Supreme Court & High Courts Weekly Round-Up

This weekly round-up analytically summarises the key stories related to the Supreme Court & High Courts reported at Taxscan.in during the previous week, from November 9, 2025 to November 15, 2025.

SUPREME COURT

Taxability of Issuance of Bonus Shares: Supreme Court to Hear Matter

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

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

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

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

M/S ANSAL PROPERTIES AND INDUSTRIES LTD vs COMMISSIONER OFINCOME TAX DELHI CITATION : 2025 TAXSCAN (SC) 343

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

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

Can Modvat Credit Be Refunded When Goods Are Later Found Non-Excisable? Supreme Court to Decide

M/S. SURANA TELECOM LTD. vs COMMISSIONER OF CUSTOMS AND CENTRALEXCISE CITATION : 2025 TAXSCAN (SC) 344

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

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

Service by E-Mail is Valid, Consolidated GST SCNs Justified in ITC Fraud Cases: Supreme Court Upholds Delhi HC Order

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

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

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

Customs Concessional Duty Relief on Massagers: SC to Hear Dept’s Appeal Over ‘Medical Use Only’ Clause Interpretation

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

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

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

Benami Amendment 2016 Retrospective or Not? Supreme Court to Examine Validity of Attachment Orders Issued Pre-2016

DEPUTY DIRECTOR OF INCOME TAX vs SOMESHWAR DARSHAN CO.OPERATIVEHOUSING SOCIETY LIMITED

CITATION : 2025 TAXSCAN (SC) 347

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

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

Can Customs Deny Advance Authorisation Benefit for Misclassified Imports? Supreme Court Stays Kerala HC Relief to Nitta Gelatin

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

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

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

Book Entries of Unverified Bank Overdrafts Not Genuine Income Tax Liabilities: Supreme Court sustains Delhi HC Order

HARSHA ASSOCIATES PRIVATE LIMITED vs DEPUTY COMMISSIONER OFINCOME TAX CITATION : 2025 TAXSCAN (SC) 349

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

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

Overriding effect of Article 5(3) of DTAA: Supreme Court Adjourns Hearing in Hyundai Heavy Industries Taxation Appeals

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

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

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

Supreme Court Grants 2 Weeks to File Additional Documents in SLP regarding Proceedings under PMLA

DIRECTORATE OF ENFORCEMENT 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.

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.

Supreme Court Dismisses Curative Petition, Upholds Limitation Period of 3 months for Proceedings under Customs Act

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

The Supreme Court through its order dismissed a curative petition filed by Pushpa L. Tolani challenged earlier final judgment, which had upheld the three-month limitation period for proceedings under Section 155(2) of the Customs Act, 1962. The Bench comprising 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.

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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.

Is Preloaded Software Part of Hardware for Customs Valuation? Supreme Court to Decide

OKOBOJI GLOBAL PRIVATE LIMITED 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.

Transfer of Title in Immovable Property by Way of Sale Excluded from Service Tax: Supreme Court

COMMISSIONER OF SERVICE TAX 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.

Bombay HC Strikes Down EEZ Customs Seizure Without Notification: SC to Decide on Department’s Appeal

THE COMMR.OF CUSTOMS vs M/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.

Service Tax Relief on Works for RDA and NRDA Townships under 2012 Notification: Supreme Court to Hear L&T’s Appeal

LARSEN AND TOUBRO LIMITED 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.

Club’s Service Tax Exemption on Charges Collected from Members: Supreme Court to Examine Issue

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.

CESTAT Rules Reliance’s Indonesian Steam Coal Imports Not Overvalued, Supreme Court to Hear Customs Appeal

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.

Eligibility of Trust allegedly for Working Particular Community Welfare to Claim Income Tax Exemption: Supreme Court sets for Final Hearing

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.

Whether Domestic Water Meters are Classifiable Under “Liquid” or “Flow Meters”? Supreme Court to Decide Matter

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.

CESTAT Rules Reassessment of Copper Busbars Exceeded Jurisdiction: SC to Hear Customs Appeal

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.

Supreme Court Set to Hear Empire Exports in Betel Nut Import Case Challenging Calcutta HC Order of Fresh Adjudication

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.

Challenge on provision u/s 10(46) of the Income Tax Act: SC to Hear CBDT's appeal Against TPCB

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).

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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.

Concurrent Jurisdiction of JAO and FAO to initiate Re-assessment proceedings under Income-Tax Act: Supreme Court issues notice

YUKTI EXPORT vs INCOME TAX OFFICER WARD CITATION : 2025 TAXSCAN (SC) 365

The Supreme Court of India considered a legal challenge concerning the scope of jurisdiction under Section 148 of the Income-tax Act, 1961, specifically addressing whether both the Jurisdictional Assessing Officer (JAO) and the Faceless Assessing Officer (FAO) can concurrently issue reassessment notices. The petitioners, including Yukti Export and others, assailed the Delhi High Court’s judgment that upheld concurrent jurisdiction, arguing that only the FAO could initiate reassessment under the faceless regime, and relying on contrary rulings from the Bombay and Telangana High Courts.

The bench of Justice J.B. Pardiwala and Justice K.V. Viswanathan issued notice on the batch of Special Leave Petitions and granted interim relief by staying the assessment proceedings impugned before the Court until the next hearing. The Supreme Court also permitted dasti service and directed that the petitions be tagged with a connected matter for likely joint adjudication, thereby keeping the High Court’s ruling in abeyance pending final consideration.

Challenge on Service Tax Liability on "Event Management Service": Supreme Court Allows Exemption Application in HT Media's Tax Appeal

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 with 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.

Guidelines on Costs for Compounding Cheque Dishonour Cases in Damodar S Prabhu Ruling not Binding: 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.

Supreme Court agrees to Examine Plea Seeking Probe Into NCLAT Member's Disclosure of Higher Judge Trying to Influence Decision

M/S A.S. MET CORP PRIVATE 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.

HIGH COURT

Delhi HC Reaffirms 10-Year Limit u/s 153C, Quashes Income Tax Notices

RAMAA ADVISORS PRIVATE LIMITED vs ASSISTANT COMMISSIONER OFINCOME TAX CENTRAL CIRCLE CITATION : 2025 TAXSCAN (HC) 2272

The Delhi High Court examined the validity of reassessment notices issued to Ramaa Advisors Private Limited under Section 153C of the Income Tax Act, 1961, focusing on whether the notices adhered to the mandatory ten-year limitation period prescribed under the provision. The writ petitions challenged multiple notices on the ground that the assessment years involved fell outside the statutorily permissible ten-year block.

The Division Bench of Justice V. Kameswar Rao and Justice Vinod Kumar reaffirmed its interpretation of the First Proviso to Section 153C, reiterating that the limitation period begins from the date of receipt of documents by the jurisdictional AO of the non-searched entity. Applying this benchmark, the Bench noted that materials were handed over only in FY 2021-22, limiting the permissible block period to AY 2016-17. Consequently, the notices issued for AYs 2010-11 to 2015-16 were held to be time-barred. The Court therefore quashed all impugned reassessment notices and allowed the writ petitions in full.

No Reassessment under Income Tax Act on Identical Issue: Delhi HC Quashes Order Against Logix Heights

LOGIX HEIGHTS PRIVATE LIMITED vs DEPUTY COMMISSIONER OF INCOMETAX CIRCLE 13(1) CITATION : 2025 TAXSCAN (HC) 2273

The Delhi High Court examined whether a reassessment proceeding under Sections 148A(1), 148A(3), and 148 of the Income Tax Act, 1961, could be initiated on a matter that had already been scrutinized and concluded by the tax department for the same assessment year. Logix Heights Private Limited challenged a notice and a subsequent order and notice pertaining to AY 2019-20, arguing that the reassessment was impermissible because the alleged non-genuine transactions with M/s Mekaster Finlease Limited had already been examined in an earlier reassessment order, where the transactions were treated as accommodation entries.

The Division Bench comprising Justice V. Kameswar Rao and Justice Vinod Kumar held that the reassessment could not be sustained since the Assessing Officer had ignored the petitioner’s categorical submission that the very same issue had been previously adjudicated by the department. Observing that reassessment cannot be invoked to revisit a matter already examined and decided, the Court set aside the impugned order passed under Section 148A(3) as well as the consequent notice issued under Section 148. The Bench remanded the matter to the Assessing Officer with directions to grant a proper hearing, permit submission of documents, and pass a fresh, reasoned order within eight weeks.

Delhi HC Raps Income Tax Dept for 3-Year Delay in tax refund, Orders Refund with Interest

SANTOSH KUMAR SURI vs DEPUTY COMMISSIONER OF INCOME TAX CITATION : 2025 TAXSCAN (HC) 2274

The Delhi High Court examined the issue of the Income Tax Department’s prolonged inaction in giving effect to an order passed by the Income Tax Appellate Tribunal (ITAT), highlighting a clear violation of the statutory mandate under Section 153(3) of the Income Tax Act, 1961. The writ petition, filed by Santosh Kumar Suri, challenged the department’s failure to complete the reassessment and process the refund arising from the ITAT’s order relating to AY 2016-17. The Tribunal had directed the Assessing Officer to grant the benefit of indexation on inherited property from the year in which the previous owner first held the asset, yet the tax authorities did not act for nearly three years despite several reminders.

The Division Bench of Justice Prathiba M. Singh and Justice Shail Jain strongly criticised the department for its unexplained delay, observing that the officials appeared to have “got activated” only after the writ petition was filed. Noting that the department failed to comply with the ITAT’s directions within the mandated period and caused undue hardship to the assessee, the Court directed that the refund amount of ₹36,85,243 computed by the Assessing Authority in its order be released to the petitioner within one week, along with statutory interest at 3% under Section 244(1A). The Bench further warned that failure to comply would require the concerned official to appear personally before the Court.

GST Payment Cannot Legalise Unlicensed Business: J&K HC Rules Dealers Importing or Selling Bricks Must Obtain Valid Licence

Kehar Singh vs Union Territory of J&K CITATION : 2025 TAXSCAN (HC) 2275

The Jammu & Kashmir and Ladakh High Court examined whether GST registration or payment of tax could exempt brick dealers from obtaining a mandatory licence under the Jammu and Kashmir Brick Kiln (Regulation) Act, 2010, and the Brick Kiln (Regulation) Rules, 2017. The writ petition filed by Kehar Singh and others challenged seizure orders issued by the District Magistrates of Kathua and Samba, arguing that the licensing framework applied only to brick kiln owners, not to dealers trading in finished bricks. The petitioners claimed that their business was already regulated under the Goods and Services Tax Act, and that imposing additional licensing requirements violated their right to trade under Article 19(1)(g) of the Constitution.

A single judge bench of Justice Wasim Sadiq Nargal held that licensing under Rule 3 of the 2017 Rules is compulsory not only for manufacturers but for all persons engaged in the sale, storage, or distribution of bricks, including dealers. The Court emphasized that GST registration is merely a fiscal compliance requirement and cannot override sector-specific regulatory statutes governing trade. Observing that the petitioners had bypassed the statutory appellate remedy under Section 20 of the Act, the Court upheld the actions of the Deputy Commissioners as lawful and proportionate. Concluding that payment of tax does not legalize unlicensed business, the High Court dismissed the writ petition and directed that dealers importing or selling bricks in the Union Territory must obtain a valid licence under the Brick Kiln Regulation framework.

Bank Cannot Freeze Account Solely Due to Voluntary GST Cancellation for Exempt Goods: Rajasthan HC

M/s. Bhilwara Trading Company vs Bank Of Baroda CITATION : 2025 TAXSCAN (HC) 2276

The Rajasthan High Court at Jodhpur examined whether a bank can freeze a trader’s current account solely on the ground that the trader’s GST registration has been voluntarily cancelled, particularly when the trader deals in goods exempt from GST under Chapter 10 of the Harmonized System of Nomenclature (HSN). Bhilwara Trading Company, filed a writ petition challenging the Bank of Baroda’s action of freezing its account, arguing that the business was lawfully exempt from GST and that cancellation of registration approved by the department with effect from 31 January 2025 could not justify such coercive action.

A single judge bench of Justice Nupur Bhati held that the petitioner must be accorded a fair opportunity to explain its position before the bank proceeds with any adverse measures. The Court directed the petitioner to file a comprehensive representation within ten days, supported by documents establishing the GST-exempt nature of the goods and evidence of voluntary cancellation of registration. The Bank of Baroda was instructed to consider the representation and pass a reasoned, speaking order within one month. Importantly, the Court directed that until such a decision is made, Bhilwara Trading Company must be permitted to operate its current account without restriction. The writ petition was disposed of on these terms.

GST ITC Blocked over Purchases from Non-Existent Dealers: Madras HC Orders to Debit 50% of 4-Months Tax Liability from Negative Block

Tvl. Red Rose Garments vs Assistant Commissioner (ST) CITATION : 2025 TAXSCAN (HC) 2277

The Madras High Court examined whether the blocking of Input Tax Credit (ITC) under Rule 86A of the CGST Rules could continue indefinitely when the taxpayer was already facing adjudication proceedings under Sections 73 and 74 of the Central Goods and Services Tax Act, 2017. Red Rose Garments, the petitioner, challenged the order of the Assistant Commissioner (ST), Tiruppur, which had blocked ITC on the allegation that credit was availed on invoices issued by non-existent suppliers, including Tvl. Sri Vishweshwara Knits. With a total of ₹62,33,318 blocked, the petitioner argued that the negative balance had prevented it from filing GSTR-3B returns and paying tax for June to September 2025, and that authorities lacked the power to demand replenishment of utilized ITC.

A single judge bench of Justice C. Saravanan held that, in view of pending proceedings under Sections 73 and 74 and the need to balance revenue protection with the petitioner’s ability to discharge current tax liabilities, a partial stay of the impugned order was warranted. The Court stayed 50% of the petitioner’s tax liability and directed that the negative blocking continue to the extent of ₹37,05,811, while permitting the assessee to debit ₹11,87,740 from the blocked ITC. The petitioner was also required to replenish the blocked credit before the next tax due date. Further, the authorities were directed to complete proceedings under Rule 86A and Sections 73/74 within 30 days. The writ petition was disposed of with partial relief on these terms.

Auditor Generated Fake Invoices and Records in GSTR -1 Return: Madras HC Orders Fresh Adjudication

Sri Sarguru Associates vs The Joint Commissioner (CT) CITATION : 2025 TAXSCAN (HC) 2278

The Madras High Court examined the validity of an assessment order passed under Section 73 of the Tamil Nadu Goods and Services Tax Act, 2017, read with the CGST Act, after allegations surfaced that the petitioner’s auditor had fraudulently generated invoices and uploaded them in the petitioner’s GSTR-1 without authorization. Sri Sarguru Associates, challenged the assessment order contending that the fictitious invoices for November 2018 and January 2019 showing sales to Janse Manpower Services were created without any actual supply of goods. These fraudulent entries allegedly enabled the fifth respondent to claim wrongful ITC and resulted in tax liability being fastened on the petitioner, who had also lodged a police complaint documenting the manipulation.

A single judge bench of Justice C. Saravanan held that the question of whether any genuine supply had taken place could not be conclusively determined in writ proceedings and therefore required proper adjudication by the assessing authority. The Court set aside the impugned assessment order and remitted the matter to the Deputy State Tax Officer, for a fresh decision on merits. It further permitted the GST Department to initiate appropriate action against the fifth respondent if no actual supply was found and clarified that the petitioner was free to recover amounts from the fifth respondent based on admissions made before the police. The writ petition was accordingly disposed of.

Once ITAT Order Attains Finality and Tax Paid, No Further Recovery Permissible: Madras HC Rules Authority Bound to Lift Attachment

K.Rethinam vs The Tax Recovery Officer CITATION : 2025 TAXSCAN (HC) 2279

The Madras High Court examined whether the Tax Recovery Officer (TRO) could continue recovery and attachment proceedings under Section 222 of the Income Tax Act, 1961, after the order of the Income Tax Appellate Tribunal (ITAT) had attained finality and the assessee had fully discharged the resultant tax liability. The writ petition was filed by K. Rethinam, who challenged multiple attachment orders issued despite the appellate process concluding in his favour. The ITAT, through its order, upheld the relief granted by the Commissioner of Income Tax (Appeals), and the petitioner had already paid the entire demand, yet the TRO continued to retain attachment over the petitioner’s properties.

A single judge bench of Justice Krishnan Ramasamy held that once the ITAT being the final authority has issued an order that has attained finality and the tax demand stands fully satisfied, no further recovery can be pursued. The Court reiterated that the TRO is bound to lift attachments and cancel recovery certificates, as mandated under Section 225(2) of the Act, when the tax demand is reduced or extinguished. The Court further clarified that even if the Revenue files an appeal on a substantial question of law, coercive recovery cannot continue unless such appeal succeeds and a fresh demand arises. Accordingly, the TRO was directed to release the attached properties within four weeks and return the original documents to the petitioner.

Difference in ITC between GSTR-9A and Audited Accounts: Madras HC Directs Fresh Verification of Dealer’s Reply

M/s. Laxmi Jewellery Chennai Private Limited vs he DeputyCommissioner (GST) Appeal CITATION : 2025 TAXSCAN (HC) 2280

The Madras High Court examined whether the assessment order issued under Section 73 of the TNGST/CGST Act, 2017, for FY 2018-2019 was valid when the alleged discrepancy in Input Tax Credit (ITC) between Form GSTR-9A and the audited financial statements had not been properly reconciled. The legal issue centred on the department’s confirmation of tax liability on account of a reported “negative ITC difference” between Tables 8A and 8B of GSTR-9 and the allegation that the dealer, Laxmi Jewellery Chennai Private Limited, had claimed excess ITC of ₹40.57 lakh.

The Bench of Justice C. Saravanan held that the petitioner’s detailed reply dated January 3, 2024, had not been duly considered while confirming the demand, and noted that the entire disputed tax amount had already been recovered. The Court therefore remitted the matter back to the assessing authority to pass a fresh order after verifying the recovery and directed that any unrecovered balance, if found, must be deposited by the petitioner.

Madras HC Remits GST Demand to STO for Recomputation Interest on Belated Payment and Review ITC Claims

M/s.A.S.R Constructions vs The State Tax Officer CITATION : 2025 TAXSCAN (HC) 2281

The Madras High Court examined whether the State Tax Officer (STO) had correctly levied interest and partially denied Input Tax Credit (ITC) while passing the assessment order under the GST enactments. The legal issue arose from the challenge by A.S.R. Constructions to the order, which confirmed demands proposed in the DRC-01 notice relating to defects in GSTR-9 reporting and ITC entitlement. The petitioner argued that since the entire tax of ₹4,14,998 was paid on 19.12.2022 through the electronic credit ledger well before issuance of the notice the levy of interest under the provisions corresponding to Section 50 of the GST Act was unjustified, and that their ITC claim had not been properly examined.

The bench of Justice C. Saravanan remitted the matter to the State Tax Officer with explicit directions to recompute interest by comparing the delay, if any, with reference to the monthly GSTR-3B returns filed under Section 39, taking into account the debit entry dated 19.12.2022. The Court further directed that the petitioner be given an opportunity to substantiate the balance ITC claim by producing supplier certificates within thirty days. The STO was instructed to redo the assessment for defect Nos. 1 and 3 and pass a fresh order on merits after granting the petitioner a hearing, upon which the writ petition was disposed of.

GST Duty on Hajmola Candy Already Settled by SC: Allahabad HC Stays Fresh Proceedings Against Dabur India Ltd

M/S Dabur India Ltd vs Union Of India CITATION : 2025 TAXSCAN (HC) 2282

The Allahabad High Court considered the legal issue of product classification and applicable GST rate for Dabur India Ltd.’s “Hajmola Candy Tablets,” arising from a show-cause notice proposing a higher tax rate under the GST laws. The petitioner contended that the classification dispute was already settled under the earlier Central Excise and Customs regime, culminating in a Supreme Court ruling that upheld Hajmola’s classification under a lower duty bracket. Dabur argued that the shift to the GST regime had not materially altered the statutory framework on classification and therefore the settled legal position must continue to apply, asserting that the authorities could not reopen the issue through Section 73 proceedings or a classification-based show-cause notice.

The Division Bench of Justice Saumitra Dayal Singh and Justice Indrajeet Shukla granted interim relief to the petitioner by staying all proceedings pursuant to the impugned show-cause notice. The Bench observed that Dabur had made out a strong prima facie case, particularly given the finality of the Supreme Court’s earlier decision on identical classification issues and the need for judicial consistency. The Court held that international developments, including changes in the World Customs Organisation (WCO) classification in foreign jurisdictions, could not override binding domestic precedent. Accordingly, the proceedings under the show-cause notice were ordered to remain stayed until the next date of listing.

Reassessment Order Passed Ex Parte After No Response to Notice: Madras HC Dismisses Writ as Infructuous, Permits Appeal

A H Engineering Contractors vs The Income Tax Officer CITATION : 2025 TAXSCAN (HC) 2284

The Madras High Court dealt with the legality of an ex parte reassessment order passed under Section 147 read with Section 144B of the Income Tax Act, 1961, after the assessee failed to respond to a statutory notice issued under Section 148. The petitioner, A H Engineering Contractors, challenged the reassessment proceedings on the ground that they violated principles of natural justice, arguing that the order was based on uncorroborated third-party data from Form 26AS and was passed without granting a proper opportunity of hearing. The Court examined whether the reassessment proceedings were conducted in accordance with the statutory framework and whether the petitioner could invoke writ jurisdiction despite the availability of a statutory appellate remedy.

A single judge bench of Justice C. Saravanan held that the reassessment proceedings were validly initiated and that the notice under Section 148 had been duly served, but the petitioner failed to participate despite opportunities provided. Observing that the Income Tax Act provides an effective alternate remedy through an appeal before the Commissioner (Appeals), the Court ruled that the writ petition was not maintainable. It concluded that any factual disputes regarding contract receipts or the correctness of the assessment were matters for the appellate authority to examine. Consequently, the Court dismissed the writ petition and granted liberty to the petitioner to avail the statutory appellate remedy.

GST Notice Challenges Require Factual Review: Allahabad HC Declines to Interfere, Refers Matter to Fresh Adjudication

M/S Ashok Auto Sales Limited vs Union Of India And 2 Others CITATION : 2025 TAXSCAN (HC) 2285

The Allahabad High Court examined the legality of a GST adjudication notice issued under Section 76 of the Central Goods and Services Tax Act, 2017, which was challenged by Ashok Auto Sales Limited. The petitioner contended that the impugned notice was inconsistent with earlier departmental communications from the Director General of GST Intelligence and contrary to established judicial precedent under the Central Excise framework. The key legal issue before the Court was whether such alleged inconsistencies justified the exercise of writ jurisdiction at a pre-adjudication stage.

A division bench of Justice Saumitra Dayal Singh and Justice Indrajeet Shukla declined to interfere, observing that the challenge raised factual issues best addressed during adjudication. Emphasising the availability of a statutory remedy and the ongoing nature of the proceedings, the Court held that writ intervention was unwarranted at this stage. The bench refrained from expressing any opinion on the merits of the dispute and granted liberty to the petitioner to contest the matter before the proper authority. Accordingly, the writ petition was disposed of.

DGCA-Approved Pilot Training Qualifies as Educational Service: Allahabad HC Remits Service Tax Matter for Re-Adjudication

Cae Simulation Training Private Limited vs Commissioner Of CgstGreater Noida CITATION : 2025 TAXSCAN (HC) 2286

The Allahabad High Court addressed a Goods and Services Tax (GST) exemption dispute concerning whether DGCA-approved pilot training qualifies as an “educational service” under Notification No. 12/2017-Central Tax (Rate) issued under the CGST Act, 2017. CAE Simulation Training Pvt. Ltd., a DGCA-approved training organisation offering simulator-based Aircraft Type Rating (ATR) courses mandated by the Aircraft Act, 1934 and the Aircraft Rules, 1937, had approached the Authority for Advance Ruling (AAR) under Section 97 of the CGST Act seeking exemption. The AAR rejected the claim, holding that CAE was not an “educational institution” within the meaning of the notification, prompting the writ petition.

A single judge bench of Justice Rohit Ranjan Agarwal set aside both the AAR order and the appellate order, noting that the Ministry of Finance’s clarificatory circular dated 11 October 2024 expressly recognised DGCA-approved pilot training as exempt educational services. Observing that the curriculum is one recognised by law and that the circular directly applies to the petitioner’s courses, the Court remanded the matter to the AAR for fresh consideration in light of the updated clarification. The writ petition was disposed of with directions to reconsider the exemption claim afresh.

‘Assessees are facing difficulties in working on the GST Portal’: Allahabad HC Finds Violation of Natural Justice, Sets Aside Demand

M/S 360 Realtors Llp vs The Department Of Revenue And 2 Others CITATION : 2025 TAXSCAN (HC) 2287

The Allahabad High Court examined a GST dispute involving the validity of a demand order issued under Section 73 of the Uttar Pradesh Goods and Services Tax Act, 2017, against M/s 360 Realtors LLP. The central legal issue concerned violation of the principles of natural justice, arising from the assessee’s claim that the show cause notice and adjudication order were never effectively served, as they were uploaded only under the “Additional Notices and Orders” tab on the GST portal and not displayed on the main dashboard. The petitioner argued that this technical lapse prevented timely knowledge of the proceedings, ultimately leading to an appeal being dismissed as time-barred.

The Division Bench comprising Justice Saumitra Dayal Singh and Justice Indrajeet Shukla set aside the demand order after noting widespread and genuine difficulties faced by taxpayers in receiving GST portal communications. The Court observed that such procedural deficiencies undermine access to justice, particularly when strict appeal limitation periods and the absence of remand powers under GST law leave taxpayers remediless. Holding that dismissal of the appeal as time-barred did not constitute a decision on merits, the bench exercised writ jurisdiction and remitted the matter for fresh adjudication. The petitioner was directed to deposit ₹1,00,000, and the adjudicating authority was instructed to grant a fresh opportunity to respond and issue a reasoned order by 31 March 2026.

No Need to Relegate to Alternate Remedy when GST Order Passed in Violation of Natural Justice and Jurisdictional Error: Allahabad HC

Ankit Automobiles vs Assistant Commissioner, Cgst & CentralExcise CITATION : 2025 TAXSCAN (HC) 2288

The Allahabad High Court examined the legality of a GST confiscation and tax demand order passed against Ankit Automobiles, holding that the adjudication suffered from jurisdictional defects and violated the principles of natural justice. The dispute arose under Sections 130, 122, and 74 of the Central Goods and Services Tax Act, 2017, as the show cause notice issued under Sections 130 and 122 was later used to confirm demand under Section 74 despite the fact that proceedings under Section 74 had never been initiated. The Court found that the authorities also failed to provide a fair hearing, having passed the final order nearly four months after the last hearing without any further communication or opportunity to respond.

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A Division Bench comprising Justice Saumitra Dayal Singh and Justice Indrajeet Shukla set aside the impugned order, observing that the adjudicating authority exceeded the scope of the show cause notice and violated fundamental fairness in quasi-judicial proceedings. The Court held that no useful purpose would be served by directing the petitioner to pursue an alternative remedy when the order itself was jurisdictionally unsustainable and rendered in breach of natural justice. The matter was remanded to the adjudicating authority to pass a fresh order strictly in accordance with law after granting the petitioner a proper opportunity of hearing.

GST Registration Cannot Be Cancelled on Voluntary Application without Issuing Notice u/r 22(1): Allahabad HC

Neelam Tripathi vs State Of U.P CITATION : 2025 TAXSCAN (HC) 2289

The Allahabad High Court examined the legality of a cancellation of Goods and Services Tax (GST) registration carried out without adherence to the mandatory statutory procedure under Rule 22(1) of the CGST Rules, 2017. The central legal issue before the Court was whether a taxpayer’s GST registration could be cancelled solely on the basis of a voluntary application filed in Form REG-16, without issuance of the compulsory notice in Form GST REG-17, which is required under Rule 22(1) before any cancellation action is taken. The challenge arose after the petitioner, Neelam Tripathi, contested the cancellation order and the subsequent appellate order, both of which were passed without following the mandatory procedural safeguards incorporated in the CGST Act and Rules.

The bench of Justice Piyush Agrawal held that the cancellation order was vitiated for non-compliance with the mandatory procedure prescribed under Rule 22(1) of the CGST Rules, particularly since the department itself admitted that no notice in Form GST REG-17 had been issued prior to cancellation. The Court concluded that cancellation based merely on a voluntary application filed by counsel without issuing the required show-cause notice was unsustainable in law and contrary to statutory mandate. Consequently, both the original cancellation order and the appellate order were quashed, and the matter was remitted to the proper officer to initiate fresh proceedings by issuing a proper notice, granting adequate opportunity to respond, and passing a reasoned order within the stipulated timeline.

Jurisdictional Objection in Parallel GST Proceedings: Allahabad HC Declines to Invoke Extraordinary Jurisdiction

M/S Meerut Steels vs Union Of India And 3 Others CITATION : 2025 TAXSCAN (HC) 2290

The Allahabad High Court examined whether parallel proceedings initiated by both the State and Central GST authorities violated the jurisdictional bar contained in Section 6(2)(b) of the CGST Act, 2017, read with the coordination mechanism prescribed under the CBIC Circular dated 5 October 2018. The legal issue centred on whether the subsequent proceedings initiated by the Central GST authorities under Section 74 of the CGST Act, 2017 (read with Section 74 of the UPGST Act and Section 20 of the IGST Act), were without jurisdiction, given that earlier proceedings on the allegedly same subject matter had already been concluded by the State GST department under Sections 73 and 74 of the UPGST Act. The petitioner, M/s Meerut Steels, invoked the Court’s writ jurisdiction under Article 226, challenging the order dated 17 January 2025 passed by the Central authority.

The Division Bench comprising Justice Saumitra Dayal Singh and Justice Indrajeet Shukla declined to exercise writ jurisdiction, holding that the jurisdictional objection raised by the assessee was not a pure question of law but required factual examination regarding whether the “subject matter” of both proceedings was identical. Observing that the Central proceedings pertained to amounts different from those adjudicated by the State authorities, the Court held that the dispute was fact-intensive and therefore unsuitable for determination under Article 226 when an effective statutory remedy existed. The petition was dismissed with liberty to the assessee to file a statutory appeal within three weeks, with a direction to the appellate authority to entertain the appeal on merits without rejecting it on limitation grounds.

ITC Cannot Be Blocked Merely on Suspicion without Written ‘Reasons to Believe’ u/r 86A: Allahabad HC directs to Unblock Credit

M/S Pilcon Infrastructure Pvt. Ltd vs State of U.P CITATION : 2025 TAXSCAN (HC) 2291

The Allahabad High Court examined the legality of blocking Input Tax Credit (ITC) under Rule 86A of the Central Goods and Services Tax (CGST) Rules, 2017, and held that credit cannot be frozen merely on suspicion or on the basis of generic allegations without recording specific and written “reasons to believe” as mandated under the statutory framework. The case arose from a challenge filed by M/s Pilcon Infrastructure Pvt. Ltd., whose ITC amounting to ₹13,96,220 had been blocked solely on the basis of an email from the GST Network (GSTN) citing “Supplier found non-functioning,” without any written order or reasoned satisfaction recorded by the proper officer as required under Rule 86A(1) of the CGST Rules.

The Division Bench comprising Justice Saumitra Dayal Singh and Justice Indrajeet Shukla ruled that the blocking of ITC was wholly unsustainable, as the department had relied only on a generic DGGI alert regarding the supplier and had failed to record any specific, written “reasons to believe” connecting the petitioner to any fraudulent activity. The Court held that Rule 86A confers an extraordinary, ex parte power that must be exercised with strict adherence to statutory safeguards, and that vague suspicion or departmental alerts cannot justify freezing ITC. Finding a complete absence of jurisdictional foundation and application of mind, the Bench quashed the ITC blockage and directed the authorities to immediately restore the petitioner’s credit.

GST Bar on Auction Sales Beyond Customs Jurisdiction: Madras HC Quashes Public Notice, Affirms GST Liability

M/s. National Association of Container Freight Stations vs TheJoint Commissioner of Customs CITATION : 2025 TAXSCAN (HC) 2292

The Madras High Court examined the legality of a Public Notice issued by the Customs Department prohibiting custodians from collecting Goods and Services Tax (GST) on auctioned goods, holding that the Customs authority had acted beyond its jurisdiction. The issue centered on whether the Customs Department, while exercising powers under Section 48 of the Customs Act, 1962, could direct custodians not to collect GST on auction sales despite such sales being taxable supplies governed exclusively by the Central Goods and Services Tax (CGST) Act, 2017.

The single judge bench of Justice N. Anand Venkatesh allowed the writ petitions, ruling that the Customs Department had no authority to issue directions regulating GST collection and that the Public Notice was ultra vires and legally unsustainable. The Court held that the CGST Act is a complete code for GST levy and administration, reaffirmed that auction sales of uncleared cargo are taxable supplies on which custodians must collect and remit GST, and accordingly quashed the Public Notice issued by the Joint Commissioner of Customs.

Customs Failed to Act on Remand Despite Representation: Madras HC Orders Adjudication of Gold Seizure in Four Weeks

Jignesh Kishorbhai Patadiya vs The Principal Commissioner ofCustoms CITATION : 2025 TAXSCAN (HC) 2293

The Madras High Court in a writ petition concerning the delayed adjudication of a gold seizure under the Customs Act, 1962, examined the legal issue of departmental inaction despite a clear remand direction issued by the Commissioner of Customs (Appeals). The dispute pertained to confiscation proceedings initiated under the Act, which had been set aside on appeal with instructions for fresh adjudication. Despite the petitioner’s representation seeking expeditious disposal, the Customs Department failed to act, prompting the Court to address whether such inaction violated the binding force of appellate orders and warranted issuance of a writ of mandamus.

A single judge bench of Justice N. Anand Venkatesh, who held that the delay was wholly unjustified and contrary to the statutory obligation of the adjudicating authority to comply with appellate directions. The Court issued a writ of mandamus directing the Deputy Commissioner of Customs to complete the adjudication within four weeks from the date of receipt of the order, cautioning that any further delay would be viewed seriously and may attract judicial consequences.

Madras HC Invalidates Circular's Time Bar on Shipping Bill Conversion: SC to Hear Appeal Against Indian Oil

The Commissioner of Customs vs Indian Oil Corporation Ltd CITATION : 2025 TAXSCAN (HC) 2294

The Madras High Court determined concerning the interpretation of Section 149 of the Customs Act, 1962, and struck down the three-month time limit prescribed in CBEC Circular No. 36/2010-Cus for conversion of shipping bills, holding it ultra vires the parent statute and violative of Articles 14 and 19(1)(g) of the Constitution. The case arose from Indian Oil Corporation Limited’s (IOCL) request for conversion of 698 shipping bills, of which 104 were rejected by the Commissioner of Customs solely on the basis of the circular-imposed time bar. The High Court affirmed that Section 149 contains no statutory time restriction for such amendments and that delegated legislation cannot curtail a substantive right conferred by the Act.

ThE Madras High Court in an appeal under Section 130 of the Customs Act, where the bench upheld the CESTAT’s order and directed reconsideration of the 104 rejected bills on merits, without applying the circular’s time limitation. With the Department’s appeal dismissed, the Court directed the Original Authority to grant a personal hearing and dispose of the matter within 12 weeks. The Customs Department has since filed a Special Leave Petition, and the issue now awaits final determination before the Supreme Court.

Expiry of GST E-Way Bill Does Not Imply Tax Evasion Intent: Allahabad HC Quashes Seizure Orders

M/S Trimble Mobility Solutions India Private Limited vs State OfUp And 2 Others CITATION : 2025 TAXSCAN (HC) 2295

The Allahabad High Court while examining the legal issue of whether the expiry of an e-way bill amounts to an intention to evade tax under Section 129 of the Central Goods and Services Tax Act, 2017, held that mere lapse of validity does not automatically establish tax evasion. The case concerned M/s Trimble Mobility Solutions India Pvt. Ltd., whose goods were intercepted after the e-way bill expired due to an unforeseen vehicle breakdown during transit. Although fresh e-way bills were generated before the seizure order, the Proper Officer proceeded to seize the goods under Section 129(3), prompting the petitioner to challenge the action as arbitrary and unsupported by any evidence of intent to evade payment of tax.

A single judge bench of Justice Piyush Agarwal ruled that the expiry of an e-way bill, when accompanied by bona fide circumstances such as an admitted mechanical breakdown, cannot justify severe penal action under Section 129. The Court emphasised that the goods were covered by genuine invoices and valid e-way bills at all material times, and that the delay was neither deliberate nor indicative of evasion. Setting aside the seizure and penalty orders, the High Court held that technical lapses must be distinguished from intentional violations, and quashed the orders passed by the authorities as unsustainable in law.

Cybercrime is a “Silent Virus”: Allahabad HC Denies Bail to Accused in Bogus Transactions Using Fake GST Documents

Yesh Arya vs State of U.P CITATION : 2025 TAXSCAN (HC) 2296

The Allahabad High Court while dealing with issues arising under the GST framework and the broader offence of cyber-enabled financial fraud, examined whether an accused allegedly involved in fraudulent transactions using fake GST registration documents and bank accounts was entitled to bail. The case stemmed from an FIR detailing recovery of multiple mobile phones, ATM cards, cheque books, passbooks and GST registration papers in different names material that the police claimed linked the applicant, Yesh Arya, to a cyber-fraud network operating shell entities and bogus GST transactions. The Court was called upon to assess the seriousness of offences involving misuse of GST documentation, digital financial manipulation, and technological tools, in the context of a bail plea.

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A single judge bench of Justice Ashutosh Srivastava rejected the bail application, holding that the evidence including WhatsApp communications, screenshots of cheques, and GST papers seized from the applicant prima facie connected him to the cyber-fraud racket. The Court described cybercrime as a “silent virus” eroding public trust and financial stability, observing that the scale and impact of such offences require strict judicial scrutiny. Noting the rampant rise in phishing, fake transactions and digital financial fraud across the country, the bench concluded that it was not inclined to release the applicant on bail, and accordingly dismissed the application.

Allahabad HC Orders GSTN to Modify Portal within 1 Month to Allow Appeals Even When Disputed Tax Shows Nil

M/S Agarwal Aromas Private Limited vs Union Of India CITATION : 2025 TAXSCAN (HC) 2297

The Allahabad High Court examined the legal issue of whether a taxpayer’s statutory right to appeal under Section 107 of the GST Act can be curtailed due to technical or software-based restrictions on the GSTN portal, particularly when the portal auto-populates the “disputed tax” as Nil. The case arose when M/s Agarwal Aromas Pvt. Ltd. was prevented from filing an appeal against an order passed under Section 74 of the UPGST Act because the GST system displayed an error stating that the “disputed amount cannot be zero.” Since the petitioner had already deposited the disputed tax at the show-cause stage, the portal reflected no outstanding tax, thereby blocking the filing process. The Court held that technological limitations or program design cannot override or restrict statutory appellate rights.

The Division bench of Justice Saumitra Dayal Singh and Justice Indrajeet Shukla held that GSTN’s digital architecture cannot eclipse substantive legal rights and directed the GSTN to modify its software within one month to permit filing of appeals even when the disputed tax appears as Nil. The Judges observed that under the earlier manual system, every appeal had to be accepted at the filing stage, and the shift to an electronic regime does not authorize GSTN to exercise discretion or impose restrictions inconsistent with the Act. The Court also permitted the petitioner to file the appeal manually within two weeks and directed the appellate authority to register and decide it on merits without raising objections regarding limitation or mode of filing.

Amount Deposited ‘Under Protest’ Adjustable Toward 10% Pre-Deposit for GST Appeal u/s 107(6): Allahabad HC

M/S Wintage Engineers & Consultants Private Limited vs UnionOf India CITATION : 2025 TAXSCAN (HC) 2298

The Allahabad High Court examined the legal issue of whether an amount deposited “under protest” during investigation can be treated as compliance with the mandatory pre-deposit requirement under Section 107(6) of the GST Act, 2017 for filing an appeal. The dispute arose when M/s Wintage Engineers & Consultants Pvt. Ltd., which had deposited ₹31,95,976 under protest through DRC-03 as IGST refund on export transactions, later faced an adverse order under Section 74 of the CGST Act. Its statutory appeal was dismissed on the ground that the assessee had not made the mandatory 10% pre-deposit. The petitioner contended that the earlier unadjusted protest deposit ought to have been appropriated toward the pre-deposit condition, a claim supported by judicial precedent.

A single judge bench of Justice Piyush Agrawal held that any amount deposited under protest can indeed be adjusted toward the statutory pre-deposit required for entertaining an appeal under Section 107(6). The Court observed that a protest deposit made prior to adjudication cannot be ignored when it remains unadjusted. Setting aside the orders of the appellate authority, the Court remanded the matter with directions to accept the protest deposit toward the pre-deposit requirement, decide the appeal on merits, and permit the petitioner to make up any shortfall within 15 days if necessary.

Allahabad HC grants bail to Business Man alleged with Rs. 32 Crores GST Fraud

Dhiraj Nath Gupta vs Union of India CITATION : 2025 TAXSCAN (HC) 2299

The Allahabad High Court examined whether an accused charged under Sections 132(1)(c), (f) and (h) of the GST Act, 2017 for allegedly availing and passing on fake Input Tax Credit (ITC) worth ₹32 crores was entitled to bail once investigation had been completed. The case concerned businessman Dhiraj Nath Gupta, who had been in judicial custody since June 22, 2025. The allegations were based entirely on documentary and electronic evidence, and the applicant argued that the offences were triable by a Magistrate, carried a maximum sentence of five years, and that continued custody was unwarranted after the filing of the complaint. The High Court was required to determine whether pre-trial detention served any further purpose under the statutory framework governing GST offences.

A single judge bench of Justice Sameer Jain granted bail after noting that the investigation was complete, the charge sheet had been filed, and the nature of evidence did not justify further incarceration. The Court held that in economic offences based on documents, prolonged custody is ordinarily unnecessary once investigation concludes. Observing that the applicant had already spent four months in custody and that the trial would take considerable time, the Court ruled that no exceptional circumstances existed to deny bail and directed his release on furnishing a personal bond and two sureties, subject to standard conditions.

‘Bail is a Rule, Bail Rejection is an Exception’: Allahabad HC Grants Bail in ₹185 Crore GST ITC Case

Chhatar Pal Sharma vs Union of India CITATION : 2025 TAXSCAN (HC) 2300

The Allahabad High Court examined the question of bail in a prosecution under Section 132(1) of the GST Act, 2017, arising from allegations that the applicant, Chhatar Pal Sharma, had formed multiple shell companies and fraudulently availed and passed on fake Input Tax Credit (ITC) exceeding ₹185 crore. With the investigation complete, the complaint filed, and the trial still at its nascent stage, the Court was required to determine whether pre-trial incarceration was necessary within the statutory framework governing economic offences under GST law.

A single judge bench of Justice Sameer Jain granted bail, reiterating the fundamental principle that “bail is a rule and bail rejection is an exception,” and noting that an accused remains presumed innocent until proven guilty. The Court emphasized that prolonged custody of nearly one year in this case cannot be justified when the trial has not progressed and the maximum punishment is limited. Holding that economic offences do not automatically mandate denial of bail, the Court directed the applicant’s release upon furnishing a personal bond and two sureties, subject to standard conditions relating to appearance, non-tampering, and good conduct.

Bombay HC Grants Anticipatory Bail to Walnut Importers in ₹44 Crore Customs Evasion Case: Notes Willingness to Deposit ₹5 Crore

Dipakkumar Dharamsinhbhai Kakadiya vs Directorate of RevenueIntelligence CITATION : 2025 TAXSCAN (HC) 2301

The Bombay High Court considered the legal issue of whether anticipatory bail could be granted in a case involving allegations of misdeclaration and deliberate undervaluation of inshell walnut imports, an offence punishable under Sections 132 and 135 of the Customs Act, 1962. The Directorate of Revenue Intelligence (DRI) alleged that the applicants had suppressed the true transaction value by using fabricated invoices issued by Dubai-based entities, resulting in an alleged customs duty evasion of about ₹44 crore.

A single bench of Justice R.N. Laddha delivered the judgment in Anticipatory Bail Application No. 1808 of 2025, holding that the offences alleged were compoundable and that custodial interrogation was unnecessary given the documentary nature of the evidence already seized. The Court granted anticipatory bail to the applicants subject to conditions, noting their bona fide conduct, including the filing of a compounding application and their offer to jointly deposit ₹5 crore towards the alleged liability.

Summary in DRC-01 Cannot Substitute Signed and Authenticated SCN u/s 73: Gauhati HC Quashes GST Demand for Lack of Proper SCN

NASER ALI MONDAL vs THE STATE OF ASSAM CITATION : 2025 TAXSCAN (HC) 2302

The Gauhati High Court examined the legality of a GST demand raised without a valid and duly authenticated Show Cause Notice (SCN) under Section 73 of the CGST Act, 2017, holding that a mere summary issued in Form DRC-01 cannot replace the mandatory statutory SCN. The case concerned an assessee, Naser Ali Mondal of Alom Enterprise, who was served only with a DRC-01 summary lacking a proper digitally signed SCN, thereby violating Rule 26(3) of the CGST Rules, 2017 and depriving him of the opportunity to respond.

A single bench of Justice Sanjay Kumar Medhi set aside the demand order issued in Form DRC-07, ruling that the attachments to both DRC-01 and DRC-07 were unauthenticated and legally invalid, and that the proceedings suffered from violations of Sections 73 and 75(4) as no personal hearing was granted despite an adverse decision being proposed. The Court quashed the entire proceedings and granted liberty to the authorities to initiate fresh action under Section 73, directing that the limitation period would exclude the time between the issuance of the summary and delivery of the judgment.

Bombay HC Stays CESTAT’s Order Granting Redemption of Confiscated Gold: Questions Tribunal’s Jurisdiction and Passenger’s Eligibility under Customs Act

COMMISSIONER OF CUSTOMS vs SHEHBAZ NASIR KHAN RIZWANI CITATION : 2025 TAXSCAN (HC) 2304

The Bombay High Court at Goa examined the legality of an order passed by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) relating to confiscation and redemption of gold ornaments under Section 125 of the Customs Act, 1962. The legal issue concerned whether the Tribunal had validly exercised its authority by permitting redemption of confiscated gold and reducing penalty, despite the Customs Department’s contention that the respondent was not an eligible passenger and that the imported gold constituted “prohibited goods” under Section 2(33) of the Customs Act, read with Para 2.20 of the Foreign Trade Policy and provisions of the Foreign Trade (Development & Regulation) Act, 1992.

The Division bench comprising Justice M.S. Karnik and Justice Nivedita P. Mehta, which admitted the appeal and stayed the operation of the CESTAT order as an interim measure. The Bench held that the Tribunal’s findings required examination, particularly the allegation that it exceeded jurisdiction under Section 129DD of the Customs Act, and therefore stayed the relief of redemption and reduced penalty until final disposal of the appeal.

S.74 of GST Cannot Be Invoked when No Fraud Alleged: Madras HC Clarifies application of S. 74

Neeyamo Enterprise Solutions Private Limited vs The CommercialTax Officer CITATION : 2025 TAXSCAN (HC) 2306

The Madurai Bench of the Madras High Court examined whether reassessment proceedings could legally be initiated under Section 74 of the GST Act, 2017, which applies only in cases involving fraud, wilful misstatement, or suppression of facts. The legal issue before the Court was whether the tax department could invoke Section 74 without alleging or establishing these jurisdictional facts in the show-cause notice, particularly in the context of notices issued to Neeyamo Enterprise Solutions Private Limited following a Section 67 inspection.

The bench of Justice G.R. Swaminathan held that Section 74 cannot be triggered unless the statutory preconditions of deliberate wrongdoing are clearly asserted and supported by material in the notice. Finding that the show-cause notices lacked any allegation of fraud or suppression and even used the term “determined” instead of “specified,” the Court quashed both the notices and the consequent reassessment orders, while granting liberty to the department to proceed afresh under Section 73 if permissible.

GST Reg. Cancellation can be Revoked when Dealer agrees to Clear Dues: J&K & Ladakh HC Directs Immediate Restoration

M/S G N T Constructions Company vs Union Territory of J&K CITATION : 2025 TAXSCAN (HC) 2307

The Jammu & Kashmir and Ladakh High Court addressed the legal issue of whether GST registration cancelled under Section 29 of the CGST Act, 2017 can be restored when the dealer commits to clearing all outstanding statutory dues. The petitioner, GNT Constructions Company, challenged the cancellation order and the dismissal of its appeal as time-barred, arguing that revocation should be permitted upon filing pending returns and depositing tax, interest, and penalties as mandated under the GST Act.

A Division Bench comprising Justice Sanjeev Kumar and Justice Sanjay Parihar held that, consistent with earlier decisions rendered in April 2024, GST registration must be restored when the dealer undertakes to comply with all statutory obligations. The Court directed the petitioner to approach the competent authority within seven days and ordered that the registration be restored immediately upon completion of formalities, failing which the relief would stand withdrawn.

Calcutta HC dismisses Petitions Challenging CESTAT Order on CENVAT Credit Reversal in Tata Steel Insolvency Case

M/S Tata Steel Limited (formerly Tata Steel BSL Limited) vsUnion of India & Ors. CITATION : 2025 TAXSCAN (HC) 2308

The Calcutta High Court dealt with a set of writ petitions filed by Tata Steel Limited challenging a common order of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), which had held that the statutory appeals filed by the petitioner’s predecessor entity Bhusan Steel Ltd. (BSL) stood abated due to the initiation of corporate insolvency proceedings under the Insolvency and Bankruptcy Code, 2016. The core legal issue before the Court concerned the correctness of CESTAT’s decision to treat the appeals as abated and whether CENVAT credit reversals arising from disputes initiated through show-cause notices between 2005 and 2009 could be refunded or treated as surviving claims under the approved resolution plan. The matter also involved interpretation of Section 35F of the Central Excise Act, 1944, the provisions of the IBC relating to extinguishment of claims, and the scope of Articles 226 and 227 of the Constitution in exercising supervisory jurisdiction over tribunal orders passed within territorial limits.

The Division bench led by Justice Raja Basu Chowdhury dismissed the writ petitions, holding that CESTAT had not committed any jurisdictional error in recording the abatement of appeals and that the High Court could not re-evaluate the tribunal’s procedural interpretation in its supervisory capacity. The bench observed that the CENVAT credit reversal made by BSL was voluntary in nature and did not constitute a mandatory pre-deposit under Section 35F, and that such amounts could not be resurrected as claims once extinguished under the resolution plan approved in insolvency proceedings. While affirming that the High Court possesses supervisory powers to correct jurisdictional errors in orders passed within its territory, the Court concluded that CESTAT had acted strictly within its statutory mandate. Accordingly, the petitions were dismissed, with the Court affirming that the disputed claims had either not been included in the insolvency process or stood extinguished by operation of law.

No Nexus with Employment: Karnataka HC Rules Interest on Loan Advanced to Company Not Deductible From Salary Income

SRI MUKESH GUPTATHE vs DEPUTY COMMISSIONER OF INCOME TAX CITATION : 2025 TAXSCAN (HC) 2309

The Karnataka High Court examined whether an assessee could claim deduction of interest paid on borrowed funds under the Income Tax Act, 1961, when such funds were advanced to a company in which he was a Director. The central legal issues were (i) whether the amount received by the assessee from the company constituted professional fees or salary, and (ii) whether interest expenditure could be allowed as a deduction against salary income or as a business-related expense. The appeal was filed under Section 260A of the Act, with arguments touching upon Sections 194J, 206, and the general deductibility principles governing interest expenditure incurred “wholly and exclusively” for business purposes.

The Division bench comprising Justice D.K. Singh and Justice Rajesh Rai K dismissed the assessee’s appeal, affirming the findings of the Assessing Officer, the Commissioner (Appeals), and the Income Tax Appellate Tribunal. The Court held that the assessee had produced no material to show that he had rendered any professional or technical services and therefore rightly treated the receipt as salary. It further held that the assessee failed to establish any nexus between the borrowed funds and a business activity carried on by him, and that advancing money to a company where he was a Director did not constitute commercial expediency. Concluding that the tribunal had taken the correct view in disallowing the interest deduction, the bench answered all substantial questions of law against the assessee and dismissed the appeal.

Bribe Money Repayment not Legally enforceable Debt/Liability: Madras HC upholds Acquittal in S. 138 Cheque Bounce Case

P. Kulanthaisamy vs K. Murugan CITATION : 2025 TAXSCAN (HC) 2310

The Madurai Bench of the Madras High Court examined whether a cheque issued for returning a bribe amount could constitute a “legally enforceable debt or liability” under Section 138 of the Negotiable Instruments Act, 1881. The central legal issue before the Court was whether repayment of money given for an unlawful purpose specifically, securing a government job could attract penal consequences under Section 138. In doing so, the Court analysed the scope of Section 23 and Section 65 of the Indian Contract Act, 1872, which govern agreements involving unlawful consideration and restitution, respectively.

Justice K. Murali Shankar upheld the order of the Fast Track Judicial Magistrate Court, Srivilliputtur, confirming the acquittal of the accused, K. Murugan. The Court held that since the complainant had admitted that the ₹3 lakh payment was made as a bribe to procure employment, the transaction was illegal and void ab initio. Consequently, the cheque could not be treated as one issued towards discharge of a legally enforceable liability. The Court ruled that neither restitution nor enforcement could be claimed under criminal proceedings. Finding no error in the Magistrate’s conclusion, the High Court dismissed the appeal and affirmed the acquittal.

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