Supreme Court & High Courts Weekly Round-Up

SUPREME COURT

GST Dept Cannot Attach Bank Accounts or Restrain Funds Once 10% Pre-Deposit for Appeal is Paid: Supreme Court

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.

Non-Resident Assessee need not Mandatorily have PE in India: Supreme Court remands Disallowance to AO

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.

HIGH COURT

Karnataka HC Rules Canara Bank’s SARFAESI Charge Prevails over Later GST Department Claim, Orders Removal of Encumbrance

THE CANARA BANK vs THE STATE OFKARNATAKA CITATION : 2025 TAXSCAN (HC) 2099

The Karnataka High Court dealt with a significant legal issue concerning the priority of charges between secured creditors and tax authorities under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) and the Goods and Services Tax Act, 2017 (GST Act). The case arose when Canara Bank challenged the encumbrance created by the Commercial Tax Department on a residential property in Belagavi that had already been mortgaged to the bank as security for a loan. The bank had initiated proceedings under Sections 13(2) and 13(4) of the SARFAESI Act after the loan turned non-performing and later discovered that the GST Department had also placed a charge on the same property to recover tax dues of ₹1.38 crore. The crux of the dispute revolved around whether the bank’s earlier registered charge under Section 26-E of the SARFAESI Act, which grants secured creditors priority over all other claims including government dues, would prevail over the subsequent statutory charge created under Section 82 of the GST Act, which similarly accords precedence to tax liabilities.

The bench of Justice Suraj Govindaraj of the Karnataka High Court held that Canara Bank’s registered charge under the SARFAESI Act takes precedence over the subsequent charge created by the GST Department. The court observed that when two statutes containing non-obstante clauses conflict, the chronology of charge creation determines priority. Since the bank’s security interest was registered in July 2017, whereas the GST charge arose in November 2019, the earlier charge enjoyed legal superiority. The Court directed the State authorities to remove the GST encumbrance from the property card within fifteen days and permitted the bank to proceed with the auction, stipulating that any surplus funds be remitted to the GST Department toward the borrowers’ outstanding tax dues.

Natural Justice Breach and Procedural Delay Renders GST Assessment Invalid: Madras High Court Directs De-Freezing of Bank Accounts

M/s.VMC POLYCHEM LLP vs TheCommercial Tax Officer CITATION : 2025 TAXSCAN (HC) 2100

The Madras High Court addressed an issue under the Central Goods and Services Tax Act, 2017, holding that breach of the principles of natural justice and undue procedural delay in completing assessment proceedings under Section 73 rendered the final order unsustainable. The case concerned M/s. VMC Polychem LLP, represented by its partner Pritesh Rohit Mehta, who challenged an assessment order dated January 29, 2025, passed by the Commercial Tax Officer, Chennai, for the Financial Year 2021–2022. The impugned order, issued after a prolonged period of inaction, was accompanied by the freezing of the petitioner’s two bank accounts with IndusInd Bank.

The Bench of Justice Krishnan Ramasamy found that the notices calling for hearing were served solely through the GST portal and not by physical delivery as mandated under Section 169 of the CGST Act, thereby justifying the petitioner’s non-response. The Court held that the assessment proceedings suffered from procedural irregularity, lack of proper service, and an unreasonable delay inconsistent with the legislative intent of expeditious completion. Emphasizing that even in the absence of an express timeline under Section 73, assessments should ordinarily be concluded within three months from issuance of a show cause notice, the Court set aside the impugned assessment order and remitted the matter for fresh consideration. It was further directed the petitioner to deposit 10% of the disputed tax within four weeks, following which the authorities were instructed to de-freeze the petitioner’s bank accounts and permit normal operation.

GST Liability Cannot Be Deferred Due to Non-Reimbursement by Government Department: Madras High Court Allows Installment Relief to Contractor

Devaki Constructions vs TheDirector CITATION : 2025 TAXSCAN (HC) 2101

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

The Bench of Justice Krishnan Ramasamy held that as per the terms of the Government contract, the liability to pay GST rests solely on the contractor, and the failure of the contracting department to release the differential amount cannot be a ground to defer statutory tax payments. The Court ruled that the petitioner must first discharge the tax liability under the CGST Act and thereafter pursue recovery of the differential component from the department separately. However, taking into account the petitioner’s financial hardship and the fact that the first respondent was a State Government entity, the Court allowed payment of the outstanding ₹4,15,69,890 in eight equal monthly installments. The Bench also granted liberty to the tax authorities to initiate recovery proceedings in the event of default, and accordingly, disposed of the writ petition without costs.

Delay in Payment of Self-Assessment Tax If Subsequently Paid Not a Willful Attempt to Evade Tax u/s 276C(2) of Income Tax: Bombay HC

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

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

The bench of Justice S. M. Modak ruled in favour of the petitioner, emphasizing that the term “willful” under Section 276C(2) implies deliberate and intentional conduct, not a mere procedural lapse or delay. The Court observed that since the petitioner had fully paid the self-assessment tax and interest, there was no element of willful evasion. It was further held that prosecuting an assessee who has already made payment would constitute an abuse of the process of law. Accordingly, the Bench concluded that the essential ingredients of Section 276C(2) were not met, as the record lacked any evidence of deliberate evasion. The order dated 5 December 2024 and the related criminal complaint were therefore quashed and set aside, and the writ petition was allowed.

Once Income Disclosure Certificate is Validly Issued, Revenue Cannot Reopen Assessment Unless It is Cancelled: Bombay HC

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

The Bombay High Court recently dealt with the legal issue of whether the Revenue can reopen an assessment once a valid Income Disclosure Certificate has been issued under the Income Disclosure Scheme (IDS), 2016, framed under Section 183 of the Finance Act, 2016. The case concerned Prabhakar Nerulkar, a real estate businessman from Goa, who had not filed income tax returns for six assessment years. Acting on professional advice, he availed of the IDS, 2016, disclosing his undisclosed income, which was duly accepted by the Principal Commissioner of Income Tax, Panaji, who issued a Certificate of Declaration (Form IV) under the scheme. A reassessment order was subsequently passed under Sections 147, 144, and 144B, adding ₹1.43 crore to his income. After partial rejection of his revision petition under Section 264, the petitioner approached the High Court, contending that the reassessment violated the statutory immunity granted under the IDS.

The Division Bench comprising Justice Bharati Dangre and Justice Ashish S. Chavan held that once a valid IDS certificate is issued, the Revenue cannot reopen the assessment for the same income unless the certificate is cancelled for misrepresentation or fraud. The Court observed that the IDS, 2016, was introduced as a one-time opportunity for taxpayers to declare previously undisclosed income, pay tax at a prescribed rate of 45%, and obtain complete immunity from further proceedings. Relying on the provisions of the Finance Act and relevant CBDT circulars, the Bench clarified that information contained in a valid declaration is confidential and cannot be used for reassessment unless the declaration itself is invalidated. Since the department had neither alleged nor proved fraud or misrepresentation by the petitioner, nor revoked the issued certificate, the reassessment proceedings under Section 147 and all consequential orders were declared invalid. The Court accordingly quashed the reassessment order dated 16 March 2022, the revision order under Section 264 dated 14 November 2023, and all related notices, thereby allowing the writ petition.

Mere Adjustment of ITC doesn't attract Section 73 Proceedings: Kerala HC Quashes GST Order

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

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

The bench of Justice Ziyad Rahman A.A. observed that the issue was squarely covered by the earlier precedent in Rejimon Padikapprambil Alex. The Court reaffirmed that Section 73 proceedings are maintainable only when there is wrongful availment or utilization of ITC causing a tangible loss to the exchequer, not in cases of mere misclassification or technical adjustment between CGST, SGST, and IGST heads. Finding that the petitioner’s case involved no element of fraud, suppression, or wrongful benefit, the Court ruled that the impugned order lacked legal foundation. Accordingly, the writ petition was allowed, and the order dated 26 December 2023 was quashed, reiterating that mere procedural errors in ITC allocation cannot trigger penal proceedings under Section 73 of the GST Act.

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

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

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

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

Is GST Applicable on DGCA-Approved Commercial Flying Training Organizations? Allahabad HC Remands Case to AAR

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

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

The Bench of Justice Rohit Ranjan Agarwal observed that the Aircraft Act, 1934 and Aircraft Rules, 1937 empower the DGCA to approve training organizations and their courses, thus rendering such programs legally recognized. Referring to the clarificatory circular dated October 11, 2024, issued by the Ministry of Finance, which confirmed that DGCA-approved flight training institutions fall under the ambit of educational institutions exempt from GST, the Court held that the earlier orders of the Authority for Advance Ruling (AAR) and the Appellate Authority for Advance Ruling (AAAR) were passed without considering this vital clarification. Consequently, the High Court set aside both orders and remanded the matter to the AAR for fresh consideration within three months, directing it to re-evaluate the issue in light of the new government clarification.

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

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

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

The Division Bench comprising Justice V. Kameswar Rao and Justice Vinod Kumar held that the license fee was paid for the commercial right to use the firm’s goodwill and trade name, not as a form of revenue sharing. The Court observed that the Bar Council of India Rules do not treat such payments as an offence and that the arrangement was a legitimate commercial transaction. It clarified that linking the license fee to a percentage of the firm’s revenue was only a method of computation and did not constitute prohibited sharing of professional income. Upholding the ITAT’s findings, the Bench held that the payment represented a lawful business expense made in the ordinary course of business and that no substantial question of law arose from the Revenue’s appeal. Consequently, the High Court dismissed the appeal and affirmed that the license fee paid for the use of Remfry & Sagar’s goodwill was a valid deduction under Section 37(1) of the Income Tax Act.

Summary in GST Form DRC-01 Cannot Substitute Mandatory SCN, Unsigned & Incomplete Notice Invalid: Gauhati HC Quashes Order

DIGANTA KUMAR DEKA vs THE STATEOF ASSAM AND 2 ORS CITATION : 2025 TAXSCAN (HC) 2108

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

The bench of Justice Sanjay Kumar Medhi held that the issuance of a proper show cause notice under Section 73(1) is a mandatory legal requirement and that a summary in Form GST DRC-01 cannot replace the notice itself. The Court noted that the documents uploaded on the GST portal were unsigned, incomplete, and failed to specify the date and venue for a personal hearing, thereby violating Section 75(4) of the Act. Emphasizing that digital authentication is an essential procedural safeguard under Rule 26(3), the Court ruled that the unsigned and incomplete DRC-01 notice was legally invalid. Consequently, the impugned order dated 27 December 2023 was quashed, and the writ petition was allowed.

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

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

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

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

No Coercive Action To Be Taken If Taxpayers Cooperate With GST Investigation Into Fake ITC Claims: Chhattisgarh HC

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

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

The bench of Justice Naresh Kumar Chandravanshi observed that while tax authorities possess the power to summon and record oral evidence, such powers must be exercised fairly and without coercion when taxpayers are cooperating in the investigation. The Court noted that the petitioners had already filed their written replies and expressed readiness to participate in the inquiry. It directed the petitioners to appear before the DGGI, Raipur on 28 October 2025 for recording statements and to comply with subsequent summons as required. The Court directed that no coercive action shall be taken against the petitioners as long as they continued to cooperate with the investigation. The Court also instructed the department to dispose of the petitioners’ objections by passing a reasoned and speaking order, thereby ensuring adherence to due process. The writ petition was disposed of with no order as to costs.

Madhya Pradesh HC Imposes ₹25,000 Cost on GST Officer for Wrongly Dismissing Appeal as Time-Barred

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

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

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

Customs Seized Imported Used Printers Despite DGFT Chartered Engineer Clearance: Madras HC Orders Provisional Release

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

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

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

Levy of IGST on Ocean Freight under CIF Contracts Invalid after Mohit Minerals Ruling: Madras HC

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

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

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

Limitation of Income Tax Rule 68B Not Applicable to Debt Recovery under RDDB Act: Kerala High Court

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

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

The Bench of Justice Mohammed Nias C.P held that the RDDB Act is a self-contained code and that Rule 68B’s timelines cannot be imported into its recovery mechanism. The Court emphasized that the procedural adaptations from the Income Tax Act under Section 29 of the RDDB Act are only to the extent necessary and do not impose substantive limitations on debt recovery. Observing that the writ petition was also barred by delay and laches, and that third-party rights had arisen from the auction, the Court dismissed the petition, holding that Rule 68B is inapplicable to RDDB Act proceedings and that the petitioners’ challenge to the auction sale was legally untenable.

Non-Filing of Form 3CL Not Ground to Reopen Assessment u/s 147: Kerala HC Quashes ITAT Order Against Apollo Tyres on Limitation

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

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

The Division Bench of Justice A. Muhamed Mustaque and Justice Harisankar V. Menon held that, prior to the 2016 amendment to Rule 6(7A), it was the assessing officer’s responsibility to determine the allowable R&D expenditure, and the non-production of Form 3CL could not be treated as concealment by the assessee. The Court set aside the Tribunal’s order, ruling that reopening the assessment after four years on this basis was invalid and time-barred. The appeal was allowed in favor of Apollo Tyres Ltd. and against the Revenue.

Chhattisgarh HC Grants Bail in ₹23 Cr Fake GST ITC Case, Notes No Tax Assessment or Recovery Proceedings by Dept.

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

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

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

Customs cannot Insist on Environment Ministry Clearance for Importing Used Multifunction Printers: Madras HC

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

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

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

Income Tax Recovery Officer should Lift Attachment once ITAT Order Attains Finality: Madras HC

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

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

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

Interest on IGST Refund Mandatorily Payable After 60 Days from Due Date: Gujarat HC

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

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

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

Proper Officer Shall Consider Dropping GST Cancellation Proceedings if Pending Returns and Dues Are Cleared: Gauhati HC

DHIRGHAT HARDWARE STORES vs THEUNION OF INDIA CITATION : 2025 TAXSCAN (HC) 2120

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

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

SC/ST Provisions cannot be Invoked to Obstruct Banks’ Lawful Security Interest & Mortgage Rights u/ SARFAESI: Delhi HC

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

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

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

Status Quo Order Not Served: Orissa HC Upholds Bank's SARFAESI Auction of Cashew Unit's Property

gannath Cashew Processing Unitvs Registrar, Debts Recovery Appellate Tribunal CITATION : 2025 TAXSCAN (HC) 2122

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

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

Gujarat HC Dismisses SARFAESI Plea, Cites Petitioner's "Lack of Vigilance" and "Slumber" After Filing Appeal

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

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

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

Merely passing through Indian port to another country not amount to "import" under Section 2(23) of Customs Act: Madras HC refuses to intervene in Copper Scrap Transhipment

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

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

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

Misdeclaration of Broken Cashew Nut Pieces and Residues under Customs Act: Andhra Pradesh HC directs DRI to Expedite Decision considering perishable nature

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

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

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

Ex Parte and Uncommunicated CIT(A) Order Violates Natural Justice u/s 250: Chhattisgarh HC Sets Aside Income Tax Appeal Order

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

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

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

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

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

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

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

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

Chaitanya Baghel vs Directorateof Enforcement CITATION : 2025 TAXSCAN (HC) 2128

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

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

Allahabad HC Stays ₹110 Crore GST Proceedings Against Dabur Over ‘Hajmola Candy’ Classification Dispute

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

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

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

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates