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

DIRECTORATE OFENFORCEMENT vs SUSHIL PANDURANG MANTRI CITATION : 2025 TAXSCAN (SC) 351

The Supreme Court granted two weeks’ time to the respondents to file additional documents in a Special Leave Petition (SLP) filed by the Directorate of Enforcement (ED) challenging the Karnataka High Court’s order dated October 9, 2023, which had quashed proceedings under the Prevention of Money Laundering Act, 2002 (PMLA). The matter concerns allegations of money laundering and diversion of funds in connection with the housing project “Mantri Serenity” developed by M/s. Mantri Developers Pvt. Ltd. The two-judge Bench of Justice M.M. Sundresh and Justice Satish Chandra Sharma granted the respondents’ counsel two weeks to submit the additional documents and directed that the case be listed again on November 26, 2025.

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The Karnataka High Court had quashed the FIR and related proceedings, holding that they were unsustainable and amounted to an abuse of process of law, as the predicate offence forming the basis for PMLA action was invalid. The High Court noted that the allegations relating to delay in delivery of flats and alleged fund diversion by the developer had already been addressed before RERA and other authorities, and that continuation of PMLA proceedings without a valid predicate offence could not be legally sustained. Consequently, the High Court allowed both writ petitions filed by the company directors, including Sushil Pandurang Mantri, and terminated all related criminal and PMLA investigations, prompting the ED to approach the Supreme Court.

PUSPHA L. TOLANI vsDIRECTORATE OF REVENUE INTELLIGENCE CITATION : 2025 TAXSCAN (SC) 352

The Supreme Court through its order dismissed a curative petition filed by Pushpa L. Tolani challenged an earlier final judgment, which had upheld the three-month limitation period for proceedings under Section 155(2) of theCustoms Act, 1962. The Bench comprises the Chief Justice, Justice Surya Kant, Justice Vikram Nath, and Justice S.V.N. Bhatti examined the petition and found that it did not satisfy the conditions laid down in Rupa Ashok Hurra v. Ashok Hurra (2002), which restricts curative petitions to cases involving violation of natural justice or a manifest miscarriage of justice. Accordingly, the Court declined to reopen the matter and dismissed the petition.

In the proceedings before the Delhi High Court, the issue had revolved around the applicability of limitation periods under Section 155(2) of the Customs Act vis-à-vis the Limitation Act, 1963 for civil suits alleging malicious prosecution. The High Court clarified that Section 155(2) prescribes a three-month limitation for initiating proceedings other than suits, but such suits are instead governed by the Limitation Act, which allows one year from the date of acquittal. Excluding the date of acquittal as per Section 12(1) of the Limitation Act, the Court found that the suit filed on April 11, 2008, exactly one year after acquittal was within time. The Court also held that precedents involving longer delays were inapplicable and directed the trial court to proceed with the matter expeditiously.

OKOBOJI GLOBAL PRIVATELIMITED vs COMMISSIONER OF CUSTOMS CITATION : 2025 TAXSCAN (SC) 353

The Supreme Court has admitted an appeal filed by Okoboji Global Private Limited challenging a ruling of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Bangalore, which held that the value of preloaded software in imported navigation devices must be included in the customs assessable value as part of the hardware. The apex court will now examine whether preloaded or embedded software constitutes an integral component of imported hardware for valuation purposes under the Customs Act, 1962.

A Division Bench of the CESTAT had earlier ruled that since the navigation software was already etched into the devices and essential to their operation, it could not be treated as a separate good eligible for exemption under Notification No. 21/2002-Cus. Upholding the Commissioner’s demand of differential duty and confiscation, the Tribunal, however, reduced penalties on the company’s directors to ₹1 lakh each. While admitting the appeal, the Supreme Court stayed the fine and penalty portions of the Tribunal’s order and will determine whether the value of preloaded software should be merged with the hardware value for customs duty assessment.

COMMISSIONER OF SERVICETAX vs M/S ELEGANT DEVELOPERS CITATION : 2025 TAXSCAN (SC) 354

The Supreme Court held that the simple sale or transfer of land does not constitute a taxable service under the Finance Act, 1994, as the transfer of title in immovable property falls outside the scope of “service” defined under Section 65B(44)(a)(i). The case arose from an appeal filed by the Commissioner of Service Tax against Elegant Developers, wherein the Revenue had sought to levy service tax exceeding ₹10 crore by classifying the firm’s activities as “real estate agent services” under Section 65(105)(v) of the Act.

The Bench of Justice B.V. Nagarathna and Justice Augustine George Masih dismissed the department’s appeal, upholding the CESTAT’s order in favour of the assessee. The Court found that Elegant Developers was engaged in buying and selling land on its own account, and the agreements with Sahara India Commercial Corporation Ltd. did not create any principal-agent relationship. Since no service fee or consultancy charge was involved, the transactions were purely in the nature of land trading. The Court further held that the extended limitation period for raising demand was inapplicable in the absence of suppression, affirming that land sale transactions are not liable to service tax.

THE COMMR.OF CUSTOMS vsM/S PARAGON ASSETS CO.LTD CITATION : 2025 TAXSCAN (SC) 355

The Supreme Court is set to examine whether the Commissioner of Customs (Preventive) has jurisdiction to seize an offshore drilling rig operating within India’s Exclusive Economic Zone (EEZ) without a specific notification issued under Section 4 of the Customs Act, 1962 assigning such powers. The appeal arises from a Bombay High Court judgment, which held that the seizure of the rig “Noble Jimmy Puckett” owned by Noble Asset Co. Ltd. was without authority, as the location of the rig beyond the notified maritime zones under the Maritime Zones Act, 1976 fell outside the Commissioner’s territorial jurisdiction.

The Division Bench of the Bombay High Court upheld the CESTAT’s 2005 order, which had quashed the customs duty demand and confiscation proceedings initiated by the Commissioner (Preventive). The Court ruled that jurisdiction under the Customs Act must derive strictly from statutory notifications, not administrative assumptions, citing Notification No. 27/97-Cus. (NT) and related circulars. It clarified that only officers specifically designated for EEZ areas, such as the Commissioner of Customs (Imports), could exercise powers in offshore zones. The Supreme Court has since admitted the customs department’s appeal and will also consider related issues raised in the Paragon Assets Co. Ltd. matter, which concerns similar jurisdictional questions on customs enforcement in offshore operations.

LARSEN AND TOUBROLIMITED vs COMMISSIONER OF CENTRAL TAX CITATION : 2025 TAXSCAN (SC) 356

The Supreme Court will hear Larsen & Toubro Limited’s (L&T) appeal challenging the CESTAT’s order on the scope of Service Tax exemptions under Notification No. 25/2012-ST dated 20 June 2012, concerning works executed for the Raipur Development Authority (RDA) and Naya Raipur Development Authority (NRDA). The core issue before the Court is whether township development works undertaken for these statutory authorities qualify for exemption under Entries 12(a) and 12(e) of the notification, and whether the extended limitation period under Section 73(1) of the Finance Act, 1994 was rightly invoked.

The Bench of Justice J.B. Pardiwala and Justice K.V. Viswanathan will hear the matter, which has been listed for 14 November 2025. The CESTAT had partly allowed L&T’s claim, holding that while infrastructure works like water supply and sewage systems qualify for exemption under Entry 12(e), the broader township development projects were commercial in nature and thus ineligible under Entry 12(a). The Tribunal also ruled that the extended limitation period under Section 73(1) could not apply, as the issue involved interpretation rather than suppression or fraud. The Supreme Court will now determine the extent of service tax exemption available for infrastructure projects undertaken for statutory development authorities, a decision expected to have wide implications for the construction and infrastructure sectors.

M/s. Secunderabad Club CITATION : 2025 TAXSCAN (SC) 357

The Supreme Court is set to examine whether charges collected by clubs from their members constitute a taxable service under the Finance Act, 1994, or whether such transactions are protected by the principle of mutuality, which treats clubs as mutual associations rather than service providers. The proceedings stem from a judgment of the Telangana High Court, which struck down Section 65(105)(zzzzv) of the Finance Act, 1994, as unconstitutional, in line with the Supreme Court’s earlier ruling in State of West Bengal v. Calcutta Club Limited (2019) that held similar levies on mutual associations to be invalid.

The Bench of the Supreme Court has taken up the appeal filed by the Union of India against the High Court’s decision favouring Secunderabad Club, a long-established social association. The High Court had ruled that the Club’s collections from members being part of a mutual arrangement where contributors and beneficiaries are the same could not be considered “service” for consideration. It held that any levy on such activities was ultra vires the Constitution. The Supreme Court has now granted four weeks to Secunderabad Club to file its counter affidavit, and will adjudicate on the validity of taxing mutual associations and the continuing applicability of the mutuality principle under the indirect tax framework.

PRINCIPAL COMMISSIONER OF CUSTOMS vs VAIBHAV AGGARWAL CITATION : 2025 TAXSCAN (SC) 358

The Supreme Court has taken up a customs appeal filed by the Revenue arising from a major valuation dispute involving the import of Indonesian steam coal, raising questions under Rule 12 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 and provisions of the Customs Act, 1962, including Sections 111(m), 112, 114AA, and 129D. The appeal challenges the CESTAT’s final order granting complete relief to Rosa Power Supply Company Ltd. and Reliance Infrastructure Ltd., after the Directorate of Revenue Intelligence alleged that the importers had undervalued coal consignments by routing payments through foreign intermediaries. The Tribunal had rejected the proposed redetermination of transaction value and confiscation, holding that the Revenue had failed to establish misdeclaration or suppression.

A Division Bench of Justice Sanjiv Khanna and Justice Dipankar Datta admitted the Revenue’s appeal after condoning the delay but noted that the Tribunal’s order had raised serious concerns about the misuse of the review power under Section 129D and the re-litigation of settled issues. During the proceedings, counsel for the respondents highlighted that the Supreme Court had earlier dismissed or closed multiple identical appeals filed by the Revenue in similar coal-valuation matters. Taking cognizance of this, the Bench directed Additional Solicitor General N. Venkataraman to examine those earlier dismissals and clarify whether the present appeal stands on a distinguishable footing. The matter will now proceed after the ASG’s clarification, marking a crucial stage in the long-running coal valuation controversy.

PRINCIPAL COMMISSIONER OF INCOME TAX vs EVANGELICAL FELLOWSHIPOF INDIA CITATION : 2025 TAXSCAN (SC) 359

The Supreme Court is set to examine a challenge filed by the Revenue concerning the eligibility of Evangelical Fellowship of India to claim income tax exemption under Sections 11 and 12 of the Income Tax Act, 1961, in light of the bar contained in Section 13(1)(b). The central issue raised by the Principal Commissioner of Income Tax (Exemptions) is whether the trust, alleged to be working for the benefit of a particular religious community, is legally entitled to exemption despite the statutory prohibition applicable to trusts established after the commencement of the Act. The Revenue’s Special Leave Petition assails the Delhi High Court’s refusal to interfere, wherein the court held that the matter was already covered by its earlier rulings in favour of the assessee.

The bench of Justice J.B. Pardiwala and Justice K.V. Viswanathan condoned the delay and granted leave to appeal, thereby admitting the Revenue’s challenge to the High Court’s order. During the hearing, the Additional Solicitor General stressed that the trust’s memorandum of association revealed activities confined to a specific religious community, invoking Section 13(1)(b) to deny exemption, while the assessee relied on precedents such as DIT (Exemption) v. Indian Evangelical Team. The Supreme Court, after briefly hearing both parties, has listed the matter for final hearing on 20 November 2025.

SPML INFRA LIMITED vs PRINCIPAL COMMISSIONER OF CUSTOMS CITATION : 2025 TAXSCAN (SC) 360

The Supreme Court of India is set to examine a classification dispute arising under the Customs Tariff Act, 1975, specifically whether imported domestic water meters should be classified as “liquid meters” under CTI 90282000 or “flow meters” under CTI 90261010, which would attract Nil Basic Customs Duty under Notification No. 24/2005-Cus. The legal issue stems from the CESTAT, New Delhi’s conclusion that the meters imported by M/s SPML Infra Ltd. for water supply projects were domestic volumetric consumption meters used for billing, and therefore could not be classified as flow-rate measuring instruments.

The matter arises from the ruling of the CESTAT, New Delhi Bench comprising Dr. Rachna Gupta held that the goods were correctly classifiable under CTI 90282000, sustained duty demands under Section 28 of the Customs Act, upheld confiscation under Section 111(m), and confirmed penalties under Sections 112, 114A and 114AA, while deleting penalty under Section 117. With the appeals partly allowed only to this limited extent, the Tribunal’s decision has now been carried to the Supreme Court, which will take up the matter on 05-12-2025.

COMMISSIONER OF CUSTOMS (NS III) vs MSS INDIA PVT. LTD. CITATION : 2025 TAXSCAN (SC) 361

The Supreme Court of India has taken up a classification dispute arising under the Customs Tariff Act, 1975, concerning whether imported “Polyester Bed Sheets” should fall under CTH 6304 (made-up textile articles) or be reclassified by the Revenue as CTH 5407 (woven fabrics of synthetic filament yarn). The appeal challenges the CESTAT Mumbai’s decision that the goods retained their identity as bed sheets, thereby rejecting the Revenue’s allegation of misdeclaration and related penal action under the Customs Act, 1962, including the proposed invocation of Section 114A.

The bench of Justice Pamidighantam Sri Narasimha and Justice Atul S. Chandurkar condoned the delay and admitted the Revenue’s civil appeal, thereby keeping open both the classification question and the scope of penalties. The Supreme Court’s order places the CESTAT’s ruling favoring classification under CTH 6304 and setting aside confiscation and penalties under fresh scrutiny, signalling that the dispute will now proceed to full adjudication before the apex court.

M/S EMPIRE EXPORTS vs THE COMMISSIONER OF CUSTOMS(PREVENTIVE)WEST BENGAL CITATION : 2025 TAXSCAN (SC) 362

The Supreme Court of India is set to examine a customs dispute arising under the Customs Act, 1962 and the Foreign Trade (Development and Regulation) Act, 1992, concerning the import of betel nuts allegedly brought in below the minimum import price fixed by the DGFT. The appeal, filed by Empire Exports, challenges the Calcutta High Court’s order directing fresh adjudication after holding that the CESTAT had failed to consider binding precedents, including Union of India v. Navin Kumar Jha (2016), on the legality of such imports and the scope of confiscation.

.The matter has been placed before a bench comprising Justice B.V. Nagarathna and Justice R. Mahadevan, which has listed the case for further hearing on January 13, 2026, thereby keeping open the High Court’s directive for reconsideration of the confiscation issue. The High Court bench of Justice T.S. Sivagnanam and Justice Hiranmay Bhattacharyya had earlier set aside the CESTAT ruling and remanded the matter, emphasising the Central Government’s authority to regulate imports in national interest—an issue now poised for apex court scrutiny.

CENTRAL BOARD OF DIRECT TAXES vs TELANGANA STATE POLLUTIONCONTROL BOARD CITATION : 2025 TAXSCAN (SC) 364

The Supreme Court of India has scheduled a hearing on the constitutional and interpretative challenge concerning Section 10(46) of the Income Tax Act, 1961, in the appeal filed by the Central Board of Direct Taxes (CBDT) against the Telangana Pollution Control Board. The dispute arises from the Telangana High Court’s judgment dated 26 July 2021, which held that the Pollution Control Boards of Telangana and Andhra Pradesh were entitled to notification under Section 10(46) granting automatic income-tax exemption, rather than being confined to the discretionary approval process under Section 10(23C)(iv).

The bench of Justice B.V. Nagarathna and Justice R. Mahadevan heard the matter and adjourned the proceedings, listing the appeal for further hearing on 4 February 2026. The High Court had earlier directed the authorities to withdraw the Boards’ existing Section 10(23C)(iv) approval and to process their applications for notification under Section 10(46), holding that the Boards being State instrumentalities performing statutory public functions were fully eligible for automatic exemption on specified income.

HT MEDIA LIMITED vs PRINCIPAL COMMISSIONER DELHI SOUTH GOODS ANDSERVICE TAX CITATION : 2025 TAXSCAN (SC) 366

The Supreme Court of India has concluded hearings in a civil appeal filed by HT Media Limited challenging the service tax liabilities confirmed by the authorities under various categories of the Finance Act, 1994. The appeal arises from a partial relief granted by the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), New Delhi, which upheld service tax on “Event Management Service” under the reverse charge mechanism while setting aside demands under Management Consultancy Service, Business Support Service, and related interest and penalties. The central legal issues before the Court concern service classification, the scope of the reverse charge, the application of limitation, and the interpretation of Rule 5(2) of the Service Tax Valuation Rules regarding “pure agent” conditions.

The Bench comprising Justice J.B. Pardiwala and Justice K.V. Viswanathan, which reserved judgment on 6 November 2025 after extensive submissions from both sides. In addition to permitting the appellant’s exemption application, the Court directed parties to file written submissions supporting case law within two weeks, with the appellant to file first followed by the respondent. The underlying CESTAT ruling had upheld tax only on Event Management Service for the normal period of limitation, while granting complete relief on Management Consultancy and Business Support Service demands, and setting aside interest and penalties conclusions now pending final scrutiny before the Supreme Court.

RAJEEV KHANDELWAL vs STATE OF MAHARASHTRA & ANR. CITATION : 2025 TAXSCAN (SC) 367

The Supreme Court of India examined the legal issue of whether costs imposed during the compounding of an offence under Section 138 of the Negotiable Instruments Act, 1881 can be treated as mandatory by mechanical application of the guidelines issued in Damodar S. Prabhu v. Sayed Babalal H. The Court was dealing with an appeal filed by Rajeev Khandelwal, who challenged only the cost component imposed by the Bombay High Court while disposing of his criminal revision petition. The central question before the Court was whether the High Court was justified in applying Damodar S. Prabhu as a binding precedent requiring compulsory payment to the Legal Services Authority even when the complainant sought no additional amount and the accused demonstrated financial inability.

The Bench of Justice M.M. Sundresh and Justice Satish Chandra Sharma set aside the High Court’s direction, holding that the cost requirement derived from Damodar S. Prabhu is not an inflexible rule and cannot bind courts in every case of settlement under Section 138. The Court emphasized that the earlier judgment was rendered under Article 142 of the Constitution, intended to do complete justice, and therefore cannot automatically govern all future cases. Observing that the complainant had sought no further payment and the appellant lacked financial capacity which was undisputed, the Bench held the High Court’s cost direction was legally unsustainable and accordingly quashed it, disposing of the appeal along with pending applications.

M/S A.S. MET CORPPRIVATE LIMITED vs THE REGISTRAR CITATION : 2025 TAXSCAN (SC) 368

The Supreme Court of India has taken cognizance of a serious allegation concerning possible judicial interference within the National Company Law Appellate Tribunal (NCLAT), arising in the context of an appeal filed under Section 9 of the Insolvency and Bankruptcy Code, 2016. The legal issue before the Court concerns a plea seeking an investigation into claims made by an NCLAT member that a “higher judge” attempted to influence the adjudication of a corporate insolvency appeal relating to M/s KLSR Infratech Ltd.

A Bench comprising Justice Surya Kant and Justice Joymalya Bagchi directed the Chairperson of the NCLAT to place the pending appeal before a bench presided over by His Lordship for expeditious hearing and disposal. The Court also requested the Principal Bench of the NCLAT to consider the application for vacating the stay and examine whether the Interim Resolution Professional appointed by the NCLT, Hyderabad, should be permitted to manage the affairs of the company during the proceedings, while indicating that it intends to address the systemic concerns arising from the alleged judicial pressure.

RAKESH MISHRA vsCUSTOMS CITATION : 2025 TAXSCAN (SC) 369

The Supreme Court dealt with the legal issue of whether anticipatory bail could be granted in a case involving alleged smuggling of foreign-origin cigarettes worth ₹2.4 crore, seized under the Customs Act, 1962 and for violations of the Cigarettes and Other Tobacco Products Act, 2003 (COTPA). The matter arose from the Delhi High Court’s refusal to grant protection under Section 438 of the Code of Criminal Procedure, after the Customs Department recovered 12 lakh contraband cigarettes lacking mandatory pictorial warnings and MRP markings. The appellant, Rakesh Mishra, challenged the High Court order through a Special Leave Petition (SLP), arguing that the denial of anticipatory bail was unwarranted despite his cooperation.

The case came before a Bench of Justice Pankaj Mithal and Justice Prasanna B. Varale, which admitted the SLP and issued notice to the Customs Department. The Supreme Court granted interim protection by directing that no coercive steps be taken against the appellant for six weeks, subject to cooperation with the investigation. By doing so, the Court kept the question of anticipatory bail open for further adjudication, effectively staying the operation of the Delhi High Court’s order rejecting pre-arrest relief.

"EAST INDIA HOTELS LTD vs COMMISSIONER OF CUSTOMS CENTRALEXCISE AND CENTRAL GST NEW DELHI" CITATION : 2025 TAXSCAN (SC) 370

The Supreme Court is set to examine the legal issue of whether customs duty exemption can be denied on an imported aircraft used exclusively for corporate travel, in the context of Customs Notification No. 21/2002. The appeal by East India Hotels Ltd. challenges the Delhi High Court’s judgment affirming that the aircraft’s non-revenue, internal corporate use did not amount to “non-scheduled (passenger) services” as defined under Rule 3(9) of the Aircraft Rules, 1937. The High Court had upheld the Customs Tribunal’s view that the aircraft, imported in 2007 under an exemption undertaking, was misused because it transported company officials without charging any fare, thereby failing the statutory requirement of a remunerated air transport service.

The matter has been registered as a Civil Appeal before the Supreme Court, and will be heard by an appropriate Bench (yet to be assigned), following the appellant’s challenge to the High Court’s decision. The Delhi High Court had affirmed confiscation and a demand of ₹13.92 crore in customs duty, holding that DGCA permits do not override Customs’ authority to verify exemption compliance. With the Supreme Court now seized of the issue, the correctness of the High Court’s findings particularly the interpretation of “remuneration” and the scope of Customs’ jurisdiction will be adjudicated in the forthcoming hearing.

SARLA HOLDINGS PRIVATE LIMITED vs PR COMMISSIONER OF INCOMETAXDELHI-7 NEW DELHI & ANR CITATION : 2025 TAXSCAN (SC) 371

The Supreme Court examined the legal issue of whether a company that failed to opt for concessional corporate tax under Section 115BAA of the Income Tax Act, 1961 in its original return could later claim the benefit by filing Form 10-IC belatedly. The appellant, Sarla Holdings Pvt. Ltd., had filed its return for AY 2020-21 declaring taxable income of ₹60.93 lakh and expressly selected “None of the above” against the option for concessional taxation under Sections 115BA/115BAA/115BAB. Though a revised return and a delayed Form 10-IC were later filed, the Delhi High Court held that Section 115BAA(5) required the option to be exercised in the prescribed manner on or before the due date under Section 139(1), and that CBDT Circular No. 6/2022 could not assist the assessee since it applied only where the option under Section 115BAA had been chosen in the return itself.

The Bench comprising Justice Pamidighantam Sri Narasimha and Justice Atul S. Chandurkar refused to interfere with the Delhi High Court’s findings, concluding that the company’s failure to exercise the statutory option in its validly filed return rendered its claim untenable. The Court held that the belated filing of Form 10-IC could not cure the fundamental defect of not having opted for Section 115BAA in the return, and accordingly dismissed the Special Leave Petition, thereby affirming the assessment order under Section 143(3) read with Section 144B and the consequential MAT-based tax demand.

THE KOLKATA MUNICIPAL CORPORATION & ANR. vs THE CRICKETASSOCIATION OF BENGAL & ORS. CITATION : 2025 TAXSCAN (SC) 372

The Supreme Court examined the legal issue of whether Eden Gardens qualifies as a “public place” for the purpose of levying advertisement tax under Section 204 of the Kolkata Municipal Corporation Act, 1980, which governs the imposition of advertisement tax and requires the framing of regulations and rate calculations before any demand is issued. The dispute arose from the Kolkata Municipal Corporation’s demand notice dated 27 March 1996, seeking advertisement tax from the Cricket Association of Bengal (CAB) for in-stadia banners displayed during the 1996 Cricket World Cup. CAB had challenged the levy before the Calcutta High Court, arguing that Eden Gardens was not a public place, that the advertisements were not visible from any public street, and that KMC had issued the notice without proper computation, hearing, or statutory compliance under Section 204.

The Bench comprising Justice Vikram Nath and Justice Sandeep Mehta, which upheld the Calcutta High Court’s decision. The Court agreed that Eden Gardens is not a public place due to restricted entry, and that the demand notice issued without proper reasons, break-up of tax, statutory regulations, or adequate opportunity to respond was arbitrary and violative of natural justice. Finding no ground to interfere, the Supreme Court dismissed the Special Leave Petition, affirming that KMC could not levy advertisement tax on the in-stadia advertisements in question.

SREE METALIKS LIMITED & ANR. vs DIRECTOR GENERAL OFINCOMETAX & ORS CITATION : 2025 TAXSCAN (SC) 373

The Supreme Court is seized of a legal issue concerning the adjustment of an income tax refund of ₹6.00 crore against pre-existing tax liabilities, arising under the Income Tax Act, 1961, in the context of insolvency proceedings governed by the Insolvency and Bankruptcy Code, 2016 (Section 31(1)). The dispute centres on whether a Resolution Applicant can claim a refund for an assessment year preceding the resolution plan, and whether the Income Tax Department was justified in setting off the refund against “old tax dues” that formed part of the corporate debtor’s financial statements during the CIRP. The petitioner, Sree Metaliks Limited, had challenged the adjustment before the Orissa High Court, contending that the refund for Assessment Year 2010-11 was independently due and could not be appropriated toward liabilities not properly submitted before the Resolution Professional, relying heavily on the Supreme Court’s ruling in Ghanashyam Mishra and Sons v. Edelweiss ARC (2021), which held that claims not included in an approved resolution plan stand extinguished.

The Division Bench of the Supreme Court comprising Justice Manoj Misra and Justice Ujjal Bhuyan, has issued notice on the Special Leave Petition as well as on the application for condonation of delay, keeping the petitioner’s plea alive. While the Orissa High Court had upheld the Department’s action holding that the refund pertained to a pre-resolution period and that its adjustment merely reduced acknowledged “old income tax” dues considered in the CIRP the Supreme Court has sought the Revenue’s response within six weeks. The apex court will hear the matter thereafter, leaving open the question of whether a Resolution Applicant can assert refund claims relating to years predating the resolution plan.

MADRAS BAR ASSOCIATION vs UNION OF INDIA AND ANOTHER CITATION : 2025 TAXSCAN (SC) 374

The Supreme Court dealt with a constitutional challenge to several provisions of the Tribunals Reforms Act, 2021, focusing on issues relating to judicial independence and whether Parliament could reenact provisions previously struck down by the Court. The core legal issue concerned whether Parliament, while exercising its legislative power, could reintroduce provisions that suffered from the same constitutional defects identified in earlier judgments particularly regarding tenure, age limits, qualifications, and executive control over tribunals as laid down in the Madras Bar Association (MBA) IV and MBA V cases. The Court reiterated that while Parliament may enact new laws to neutralise the basis of earlier judgments, it cannot reenact provisions that revive previously invalidated constitutional infirmities, as doing so violates principles of separation of powers and judicial review under Articles 32, 136, 141, 226 and 227 of the Constitution.

A Bench led by Chief Justice B.R. Gavai examined the statutory scheme, reviewed prior tribunal-related judgments, and ultimately struck down the unconstitutional provisions of the Tribunals Reforms Act, 2021. The Court held that the impugned provisions failed to cure defects previously identified and continued to undermine judicial independence. It issued binding directions requiring that the principles laid down in MBA (IV) and MBA (V) will continue to govern all aspects of tribunal appointments, qualifications, tenure, and service conditions until Parliament enacts a constitutionally compliant framework. Significantly, the Bench directed the Centre to establish a National Tribunals Commission within four months, mandated that its functioning remain free from executive control, and clarified that certain tribunal members such as those of the ITAT appointed before the Act would continue under the earlier statutory regime. The writ petitions were accordingly allowed.

M/S PARLE AGRO PVT vs THE COMMISSIONER OF COMMERCIAL TAX&ORS CITATION : 2025 TAXSCAN (SC) 375

The Supreme Court of India is examining the legal issue of product classification under the Chhattisgarh Entry Tax Act, 1976, specifically whether “Frooti” should be treated as a fruit product falling under the residuary entry or as a non-alcoholic drink under Entry 14 of Schedule-II. The challenge arises from the Chhattisgarh High Court’s judgment dated 11.09.2018, which held that “Frooti” qualifies as a non-alcoholic beverage for purposes of entry tax. The appellants, M/s Parle Agro Pvt. Ltd., argued that “Frooti” derives its core identity from fruit pulp and therefore cannot be grouped with beverages of unrelated composition included in Entry 14. They contended that the High Court incorrectly rejected the classification based on the product’s essential character, thereby misapplying statutory interpretation principles related to taxing entries.

The Bench of Justice M.M. Sundresh and Justice Satish Chandra Sharma granted leave in the Special Leave Petition, permitting Parle Agro to file additional documents and listing the matter for final hearing on 11 March 2026. By granting leave, the Supreme Court has agreed to examine the correctness of the High Court’s interpretation that fruit-based drinks fall within Entry 14 and to reconsider whether “Frooti” should instead be classified under the residuary entry for fruit products. The High Court had upheld the Single Judge’s view, dismissed the company’s appeal, and affirmed taxation of “Frooti” at the rate applicable to non-alcoholic beverages. The Supreme Court will now adjudicate on the validity of this classification.

COMMISSIONER OF INCOME TAX (CENTRAL) BHOPAL vs LAXMINARAYANSHIVHARE CITATION : 2025 TAXSCAN (SC) 377

The Supreme Court of India recently dealt with the legal issue concerning the taxability of income earned by an Association of Persons (AOP) and whether such income can be clubbed with the individual income of its members under the Income-tax Act, 1961. The matter originated from assessment proceedings involving Laxmi Narayan Shivhare, where the Assessing Officer sought to treat the syndicate’s income as part of the assessee’s individual taxable income. Both the CIT(A) and the ITAT rejected this approach, holding that the syndicates constituted independent taxable entities and that income assessed in the hands of the AOP could not again be assessed in the hands of its members. The Madhya Pradesh High Court, affirming this reasoning, held that clubbing such income would amount to double taxation, contrary to the statutory scheme governing assessments of individuals versus associations.

The Bench, consisting of Justice Manoj Kumar Varale and Justice Sanjay Kumar Mithal considered the Revenue’s Special Leave Petitions and upheld the High Court’s ruling. The Supreme Court declined to interfere with the judgment of the Madhya Pradesh High Court, noting that once income has been assessed in the hands of the AOP or syndicate, the Revenue cannot reassess the same income in the hands of its individual members. Consequently, the Court dismissed the SLPs on 7 November 2025, thereby confirming that AOP income must be taxed only in the hands of the AOP and cannot be clubbed with member-level income for computing tax liability.

The Supreme Court dealt with a controversy concerning charitable expenditure and exemption claims under Section 11 of the Income Tax Act, 1961, as well as disallowances made under Section 40(a)(ia) relating to alleged TDS defaults. The matter arose from assessments of the Hyderabad Cricket Association (HCA), where the assessing officer had disallowed various expenses for want of adequate bills, vouchers, and confirmations, and had also questioned cash payments and donations, including one to the Hyderabad Hockey Association. The central legal issue before the Court was whether the Income Tax Appellate Tribunal (ITAT) was justified in remanding the matter for fresh factual verification after noting that similar issues in earlier years had been accepted upon reassessment. The case reached the Supreme Court after the Revenue challenged the Telangana High Court’s dismissal of its appeal, which held that the ITAT’s order involved only factual examination and raised no substantial question of law.

The Division Bench comprising Justice Pankaj Mithal and Justice Prasanna B. Varale criticised the Income Tax Department for its excessive delay of 524 days in filing the Special Leave Petition, remarking that the authorities appeared to have “not trusted even upon its lawyers.” Although the Bench found the reasons for delay unsatisfactory and noted the Department’s unnecessarily prolonged internal vetting process, it nevertheless condoned the delay in both filing and refiling, primarily because similar matters were already pending before the Court. The Supreme Court therefore directed that the case be tagged with Civil Appeal No. 1294 of 2015 and forwarded a copy of the order to the concerned Commissioner of Income Tax and other senior authorities for necessary corrective action. The SLP will now proceed to be heard on the Revenue’s challenge to the ITAT’s remand directing fresh factual verification of HCA’s expenditure claims.

The Supreme Court examined whether the Rajasthan High Court was right in refusing to exercise its writ jurisdiction under Article 226 of the Constitution in a matter arising under the Customs Act, 1962. The controversy stemmed from a 1996 adjudication order confiscating 294 silver chaurasas weighing 252.177 kg and imposing a penalty of ₹50,000 on Rikhab Chand Jain under the Customs Act. The central legal issue before the Supreme Court was whether a writ petition was maintainable when an alternative statutory remedy before the High Court itself had been allowed to lapse.

The Bench comprising Justice Dipankar Datta and Justice Aravind Kumar upheld the Rajasthan High Court’s decision, reiterating that when a statute provides a specific alternative remedy such as a reference under Section 130A a writ petition should ordinarily not be entertained, especially after the limitation period for availing that remedy has expired. The Supreme Court noted that the appellant could have sought condonation of delay in the reference proceedings and that his writ petition lacked the essential pleading that the Tribunal had failed to decide the confiscation issue, even though the appeal memo before CEGAT mentioned it. Since this foundational averment was absent, the Supreme Court held that the appellant could not claim adjudicatory error, and therefore the High Court’s refusal to examine the matter on merits was justified. The appeal was accordingly dismissed, affirming the confiscation and the penalty as sustained by the Rajasthan High Court.

The Supreme Court has struck down as unconstitutional the statutory requirement mandating that Chartered Accountants must possess a minimum of 25 years of practice experience to be eligible for appointment as Accountant/Technical Members of the Income Tax Appellate Tribunal (ITAT). This statutory stipulation challenged in a batch of petitions led by the Madras Bar Association with the Institute of Chartered Accountants of India supporting the challenge was held to be arbitrary, exclusionary, and violative of constitutional principles governing judicial independence and fair access to tribunal positions.

The Division Bench comprising Chief Justice B.R. Gavai and Justice Vinod Chandran declared the 25-year experience requirement invalid. The Bench held that allowing such a provision to stand would unjustifiably exclude younger and well-qualified Chartered Accountants from entering tribunal service, mirroring the concerns already addressed in MBA (IV). Affirming parity between advocates and Chartered Accountants for purposes of eligibility, the Court stated that there was “no difficulty in applying the same analogy” and ruled the impugned provision to be unconstitutional. Importantly, the Supreme Court also directed the Union of India to ensure that future legislation respects this ruling and does not attempt to reintroduce or replicate the invalidated 25-year mandate.

M/S DALMIA POWER LIMITED vs THE ASSISTANT COMMISSIONER OF INCOME TAX CITATION : 2025 TAXSCAN (SC) 381

The Supreme Court intervened to stay penalty proceedings initiated under Section 272A of the Income Tax Act, 1961, after finding that the Income Tax Department had proceeded with issuing a penalty notice despite a subsisting stay of the Madras High Court’s order. The proceedings arose from reassessment actions initiated against Dalmia Power Limited, which had earlier succeeded before a Single Judge of the Madras High Court who quashed the reassessment on the ground that the extended-limitation precondition under the Act was not satisfied. Although the Department succeeded before the Division Bench in April 2025, prompting the petitioner to approach the Supreme Court, the Department issued a penalty notice dated 14 November 2025 even though the High Court’s order had been stayed. The central issue before the Supreme Court was whether the continuation of penalty proceedings, particularly those relating to failure to answer questions or furnish information under Section 272A, could survive once the High Court’s order had already been suspended.

The Bench comprising Justice Vikram Nath and Justice Sandeep Mehta stayed all further proceedings arising from the penalty notice, holding that once the Supreme Court had stayed the High Court’s judgment, the Revenue could not proceed with consequential steps. Observing that the penalty proceedings flowed directly from the High Court’s order that had already been stayed, the Bench ordered that “all further proceedings as a consequence of the notice dated 14.11.2025 shall also remain stayed,” and disposed of the interlocutory application accordingly. This ensures that no coercive action under Section 272A will proceed while the main appeal remains pending before the Supreme Court.

MANGALAM EDU GATE vs ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE2 CITATION : 2025 TAXSCAN (SC) 382

The Supreme Court examined the challenge to reassessment proceedings under Section 148A of the Income Tax Act, 1961, raising the focused legal question whether reassessment notices must be issued by the Faceless Assessing Officer under the CBDT’s faceless scheme or may lawfully be issued by the jurisdictional Assessing Officer. The petitions arise from multiple writ petitions dismissed by the Delhi High Court, which had held that faceless and jurisdictional assessing officers exercise concurrent jurisdiction in Delhi. The petitioners (including Mangalam Edu Gate) contend the notices were invalid because they originated from the jurisdictional AO rather than the designated Faceless AO; the Revenue contends there is concurrent jurisdiction and the notices are therefore valid.

The Bench of Justice B.V. Nagarathna and Justice R. Mahadevan have issued notice and permitted service on the Central Agency, while granting limited interim relief: assessment proceedings may continue, but no coercive action (such as recovery, penalties or enforcement) shall be taken against the petitioners until further orders. The matter has been tagged with Sunrender Kumar Wadhwa v. Principal Commissioner of Income Tax & Anr., and will therefore be considered along with that matter to enable a comprehensive decision on whether the faceless scheme ousts or coexists with jurisdictional assessing officers for issuing reassessment notices.

The Supreme Court examined a challenge arising under the Customs Act, 1962, involving the confiscation of two gold chains weighing 198 grams seized from a Thai national, Chadchaporn Thiankrathok, at IGI Airport. The petitioner had approached the Delhi High Court through a writ petition assailing the Order-in-Original, claiming she had no knowledge of the order and had not been served any show-cause notice. The High Court, however, after verifying her identity and examining the record, noted that she had already given a statement under Section 108 of the Customs Act admitting that the gold had been handed over to her by an unknown individual and did not belong to her. Observing that the confiscation related to events predating her marriage and that she appeared aware of her obligation to declare dutiable goods, the High Court declined to set aside the order and instead directed her to pursue the statutory appellate remedy, treating the order as served as of the date of the High Court’s decision.

The Bench of Justice Pankaj Mithal and Justice Prasanna B. Varale found no error in the Delhi High Court’s reasoning and refused to interfere with its decision. The Supreme Court recorded that the petitioner’s rights had been adequately protected by the High Court through its direction that an appeal filed within the recalculated limitation period would be heard on merits without being dismissed for delay. Accordingly, the Court dismissed the Special Leave Petition while granting liberty to the petitioner to avail the statutory appellate remedy within 30 days, further directing that any such appeal must be adjudicated on its merits. With these observations, the matter was disposed of.

The Supreme Court is set to examine a significant question concerning the interplay between treaty law and domestic tax provisions specifically, whether the Double Taxation Avoidance Agreement (DTAA) prevails over Section 206AA of the IncomeTax Act, 1961 in determining the applicable tax-deduction-at-source (TDS) rate on payments made to non-residents who do not furnish a Permanent Account Number (PAN). The issue arises from a series of appeals involving Wipro Ltd., Vodafone Idea Ltd., Mphasis Ltd., and others, where the Income Tax Department applied the higher statutory TDS rate of 20% under Section 206AA, while the assessees applied the reduced 10% rate prescribed under the relevant DTAAs. The Karnataka High Court, in Wipro’s case concerning assessment year 2011-12, upheld the Income Tax Appellate Tribunal’s view that treaty rates override Section 206AA and that no TDS may be deducted at a rate exceeding that provided under the DTAA when treaty benefits are available.

The matter is presently before the Supreme Court in a batch of tagged appeals, including those arising from Wipro, Vodafone Idea, Mphasis, and Manthan Software Services Pvt. Ltd., all raising the common issue of whether Section 206AA can impose a higher TDS rate despite the DTAA. While noting earlier High Court observations particularly reliance on Danisco that Section 206AA cannot override treaty provisions the Supreme Court has directed that all connected petitions be listed together, with the Bench scheduling for hearing. By grouping these matters, the Court aims to settle the larger legal question on the precedence of treaty rates over domestic withholding-tax provisions, a ruling that will have major implications for cross-border payments and TDS compliance.

The Supreme Court has declined to interfere with the Punjab & Haryana High Court’s judgment upholding the grant of registration under Section 12AA of the Income Tax Act, 1961 to Yadvindra Public School Association, an educational society. The core legal issue concerned whether an institution imparting education without providing subsidised or free education to the poor could still qualify as a charitable organisation under Section 2(15) for the purpose of obtaining registration under Section 12AA. The dispute began in 2009 when the Commissioner of Income Tax rejected the registration application on the ground that the society was not engaged in charitable activity. However, both the ITAT and the High Court found that educational institutions recognised under Section 10(23C)(vi) are permitted to retain surplus up to 15%, and the mere existence of surplus does not negate charitable character so long as funds are applied towards educational purposes.

The Bench comprising Justice Aravind Kumar and Justice N.V. Anjaria dismissed the Revenue’s Special Leave Petition, concurring with the High Court’s conclusion that the society satisfied the statutory requirements for registration under Section 12AA. While the Supreme Court condoned the delay in filing, it made clear that it was “not inclined to interfere with the impugned order,” thereby affirming the High Court’s reliance on precedents such as Ananda Social and Educational Trust v. CIT (2020), which held that even proposed activities must be considered at the registration stage. With the dismissal of the SLP, the ITAT’s directive granting Section 12AA registration to the educational society now stands confirmed, bringing the matter to a close.

The Supreme Court examined whether a Show Cause Notice (SCN) issued under Section 74 of the Goods and Services Tax (GST) Act can be sustained when it does not contain material particulars indicating fraud, wilful misstatement, or intention to evade tax. The case arises from a challenge by G R Infra Projects Limited, which argued that the Department invoked Section 74 without any factual basis, even though such invocation requires clear evidence of fraudulent conduct. The core legal question before the Court is whether a vague and unsupported SCN can lawfully trigger proceedings under the stringent provisions of Section 74, instead of Section 73, which applies in the absence of fraud.

The Bench comprising Justice J.B. Pardiwala and Justice K.V. Viswanathan observed that the impugned SCN appeared “bereft of material particulars”, noting that apart from numerical figures, the notice disclosed no facts explaining why the Department alleged fraud or wilful suppression. Diverging from the view taken by the Madhya Pradesh High Court, which had upheld the SCN and dismissed the writ petition, the Supreme Court found serious deficiencies in the notice and accordingly entertained the Special Leave Petition, signalling that invocation of Section 74 requires a factually supported foundation and cannot rest on bare allegations.

The Supreme Court examined whether the mandatory 10% pre-deposit under Section 107(6) of the Central Goods and Services Tax (CGST) Act can be paid through the Electronic Credit Ledger (ECRL) instead of the Electronic Cash Ledger (ECL). The matter arose after the GST appellate authority rejected Flipkart’s appeals as “defective” on the ground that utilisation of Input Tax Credit (ITC) for the statutory pre-deposit violated Section 49(3) of the CGST Act and Rule 85(4) of the CGST Rules. Challenging this interpretation and the Patna High Court’s view that the pre-deposit constitutes “any other amount” payable only in cash, Flipkart approached the Supreme Court seeking revival of its GST appeals linked to assessments under Section 73 relating to alleged ITC mismatches.

The Bench of Justice B.V. Nagarathna and Justice R. Mahadevan allowed the revival of Flipkart’s GST appeals and directed the Department to file an affidavit clarifying the interpretation of Sections 49 and 107, read with CBIC Circulars dated 06.07.2022 and 28.10.2022, and Notification No. 53/2023 – Central Tax. The Supreme Court permitted Flipkart to move restoration applications before the appellate authority and ordered that no objections regarding delay or manner of pre-deposit shall be raised. By keeping the appeals alive and granting full interim protection, the Bench signalled its readiness to reconsider the restrictive interpretation adopted by the lower forums and to examine, on merits, whether statutory pre-deposit can lawfully be discharged through the Electronic Credit Ledger.

LG ELECTRONICS INDIA PRIVATE LIMITED vs ASSISTANT COMMISSIONER CITATION : 2025 TAXSCAN (SC) 388

The Supreme Court granted four weeks’ time to file vakalatnama and counter affidavit in the Special Leave Petitions challenging the Rajasthan High Court’s decision upholding the levy of entry tax. The core legal issue arises under Section 3 of the Rajasthan Tax on Entry of Goods into Local Areas Act, 1999, read with Rule 12(3) of the Rajasthan Entry Tax Rules, 1999, concerning whether goods brought from outside the State and retained in Rajasthan for more than six months, but later stock-transferred outside the State, attract entry tax.

The Single Bench of the Rajasthan High Court comprising Justice Ashok Kumar Jain dismissed all four Sales Tax Revision Petitions filed by the appellant, holding that Rule 12(3) validly operationalizes the statutory scheme by prescribing a reasonable timeframe to identify non-taxable stock transfers. The Court held that Section 3 is the charging provision and that LG Electronics had not challenged the constitutional validity of the Rule, therefore, the six-month condition had to be applied as enacted. Finding no substantial question of law and affirming the Tax Board’s reasoning, the High Court dismissed the revision petitions. The Supreme Court has now taken cognizance of the challenge to this ruling and granted time to the respondent to complete filings before the matter is next listed.

THE DEPUTY COMMISSIONER OF INCOME TAX vs M/S MAXIS INTERNATIONALSDN BHD CITATION : 2025 TAXSCAN (SC) 389

The Supreme Court reprimanded the Income Tax Department for repeatedly filing Special Leave Petitions on issues that already stand conclusively settled by earlier judgments, particularly the ruling in Engineering Analysis Centre of Excellence Pvt. Ltd. v. CIT (2022). The legal issue before the Court concerned the taxability of royalty on interconnect service charges paid to non-resident telecom operators, and whether such payments attract liability under Section 195 of the Income Tax Act, 1961. The Department sought to challenge a Karnataka High Court judgment which held that tax was not deductible at source on such payments made to non-residents.

The Division Bench of Justice B.V. Nagarathna and Justice R. Mahadevan dismissed the SLP, expressing strong displeasure at the Department’s persistence in litigating settled questions of law. The bench observed that the petition itself suffered from a “gross delay of 260 days,” and even after condoning the delay in refiling, the Court found no merit to justify interference. Referring to its earlier rulings, including Engineering Analysis Centre of Excellence Pvt. Ltd. v. CIT (supra), the Supreme Court held that payments made to non-resident telecom operators or foreign software providers do not constitute “royalty” and therefore do not trigger tax deduction under Section 195. Finding the earlier precedent squarely applicable, the Court dismissed the SLP and reiterated that such repetitive filings only contribute to docket congestion and waste valuable judicial time.

SAANIL PATNAYAK vs BAR COUNCIL OF INDIA CITATION : 2025 TAXSCAN (SC) 390

The Supreme Court declined to interfere with the regulatory framework of the Bar Council of India (BCI) which mandates that Indian citizens holding foreign law degrees must clear an additional qualifying examination, even after completing the prescribed two-year bridge course, before becoming eligible for enrolment and the All India Bar Examination (AIBE). The legal issue centered on whether the BCI has statutory authority under the Advocates Act, 1961 and the BCI Rules to impose a separate qualifying exam on foreign law graduates, and whether such a requirement amounted to arbitrary or duplicative academic scrutiny.

The Division Bench of Justice Vikram Nath and Justice Sandeep Mehta dismissed the petition, holding that the petitioner had previously approached the Delhi High Court on the same issue and had withdrawn that plea after receiving an assurance regarding provisional enrolment. The Supreme Court found no basis to re-open the challenge and declined to examine the validity of the qualifying exam, noting the petitioner had already sought identical relief earlier. By refusing to interfere, the Court effectively upheld the BCI’s position that the qualifying examination remains a mandatory prerequisite for foreign law graduates seeking enrolment in India, notwithstanding the completion of the two-year bridge course, thereby affirming the continued applicability of the BCI’s regulatory scheme.

AA ESTATES PRIVATE LIMITED vs KHER NAGAR SUKHSADAN CO-OPERATIVEHOUSING SOCIETY LTD. & ORS. CITATION : 2025 TAXSCAN (SC) 391

The Supreme Court has dismissed an appeal filed by a developer undergoing Corporate Insolvency Resolution, thereby upholding the Bombay High Court’s order that allowed a housing society to appoint a new developer for a slum redevelopment project. The central legal issue before the apex court concerned the applicability of the moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 (IBC) and whether development rights under a terminated redevelopment agreement could be treated as “assets” or “property” under Section 3(27) of the IBC.

The Bench of Justice J.B. Pardiwala and Justice R. Mahadevan upheld the Bombay High Court’s ruling, holding that the moratorium under Section 14 protects only existing and enforceable rights, not inchoate, forfeited, or extinguished rights arising from the developer’s non-performance. The Court concluded that since the redevelopment agreement was validly terminated in 2019,three years prior to the CIRP, the developer had no surviving proprietary or contractual right capable of protection under the IBC. Noting that the developer neither secured possession nor undertook any steps toward redevelopment, the Court ruled that such dormant development rights could not be elevated to the status of an “asset” of the corporate debtor. Emphasizing that the IBC cannot be used as a shield by defaulting developers to indefinitely stall socially vital slum redevelopment projects, the Supreme Court affirmed the High Court’s direction permitting statutory authorities to grant approvals to the newly appointed developer, thereby ensuring continuity of the welfare-oriented housing project for vulnerable residents.

THE COMMISSIONER, DEPARTMENT OF TRADE AND TAXES & ANR vsINGRAM MICRO INDIA PVT. LTD. CITATION: 2025 TAXSCAN (SC) 392

The Supreme Court has disposed of a batch of appeals concerning the denial of C-Forms for inter-State purchases under the Central Sales Tax Act, 1956, after noting that the Revenue had already complied with the Delhi High Court’s directions in the lead matter. The core legal issue before the Court concerned whether a dealer’s omission of certain inter-State purchase transactions in revised returns justified refusal of C-Forms, despite the transactions being genuine and duly verifiable.

The Bench of Justice B.V. Nagarathna and Justice R. Mahadevan observed that the Department had already issued the required C-Forms in the lead case and completed the assessment proceedings, thereby implementing the High Court’s findings in full. Since all other appeals arose from identical factual backgrounds and merely followed the same High Court reasoning, the Supreme Court found no basis to reopen issues already resolved and accepted by both parties. The Court noted that the High Court had rightly held that Rules 5(4)(i) and 5(4)(iv) of the CST (Delhi) Rules were not attracted, as the omission in returns did not constitute concealment nor cause any revenue prejudice. Accordingly, the Court disposed of the appeals by directing the Department to extend similar compliance and issue C-Forms and F-Forms in all connected matters, subject to the assessees furnishing indemnity bonds.

COMMISSIONER OF CUSTOMS vs NARSIBHAI KARAMSIBHAI GAJERA CITATION : 2025 TAXSCAN (SC) 393

The Supreme Court has ruled that where multiple units collectively contribute to a continuous and integrated manufacturing process, excise duty cannot be avoided by treating the units as separate entities. The case concerned the scope of “manufacture with the aid of power” under Section 2(f) of the Central Excise Act, 1944, and the eligibility of exemption under the relevant power-based processing notification.

The Bench of Justice Pamidighantam Sri Narasimha and Justice Atul S. Chandurkar set aside the CESTAT’s order and restored the Commissioner’s demand and penalties, holding that both units were jointly engaged in a power-aided, continuous manufacturing process, thereby disqualifying the assessee from exemption. The Court emphasized that if the various processes undertaken by different units collectively form a single, inseparable chain culminating in the final product, the entire operation constitutes manufacture with the aid of power, even if power is used at only one essential stage. The Court further observed that the Tribunal had ignored clear evidence from the panchnama showing power usage, and had incorrectly relied on belated retractions by the partners. Noting that bleaching and mercerising at Unit 1, squeezing and stentering at Unit 2, and final bailing and packing at Unit 1 formed a seamless production line, the Supreme Court held that both units together manufactured finished cotton fabrics using power, rendering the exemption inapplicable.

M/S CAPPITHAN AGENCIES vs COMMISSIONER OF CUSTOMS CITATION : 2025 TAXSCAN (SC) 394

The Supreme Court dealt with an issue concerning the revocation of a Customs Broker licence under the Customs Brokers Licensing Regulations (CBLR), 2018, in the context of a large-scale diplomatic-cargo gold smuggling racket. The legal questions before the Court stemmed from allegations of violation of obligations under Regulation 10(a), (d), (e), (m), and (n) of the CBLR, 2018, relating to due diligence, verification of documents, and safeguarding the integrity of customs processes.

The bench comprising Justice J.B. Pardiwala and Justice Prasanna B. Varale dismissed the Special Leave Petition (SLP) filed by Cappithan Agencies, thereby affirming the Kerala High Court’s judgment that upheld the revocation of the broker’s licence. The Supreme Court found no grounds to interfere with the findings of the High Court, which had held that denial of cross-examination caused no prejudice, that the 90-day timeline under Regulation 17(5) was directory rather than mandatory, and that serious breaches of trust by the broker, particularly in repeatedly misdeclaring consignor details in diplomatic cargo justified the harsh regulatory action. By refusing to intervene, the apex court effectively validated the Commissioner’s original order and the Tribunal’s confirmation of licence revocation, forfeiture of security deposit, and penalty.

INDIAN NATIONAL CONGRESS vs DEPUTY COMMISSIONER OF INCOME TAX,CENTRAL CIRCLE -19 & ORS CITATION : 2025 TAXSCAN (SC) 395

The Supreme Court is set to hear a crucial tax dispute concerning the Indian National Congress on 5 December 2025, involving the denial of a ₹199-crore income tax exemption under Section 13A of the Income Tax Act, 1961, a provision that grants tax benefits to registered political parties. The underlying legal issues arise from allegations that the party filed its return belatedly in violation of Section 139(4B) and accepted cash donations exceeding ₹2,000, contrary to clause (d) of the first proviso to Section 13A. These alleged violations led the Assessing Officer to deny the exemption, raise a substantial tax demand, and initiate recovery proceedings under Section 226(3) of the Act.

The Bench led earlier by Justice B.V. Nagarathna and Justice Nongmeikapam Kotiswar Singh issued notice in the party’s Special Leave Petition on 20 August 2024, clarifying that the pendency of the matter would not prevent the ITAT from proceeding with the main appeal. The Supreme Court later listed the matter for final hearing on 5 December 2025, after the Delhi High Court had declined to interfere with the ITAT’s rejection of the stay application holding that the Tribunal had applied its mind and supplied the required prima facie reasoning. With nearly ₹65.94 crore already recovered by the Department, the High Court had permitted the Congress to file a fresh stay request before the ITAT based on changed circumstances. The forthcoming hearing before the Supreme Court will now determine the trajectory of the ₹199-crore Section 13A exemption dispute.

KULDIPAK RAJESH PRASHAD vs UNION OF INDIA & ORS. CITATION : 2025 TAXSCAN (SC) 396

The Supreme Court issued notice to the Union of India in a writ petition challenging the withdrawal of GST concessions on motor vehicles for persons with disabilities. The case raises an issue concerning whether a series of government notifications and clarifications issued between 2021 and 2025, culminating in the Finance Ministry’s clarification dated 29.09.2025 and the Heavy Industries notification dated 8.10.2025 have unlawfully extinguished the concessional GST regime for disabled car buyers.

The Bench comprising Justice Vikram Nath and Justice Sandeep Mehtathe petitioner’s challenge alleging that recent policy actions have effectively dismantled a mobility-support framework in place since 1999. After noting the allegations of arbitrary exclusion of non-orthopaedically disabled persons, inconsistent governmental positions before various High Courts, and the absence of any alternative mechanism ensuring mobility assistance, the Supreme Court issued notice to the Union of India, directing it to file its response within four weeks.

SRI LAKSHMI HOTEL PVT. LIMITED & ANR vs SRIRAM CITY UNIONFINANCE LTD. & ANR CITATION : 2025 TAXSCAN (SC) 397

The Supreme Court dealt with the legality of interest awarded in an arbitral award under Section 31(7)(b) of the Arbitration and Conciliation Act, 1996. The legal issue concerned whether the arbitrator could award 24% interest on high-risk commercial loans, challenged by the appellants as usurious and contrary to RBI guidelines and the Usurious Loans Act, 1918.

The Bench of Justices J.B. Pardiwala and K.V. Viswanathan dismissed the appeal, holding that arbitrators have discretion to determine interest rates in commercial loan agreements, and the interest awarded did not violate public policy. The Court emphasized that interference under Section 34 of the Act is limited and cannot be invoked merely on grounds of alleged contractual misinterpretation. The Supreme Court upheld the arbitral award directing payment of ₹2.21 crore with 24% interest, noting that partial recovery through insolvency proceedings had occurred and it would be unjust to deprive the lender of its rights. The appeal was dismissed, reaffirming the principle that courts should not disturb arbitral awards absent patent illegality or breach of fundamental justice principles.

Livein Aqua Solutions Private Limited vs HDFC Bank Limited CITATION : 2025 TAXSCAN (SC) 399

The Supreme Court addressed a procedural issue under the Insolvency and Bankruptcy Code, 2016 (IBC) concerning a Section 7 application filed by a financial creditor. The legal issue involved whether a defective affidavit accompanying a Section 7 petition warrants automatic rejection of the application, with the Court examining the interplay between Section 7(5)(b) and the NCLT Rules.

The Bench of Justice Sanjay Kumar and Justice Alok Aradhe allowed the appeal, holding that procedural defects that are curable should not defeat substantive rights. The Court observed that the NCLT had erred by failing to issue a specific notice under Section 7(5)(b) to the bank to rectify the defect before rejecting the application. The Supreme Court directed HDFC Bank to cure the defective affidavit within seven days and instructed the NCLT, Ahmedabad Bench, to hear the matter in accordance with law. The judgment reinforces that procedural technicalities cannot override substantive justice in insolvency proceedings.

THE STATE OF KARNATAKA & ANR vs TAGHAR VASUDEVA AMBRISH& ANR CITATION : 2025 TAXSCAN (SC) 400

The Supreme Court adjudicated a dispute concerning the levy of Goods and Services Tax (GST) at 18% on the leasing of residential premises used as hostels. The legal issue centred on whether the exemption under Entry 13 of Notification No. 9/2017-Integrated Tax (Rate) dated 28 June 2017 applied when a residential property was leased to a company for long-term student accommodation prior to the 2022 amendment to the exemption notification.

The Bench of Justice J.B. Pardiwala and Justice K.V. Viswanathan dismissed the appeals filed by the State of Karnataka, holding that the property qualified as a “residential dwelling” and that the exemption applied as long as the ultimate use was residential, irrespective of whether the lessee personally occupied it. The Court emphasized that taxing such leases before 18.07.2022 would contradict the legislative intent of the exemption and affirmed that the assessee was entitled to GST exemption for the relevant period.