMMISSIONER OF CENTRAL EXCISE CITATION : 2025 TAXSCAN (SC) 324

The Supreme Court has affirmed the legality of penalties imposed under the Export Oriented Unit (EOU) exemption scheme, refusing to interfere with the findings of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT). The appeal concerned allegations that Elentec India, operating as a 100% EOU under the Electronics Hardware Technology Park scheme, had violated the conditions of the exemption by removing duty-free capital goods from bonded premises to a Domestic Tariff Area unit without authorization, resulting in duty liability under Section 111(j) of the Customs Act, 1962 and Rule 25 of the Central Excise Rules, 2002.

The Bench comprising Justice J.B. Pardiwala and Justice K.V. Viswanathan dismissed the appeal, noting that the delay of 122 days was not satisfactorily explained and that no valid grounds were demonstrated to upset the CESTAT’s order. With the rejection of the appeal, the Supreme Court upheld the penalty of Rs. 50 lakh imposed by the Tribunal along with the confiscation and duty demands, and directed that all pending applications stood disposed of.

COMMISSIONER OF CGST vsM/SGUJARAT STATE LAND DEVELOPMENT CORPORATION LTD CITATION : 2025 TAXSCAN (SC) 325

The Supreme Court has taken up a significant service tax dispute relating to whether the soil conservation and land reclamation activities of the Gujarat State Land Development Corporation Ltd. fall within taxable service categories under the Finance Act, 1994. The Revenue has appealed against the CESTAT’s order which set aside the service tax demand raised under classifications such as Business Auxiliary Service, Supply of Tangible Goods Service, and Rent-a-Cab Service, contending that the corporation received grants from the State Government amounting to consideration for taxable services.

The Bench comprising Justice Sanjay Karol and Justice Nongmeikapam Kotiswar Singh found the Department’s explanation for delay in service of notice satisfactory and directed issuance of a fresh notice to the respondent, returnable on 11 November 2025. The Supreme Court also directed the corporation to file its counter-affidavit before the next date of hearing, keeping the challenge to the Tribunal’s findings on exemption for public welfare activities open for adjudication.

AUTHORITY FORCLARIFICATION AND ADVANCE RULINGS vs M/S SKYLINE CONSTRUCTION AND HOUSING PVT.LTD CITATION : 2025 TAXSCAN (SC) 326

The Supreme Court has upheld the legal principle that double taxation cannot be imposed on works contracts under Section 15 of the Karnataka Value Added Tax Act, 2003 (KVAT Act). The decision arose in the case of M/s Skyline Construction and Housing Pvt. Ltd., where the Court confirmed that principal contractors are entitled to deduct the value of work executed by registered sub-contractors from their taxable turnover, as VAT is already paid by sub-contractors on that portion of the contract.

The Bench comprising Justice J.B. Pardiwala and Justice K.V. Viswanathan dismissed the State’s appeal and affirmed the Karnataka High Court’s ruling, holding that taxing both the main contractor and the sub-contractor on the same work would amount to impermissible double taxation. The Court clarified that only the portion of work actually executed by the principal contractor can be included in his taxable turnover, making the deduction of sub-contractor payments a necessary and lawful adjustment under Section 15(1) of the KVAT Act.

SHARAD CHANDRATOSHNIWAL vs THE STATE OF TELENGANA AND ORS CITATION : 2025 TAXSCAN (SC) 327

The Supreme Court has issued notice in a writ petition concerning the consolidation of multiple First Information Reports (FIRs) registered across various States against CA Sharad Chandra Toshniwal, who has been implicated in the ₹792 crore Falcon Invoice Discounting scam. The legal issue before the Court pertains to the petitioner’s plea for clubbing the FIRs under its jurisdiction, with the underlying allegations involving offences under the Prevention of Money Laundering Act, 2002 (PMLA). Toshniwal, who was arrested by the Enforcement Directorate (ED) in August 2025 for allegedly facilitating the laundering of proceeds of crime linked to a fraudulent invoice discounting scheme, contends that he had resigned from the principal accused company well before the purported misconduct and has not been named as an accused in any registered FIR.

The bench comprising Chief Justice B.R.Gavai and Justices K. Vinod Chandran and N.V. Anjaria, which while agreeing to issue notice on the plea, refused to grant interim protection from coercive action at this stage. The Court has sought responses from the concerned States including Telangana, Maharashtra, Delhi, Rajasthan, Andhra Pradesh, and West Bengal and additionally issued notice on Toshniwal’s application seeking protective relief, listing the case for further hearing after four weeks.

CENTRE FORACCOUNTABILITYSYSTEMIC CHANGE (CASC) & ANR vs UNION OF INDIA & ORS. CITATION : 2025 TAXSCAN (SC) 328

The Supreme Court has sought responses from the Union Government and Revenue authorities on a writ petition questioning the legality and regulatory oversight of offshore online gaming and gambling platforms operating without compliance under Indian laws. The core issue before the Court concerns whether these platforms should be subjected to Goods and Services Tax (GST) and Income Tax within India, while also addressing enforcement actions under Section 69A of the Information Technology Act, 2000 to block unlawful online betting websites. The plea, filed by the Centre for Accountability and Systemic Change (CASC), also presses for harmonised implementation of the Promotion and Regulation of Online Gaming Act, 2025 along with relevant State laws to safeguard users particularly minors from illicit online gambling activities.

The Division Bench comprising Justice J.B. Pardiwala and Justice K.V. Viswanathan directed the petitioner to furnish complete case records to the counsel representing the Revenue and fixed the matter for further consideration after two weeks. The petition seeks directions to ensure tax recovery from offshore betting platforms with the support of enforcement agencies including the ED, CBI and Interpol, while also demanding stringent measures akin to those under the Tamil Nadu Prohibition of Online Gaming Act, 2022.

COMMISSIONER OF CUSTOMSvs ADANIEXPORTS LTD CITATION : 2025 TAXSCAN (SC) 329

The Supreme Court has admitted the Customs Department’s appeal challenging the order of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), which granted relief to Adani Exports in a case concerning alleged circular trading of gold jewellery. The primary legal issue relates to accusations of misuse of export incentives under the Target Plus Scheme and duty-free import benefits under the Advance Licence Scheme, following a Directorate of RevenueIntelligence (DRI) investigation that claimed the company exported lower-purity jewellery with glued stones to inflate export value and subsequently reimported remelted gold bars, thereby evading customs laws.

The matter, which was previously decided in favour of the assessee by CESTAT, was heard by a two-member bench comprising Judicial Member Ramesh Nair and Technical Member Raju, who held that the facts were identical to the earlier Samir Vora and Adani Enterprises Ltd. rulings upheld by the Supreme Court. The Tribunal found no substantiated evidence of bogus exports or financial repatriation and noted that export obligations were duly fulfilled with payments received through authorised banking channels. Dissatisfied with the findings, the Commissioner of Customs, Ahmedabad, has approached the Supreme Court, which has issued notice in the appeal and listed the matter for further adjudication.

Summoning Advocates whogivelegal opinion or represent parties during investigation of cases andrelatedissues CITATION : 2025 TAXSCAN (SC) 330

The Supreme Court ruled that investigating agencies cannot summon advocates solely for legal advice or professional representation in criminal matters. The central issue concerned the interpretation of Section 132 of the Bharatiya Sakshya Adhiniyam, 2023 (BSA), which protects confidential professional communication between lawyers and clients, vis-à-vis powers under Section 179 of the Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS). The matter arose from a Special Leave Petition challenging a police summons issued to an advocate by Ahmedabad Police seeking details related to his client’s case, raising constitutional concerns under Articles 19(1)(g) and 21 over the arbitrary intrusion into an advocate’s protected professional role.

A three judge Bench led by Chief Justice B.R. Gavai, along with Justices K. Vinod Chandran and N.V. Anjaria, set aside the summons as “illegal and unsustainable,” while clarifying that although no new guidelines are required, strict adherence to existing statutory safeguards must be ensured. The Court held that advocates may only be summoned where statutory exceptions under Section 132 apply including communications made to further an unlawful act or when an advocate observes a crime or fraud during representation and directed that any such summons must have prior written approval from a superior police officer, with reasons recorded and subject to judicial review under Section 528 of the BNSS. This judgment reinforces the sanctity of client confidentiality and draws a clear boundary against investigative overreach into professional legal conduct.

M/S. DAIMLER INDIACOMMERCIAL VEHICLES PVT. LTD. vsTHE COMMISSIONER OF CGST AND C. EX CITATION : 2025 TAXSCAN (SC) 331

The Supreme Court has issued notice in an appeal filed by Daimler India Commercial Vehicles Pvt. Ltd. challenging the order of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), which upheld the levy of service tax on salary reimbursements for expatriate employees seconded from Daimler AG, Germany. The core legal issue relates to whether such secondment arrangements constitute ‘manpower supply services’ taxable under Section 66A of the Finance Act, 1994 and chargeable under the reverse charge mechanism, covering the period from 2008-09 to June 2017.

The two member CESTAT bench comprising Technical Member Vasa Seshagiri Rao and Judicial Member Ajayan T.V. relied on the Supreme Court’s ruling in Northern Operating Systems Pvt. Ltd. v. CCE (2022), concluding that Daimler AG had indeed provided manpower supply services to its Indian subsidiary. While modifying the demand to the normal period of limitation and deleting penalties due to the issue being interpretational, the Tribunal sustained the tax liability with applicable interest. Aggrieved, Daimler India has moved the Supreme Court, which has now sought responses from the tax authorities, with the matter returnable in six weeks.

Current update: The matter is still pending before the apex court.

MAXWELL ENGINEERINGSOLUTIONSPRIVATE LIMITED vs ASSISTANT COMMISSIONER OF CENTRAL GST AND EXCISE CITATION : 2025 TAXSCAN (SC) 332

The Supreme Court has dismissed the Special Leave Petition (SLP) filed by the Revenue challenging the Gujarat High Court’s decision that permitted refund of Integrated Goods and Services Tax (IGST) to Maxwell Engineering Solutions Pvt. Ltd., despite availing benefits under the Export Promotion Capital Goods (EPCG) Scheme. The primary legal issue before the Court revolved around the interpretation of Rule 96(10) of the Central Goods and Services Tax (CGST) Rules, 2017, which restricts IGST refund claims where certain customs duty exemptions are availed, including Notification No. 79/2017-Customs dated 13 October 2017. The assessee, engaged in export of engineering parts, had paid IGST on zero-rated supplies and sought a refund under Rule 96, contending that import of capital goods under the EPCG Scheme is expressly excluded from the ambit of Rule 96(10).

The matter was taken up by a Supreme Court Bench comprising Justice Aravind Kumar and Justice N.V. Anjaria, which found no merit in the Revenue’s challenge and accordingly dismissed the SLP without expressing any opinion on the merits, affirming that the High Court’s order remanding the matter for fresh consideration would stand.

S. RAVI SELVAN vsCENTRAL BOARD OF INDIRECT TAXES AND CUSTOMS & ORS. CITATION : 2025 TAXSCAN (SC) 333

The Supreme Court has dismissed the Special Leave Petition (SLP) filed by an IRS officer challenging the Madras High Court’s directive for a fresh Internal Complaints Committee (ICC) inquiry into a sexual harassment complaint lodged against him. The core legal issue concerns compliance with the statutory framework under the Prevention of Sexual Harassment (POSH) Act, 2013 and CCS (CCA) Rules, particularly addressing allegations of procedural irregularities and bias affecting the fairness of the initial ICC proceedings relating to conduct violations under service law.

The Bench comprising Justice Pankaj Mithal and Justice Prasanna B. Varale declined to invoke the Court’s discretionary jurisdiction, noting that since a new ICC had already been ordered to examine the complaint afresh, there was no cause for interference. The Supreme Court upheld the High Court’s order setting aside the earlier ICC report and directed that the reconstituted ICC proceed independently, leaving it open for the petitioner to raise all permissible contentions, including limitation. With this order, the SLP stood dismissed, paving the way for an unbiased and legally compliant investigation into the sexual harassment allegations.

COMMISSIONER OF CUSTOMSvsCROMPTON GREAVES CONSUMER ELECTRICALS LTD. CITATION : 2025 TAXSCAN (SC) 334

The Supreme Court considered an appeal concerning the customs classification of Metal Core Printed Circuit Boards (MC PCBs) imported by Crompton Greaves Consumer Electricals Ltd. The central legal issue revolves around whether these goods should be classified as printed circuits under Heading 8534 00 00 or as parts of lamps under Heading 9405 of the Customs Tariff Act, 1975, which directly impacts the applicable customs duty. The appeal challenges the correctness of the tariff interpretation applied by the Customs Department and affirmed by the appellate tribunal.

The dispute originates from a decision of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) delivered on September 9, 2022, by a two-member bench comprising C.J. Mathew, Technical Member and Ajay Sharma, Judicial Member which ruled in favour of Crompton Greaves. The tribunal held that MC PCBs possess the characteristics of printed circuits, and their classification cannot be altered solely based on end use in LED lamps. The Supreme Court has now granted four weeks to Crompton Greaves to file its counter affidavit, with the matter to be listed thereafter for further adjudication.

Current update: The matter is pending before the apex court.

COMMISSIONER OF CUSTOMSvsSAMSUNG INDIA ELECTRONICS PRIVATE LIMITED CITATION : 2025 TAXSCAN (SC) 335

The Supreme Court considered an appeal filed by the Commissioner of Customs, Chennai-II, challenging the decision of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Chennai, which granted customs duty exemption to Samsung India Electronics Pvt. Ltd. for its imported LED monitor tiles. The core legal issue pertains to the correct classification of LED monitor tiles under the Customs Tariff Act, 1975, and whether the exemption under Notification No. 24/2005-Cus is applicable. Samsung India had classified the goods under CTH 85285200, contending that the monitors were designed for use with Automatic Data Processing (ADP) machines.

A two-member CESTAT bench comprising Sulekha Beevi, Judicial Member and Vasa Seshagiri Rao, Technical Member had delivered divergent views, prompting a reference to Third Member, R. Muralidhar, Judicial Member, who concurred with the Judicial Member to form the majority opinion in favour of Samsung India. The Tribunal allowed the exemption, holding that the LED tiles were eligible monitors designed for ADP systems. Aggrieved, the department appealed before the Supreme Court, granted four weeks to Samsung India to file its counter affidavit and directed the department to make good the deficit ad valorem court fee. The matter is now scheduled to be listed on December 2, 2025, for further consideration.

Current update: The matter is pending before the apex court and the future date is 16th January 2026.

COMMISSIONER OF CGSTAND CENTRAL EXCISE vs M/S ARJUNA NATURAL EXTRACTS CITATION : 2025 TAXSCAN (SC) 336

The Supreme Court admitted a Civil Appeal filed by the Commissioner of GST & Central Excise challenging the reclassification of Fish Oil Ethyl Esters under Central Excise Tariff Heading (CETH) 1516. The central legal issue concerns whether the chemically modified product Fish Oil Ethyl Ester (EE) should be classified under CETH 1516 1000 (inter-esterified/trans-esterified fats and oils) as held by the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), or under CETH 3824 90 90 (residuary entry), as contended by the Revenue. The dispute arises from the classification adopted by Arjuna Natural Extracts, which further purifies and concentrates fish oil for commercial supply.

The impugned order of the CESTAT Chennai Bench, by Vasa Seshagiri Rao, Technical Member and Ajayan T.V., Judicial Member, favoured classification under CETH 1516 and set aside penalties and extended limitation, leading the Department to escalate the matter. The appeal came up before a Supreme Court Bench comprising Justice J.B. Pardiwala and Justice K.V. Viswanathan, which condoned the delay and formally admitted the case for adjudication. The Supreme Court will now determine the correct tariff classification of Fish Oil Ethyl Esters between CETH 1516 and CETH 3824, a decision that holds significant implications for excise duty assessments in the sector.

Current update: The matter is pending before the apex court.

EPC Constructions Indiavs M/sMatix Fertilizers And Chemicals Limited CITATION : 2025 TAXSCAN (SC) 337

The Supreme Court dismissed an appeal filed by EPC Constructions India Limited through its Liquidator, reiterating that holders of Cumulative Redeemable Preference Shares (CRPS) are not “financial creditors” under the Insolvency and Bankruptcy Code, 2016, and therefore cannot invoke Section 7 of the IBC. The Court examined the legal status of CRPS with reference to Sections 43 and 55 of the Companies Act, 2013, holding that preference shares constitute share capital and not debt, and that redemption is contingent upon availability of profits or proceeds of a fresh issue, failing which no “debt due and payable” can arise as required under Section 3(12) of the IBC to establish default.

The decision of the National Company Law Tribunal (NCLT) and affirming order of the National Company Law Appellate Tribunal (NCLAT) were upheld by a two judge bench comprising Justice K.V. Viswanathan and Justice J.B. Pardiwala. The Court rejected the argument that issuance of CRPS had the “commercial effect of borrowing” under Section 5(8)(f) of the IBC, concluding that the transaction clearly reflected a conversion of debt into equity, extinguishing any prior liability. Observing that accounting treatment does not override the statutory legal character of capital instruments, the Supreme Court dismissed the appeal and confirmed that non-redeemable CRPS holders cannot be treated as financial creditors for initiating insolvency proceedings.

UDAIPUR ENTERTAINMENTWORLDPRIVATE LIMITED vs UNION OF INDIA CITATION : 2025 TAXSCAN (SC) 338

The Supreme Court has partially set aside Provisional Attachment Order No. 05/2019 issued under the Prevention of Money Laundering Act, 2002 (PMLA) against Udaipur Entertainment World Private Limited, the Corporate Debtor undergoing insolvency proceedings. The Court addressed the interplay between the Insolvency and Bankruptcy Code, 2016 (IBC) and the PMLA, particularly the effect of Section 32A of the IBC, which grants a “clean slate” to a corporate debtor post-resolution. The Court’s order enables the implementation of the NCLT-approved resolution plan for the benefit and protection of genuine and innocent home buyers, restoring certain attached properties to the Successful Resolution Applicant (SRA) while ensuring continued attachment of 11 units identified as being linked to proceeds of crime.

A bench of Justice Sanjay Kumar and Justice Alok Aradhe passed the order under the second proviso to Section 8(8) of the PMLA, noting that the direction was issued based on a mutually agreed settlement between the SRA and the Directorate of Enforcement (DoE). While directing deletion of the Corporate Debtor’s name from the PMLA prosecution complaint, the Court clarified that the benefit under Section 32A is conditional upon the SRA having no nexus with the former directors or alleged beneficiaries of crime, reserving liberty to the DoE to act if such connection emerges. The appeal against the resolution plan was closed, and the prosecution against the erstwhile management will continue. Significantly, the Court emphasized that the order was passed on the peculiar facts of the case and shall not operate as a precedent, leaving larger legal issues between IBC and PMLA open.

M/S. NIRMAL UJJWALCREDITCO-OPERATIVE SOCIETY LTD vs RAVI SETHIA CITATION : 2025 TAXSCAN (SC) 339

The Supreme Court has raised a crucial legal question under the Insolvency and Bankruptcy Code, 2016 (IBC) regarding whether a co-operative society qualifies as an eligible applicant to submit a resolution plan for a corporate debtor. The issue arose in the appeal filed by M/s Nirmal Ujjwal Credit Co-operative Society Ltd. against Ravi Sethia & Others, where the Court noted that clarity is required on the applicability of Section 3(7) of the IBC, which defines corporate persons eligible to participate in insolvency resolution. The Court found the involvement of the Central Registrar of Multi State Cooperative Societies essential to determine whether cooperative societies are barred in any manner from submitting resolution plans under the Code.

A bench of Justice J.B. Pardiwala and Justice K.V. Viswanathan directed the appellant to amend the cause title and implead the Central Registrar as a party respondent to the proceedings. While permitting the NCLAT to continue the approval process, the Supreme Court instructed that no final order shall be passed until the core issue is conclusively adjudicated. Notice was issued waived by counsel for the Successful Resolution Applicant, the Resolution Professional, and one respondent and the matter has been listed for further hearing on October 28, 2025, awaiting the Central Registrar’s clarification.

COMMISSIONERCUSTOMS(PREVENTIVE) JAIPUR vs M/S PELICAN QUARTZ STONE CITATION : 2025 TAXSCAN (SC) 340

The Supreme Court has admitted a set of Civil Appeals filed by the Commissioner of Customs (Preventive), Jaipur, challenging the legality of the CESTAT’s order on the classification of exported goods, specifically Engineered Quartz Stone. The central legal issue concerns whether the Directorate General of Revenue Intelligence (DRI) was empowered to re-assess the goods for customs classification after export assessment was completed, involving applicability of Sections 28, 28AAA and 114(iii) of the Customs Act, 1962 in the context of reclassification from CTI 68159990 to CTI 68101990.

A bench of Justice J.B. Pardiwala and Justice K.V. Viswanathan condoned the delay in filing the appeals and directed their admission for hearing on merits. The appeals challenge the ruling of the CESTAT, which held that the Show Cause Notice lacked authority for re-assessment once the goods had been exported and assessed at ‘NIL’ duty. The Supreme Court will now adjudicate the correctness of the Tribunal’s conclusions on jurisdiction and reclassification powers of customs authorities post-export.

Current update: The matter is pending before the apex court and the future date is 15th January 2026.

THE COMMISSIONER OF INCOMETAXvs SADHUMARGI SHANTKRANTI JAIN CITATION : 2025 TAXSCAN (SC) 341

The Supreme Court is set to examine a key legal issue under the Income Tax Act, 1961, whether registration of a trust under Section 12AA automatically entitles it to tax exemption benefits under Section 80G. The case arises from a judgment of the Chhattisgarh High Court, which held that a valid 12AA registration was sufficient for granting 80G approval, thereby eliminating the need for further scrutiny into the nature of the trust’s activities under the Act.

A Bench comprising Justice J.B. Pardiwala and Justice K.V. Viswanathan issued notice while condoning delay in the Special Leave Petition filed by the Revenue in Commissioner of Income Tax (Exemption), Bhopal v. Sadhumargi Shantkranti Jain. The Court will now reconsider whether 80G approval can be denied despite 12AA registration, particularly in cases where the trust’s activities are asserted to be religious rather than charitable. The matter remains pending, with notice returnable in four weeks.

COMMISSIONER OF INCOMETAX CENTRAL CIRCLE vs M/S TANGI FACILITYSOLUTIONS PVT. LTD CITATION : 2025 TAXSCAN (SC) 342

The Supreme Court has agreed to examine a question under the Income Tax Act, 1961, whether the issuance of bonus shares constitutes taxable income in the hands of shareholders. The issue arises from the interpretation of Section 56(2)(viia) of the Act, which deals with the taxability of shares received without consideration. The appeal stems from a decision of the Madras High Court, where the Court ruled that bonus shares are merely a capitalization of accumulated profits and do not represent income. The Revenue Department, challenging this view, contended that since bonus shares carry substantial fair market value and are issued without consideration, their exclusion from taxation undermines the intent of the statute and the CBDT’s Circular No. 3/2019.

A Division Bench of the Madras High Court, comprising Justice R. Suresh Kumar and Justice C. Saravanan, dismissed the Revenue’s appeal on 4 November 2024, upholding the findings of the Income Tax Appellate Tribunal (ITAT). The Bench relied on established precedents, reaffirming that bonus shares do not generate any new income but merely restructure the company’s capital. Holding that no substantial question of law arose, the High Court maintained that the ITAT’s reasoning was consistent with binding judicial principles. The Supreme Court, having now granted leave to appeal, will finally decide whether such issuance can be taxed as income under the Act.

Current update: The matter is pending before the apex court.

Supreme Court to Determine Whether Security Deposits on Real Estate Deals are Genuine or a Means to Evade Tax

M/S ANSAL PROPERTIESAND INDUSTRIES LTD vs COMMISSIONER OF INCOME TAX DELHI CITATION : 2025 TAXSCAN (SC) 343

The Supreme Court will examine whether a security deposit received in a property transaction qualifies as taxable income under the Income Tax Act, 1961, or represents a genuine business arrangement. The issue stems from the Delhi High Court’s ruling in Commissioner of Income Tax v. Ansal Properties and Industries Ltd., where the Court held that ₹42 crore received by the company from Verka Investments Pvt. Ltd. under a 1995 development agreement for property at New Delhi, was taxable income. During a 2000 search, documents revealed the amount was non-refundable and part of the sale consideration, leading the Revenue to argue that the deposit was a device to defer tax liability.

A Division Bench of the Delhi High Court, comprising Justice S. Ravindra Bhat and Justice A.K. Chawla ruled that the ₹42 crore had the character of taxable income, as evidence showed 95.23% of the total consideration was received and non-refundable. The Court held that the ITAT erred in treating it as a refundable deposit, finding the arrangement to be a colourable device to postpone tax liability. While upholding minor reliefs to the assessee, the High Court affirmed the main addition. Ansal Properties and Industries Ltd. has filed an SLP before the Supreme Court, which will now decide whether such deposits are genuine or taxable receipts in substance.

Current update: The matter is pending before the apex court and it is expected to be listed 6th February 2026.

M/S. SURANA TELECOMLTD. vs COMMISSIONER OF CUSTOMS AND CENTRAL EXCISE CITATION : 2025 TAXSCAN (SC) 344

The Supreme Court is set to decide a key issue under the Central Excise Act, 1944, whether Modvat credit utilized for paying duty on goods later held to be non-excisable can be refunded or reversed. The matter arises from an Andhra Pradesh High Court judgment which held that although the duty paid under protest by Surana Telecom Ltd., a manufacturer of cable jointing kits, was not barred by limitation, the Modvat credit once utilized could not be refunded or recredited.

A Division Bench of the Andhra Pradesh High Court, comprising Justice Dilip B. Bhosale and Justice A. Ramalingeswara Rao, partly allowed the Revenue’s appeal, holding that Modvat credit once used could not be recredited under Rules 57F and 57L, as there was no statutory provision permitting such restoration. The Court observed that the CESTAT’s direction to recredit the duty amount was legally untenable, while also noting that only ₹3.45 lakh paid from the Personal Ledger Account was refundable, being supported by a DoT certificate confirming non-reimbursement. The High Court thus set aside the Tribunal’s order except for this limited amount. The matter is directed to be listed before another Bench for final adjudication on whether such utilized Modvat credit is refundable or reversible.

Current update: The matter is pending before the apex court.

M/S MATHUR POLYMERS vsUNION OF INDIA & ORS CITATION : 2025 TAXSCAN (SC) 345

The Supreme Court has upheld the Delhi High Court’s ruling that service of notices through e-mail is valid under Section 169(1)(c) of the Central Goods and Services Tax Act, 2017 (CGST Act) and that consolidated show cause notices covering multiple financial years are permissible under Section 74. The case arose from proceedings initiated by the Central Goods and Services Tax (CGST) Department against Mathur Polymers, alleging fraudulent availment of Input Tax Credit (ITC) of ₹81.54 lakh. The department had issued a consolidated show cause notice and order covering several financial years.

A Division Bench of the Delhi High Court, comprising Justice Prathiba M. Singh and Justice Shail Jain, held that service at the registered e-mail address on the GST portal satisfied the requirement of Section 169(1)(c), and that consolidated notices were valid where the alleged fraudulent ITC transactions spanned multiple years. The Court observed that the petitioner had concealed material facts about the registered e-mail address and that issuing separate notices would hinder a comprehensive investigation into the fraud pattern. Finding no violation of natural justice or jurisdictional error, the High Court dismissed the writ petition and imposed costs of ₹50,000 on the petitioner. On appeal, the Supreme Court, after condoning the delay, refused to interfere with the High Court’s judgment and dismissed the Special Leave Petition, thereby affirming the validity of e-mail service and consolidated show cause notices under the CGST Act.

COMMISSIONER OFCUSTOMS, (NS V) vs LIFELONG ONLINE RETAIL PVTLTD CITATION : 2025 TAXSCAN (SC) 346

The Supreme Court is set to hear the Department’s appeal against a ruling of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Mumbai, which granted concessional customs duty relief to Lifelong Online Retail Pvt. Ltd. on imported electric massagers under Notification No. 50/2017-Cus., Serial No. 563. The dispute turns on whether the benefit under this notification applies only to goods used exclusively for medical purposes. The importer had classified the goods under CTI 9019 10 20, claiming a 5% concessional rate, but the Additional Commissioner of Customs denied the claim, stating that the goods were not “only for medical use.” While a speaking order was issued for one Bill of Entry, 76 others were decided without individual orders, with the Commissioner (Appeals) simply affirming the denial based on the first order’s reasoning.

The CESTAT, in its Final Order, found that the authorities had misread the notification and held that Serial No. 563 does not include restrictive terms such as “only,” “exclusively,” or “wholly” before “for medical use.” It clarified that the explanation to the entry merely defines “goods” as instruments or appliances not parts or accessories and imposes no exclusivity condition. The Tribunal ruled that restrictive language cannot be read into an exemption notification unless expressly stated. Concluding that the imported massagers were capable of medical use and thus eligible for concessional duty, the Tribunal also criticized the non-speaking orders in the 76 pending cases and remanded them for fresh adjudication. The Department has appealed this ruling before the Supreme Court, which will now determine whether the Tribunal’s liberal interpretation or the Department’s restrictive view of the notification prevails.

Current update: The matter is pending before the apex court.

DEPUTY DIRECTOR OFINCOME TAX vs SOMESHWAR DARSHAN CO.OPERATIVEHOUSING SOCIETY LIMITED CITATION : 2025 TAXSCAN (SC) 347

The Supreme Court is set to examine whether the Benami Transactions (Prohibition) Amendment Act, 2016 operates retrospectively in relation to transactions executed before 25 October 2016, and whether attachment orders issued prior to that date are legally sustainable. The matter arises from a judgment of the Gujarat High Court in the case of Someshwar Darshan Cooperative Housing Society Ltd., where the Court quashed attachment orders issued under Section 24(3) of the amended Act. The High Court’s decision had categorically held that the 2016 Amendment introduced substantive and punitive provisions, and therefore could not be applied retrospectively to transactions completed before the amendment came into force.

A Division Bench of Chief Justice Aravind Kumar and Justice Ashutosh J. Shastri observed that the attachment and confiscation provisions under the amended Act could not be invoked for pre-2016 transactions, as doing so would amount to retrospective penalization. The Court emphasized that all prosecution and confiscation proceedings initiated for pre-2016 transactions were invalid and stood automatically quashed. Thus, the Gujarat High Court set aside the impugned attachment orders and related proceedings. The Revenue Department has since filed multiple Special Leave Petitions (SLPs) before the Supreme Court, which will now decide whether the 2016 Benami Amendment can be given retrospective effect, and if attachment actions initiated for transactions before 25 October 2016 can lawfully stand.

Current update: The matter is pending before the apex court.

THE COMMISSIONER OFCUSTOMS vs M/S NITTA GELATIN INDIA LTD CITATION : 2025 TAXSCAN (SC) 348

The Supreme Court stayed the operation of a ruling by the Kerala High Court that had upheld an importer’s entitlement to duty-free benefit under the Advance Authorisation Scheme, despite classification errors in import declarations. The dispute concerns whether misclassification of imported goods can, by itself, disentitle an importer from claiming the exemption under Notification No. 96/2009-Cus. The case involves Nitta Gelatin India Ltd., which imported decalcified fish scales under Advance Authorisations issued by the Directorate General of Foreign Trade (DGFT) for use in export production. The Commissioner of Customs, following laboratory tests, held that the goods were correctly classifiable under CTH 0511 91 90 as “decalcified fish scales,” and not as “fish protein” under Chapter 35, as claimed. Based on this finding, differential duty was demanded, and the goods were ordered to be confiscated, though released on payment of redemption fine.

A Division Bench of the Kerala High Court, comprising Justice A.K. Jayasankaran Nambiar and Justice P.M. Manoj, in its order dated 26 June 2025, held that since the DGFT had neither cancelled nor questioned the Advance Authorisations, Customs could not deny exemption solely due to misdescription of goods. The High Court ruled that once an authorisation remains valid, benefits cannot be withdrawn on the basis of classification differences. It accordingly set aside the differential duty, redemption fine, and penalty for 42 past consignments while upholding limited demands on nine provisionally assessed entries. The Customs Department, represented by Additional Solicitor General N. Venkataraman, challenged the decision before the Supreme Court. After hearing both sides, a Bench of Justice J.B. Pardiwala and Justice K.V. Viswanathan issued notice and ordered a stay on the Kerala High Court judgment.

HARSHA ASSOCIATESPRIVATE LIMITED vs DEPUTY COMMISSIONER OF INCOME TAX CITATION : 2025 TAXSCAN (SC) 349

The Supreme Court dealt with the issue of whether book entries reflecting unverified bank overdrafts could be treated as genuine liabilities under the Income Tax Act, 1961, and consequently, whether such entries could escape addition under Section 68 as unexplained cash credits. The matter arose from the assessment of M/s Harsha Associates Pvt. Ltd. for Assessment Year 2007-08, where the Assessing Officer treated an amount of ₹4.44 crore claimed as outstanding dues to various banks as bogus liabilities, since the banks (except one) denied the existence of such overdrafts.

The Bench of Justice J.B. Pardiwala and Justice K.V. Viswanathan upheld the concurrent findings of the Delhi High Court and the Income Tax Appellate Tribunal (ITAT), affirming that the entries represented fictitious liabilities and not genuine overdrafts. Observing that the cheques were never presented for payment and that one of the accounts was incapable of showing negative balances, the Supreme Court held there was no reason to interfere with the Delhi High Court’s judgment. Accordingly, the Court dismissed the Special Leave Petition, sustaining the addition of ₹4.39 crore to the taxable income of the assessee.

M/S HYUNDAI HEAVY IND.CO. LTD vs DIRECTOR OF INCOME TAX CITATION : 2025 TAXSCAN (SC) 350

The Supreme Court took up appeals filed by Hyundai Heavy Industries Co. Ltd. against the Director of Income Tax (International Taxation) concerning the interpretation and overriding effect of Article 5(3) of the Double Taxation Avoidance Agreement (DTAA) vis-à-vis Articles 5(1) and 5(2), and whether Hyundai’s Mumbai office constituted a Permanent Establishment (PE) taxable in India. The dispute, arising under Section 44BB of theIncome Tax Act, 1961, centers on whether the Mumbai office performed only auxiliary or preparatory activities, thereby falling outside the definition of a PE under the DTAA.

The Bench of Justice B.V. Nagarathna and Justice R. Mahadevan heard submissions from both sides but, on the request of the respondent’s counsel, adjourned the matter to December 3, 2025. The bench recorded the adjournment in its order, postponing further hearing to the specified date. Earlier, the Uttarakhand High Court had upheld the Income Tax Appellate Tribunal’s (ITAT) finding that Article 5(3), being a specific provision, prevails over the general clauses of Articles 5(1) and 5(2), and held that Hyundai’s Mumbai office was not a PE in India. The High Court further ruled that new legal grounds not raised before the Tribunal could not be introduced at the appellate stage under Section 260A, and therefore, dismissed the Revenue’s appeal for lack of a substantial question of law.

Current update: The matter is pending before the apex court.