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 16, 2025 to November 22, 2025.

SUPREME COURT

Delhi HC Denies Anticipatory Bail in ₹2.4 Cr Foreign Cigarette Smuggling Case: SC Admits SLP Challenging Rejection

RAKESH MISHRA vs CUSTOMS CITATION : 2025 TAXSCAN (SC) 369

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

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

Delhi HC Denies Customs Duty Exemption of ₹56.15 Cr on Aircraft Import: Supreme Court to Hear East India Hotels’ Appeal

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

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

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

Failure to Opt u/s 115BAA and File Form 10‑IC Bars Concessional Tax: Supreme Court upholds Delhi HC Order Against Appellant

SARLA HOLDINGS PRIVATE LIMITED vs PR COMMISSIONER OF INCOME TAXDELHI-7 NEW DELHI & ANR

CITATION : 2025 TAXSCAN (SC) 371

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

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

“Eden Gardens Not A Public Place”: Supreme Court Upholds Calcutta HC Verdict, No Advertisement Tax On In-Stadia Ads

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

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

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

ITR Refund Adjustment to Old Tax Dues of Company in Resolution Process: Supreme Court to Hear SLP against Orissa HC Ruling

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

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

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

Supreme Court Strikes Down Key Provisions of Tribunals Reforms Act, 2021 for Violating Judicial Independence

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

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

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

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Supreme Court Admits Parle Agro’s Appeal against Chhattisgarh HC Ruling Classifying ‘Frooti’ as Non-Alcoholic Beverage

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

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

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

Income of Association of Persons or Syndicates to be Taxed Separately from That of its Members: Supreme Court

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

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

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

HIGH COURT

Madras HC Permits Re-Export of Misclassified Textile Fabric Imports Pending Adjudication on Bond and Bank Guarantee

M/s.Shaurya International vs The Principal Commissioner ofCustoms (Chennai-III) CITATION : 2025 TAXSCAN (HC) 2311

The Madras High Court dealt with the issue of re-export of imported goods detained and seized under the Customs Act, 1962, particularly on allegations of misclassification and undervaluation attracting Section 111 of the Act. The case concerned 303114 SQM of “Textile Fabric Coated with Plastic” imported by Shaurya International from China, which was detained based on a CRCL test report and subsequently seized through a memo dated 18.02.2025. The petitioner sought permission to re-export the goods back to the supplier, citing undue delay in adjudication and the supplier’s willingness to take back the consignment.

The Bench of Justice N. Anand Venkatesh permitted the re-export, subject to conditions aimed at securing revenue interests. The Court held that continued retention of the goods in India was unnecessary and directed that the petitioner execute a bond for the full value of differential duty and furnish a bank guarantee equivalent to 20% of the re-determined value. Upon fulfilling these requirements, the goods were to be allowed re-export within twelve days.

Wheat Gluten Covered under Wheat Flour and Eligible for DFIA Benefits for Biscuit Production: Madras HC

M/s.Parry Enterprises India Limited vs The AdditionalCommissioner of Customs CITATION : 2025 TAXSCAN (HC) 2312

The Madras High Court examined the legality of the Commissioner of Customs’ orders denying Duty Free Import Authorisation (DFIA) benefits for the import of wheat gluten, a dispute arising under the Foreign Trade Policy and the exemption notification dated 11.09.2009. The core issue was whether wheat gluten falls within the scope of “wheat flour” permitted for duty-free import under a DFIA issued for biscuit production. The petitioners had imported wheat gluten under a DFIA dated 14.08.2012 linked to biscuit exports, and the goods were initially assessed and cleared without duty. However, proceedings were later initiated alleging ineligibility of wheat gluten under the licence, leading to show cause notices proposing confiscation, duty, interest, and penalty.

The bench of Justice N. Anand Venkatesh, who held that the Commissioner was bound by consistent judicial precedent which had categorically recognised wheat gluten as a form of wheat flour eligible for DFIA benefits. The Court reiterates that lower authorities cannot disregard binding precedent. Concluding that the impugned orders suffered from lack of jurisdiction, the High Court quashed the orders passed by the Commissioner of Customs and allowed all writ petitions. No costs were imposed, with connected miscellaneous petitions closed.

Income Tax SCNs Missed After Accounts Executive Resigned, but Records Show updated Email Actively Used: Madras HC quashes with Cost of 50k to cancer institute

Assessment Unit vs The Income Tax Officer CITATION : 2025 TAXSCAN (HC) 2313

The Madras High Court examined the legality of an ex-parte assessment order issued under the Income Tax Act for AY 2023–2024, arising from Wandse Solutions India Private Limited’s failure to respond to multiple show cause notices and departmental communications. The petitioner attributed the non-response to the resignation of its Accounts Executive, whose email account allegedly went unchecked. The Revenue, however, refuted this by demonstrating that the petitioner had actively used another primary email ID for filing returns for the subsequent AY 2024–2025, thereby undermining the explanation offered for missing statutory notices.

The bench of Justice C. Saravanan held that the petitioner’s explanation “could not be countenanced” but nevertheless granted one final opportunity since the assessment order had been passed without a proper reply. The Court quashed the ex-parte order on strict conditions, including payment of ₹50,000 as costs to the Adyar Cancer Institute within 15 days and submission of a complete reply to the show cause notice within 30 days in both physical and online form. It further directed the Assessment Unit to pass a fresh order on merits within nine months of compliance. The writ petition and related miscellaneous petition were accordingly disposed of.

At the best Petitioner can seek for Instalment u/s 80 of GST': Madras HC confirms Interest on Delayed Tax Payment

M/s.Sri Vinayaka Industries Rep vs The State Tax Officer CITATION : 2025 TAXSCAN (HC) 2314

The Madras High Court addressed the issue of liability to pay interest on delayed remittance of tax under Section 50(1) of the respective Goods and Services Tax enactments, arising from Sri Vinayaka Industries’ challenge to a fresh adverse assessment order for the tax period 2018-2019. The Court reiterated that interest under Section 50(1) is automatic and mandatory where tax remains unpaid beyond the prescribed period and that neither the original authority nor the appellate authority has discretion to waive such statutory interest. The Court further clarified that the only relief available to the petitioner, in law, is the option to seek payment of interest in instalments by invoking Section 80 of the State GST Act, which allows the Commissioner to extend the time for payment or permit instalments subject to recorded reasons and continued liability to pay statutory interest.

The bench Justice C. Saravanan, who noted the petitioner’s repeated non-compliance, including failure to respond to the personal hearing notice dated 08.01.2025, which resulted in the passing of the fresh adverse assessment order on 11.03.2025 following a prior remand. Observing that the writ petition pertained solely to interest liability, an area with no scope for judicial interference under Section 50(1), the Court dismissed the petition. However, it granted liberty to the petitioner to approach the competent authority under Section 80 of the GST enactments to seek installment-based payment of the interest dues. The writ petition and connected miscellaneous petition were accordingly dismissed and closed.

Hostel Use by Working-Class Tenants Constitutes Residential Occupancy: Madras HC Sets Aside Commercial Tax Demands

Mrs.M.Divya vs The Senior Revenue Officer CITATION : 2025 TAXSCAN (HC) 2315

The Madras High Court examined the legality of reclassification of hostel properties as commercial units by municipal authorities in Coimbatore and Chennai, which resulted in enhanced property tax, water tax, and electricity charges. The core issue involved whether hostels accommodating working men and women who used the premises solely for residential purposes could be treated as commercial establishments without prior notice

The batch of writ petitions was adjudicated by Justice Krishnan Ramasamy, who rejected the municipal authorities’ contention that hostels were commercial ventures merely because rent was collected. Emphasising that taxation must be based on the functional use of the property, the Court held that the hostel rooms served as residential dwellings for their occupants and therefore could not be classified as commercial premises. The Court also found the impugned demand notices procedurally unsustainable due to the lack of prior notice and opportunity to be heard. Consequently, all reclassification orders and tax demand notices were quashed, with directions to reassess the properties strictly under the residential category.

EPCG Obligation Default: Madras HC Directs Adjudication Before Refunding Encashed Bank Guarantee

BELLCO Industries Rep vs The Commissioner Of Customs CITATION : 2025 TAXSCAN (HC) 2316

The Madras High Court addressed the issue arising under the Customs Act, 1962, concerning the encashment of a bank guarantee and the pending adjudication of a Show Cause Notice (SCN) issued to Bellco Industries. The petitioner, which had imported capital goods under the Export Promotion Capital Goods (EPCG) Scheme for export production, was issued the SCN proposing denial of customs duty exemption, recovery of interest, and penalty under Section 117 of the Act for alleged non-fulfilment of export obligations. Before adjudication could be completed, the respondents encashed the petitioner’s bank guarantee on the ground that the Export Obligation Discharge Certificate had not been produced, prompting the present challenge.

The Bench of Justice M. Dhandapani disposed of the writ petition with directions to the Assistant Commissioner of Customs to conclude the adjudication proceedings and pass a reasoned order on merits. The Court clarified that if the petitioner succeeds in the adjudication, the bank guarantee earlier encashed shall be refunded to them, making the final adjudication outcome determinative of the petitioner’s restitution rights.

Entry 54 Omission of State List No Bar: Kerala HC Upholds S.174 KGST Saving Pre-GST Liabilities Against Josco Jewellers

M/S SHEEN GOLDEN JEWELS (INDIA) PVT LTD vs THE STATE TAX OFFICER CITATION : 2025 TAXSCAN (HC) 2317

The Kerala High Court examined a substantial constitutional question concerning the validity of Section 174 of the Kerala Goods and Services Tax Act, 2017 (“KGST Act”), which preserves pre-GST liabilities, assessments, and recovery proceedings under the Kerala Value Added Tax Act, 2003 (“KVAT Act”). The petitioners, including Josco Jewellers Pvt. Ltd. and other commercial entities, argued that the 101st Constitutional Amendment by restructuring fiscal powers and modifying Entry 54 of List II extinguished the State’s authority to enforce VAT liabilities beyond 16 September 2017, as contemplated under Section 19 of the Amendment Act.

Justice Dama Seshadri Naidu, presiding over the batch of writ petitions, upheld the validity of Section 174 KGST Act and dismissed the challenges. The Court held that constitutional amendments do not nullify accrued rights or liabilities unless expressly stated, and that the State retained legislative authority to enact a saving clause safeguarding past events under pre-GST statutes. It concluded that the omission of Entry 54 did not retrospectively invalidate VAT proceedings, including the notices issued under Section 67 of the KVAT Act to Josco Jewellers for A.Y.s 2009-2012. Emphasising fiscal continuity and federal discipline, the Court ruled that legacy tax liabilities can be lawfully pursued and are not erased merely due to the transition to the GST regime.

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‘Misprint in TAXMANN Income Tax Bare Act’: Bombay HC Condones 509-Day Delay in Filing Form 9A, says Such Errors cannot Adversely Affect Assessee

Savitribai Phule Shikshan Prasarak Mandal vs Directorate Generalof Income Tax Investigation (Investigation) Pune & Ors CITATION : 2025 TAXSCAN (HC) 2318

The Bombay High Court examined whether a delay of nearly 509 days in filing Form 9A for Assessment Year 2022-23 could be condoned under Section 119(2)(b) of the Income Tax Act, 1961, in light of the petitioner’s reliance on a misprint in the 67th edition of the Taxmann Income Tax Bare Act. The petitioner-trust, Savitribai Phule Shikshan Prasarak Mandal, contended that the publication incorrectly stated that the amendment to the Explanation below Section 11(7) mandating computation of “application of income” on actual payment basis was applicable only from A.Y. 2023-24. Acting on this erroneous information, the trust filed its return without Form 9A, believing no shortfall existed in meeting the 85% application requirement. The error surfaced only during scrutiny assessment under Section 143(3), prompting the trust to immediately file Form 9A and seek condonation of delay.

The Division Bench comprising Justices B. P. Colabawalla and Amit S. Jamsandekar quashed the income tax authorities’ rejection orders and condoned the delay, holding that the petitioner had demonstrated genuine and bona fide reasons. The Court emphasized that Taxmann is an authoritative publication extensively relied upon by tax practitioners, advocates, and chartered accountants across India, and an inadvertent misprint in such a source could not reasonably be expected to be detected by the petitioner or its advisor. The Bench held that denying condonation would cause grave hardship, contrary to the objective of Section 119(2)(b). Noting the petitioner’s prompt corrective steps and the absence of any undue benefit from the delay, the Court ruled that the trust should not be penalised for relying on a widely accepted yet erroneous publication.

Bombay HC Quashes Reassessment Notice Issued to Non-Existent Entity

Erangal Comtrade and Consultancy LLP vs Assistant Commissionerof Income Tax CITATION : 2025 TAXSCAN (HC) 2319

The Bombay High Court dealt with the legal issue of whether a reassessment notice issued under Section 148 of the Income Tax Act, 1961 is valid when addressed to an entity that has ceased to exist due to conversion into a Limited Liability Partnership (LLP). The case arose after Erangal Comtrade and Consultancy Private Limited, which had converted into Erangal Comtrade and Consultancy LLP on 17 March 2016, was issued a reassessment notice for A.Y. 2017-18 despite its non-existence. The petitioner challenged the proceedings on the ground that the notice and subsequent reassessment order were issued to a defunct company, rendering them void ab initio in law.

A Division Bench comprising Justice B. P. Colabawalla and Justice Amit S. Jamsandekar held that the reassessment proceedings were unsustainable, reiterating that any notice or order issued to a non-existent entity is invalid. Relying on the Supreme Court’s decision in Principal CIT v. Maruti Suzuki India Ltd. (2020), the Court ruled that once a company ceases to exist upon conversion, its successor alone is the assessable entity. Consequently, the Bench quashed the impugned Section 148 notice and the resulting reassessment order, declaring the entire proceedings void.

Loan Received via Banking Channels and Repaid with Interest cannot be treated as Bogus: Delhi HC upholds ₹10 Cr Deletion

PRINCIPAL COMMISSIONER OF INCOME TAX vs KRBL INFRASTRUCTURE LTD CITATION : 2025 TAXSCAN (HC) 2320

The Delhi High Court examined whether a loan received through regular banking channels and repaid with interest could be classified as a bogus transaction under Section 68 of the Income Tax Act, 1961. The issue arose from the Revenue’s challenge to the deletion of a ₹10 crore addition made by the Assessing Officer (AO) in respect of unsecured loans received by KRBL Infrastructure Ltd. from Shashi Foods India Pvt. Ltd. for A.Y. 2014-15. The AO had invoked Section 68 on the grounds that the lender lacked genuine business activity and that the transactions were allegedly part of a circular accommodation-entry network, further disallowing interest of ₹1.03 crore.

A Division Bench of Justice Suresh Kumar Kait and Justice Neena Bansal Krishna upheld the findings of the CIT(A) and the Income Tax Appellate Tribunal, holding that the loan could not be treated as unexplained merely because the AO doubted the lender’s business activities. The Court noted that the identity of the lender, the loan confirmations, financial statements, and repayment with interest had all been duly established, shifting the burden back to the AO who failed to discredit the evidence. Observing that the assessee was not required to prove the “source of source” for the relevant year, the Bench held that no substantial question of law arose and accordingly dismissed the Revenue’s appeal, sustaining the deletion of the ₹10 crore addition and interest disallowance.

GST Dept Denies GST Refund on Excess Amount Deducted: Calcutta HC Mandates Action on Representation Within 4 Weeks

R.B. Construction vs The State of West Bengal and Ors CITATION : 2025 TAXSCAN (HC) 2321

The Calcutta High Court addressed the issue of alleged excess deduction of Goods and Services Tax (GST) and the failure of the departmental authorities to process a corresponding refund claim. The writ petition, filed by R.B. Construction, challenged the inaction of the Assessing Authority in not acting upon the petitioner’s representation seeking refund of GST allegedly deducted beyond the lawful amount. While the State contended that no refund was due and argued that the claim was time-barred, the Court refrained from deciding these issues at this stage and confined itself to examining the administrative inaction.

The Single Judge Bench of Justice Om Narayan Rai, held that once a representation had been submitted, the authority was duty-bound to consider and dispose of it in accordance with law. The Bench accordingly directed Respondent No. 4 to pass a reasoned order on the petitioner’s representation after granting an opportunity of hearing within four weeks from receipt of the Court’s order. The Court clarified that the direction does not guarantee refund, nor does it allow the petitioner to circumvent any statutory limitation. All substantive issues were expressly left open for the competent authority to decide.

Deposits Collected During GST Searches Not Voluntary: Karnataka HC Rules Refund Cannot Be Denied Through Deficiency Memos

M/S. GUNNAM INFRA PROJECTS PRIVATE LIMITED vs THE UNION OF INDIA CITATION : 2025 TAXSCAN (HC) 2322

The High Court of Karnataka has ruled on the legality of amounts collected during search and investigation proceedings under the Central Goods and Services Tax Act, 2017, holding that such deposits cannot be treated as “voluntary” payments under Section 74(5) when no tax liability has been determined and statutory preconditions remain unfulfilled. The Court further examined the validity of deficiency memos issued under Rule 89 of the CGST Rules, 2017, observing that refund applications completed in all respects cannot be rejected or stalled by invoking technical deficiencies. The case arose from refund claims filed under Section 54 by Gunnam Infra Projects Private Limited to recover deposits made during search and summons operations conducted under Section 67(1) of the CGST Act.

The Single Judge Bench of Justice M. Nagaprasanna held that the payments extracted during the search and investigation absent any quantified demand, interest, or penalty could not be construed as voluntary under Section 74(5), particularly in light of CBIC Instruction No. 01/2022-23, which prohibits coercive recovery during search. The Bench also found that the petitioner’s refund applications complied with the documentation requirements under Rule 89(2), rendering the issuance of deficiency memos unsustainable in law. Consequently, the Court quashed the deficiency memos and directed that the refund claims be processed as per law, thereby allowing the writ petition.

Imported Goods Detained by Customs due to Alleged BIS Certification & Labelling Defects: Chhattisgarh HC Directs Adjudicating Authority to Decide

Jitendra Shadija vs Union Of India Through Secretary Ministry OfFinance CITATION : 2025 TAXSCAN (HC) 2323

The High Court of Chhattisgarh examined a writ petition under Articles 226/227 of the Constitution of India challenging the continued detention of imported goods on the ground of alleged BIS certification and labelling defects. The petitioner-importer sought directions for unconditional or conditional release of goods covered under two Bills of Entry, arguing that the purported defects were fully curable and that the customs authorities had neither adjudicated the objections nor taken a decision regarding release. The legal issue before the Court centred on whether the High Court should order release of goods directly or require the importer to pursue the statutory adjudication mechanism prescribed under customs law.

The Single Judge Bench of Justice Naresh Kumar Chandravanshi held that it would be inappropriate for the High Court to examine the merits of the BIS or labelling issues at the writ stage. The Court emphasised that the proper course was for the importer to submit detailed objections before the Adjudicating Authority, which is statutorily obligated to determine whether the alleged violations exist and whether the defects are curable in law. Accordingly, the Court disposed of the writ petition, directing the Adjudicating Authority to consider and decide all objections including those concerning curability of BIS and labelling deficiencies strictly in accordance with law.

Gujarat HC to Examine Validity of GST S. 16(2) Provisos Mandating ITC Reversal for Non-Payment Within 180 Days

PRIYA BLUE INDUSTRIES PVT. LTD vs UNION OF INDIA & ORS CITATION : 2025 TAXSCAN (HC) 2324

The Gujarat High Court has issued notice in a writ petition filed under Article 226 challenging the constitutional validity of the second and third provisos to Section 16(2) of the Central Goods and Services Tax Act, 2017, which mandate reversal of Input Tax Credit (ITC) where the recipient fails to pay the supplier within 180 days from the date of the invoice. The petitioner, Priya Blue Industries Pvt. Ltd., has questioned whether the statutory requirement of payment within 180 days as a condition for retaining ITC violates constitutional protections and is compatible with the overall design and framework of GST. The petition raises a direct challenge to the vires of Section 16(2) provisos, arguing that the payment-linked reversal mechanism imposes unreasonable and arbitrary restrictions on the right to avail ITC.

The Division Bench of Justice A. S. Supehia and Justice Pranav Trivedi noted that since the vires of a statutory provision is under challenge, the matter must proceed in terms of the earlier order dated 3 August 2022, which had recorded the requirement of appearance by the Additional Solicitor General. During the hearing, counsel for the respondents waived service of notice, and accordingly, the Bench issued notice returnable on 11 December 2025. The Court clarified that further consideration of the petition will take place after the government files its response, and thus the matter has been kept pending for detailed adjudication.

GST Pre-Deposit Must Be Computed Only on Disputed Tax, Not on Admitted Liability: Calcutta HC Directs Fresh Decision on Pre-Deposit

Dhananjoy De vs Superintendent of Central Tax Audit CITATION : 2025 TAXSCAN (HC) 2325

The Calcutta High Court addressed the issue of condonation of delay and compliance with the statutory pre-deposit requirement under the Central Goods and Services Tax Act, 2017, in a writ petition filed by Dhananjoy De. The challenge arose from an order passed by the appellate authority under Section 107, dismissing the petitioner’s appeal against an order under Section 74 on two grounds: a 27-day delay beyond the prescribed three-month limitation period and alleged non-payment of the mandatory pre-deposit required for maintainability of the appeal. The petitioner sought judicial review on the ground that the delay was unavoidable and satisfactorily explained, and that the pre-deposit had been incorrectly computed.

The Single Bench of Justice Om Narayan Rai held that the petitioner had provided a reasonable and medically supported explanation for the 27-day delay, which fell within the condonable one-month period permitted under Section 107(4) of the CGST Act. Accordingly, the Court ruled that the marginal delay warranted condonation. On the issue of pre-deposit, the Bench noted that the petitioner’s contention that the 10% pre-deposit should apply only to the disputed tax component of ₹21,53,505, and not the entire demand required fresh evaluation. The appellate authority was therefore directed to reassess the computation of the pre-deposit strictly in accordance with law, and thereafter proceed to hear and decide the appeal on merits.

Deputationist Has No Right to Insist on Full Tenure: Calcutta HC upholds Repatriation order against Senior Private Secretary of ITAT

Vukkem Rambabu vs Union of India CITATION : 2025 TAXSCAN (HC) 2326

The Calcutta High Court dealt with the legal issue of whether a deputationist has a vested right to continue for the full tenure of deputation, in the context of a challenge to repatriation from the Armed Forces Tribunal (AFT) back to the parent department, the Income Tax Appellate Tribunal (ITAT). The matter involved interpretation of the principles governing deputation under the DoPT Office Memorandum dated 17 June 2010, which prescribes conditions for premature repatriation, including the requirement of approval from the competent authority. The petitioner contended that the repatriation violated these guidelines and principles of natural justice, rendering the administrative action arbitrary and without statutory justification.

The Division Bench comprising Justice Madhuresh Prasad and Justice Supratim Bhattacharya upheld the order of the Central Administrative Tribunal (CAT) repatriating the petitioner, holding that the decision was legally sound and procedurally valid. The Court found no irregularity in the issuance of the 90-day repatriation notice or in the approval granted by the Defence Minister, and accepted the CAT’s findings regarding the petitioner’s repeated disregard for administrative hierarchy. Reiterating the settled principle that a deputationist has no vested right to remain on a deputation post for the entire tenure, the Bench dismissed the writ petition and affirmed the repatriation order.

Provisional Release Conditional on 10% Bank Guarantee and Detailed Sales Reporting: Telangana HC Clears Seized Printing Machines

M/s. Digital Print Solutions vs The Ministry of Electronics andlnformation Technology 6 Lodhi Road CITATION : 2025 TAXSCAN (HC) 2327

The Telangana High Court examined the legality of continued seizure and refusal of release of imported goods under the Customs Act, 1962, specifically addressing the importer’s right to provisional release pending adjudication. The issue arose from the seizure of 233 units of second-hand multifunction digital printing, copying, and scanning machines imported by M/s Digital Print Solutions through a declared Bill of Entry. The petitioner argued that the machines were fully compliant with the Import-Export Policy 2023, all required documents were furnished, and they were willing to pay applicable duties under the Act. They challenged the seizure as arbitrary and sought a direction for immediate provisional release, also requesting waiver of demurrage charges.

The Division Bench of Justice P. Sam Koshy and Justice Suddala Chalapathi Rao directed the Customs authorities to grant provisional release of the seized goods on the condition that the petitioner furnishes a 10% bank guarantee and complies with strict post-release disclosure requirements regarding subsequent sales. Observing that the case was factually identical to earlier writ petitions in which provisional release had been allowed and noting that those orders had withstood scrutiny before the Supreme Court the Bench held that the importer was entitled to similar relief. Accordingly, the Court ordered provisional release pending adjudication under the Customs Act, maintaining consistency with its prior rulings.

GST Refund Claim u/s 54(3)(ii) r/w S. 56 Rejected: Calcutta HC says Not a Fit Case for Intervention

Century Products vs State of West Bengal & Ors CITATION : 2025 TAXSCAN (HC) 2328

The Calcutta High Court dealt with the question of whether a writ petition under Article 226 could be invoked to challenge a refund rejection order passed under Section 54 of the Central Goods and Services Tax Act, 2017 and the West Bengal Goods and Services Tax Act, 2017, when the GST law provides an alternative statutory remedy. The issue arose in the context of a refund claim of ₹1,55,096 filed by Century Products for February 2025 under Section 54(3)(ii) read with Section 56 and Rule 89 of the CGST Rules. During the pendency of the writ petition which initially sought only expeditious processing of the refund the adjudicating authority issued a show cause notice and subsequently rejected the refund under Section 54, prompting the assessee to challenge this order within the ongoing writ proceedings.

A Single Bench of Justice Om Narayan Rai held that the writ court could not be invoked to challenge the refund rejection order when an appeal under Section 107 of the CGST Act was available. The Court observed that although writ courts may, in rare cases, set aside orders passed during the pendency of writ proceedings despite an alternative remedy, the present case did not warrant such extraordinary intervention. Finding no jurisdictional error in the impugned order, the Court emphasized that the adjudicating authority was competent to adjudicate the refund claim, including its rejection. Accordingly, the writ petition and connected application were disposed of, granting liberty to Century Products to pursue its statutory appeal, while clarifying that the merits of the refund claim were left open for independent adjudication by the appellate authority.

Frozen Chicken from Other States being Sold at 0% GST Bill instead of 5%: Kerala HC directs to Investigate Evasion

LIYAKHAT ALI vs COMMISSIONER CITATION : 2025 TAXSCAN (HC) 2329

The High Court of Kerala examined a writ petition alleging large-scale tax evasion under the Goods and Services Tax laws, specifically concerning the sale of frozen chicken, which attracts 5% GST under the rate schedule but was allegedly being billed at 0% GST by certain suppliers operating across State borders. The petitioner, a dealer in chicken meat at Manjeri, submitted that this contravention of GST rate notifications enabled evasion of tax legitimately due to the State and distorted fair market competition. Despite filing a detailed complaint on 19 September 2024 before the Deputy Commissioner of State Tax (Intelligence), Palakkad, the petitioner alleged inaction, prompting him to invoke the writ jurisdiction of the Court to seek enforcement of GST provisions and investigation into the alleged malpractice.

The Single Bench of Justice Ziyad Rahman A.A. noted that the GST Department had acknowledged receipt of the complaint, identified invoices showing billing at 0% GST, and confirmed that a preliminary enquiry and further investigation were already in progress. Observing that active steps had been initiated by Intelligence Unit I and the Deputy Commissioner (Enforcement), the Court held that the matter warranted continued statutory examination rather than judicial interference on merits. The Bench accordingly directed the GST authorities to take prompt, effective, and appropriate enforcement action to ensure that no tax evasion occurs in the sale of frozen chicken and to pursue the inquiry to its logical conclusion. The writ petition was then disposed of with the assurance that the petitioner’s grievance would be addressed through the ongoing investigation.

Reassessment Against Non-Existent Entity Void: Bombay HC Quashes S.148 Notice & ₹16.57 Cr IT Demand Against Petitioner

Erangal Comtrade and Consultancy LLP vs Assistant Commissioner of Income Tax CITATION : 2025 TAXSCAN (HC) 2330

The Bombay High Court examined the legality of a reassessment initiated under Section 148 of the Income Tax Act, 1961, against an entity that had ceased to exist due to conversion. The core legal issue was whether reopening proceedings and passing an order under the reassessment framework invoking Sections 147, 148, and 69 can be sustained when the notice is issued in the name of a dissolved or converted company. The controversy stemmed from a notice dated 30 March 2021 issued to Erangal Comtrade and Consultancy Pvt. Ltd., despite the fact that the company had been converted into the petitioner LLP on 17 March 2016. The reassessment order further treated fixed deposits as unexplained investments and added undisclosed interest income, resulting in a substantial tax demand, prompting the LLP to challenge the entire proceedings as void ab initio.

The Division Bench of Justice B. P. Colabawalla and Justice Amit S. Jamsandekar held that reassessment proceedings initiated against a non-existent entity are a jurisdictional nullity. The Court reiterated that once an entity ceases to exist after amalgamation or conversion, any notice issued in its name is invalid and cannot be cured by the successor’s participation. The Bench found the Revenue’s justification that the erstwhile company had not filed its return for the relevant A.Y/ wholly untenable, as the entity was not in existence during that period. The Court accordingly quashed the Section 148 notice, the reassessment order dated 30 March 2022, and the consequential demand of ₹16.57 crore, holding that an invalid notice vitiates all subsequent proceedings.

Jharkhand HC Grants Anticipatory Bail to Agents in GST Non-Deposit Case citing Main Allegations were Against Firm’s Proprietor

Gida Jaydip Nanku Bhai vs Vala Kuldeep Gabharubhai CITATION : 2025 TAXSCAN (HC) 2331

The Jharkhand High Court considered an application for anticipatory bail arising from allegations relating to non-deposit of Goods and Services Tax (GST) in a commercial transaction. The case stemmed from Barsol P.S. Case No. 14 of 2025, registered under Sections 406, 420, 506, 34, and 120B of the Indian Penal Code, involving an agreement for the supply of base oil where GST collected was allegedly not deposited by the proprietor of the supplier-firm. The petitioners, who were only agents of the firm, approached the Court seeking protection from arrest on the ground that they had no role in billing, collection, or deposit of GST and that all business transactions were exclusively handled by the firm’s Proprietor.

The bench of Justice Sanjay Kumar Dwivedi, who noted that the principal allegations in the FIR were directed against the Proprietor, Arvind Bhai Madhani of M/s Bapa Sitaram Enterprises, and not the petitioners-agents. Observing that the petitioners’ involvement was limited to acting on behalf of the firm and that they were not responsible for GST compliance, the Court held that custodial interrogation was unwarranted. The Bench accordingly granted anticipatory bail under Section 482(2) of the Bhartiya Nagrik Suraksha Sanhita, 2023, directing the petitioners to surrender before the Judicial Magistrate, First Class, Ghatshila within three weeks, and ordering that they be released on bail upon furnishing a bond of ₹25,000 each with two sureties.

Liability of Legal Heir Limited to Assets Inherited from Partners of Defaulter Firm: Punjab & Haryana HC sets aside Income Tax Attachment

ANITA RANI vs INCOME TAX OFFICER AND ORS. CITATION : 2025 TAXSCAN (HC) 2332

The Punjab & Haryana High Court examined the legality of attaching the independent assets of a legal heir for tax dues arising under the Income Tax Act, 1961. The central issue before the Court was whether a legal representative of a deceased partner of a defaulting firm could be held personally liable beyond the value of the estate inherited from the deceased, particularly in the context of recovery proceedings initiated under Sections 159 (Liability of legal representatives) and 189 (Liability of partners of dissolved firms). The dispute arose when the Income Tax Department attempted to recover outstanding tax dues of M/s Sham Lal Siri Ram, Sangrur, by attaching a joint bank account of the petitioner, despite no evidence showing she had inherited any estate from the deceased partner.

A Division Bench comprising Justices Jagmohan Bansal and Amarinder Singh set aside the attachment order, holding that the Revenue had acted beyond its statutory authority. The Court ruled that Sections 159 and 189 clearly restrict the liability of a legal heir only to the extent of the estate actually inherited from the deceased, and in the absence of any material showing such inheritance, the petitioner’s independent bank account could not be subjected to attachment. The Bench held the Department’s action to be mechanical and unsupported by evidence, and accordingly allowed the writ petition while clarifying that the Revenue may proceed afresh only in accordance with law and strictly within the limits prescribed by the Income Tax Act.

Taxpayer alleges Faceless Assessment SOP Breach by Income Tax Dept: Orissa HC orders to take appellate remedy

M/s. J.M. Steel Traders vs Assessing Officer Case Number : W.P.(C) No.9748 of 2025

The Orissa High Court examined whether alleged violations of the Faceless Assessment Standard Operating Procedure (SOP) issued under Section 144B of the Income Tax Act, 1961 could justify interference under Article 226 of the Constitution in a challenge to a faceless assessment order. The writ petition was filed by M/s J.M. Steel Traders against an assessment order passed under Section 143(3) read with Section 144B for A.Y. 2023-24, contending that the Assessing Officer had breached clause N.1.3 of the CBDT’s SOP by granting only six days to respond to the show-cause notice and by making an addition of ₹5.27 crore beyond the scope of the notice.

The Division Bench of Chief Justice Harish Tandon and Justice Murahari Sri Raman declined to interfere, holding that the writ petition was not maintainable in view of the effective alternative remedy provided under the Income Tax Act. The Court noted that the petitioner had admittedly submitted its reply within the time specified in the show-cause notice, and therefore no prejudice could be claimed merely because the period was shorter than that prescribed in the SOP. Further, whether the Assessing Officer travelled beyond the notice was held to be a factual issue requiring appreciation of assessment records, which is outside the scope of writ jurisdiction. Consequently, the Court dismissed the writ petition while granting liberty to the petitioner to pursue statutory appellate remedies, clarifying that the appellate authority is competent to consider allegations of SOP violations, procedural irregularities, and jurisdictional errors.

GST Officer Suspended for Not Acting Against Fake Firm: Allahabad HC sets aside Suspension Order noting Officer not On duty

Shriddha Kumari vs The State Of Up And Another CITATION : 2025 TAXSCAN (HC) 2334

The Allahabad High Court has set aside the suspension of Smt. Shriddha Kumari, Deputy Commissioner, State Tax, Sector-12, Prayagraj, who had been suspended for allegedly failing to act against a fake GST-registered firm, M/s Kanhaiya Enterprises. Justice Vikas Budhwar held that continuation of the suspension was unjustified when the alleged lapses occurred during periods when the petitioner was on duly sanctioned child-care and medical leave, and was later transferred out of the concerned jurisdiction. The Court highlighted that the deemed registration (May 2023) and subsequent declaration of the firm as bogus (May 2023) fell within her sanctioned leave period, and the fraudulent ITC claims (December 2023 to March 2024) arose after she had already joined her new posting at Gorakhpur.

The Court noted that the State’s own records confirmed the petitioner’s leave and transfer dates, and the State Counsel could not dispute that she was not in a position to initiate cancellation proceedings, which require issuance of notice and due inquiry. Observing that her absence was authorised and that attributing inaction to her was prima facie unwarranted, the Court ruled that continuing her suspension served no administrative purpose and caused undue hardship. Accordingly, the suspension order dated 23 September 2025 was quashed. However, the High Court clarified that disciplinary proceedings may continue independently and directed that the inquiry be concluded within three months of submission of the certified copy of the order, with full cooperation from both sides.

Calcutta HC Directs State of West Bengal to Execute SARFAESI Order for Cholamandalam Finance Within 4 Weeks

HOLAMANDALAM INVESTMENT & FINANCE COMPANY LIMITED vs HESTATE OF WEST BENGAL & ORS.

CITATION : 2025 TAXSCAN (HC) 2335

The Calcutta High Court, exercising its Constitutional Writ Jurisdiction, dealt with the issue of non-execution of an order passed under Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act). The petitioner, Cholamandalam Investment & Finance Company Limited, complained that despite the SARFAESI order dated 10.06.2025 directing the State authorities to take possession of the secured property, respondent no. 2 the State of West Bengal had failed to implement the direction. The core legal question before the Court was whether the State, having received a valid and enforceable Section 14 order, could delay or deny execution on administrative grounds, thereby frustrating the creditor’s statutory rights under the SARFAESI framework.

Justice Reetobroto Kumar Mitra, noting the State’s explanation that the earlier Executive Magistrate had been transferred, held that such administrative contingencies cannot justify prolonged non-execution of a judicial order. The Court found that the petitioner had complied with all statutory requirements and made the requisite payments, and therefore the State was under an obligation to ensure that possession of the secured asset is handed over within a reasonable time. Directing strict compliance, the Court ordered respondent no. 2 to execute the Section 14 order within four weeks, after giving due notice to the petitioner. With these directions, the writ petition (WPA 25353 of 2025) was disposed of, with no order as to costs.

Bail Denied in ₹6200 Crore PMLA Case: Calcutta HC Rejects Plea Noting 444 Pending Cases Against Petitioner

Sanjay Surekha vs The Directorate of Enforcement CITATION : 2025 TAXSCAN (HC) 2336

The Calcutta High Court dealt with a bail application arising under the Prevention of Money Laundering Act, 2002 (PMLA), involving alleged diversion and laundering of over ₹6200 crore. The prosecution stemmed from offences registered by the Central Bureau of Investigation under the Indian Penal Code and the Prevention of Corruption Act, forming the predicate offence for PMLA proceedings. The petitioner, Sanjay Surekha, sought bail on grounds including alleged violation of statutory safeguards under Section 19 of the PMLA, contending that the arrest was based primarily on his statement recorded under Section 50 and that continuation of PMLA proceedings was untenable since proceedings in the predicate offence had been stayed by a coordinate bench.

Justice Suvra Ghosh rejected the bail plea, holding that the petitioner failed to satisfy the twin conditions mandated under Section 45 of the PMLA. The Court found that the arresting officer had duly recorded detailed “reasons to believe” and supplied the grounds of arrest in compliance with Section 19. Upon examining the investigation materials, the Court noted prima facie evidence of the petitioner’s involvement in creating shell entities, diverting loan proceeds, and holding benami assets. The Court also relied on factors such as the magnitude of the alleged laundering, risk of influencing witnesses, attempted interference from custody, and the existence of 444 pending cases against the petitioner. Concluding that no case for bail was made out and that investigation in economic offences is necessarily complex and time-consuming, the High Court dismissed the bail application.

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Kerala HC Grants Consolidated Bail in CSR Fund Case, Citing "Exceptional Circumstance" for 70-Year-Old Trapped by Onerous Conditions

K.N. ANAND KUMAR vs STATE OF KERALA CITATION : 2025 TAXSCAN (HC) 2337

The Kerala High Court considered a writ petition concerning the accused’s right to effectively avail bail under Article 21 of the Constitution of India, in the context of over 1200 criminal cases registered against a 70-year-old accused linked to an alleged CSR fund scam. The core legal issue concerned whether the standard bail condition requiring the execution of separate bail bonds with two solvent sureties in every jurisdictional court violated the constitutional guarantee of personal liberty by making compliance impossible.

Justice Bechu Kurian Thomas held that the circumstances were “exceptional” and that the cumulative effect of the standard bail conditions had imposed an insurmountable barrier to the petitioner’s release, amounting to a denial of liberty. Relying on the Supreme Court’s ruling in Girish Gandhi v. State of Uttar Pradesh which emphasizes that “excessive bail is no bail,” the Court found that the petitioner’s continued detention frustrated the purpose of granting bail. Accordingly, the Court allowed the writ petition and directed that the accused be permitted to execute a single consolidated surety bond of ₹5,00,000 per surety in one selected case within each district. This bond, along with supporting affidavits, would serve as sufficient security for all cases within that district, thus enabling the petitioner’s release.

Jharkhand HC Rejects Bail in ₹750-Crore Fake ITC & PMLA Case Citing Failure to Meet S. 45 Twin Conditions

Mohit Deora vs Union of India through Directorate of Enforcement CITATION : 2025 TAXSCAN (HC) 2338

The Jharkhand High Court examined a bail application arising from allegations of fraudulent circulation of fake GST invoices and the laundering of proceeds of crime, offences falling under Section 132 of the Central Goods and Services Tax Act, 2017, provisions of the Indian Penal Code, 1860, and Sections 3, 19 and 45 of the Prevention of Money Laundering Act, 2002 (PMLA). The petitioner, Mohit Deora, sought bail on the ground that he was not named in the predicate offences and that statutory arrest safeguards under PMLA had not been followed. The Enforcement Directorate, however, alleged that he had participated in a large-scale GST fraud involving approximately 135 shell companies and had received over ₹10.31 crore of illicit funds through various bank accounts, making the matter a serious economic offence requiring strict application of the PMLA’s threshold conditions.

The Single Bench of Justice Sujit Narayan Prasad held that the materials collected bank statements, fund transfers from entities involved in fake ITC generation, and unexplained credits prima facie established the petitioner’s involvement in money laundering under Section 3 of the PMLA. The Court found that the arrest complied with Section 19, that the petitioner’s explanations lacked evidentiary support, and that the magnitude and pattern of transactions prevented any conclusion of innocence at the bail stage. Observing that the stringent twin conditions under Section 45 were not satisfied, the Court ruled that the petitioner had failed to show reasonable grounds for believing he was not guilty or that he would refrain from further offences if released. Accordingly, the High Court dismissed the bail plea.

Statement Recorded During Survey Has No Evidentiary Value: Chhattisgarh HC Quashes Additions on Excess Stock & Cash based on SC decision

Smt. Neetu Sharma vs Pr. Commissioner Of Income Tax Income TaxOfficer CITATION : 2025 TAXSCAN (HC) 2339

The Chhattisgarh High Court examined the legality of additions made on account of excess stock and cash during assessment proceedings, specifically addressing whether statements recorded during a survey under Section 133A of the Income Tax Act, 1961 can form the sole basis for such additions. Relying on the established legal position that survey statements have no evidentiary value since officers conducting surveys are not empowered to administer an oath the Court considered whether the Assessing Officer was justified in sustaining additions under Section 143(3) despite the assessee’s retraction and absence of corroborative evidence.

The Division Bench of Justice Rajani Dubey and Justice Amitendra Kishore Prasad held that the assessment was unsustainable, noting that both the AO and the appellate authorities had relied exclusively on the assessee’s survey statement without any independent material to substantiate discrepancies in stock or cash. The Bench reiterated that statements recorded under Section 133A do not possess evidentiary value and cannot, by themselves, justify additions. Consequently, the Court quashed the orders of the AO, CIT(A), and ITAT.

Time-Barred Audit Visit Report Vitiates Entire Proceeding: Orissa HC Sets Aside OVAT Assessment on Indian Oil Adani Ventures

M/s. Indian Oil Adani Ventures Limited vs State of Odisha CITATION : 2025 TAXSCAN (HC) 2340

The Orissa High Court examined the legality of an assessment initiated under Section 42 of the Odisha Value Added Tax Act, 2004, holding that the proceeding was vitiated because the foundational Audit Visit Report had been submitted well beyond the statutory seven-day period prescribed under Section 41. The primary legal issue before the Court concerned whether an invalid Audit Visit Report submitted more than three months late could confer jurisdiction upon the Assessing Officer to initiate an audit assessment, particularly when an escaped turnover assessment for the same period under Section 43 had already been completed.

The Division Bench of Justice B. P. Routray and Justice S. K. Mishra ruled that the delayed Audit Visit Report was invalid and incapable of forming the basis for any action under Section 42, thereby rendering the entire assessment without jurisdiction. The Bench further held that once an assessment under Section 43 is concluded, a fresh assessment under Section 42 for the same period cannot be initiated, and clarified that Section 49(2) was inapplicable since the remand order relied upon was not issued by a Court or Tribunal. Accordingly, the Court quashed the assessment and tax demand in their entirety and allowed the petition.

No Satisfaction Recorded to Invoke S.153C under Income Tax: Calcutta HC Upholds S.147 Reassessment, Rejects assessee’s Jurisdictional Plea

SHIV KUMAR SARAF vs PRINCIPAL CHIEF COMMISSIONER OF INCOME TAX CITATION : 2025 TAXSCAN (HC) 2341

The Calcutta High Court dealt with the question of whether a reassessment initiated under Section 147 of the Income Tax Act, 1961 was without jurisdiction on the ground that proceedings ought to have been initiated under Section 153C instead. The Court examined the statutory requirements under Section 153C, which mandates dual satisfaction by the Assessing Officer of the searched person and the Assessing Officer of the “other person,” and held that the petitioner failed to demonstrate any jurisdictional defect or non-compliance with the statutory preconditions for invoking Section 153C. As the reassessment was founded on information received from the Investigation Wing and not on incriminating material seized from the petitioner, the Court concluded that Section 153C was not attracted.

The Bench of Justice Om Narayan Rai dismissed the writ petition, upholding the reassessment order dated 10 June 2024 passed under Section 147 read with Sections 260 and 144B. The Court found that no document, book or asset belonging to the petitioner was discovered during the search, and therefore the statutory requirements for initiating proceedings under Section 153C were absent. It further held that the petitioner had failed to raise the jurisdictional objection at earlier stages, and that invoking writ jurisdiction for the first time at this stage amounted to circumventing the appellate remedy. Consequently, the Court refused to interfere under Article 226 and directed the petitioner to approach the appellate authority under Section 246.

No Hearing given to Clarify GST ITC availed u/s. 16(2) despite Reply Filed: Karnataka HC orders Fresh Adjudication

M/S SRI LAKSHMI AGENCIES vs THE STATE OF KARNATAKA CITATION : 2025 TAXSCAN (HC) 2342

The Karnataka High Court addressed a legal issue concerning the violation of principles of natural justice in the context of a GST demand under Section 73 of the Central Goods and Services Tax Act, 2017 (CGST) and the Karnataka Goods and Services Tax Act, 2017. The matter involved M/s Sri Lakshmi Agencies, a Bengaluru-based partnership firm, which challenged the adjudication order confirming ineligibility of Input Tax Credit (ITC) claimed under Section 16(2) of the CGST Act. The petitioner contended that it had filed detailed clarifications and supporting documents, but the authorities had passed the order without granting a personal hearing as mandated under Section 75(4) of the CGST Act, 2017, thereby violating its statutory and constitutional rights.

The bench of Justice S.R. Krishna Kumar held that the adjudication order was legally unsustainable due to the failure of the department to consider the petitioner’s reply and provide a personal hearing. The Court set aside the impugned GST demand order and directed the petitioner to appear before the adjudicating authority for fresh adjudication, allowing it to submit all clarifications and supporting documents. The judgment reinforces the mandatory requirement of providing a reasonable opportunity of hearing before passing adverse GST orders.

Service Tax Payable on Consolidated Rent Collected by Co-owners when Threshold Exceeds: Calcutta HC on Clubbing of Rent

SHRI GOUTAM MUKHERJEE vs THE COMMISSIONER OF CENTRAL EXCISE ANDSERVICE TAX CITATION : 2025 TAXSCAN (HC) 2343

The Calcutta High Court dealt with a legal issue concerning the liability of co-owners for service tax on consolidated rental income under Notification No. 06/2005-ST and Section 73(1) of the Finance Act, 1994. The case arose from a tripartite arrangement where Goutam Mukherjee and two co-owners let out jointly owned premises, routing consolidated rent through a common bank account for repayment of a housing loan. The petitioner challenged the service tax demand on the ground that each co-owner was a distinct person with separate PANs and assessments, and that the consolidation of rent into a single account should not create a single taxable unit.

The bench of Justice Rajarshi Bharadwaj and Justice Uday Kumar, who upheld the Tribunal’s decision. The Court noted that while previous separate leases fell below the exemption threshold, the consolidated lease with Vishal Retail Ltd. involved rent exceeding the statutory limit, making it taxable. The Tribunal had remanded the matter to the adjudicating authority solely for quantification of service tax liability, directing verification of whether co-owners received any other rent. The High Court observed that no substantial question of law arose, and accordingly dismissed the appeal and connected application.

GST Authorities Cannot ‘Shy Away’ from Issuing Form GST MOV-09 when Amount Paid under Protest or Not: Allahabad HC

M/S Uflex Limited vs Union Of India CITATION : 2025 TAXSCAN (HC) 2344

The Allahabad High Court addressed the legal issue regarding the mandatory issuance of Form GST MOV-09 under Section 129 of the CGST Act, 2017, irrespective of whether the penalty is deposited under protest or otherwise. The writ petition was filed by M/s Uflex Limited, challenging an order dated 22 March 2024 refusing to issue MOV-09 after the petitioner had deposited the penalty to secure release of goods. The petitioner contended that issuance of MOV-09 is required under both law and Circular No. 41/15/2018-GST, as the form constitutes the operative penalty order that enables a taxpayer to file an appeal.

The Bench comprising Justice Saumitra Dayal Singh and Justice Indrajeet Shukla relied on the Division Bench’s earlier decision in M/s Aries Agro Limited v. State of Uttar Pradesh (30 April 2025), which held that authorities cannot avoid passing MOV-09 once the penalty is paid. The High Court quashed the impugned order and directed the proper officer to issue Form GST MOV-09 within three weeks, emphasizing that failure to do so would deprive the taxpayer of the statutory right to appeal.

Contractors can claim increased GST during Work, even after Bills were paid before Rate Increase: Kerala HC rules against KWA

M/S. SHREE CONTRACTOR vs STATE OF KERALA CITATION : 2025 TAXSCAN (HC) 2345

The Kerala High Court addressed the legal issue of reimbursement of increased GST rates under a contract and the release of the contractor’s security deposit by the Kerala Water Authority (KWA). The writ petition was filed by M/s Shree Contractor, seeking payment of Rs. 65,58,361 as differential GST after the rate increased from 12% to 18%, and the release of a security deposit of Rs. 1,71,42,000 for a completed water supply project.

A single bench comprising Justice Ziyad Rahman A.A. held that the contract clearly entitled the contractor to reimbursement of GST differential, regardless of when the bills were initially paid. The court directed the respondents to release the claimed tax differential within three months upon proof of payment and to reconsider the release of the security deposit by examining whether contractual conditions for completion of pipeline work were fulfilled. The writ petition was disposed of with these directions, upholding the contractor’s contractual rights.

CBDT Raises Monetary Threshold to ₹2 Crore for HC Appeals: Chhattisgarh HC Disposes of Revenue’s Appeal

The Pr. Commissioner Of Income Tax Raipur vs M/s Aaryan RiceIndustries Llp A-8 602, Offizo CITATION : 2025 TAXSCAN (HC) 2346

The Chhattisgarh High Court dealt with the issue of departmental appeals under the Income Tax Act, 1961, specifically in light of revised monetary thresholds prescribed by the CBDT for filing appeals before High Courts. The appeal was filed by the Principal Commissioner of Income Tax, Raipur-1, against M/s Aaryan Rice Industries LLP, challenging an income-tax assessment. The case involved a tax effect below ₹2 crore, which fell short of the revised monetary limit under Section 268A of the Income Tax Act, as per the CBDT’s circular dated 17 September 2024, intended to reduce non-essential tax litigation.

A Division Bench comprising Justice Rajani Dubey and Justice Amitendra Kishore Prasad noted that continuation of the appeal would be contrary to the CBDT’s policy, which mandates withdrawal of pending appeals not meeting the threshold. The Revenue conceded that the appeal could not be pursued, and the High Court accordingly disposed of the appeal, terminating proceedings in line with the updated CBDT guidelines.

Form 10 Disclosure of Accumulation Purpose Satisfies S. 11(2): Bombay HC Quashes Reopening as Change of Opinion

Sir Jamsetjee Jejeebhoy Charity Fund vs Income Tax, Officer CITATION : 2025 TAXSCAN (HC) 2347

The Bombay High Court examined the scope of compliance under Section 11(2) and the limits of reassessment powers under Section 148 of the Income Tax Act, 1961. The matter arose from notices issued to a charitable trust registered under Section 12A, seeking to reopen its assessment for AY 2018–19. The petitioner had filed its return claiming exemption under Section 11 and submitted Form 10 along with a trustee resolution specifying accumulation of ₹3.17 crore for medical, educational, and social relief of the Zoroastrian community and for upkeep of trust properties. The AO issued notices under Sections 148A(b), 148A(d), and 148, alleging that the Form 10 did not adequately specify the purposes, thereby justifying reassessment.

The Bench of Justice B. P. Colabawalla and Justice Amit Satyavan Jamsandekar held that the petitioner had complied with Section 11(2) by furnishing Form 10 along with the trustee resolution and that reopening the assessment on the same grounds amounted to a mere change of opinion, which is impermissible. The Court observed that audit objections alone do not constitute “information” warranting reassessment under Section 148. Consequently, the High Court quashed the notices and reassessment order under Sections 148A(b), 148A(d), and 148.

GST Officers Cannot Levy Tax, Interest or Penalty on VAT-Regime Works Contract: Allahabad HC Holds Authorities Acted Without Jurisdiction

M/S Vimlesh Kumar Contractor vs State of U.P. CITATION : 2025 TAXSCAN (HC) 2348

The Allahabad High Court addressed the issue of jurisdiction under Section 73 of the CGST Act, 2017, in a case involving taxation of civil works executed entirely during the VAT regime. The petitioner, Vimlesh Kumar Contractor, had executed contracts for UP Jal Nigam in A.Y. 2015-16 and 2016-17, with VAT deducted at 4% and corresponding certificates issued. Despite the works being completed pre-GST, the GST department issued a notice under Section 73 for F.Y. 2018-19, alleging a mismatch between Form 26AS and GSTR-3B, and passed an ex parte assessment order imposing tax, interest, and penalty. The petitioner’s appeal had also been dismissed by the authorities.

The Bench of Justice Piyush Agarwal held that the GST authorities had exceeded their jurisdiction, as no services were rendered under the GST regime and the payments related solely to pre-GST contracts. The Court observed that any doubts should have been referred to the VAT authorities instead of initiating GST proceedings. The High Court quashed both the assessment and appellate orders, directed that any amounts deposited by the petitioner be refunded with interest from the date of deposit, and emphasized that the GST Act cannot be invoked to tax pre-GST transactions.

S. 130 Proceedings under GST cannot be Initiated against Excess Stock Found During Survey: Allahabad HC

Vidyarthi Dresses vs State Of Uttar Pradesh Through PrincipalSecretary CITATION : 2025 TAXSCAN (HC) 2349

The Allahabad High Court addressed the legal scope of Section 130 of the Central Goods and Services Tax Act, 2017, which governs confiscation of goods. The petitioner, Vidyarthi Dresses, challenged two orders dated 30 September 2019 and 24 October 2024, in which GST authorities initiated confiscation proceedings solely on the basis of a survey alleging excess stock, without any physical verification. The Court observed that the proper statutory mechanism to address discrepancies in stock is under Sections 73 or 74, which govern tax not paid, short paid, erroneously refunded, or irregularly availed ITC, and that Section 130 cannot be invoked as a substitute for assessment.

The Bench of Justice Piyush Agrawal held that the confiscation orders were legally unsustainable. Relying on prior Allahabad High Court precedents, including M/s Vijay Trading Company v. Additional Commissioner, the Court emphasized that assessment procedures under Sections 73 or 74 must be followed, providing statutory notice and opportunity of hearing. Consequently, the High Court quashed the Section 130 orders and directed the authorities to refund any amounts deposited pursuant to these orders within one month of producing a certified copy of the judgment.

Decade-Late Claim: Delhi HC Declines to Order Form 26A Issuance to Kohinoor Educational Services

KOHINOOR EDUCATIONAL SERVICES PVT. LTD vsUNION OF INDIA &ORS. CITATION : 2025 TAXSCAN (HC) 2350

The Delhi High Court dealt with a writ petition concerning the issuance of Form 26A under Section 201 of the Income Tax Act, 1961. The petitioner, Kohinoor Educational Services Pvt. Ltd. (KESPL), sought a mandamus directing the Airports Authority of India (AAI) to issue the accountant’s certificate for payments made under a licence agreement executed on 3 April 2009 for operating facilities at Salem Airport. The Court observed that the claim was raised nearly a decade after the termination of the agreement on 2 April 2015, and that the statutory conditions under Section 201 did not apply to most of the assessment years in question, rendering the request untenable.

The Division Bench upheld the Single Judge’s findings, noting that KESPL had failed to explain the extraordinary delay and that essential verification records were irretrievably destroyed. The Court further held that the first proviso to Section 201, which allows relief from being treated as an assessee-in-default subject to Form 26A issuance, came into effect only on 1 July 2012 and therefore did not cover the core period of the petitioner’s claim. Consequently, the High Court dismissed the petition, refusing to direct AAI to issue Form 26A.

Any Tax-Paying Person can Seek GST Refund Not Just Tax Depositor: Allahabad HC Clarifies S. 54 in Ambuja Cement Case

M/s Ambuja Cement Limited vs Union of India CITATION : 2025 TAXSCAN (HC) 2351

The Allahabad High Court addressed the scope of refund claims under Section 54 of the GST Act, 2017, clarifying that a refund application is not limited to the person who deposited the tax with the Government. The Court held that any person who has paid the tax such as a principal paying GST to a contractor can claim a refund upon proving payment. The judgment arose from a writ petition filed by Ambuja Cement Limited, which sought a refund of GST paid to its contractor for a project later cancelled. The authorities had rejected the refund on the ground that Ambuja itself had not deposited the tax directly.

A Single Bench of Justice Piyush Agrawal held that Section 54(1) allows “any person claiming refund… [to] make an application,” and the only requirement is proof of payment, which Ambuja had provided. The Court observed that refund provisions are remedial and should be interpreted liberally. Consequently, the appellate order rejecting the refund was set aside, and the matter was remanded to the first appellate authority for fresh consideration, with directions to issue a reasoned order after granting Ambuja an opportunity of personal hearing within two months.

Loan Default Alone Not Ground for Travel Restriction: Delhi HC quashes LOC Issued by Bank of Baroda against Director in ₹130 Crore UAE Loan Default Case

MANAN GOEL vs UNION OF INDIA & ORS. CITATION : 2025 TAXSCAN (HC) 2352

The Delhi High Court addressed the legality of a Look-Out Circular (LOC) issued by Bank of Baroda against Manan Goel, a director of Gulf Petrochem FZC, UAE, ruling that a loan default alone cannot justify restricting a person’s right to travel. The Court observed that in the absence of a cognizable offence, the “economic interest of India” exception under the Office Memorandums governing LOCs cannot be invoked, particularly in cases involving foreign loan defaults where the petitioner was merely a guarantor. The LOC was issued following a default on a loan of approximately ₹130 crores by the company for which Mr. Goel had provided a personal guarantee.

The Single Bench of Justice Sachin Datta held that the bank had not demonstrated any exceptional circumstance threatening India’s economic interest. The court quashed the LOC while directing the petitioner to furnish an affidavit undertaking to cooperate with any investigation. The Court clarified that any breach of this undertaking would be treated as wilful disregard of its order, thereby protecting the petitioner’s fundamental right to travel under Article 21 while ensuring cooperation with regulatory authorities.

Relief to ICICI Home Finance: Chhattisgarh HC Raps Tehsildar for Delay, Calls SARFAESI Action a "Ministerial Step"

ICICI Home Finance Company Limited vs State Of Chhattisgarh CITATION : 2025 TAXSCAN (HC) 2353

The Chhattisgarh High Court dealt with the enforcement of a possession order under Section 14 of the SARFAESI Act, emphasising that the process of taking physical possession of secured assets is a ministerial step that must be executed without delay. The petition was filed by ICICI Home Finance Company Limited against the State of Chhattisgarh and the Tehsildar of Raipur after the Tehsildar failed to act on a District Magistrate’s order dated 25.08.2025, directing possession of assets from borrowers Durga Verma and Kuleshwar Singh Verma to recover a loan default. The Court noted that any inaction frustrates the purpose of the SARFAESI Act, which is designed to ensure swift enforcement of secured creditors’ rights.

The Single Bench of Justice Parth Prateem Sahu observed that the Tehsildar’s role is ministerial, not quasi-judicial. The High Court directed the Tehsildar to complete the physical possession within 60 days from receipt of the Court’s order, reinforcing that “time is of the essence” in such proceedings and ensuring compliance with statutory timelines under the SARFAESI framework.

Demand Notice Issued During Stay Period is invalid: Delhi HC Quashes CCI's Demand for Interest on Penalty against United India Insurance

"UNITED INDIA INSURANCE COMPANY LIMITED vs COMPETITIONCOMMISSION OF INDIA " CITATION : 2025 TAXSCAN (HC) 2357

The Delhi High Court addressed the validity of interest demanded by the Competition Commission of India (CCI) on a penalty imposed on United India Insurance Company Limited for alleged cartelization in health insurance schemes under Regulation 5 of the Competition Commission of India (Manner of Recovery of Monetary Penalty) Regulations, 2011. The Court examined whether the demand notices issued during the stay of the penalty by the Competition Appellate Tribunal (COMPAT) were valid and whether interest could lawfully accrue when the penalty itself was under stay.

The Division Bench of Justice Anil Kshetarpal and Justice Harish Vaidyanathan Shankar held that the demand notice served on 01.10.2015 was invalid as it was issued during the subsistence of COMPAT’s stay order, and applied the doctrine of merger, noting that the final order of COMPAT had substantially reduced the penalty, which was duly paid by the appellant. Consequently, the Court quashed the CCI’s Order and the demand notices, clarifying that no interest could arise on the basis of an inoperative demand notice.

Delhi HC Questions BCI’s Foreign Law Firm Rules as Council Says No CJI or Centre Approval Needed

AVIMUKT DAR vs BAR COUNCIL OF INDIA CITATION : 2025 TAXSCAN (HC) 2358

The Delhi High Court took strong exception to the Bar Council of India’s (BCI) handling of the Registration and Regulation of Foreign Lawyers and Foreign Law Firms in India Rules, 2022, after the BCI claimed it did not require approval from the Chief Justice of India or the Central Government before issuing the framework. The petitions were filed by Dentons Link Legal and CMS IndusLaw, challenging the validity of the Rules and the show-cause notices issued to them over alleged unauthorized collaborations with foreign law firms. The Court noted serious statutory and constitutional concerns, including whether Section 49 of the Advocates Act, 1961 empowers the BCI to regulate foreign lawyers and whether the framework could impose major penalties based solely on preliminary inquiries.

Appearing before the Division Bench of Chief Justice Devendra Kumar Upadhyaya and Justice Tushar Rao Gedela, the BCI submitted that the Rules were validly framed, but the Court remarked that the regulatory framework was “a mess” and advised the Council to ensure proper drafting and clarity. The Bench extended interim protection for the petitioners, restraining the BCI from taking any final action, and allowed two weeks for filing the counter-affidavit. The Court also highlighted ambiguities in defining “Indian law firm” and reinforced concerns over punitive powers exercised without a clear evidentiary basis. The matter is scheduled to be heard next in January 2026.

2 Gold Bangles and 2 iPhones Seized from Dubai Passenger Found to Be Wedding Gifts: Delhi HC Orders Release

PUJA KUMARI vs COMMISSIONER OF CUSTOMS CITATION : 2025 TAXSCAN (HC) 2359

The Delhi High Court recently directed the Customs Department to release two gold bangles and two iPhones seized from a passenger arriving from Dubai, after determining that the items were bona fide wedding gifts and not intended for any unlawful purpose. The petitioner, Puja Kumari, had approached the Court under Article 226 following an order-in-original dated 19 December 2023, which had directed absolute confiscation of the items, denied her free allowance, declared her an ineligible passenger, and imposed a penalty of Rs. 1,20,000 under Sections 112(a) and 112(b) of the Customs Act. The Appellate Authority, after examining her marriage certificate, her husband’s UAE resident card, and related documents, observed that the items were personal gifts for a newly married bride and allowed their release upon payment of a redemption fine and applicable duty, modifying the original order.

The Division Bench of Justices Prathiba M. Singh and Shail Jain enforced the appellate decision after the Revisional Authority dismissed the Customs Department’s revision on 22 October 2025. The Court directed the Customs Department to release the goods on payment of the fine and duty, waived any warehousing charges, and appointed a nodal officer to ensure compliance. The petitioner was instructed to appear before the Customs Department on 24 November 2025, and the writ petition was disposed of, ensuring she was not penalized for delays arising from multiple departmental proceedings.

Heavy Penalty in GST ITC Fraud Case and Hearing Concerns: Delhi HC Allows Appellate Remedy Without Limitation Bar

M/S SAMARTH TRADERS vs ASSISTANT COMMISSIONER OF CENTRAL TAX CITATION : 2025 TAXSCAN (HC) 2360

The Delhi High Court recently observed that an assessee facing substantial penalties in an alleged Input Tax Credit (ITC) fraud case may pursue statutory appellate remedies, and that such an appeal will not be rejected on the ground of limitation if filed within the timeframe fixed by the Court. The case involved Samarth Traders, against whom the adjudicating authority confirmed a GST demand of ₹1.34 crore, imposed an equal penalty under Section 74, appropriated attached bank balances, and levied a separate penalty on the proprietor under Section 122(3) of the CGST Act.

The petitioner had challenged the order, arguing that they were not granted a proper opportunity for personal hearing. While the Department contended that hearing notices were issued and the petitioner did not cooperate, the Court noted that a substantial penalty had been imposed and emphasized that the appropriate recourse was an appeal under Section 107 of the CGST Act. The Division Bench of Justice Prathiba M. Singh and Justice Shail Jain allowed the petitioner to file the appeal on or before 15 December 2025 with the requisite pre-deposit, clarifying that it shall be decided on merits and not dismissed merely on limitation grounds. The writ petition and pending applications were disposed of accordingly.

Karnataka HC quashes Denial of Mistakenly Paid IGST Refund after Duly Paid to State Authorities

M/S MERCK LIFE SCIENCE PRIVATE LIMITED vs THE UNION OF INDIA CITATION : 2025 TAXSCAN (HC) 2361

The Karnataka High Court recently addressed the legal issue of refund of Integrated GST (IGST) wrongly paid under a bona fide mistake by a taxpayer. The matter involved determining whether the limitation period under Section 54 of the CGST Act, 2017 applies to refund claims arising from tax paid under the wrong classification of supply. The Court examined the applicability of Section 19(1) of the IGST Act, 2017 and Section 77(1) of the CGST Act, 2017, which govern refunds of tax erroneously paid to the wrong Government authority, and clarified that retaining such tax would lead to unjust enrichment of the authorities.

A Division Bench comprising Justice S.R. Krishna Kumar allowed the writ petitions filed by Merck Life Science Pvt. Ltd., quashing the multiple orders of the Assistant Commissioner of Central Taxes that had denied the refund. The Court held that Section 54 limitation is directory, not mandatory, in cases of wrongful payment under mistaken classification, and directed the Central Tax Authorities to process and release the refund within three months. The judgment reinforces the principle that taxpayers are entitled to recover taxes paid under bona fide errors without being barred by technical time limits.

Allahabad HC grants bail to Accused alleged of Committing Rs. 120 crores GST Fraud

Mukul Sharma vs Commissioner CITATION : 2025 TAXSCAN (HC) 2362

The Allahabad High Court recently dealt with a bail application in a GST fraud case involving alleged evasion of over ₹120 crore through shell companies and bogus supplies. The matter concerned offences under Section 132(1) of the CGST Act, 2017, which relate to tax evasion and fraudulent input tax credit. The Court considered the nature of the offences, noting that they are triable by a Magistrate and carry a maximum punishment of five years with fine, despite the large monetary amount involved.

The Single Bench comprising Justice Sameer Jain granted bail to Mukul Sharma, observing that the accused had already spent nearly one and a half years in custody, the investigation was complete, and the prosecution’s case was largely documentary, reducing any risk of tampering with evidence. Relying on precedents including Ratnambar Kaushik v. Union of India (2023) and Vineet Jain v. Union of India (2025), the Court held that prolonged incarceration is unwarranted when offences carry limited sentences and do not involve violence. The Court allowed the bail, directing the release of the accused upon furnishing a personal bond and two sureties, emphasizing the presumption of innocence until proven guilty.

Non-filing of Part-B of GST E-way Bill due to Tech Glitch not Amounts to Tax Evasion: Allahabad HC quashes Penalty

M/S Archana Plasmould vs State Of Up CITATION : 2025 TAXSCAN (HC) 2363

The Allahabad High Court recently addressed the issue of penalties under Section 129(3) of the CGST Act, 2017, concerning non-filing of Part B of a GST e-way bill. The Court held that when such non-compliance arises from a technical glitch and there is no intention to evade tax, it cannot attract penal consequences. The petitioner, M/s Archana Plasmould, a registered GST taxpayer in Gujarat, had its consignment detained even though all documents were in order, solely because Part B of the e-way bill was not generated.

A Single Bench comprising Justice Piyush Agarwal quashed the penalty imposed by both the adjudicating and appellate authorities, observing that no authority had found any fraudulent conduct or intent to evade tax. The Court relied on binding precedents, including the Division Bench judgment in M/s Tata Hitachi Construction Machinery Co. Pvt. Ltd. v. State of U.P. (2025), which held that mere non-filing of an e-way bill does not justify a penalty. It further directed the department to refund any amount deposited, emphasizing that liability under Section 129(3) requires a statutory precondition of tax evasion intent, which was absent in this case.

Goods Accompanied by Genuine GST E-Way Bill Cannot Be Seized: Allahabad HC Criticises Authorities for Forcing Avoidable Litigation

M/S Prostar M Info Systems Limited vs State of UP and 3 others CITATION : 2025 TAXSCAN (HC) 2364

The Allahabad High Court recently addressed the issue of detention of goods under Section 129(3) of the CGST Act, 2017, holding that goods accompanied by a valid and genuine GST e-way bill cannot be seized or detained. The Court criticised the GST authorities for dragging a registered taxpayer, M/s Prostar M Info Systems Limited, into unnecessary litigation despite full compliance. The company had transported UPS systems and related parts from its Noida unit to Lucknow, and the consignment was accompanied by a valid e-way bill and delivery challan at the time of interception. Minor clerical errors, such as an unsigned challan and a missing additional business address, were found but did not constitute intent to evade tax.

The Single Bench comprising Justice Piyush Agarwal quashed the orders of the adjudicating and appellate authorities, noting that the Commissioner’s circular dated 17 January 2024 was binding on all field officers and made clear that mere clerical lapses cannot justify detention. The Court emphasised that once goods are accompanied by a valid e-way bill, their movement is fully disclosed to the department, precluding any presumption of tax evasion. The judgment reinforced that authorities cannot detain goods with genuine documentation, and directed that the writ petition be allowed, thereby ending the litigation against the petitioner.

GST E-way bill Expires due to Kanwar Yatra Traffic ban: Allahabad HC says No Tax Evasion Found, Quashes Penalty

Sachin Jain vs State of U.P. Thru. Prin. Secy. State Taxes Lko CITATION : 2025 TAXSCAN (HC) 2365

The Allahabad High Court recently ruled on the issue of penalties under Section 129(3) of the UP GST Act, 2017, holding that expiry of an e-way bill caused by external factors such as traffic restrictions during the Kanwar Yatra cannot be treated as an act of tax evasion. The petitioner, Sachin Jain, had transported mentha oil from Barabanki to Badaun with all proper documentation, including a valid e-invoice, e-way bill, Form 9R under the Mandi Adhiniyam, and a Mandi Gate Pass. Due to government-imposed traffic restrictions, the consignment was delayed, causing the e-way bill to expire by two days. The GST authorities nevertheless issued a show cause notice and imposed a penalty of nearly ₹25 lakh.

The Single Bench comprising Justice Jaspreet Singh quashed both the penalty and appellate orders, noting that the movement of goods was fully transparent, documented, and undisputed. The Court emphasized that intent to evade tax (mens rea) is a mandatory element for imposing penalties under Section 129, and no such intent was present. The judgment underscored that technical lapses beyond a transporter’s control cannot attract harsh penal consequences, reinforcing that GST penalties require both statutory preconditions and evidence of deliberate evasion.

Is Pre-Consultation before GST SCN Mandatory or Discretionary? Delhi HC Grants Interim Relief to Aadhar India

AADHAR INDIA vs THE ADDITIONAL DIRECTOR CITATION : 2025 TAXSCAN (HC) 2367

The Delhi High Court recently addressed the constitutional validity of Notification No. 79/2020–Central Tax, which amended Rule 142(1A) of the CGST Rules, 2017, in a writ petition filed by Aadhar India. The notification had substituted “shall” with “may,” making pre-consultation under Section 74(5) of the CGST Act discretionary rather than mandatory. The petitioner contended that this amendment effectively deprived taxpayers of the opportunity to make voluntary payments before issuance of a Show Cause Notice (SCN), contrary to the legislative intent, and argued that the rule-making authority cannot override the parent statute.

The Division Bench comprising Justice Prathiba M. Singh and Justice Shail Jain granted interim relief, directing that while proceedings arising from the SCN dated 29 November 2024 may continue, no final orders under Section 74 shall be enforced without further permission of the Court. The Bench observed that the matter is under consideration in connected petitions, including SSAPP Overseas, and emphasized that taxpayers’ rights to pre-SCN consultation must be protected. The batch of petitions has been listed for further hearing on 27 January 2026.

GST Payer uses Writ Petitions as Tool to Bypass 10% Pre-Deposit: Allahabad HC notes Henderson Principle, Dismisses Petition

M/S Simla Gomti Pan Products Pvt. Ltd vs Commissioner of StateTax U.P. Commissioners Office CITATION : 2025 TAXSCAN (HC) 2368

The Allahabad High Court dismissed a writ petition filed by M/s Simla Gomti Pan Products Pvt. Ltd., holding that the petitioner deliberately used multiple writ petitions to evade the mandatory 10% pre-deposit required under Section 107(6)(b) of the GST Act to maintain a statutory appeal. The Court observed that the petitioner had repeatedly challenged assessment orders for the Assessment Years 2021-22 and 2022-23 under Section 74 of the GST Act through successive writs, even after dismissal by the High Court and rejection of the Special Leave Petition by the Supreme Court, thereby bypassing the statutory appellate mechanism.

Justice Jaspreet Singh, relying on the Henderson Principle and the doctrine of constructive res judicata, held that issues central to the case, including exemption from pre-deposit, should have been raised at the earliest opportunity. Filing successive writ petitions on the same question without seeking exemption earlier was held to be an abuse of the process of law. The Court termed the petitioner’s conduct as a “deliberate attempt… to evade the pre-deposit” and dismissed the petition as misconceived.

"Alternative Remedy Available": Orissa HC Refuses to Interfere in Bank of India's SARFAESI Action

Akshay Kumar Udaysingh vs Regional Manager CITATION : 2025 TAXSCAN (HC) 2369

The Orissa High Court dismissed a writ petition filed by borrowers Akshay Kumar and Udaysingh against the Bank of India, reaffirming that the High Court’s jurisdiction under Article 226 cannot be invoked where an efficacious alternative remedy exists under the SARFAESI Act. The petition challenged a notice dated 30.10.2025 and an auction advertisement for the sale of mortgaged property, seeking quashing of the bank’s actions and direction for settlement under a One-Time Settlement (OTS) scheme. The Court relied on the Supreme Court’s observations in Bafna Motors regarding the borrower’s right of redemption under Section 13(8) of the SARFAESI Act, noting that the statutory framework curtails redemption rights upon publication of the auction notice.

The division bench comprising Justice S.K. Sahoo and Justice Sibo Sankar Mishra emphasized that the SARFAESI Act provides a self-contained remedial framework and that borrowers must first approach the Debt Recovery Tribunal (DRT) under Section 17. The Court held that writ petitions cannot be used to circumvent the specialized procedures of the Act. The petition was dismissed, while the petitioners were granted liberty to pursue their grievances before the DRT, with the Court clarifying that it had not commented on the merits of the case.

Company Not Found During GST Anti-Evasion Visit, Absence Due to Family Bereavement: Delhi HC Directs Re-Inspection

M/S STALWART INDIA ALLOYS LIMITED vs UNION OF INDIA & ORS. CITATION : 2025 TAXSCAN (HC) 2370

The Delhi High Court addressed a writ petition filed by Stalwart India Alloys Limited challenging the retrospective cancellation of its GST registration under the CGST Act. The cancellation, dated 26 September 2025, was based on a show-cause notice alleging the company was not found at its registered premises during an Anti-Evasion inspection on 20 December 2024. The petitioner explained that its absence was due to a family bereavement and requested a re-inspection, contending that retrospective cancellation cannot be ordered unless the show-cause notice explicitly proposed it—a position consistently upheld by the Court.

The Division Bench comprising Justice Prathiba M. Singh and Justice Madhu Jain set aside the retrospective cancellation and directed the GST Department to conduct a fresh inspection after giving prior notice. The Court recorded an undertaking from the petitioner’s Director to cooperate with the investigation and allowed the company to file a detailed reply to the show-cause notice. A fresh order is to be passed thereafter in accordance with law. The writ petition was disposed of, leaving all rights and remedies of the parties open.

Belated Filing of GST Return Automatically Nullifies Best - Judgment Assessment issued u/s 62: Madras HC

Tvl. BERNARD KARUTHUDAIYAN vs The Deputy State Tax Officer CITATION : 2025 TAXSCAN (HC) 2371

The Madurai Bench of the Madras High Court dealt with a writ petition concerning a best judgment assessment issued under Section 62 of the Tamil Nadu Goods and Services Tax Act, 2017 against a non-filer of GST returns. The petitioner, Tvl. Bernard Karuthudaiyan, had failed to file his August 2024 return, leading to the issuance of a GSTR-3A notice and a best judgment assessment order dated 16 October 2024. The petitioner later filed the overdue return on 21 November 2024 and challenged the assessment order as arbitrary and without jurisdiction.

Justice G.R. Swaminathan held that a best judgment assessment under Section 62 automatically stands withdrawn once a valid return is filed, even if it is beyond the 30-day period specified in the statute, noting that the timeline is directory and not mandatory. The Court allowed the writ petition, lifted the attachment on the petitioner’s bank account, and clarified that the tax department may verify the return and issue a fresh show-cause notice if discrepancies or short payment are found.

Recovery Barred During Pending Appeal: Kerala HC Stays Income Tax Dept’s Recovery Action against Oralium Ltd.

ORALIUM LIMITED vs ASSISTANT COMMISSIONER OF INCOME TAX CITATION : 2025 TAXSCAN (HC) 2372

The Kerala High Court intervened in a dispute between Oralium Limited and the Income Tax Department, addressing the issue of recovery of a penalty for the assessment year 2020-21 while the company’s appeal and stay petition were pending. The petitioner argued that the department’s attempts to recover the penalty before the disposal of the appeal caused undue hardship and violated statutory principles, prompting the writ petition.

The single bench of Justice Ziyad Rahman A.A. stayed the recovery proceedings and directed the Commissioner of Income Tax (Appeals) to decide the stay petition within two months. The Court emphasized that until a final decision is rendered on the stay petition, no recovery actions pursuant to the impugned penalty order shall be undertaken, providing immediate interim relief to the petitioner and ensuring the appeal process is not prejudiced.

Delhi HC Waives Pre-Deposit for CGST Appeal as Same ITC Demand Already Raised By State GST

VANEETA IMPEX PRIVATE LIMITED vs UNION OF INDIA CITATION : 2025 TAXSCAN (HC) 2375

The Delhi High Court recently allowed Vaneeta Impex Private Limited to file an appeal against a CGST demand without making any additional pre-deposit, as the same Input Tax Credit (ITC) amount had already been subject to a demand by the State GST authorities. The writ petition challenged the Order-in-Original dated 27 January 2025, which raised a CGST demand of ₹56,50,646 along with an equal penalty for F.Y. 2017-18. The petitioner submitted that it had already deposited the statutory 10% pre-deposit for the earlier State GST demand concerning the same ITC, and that pursuing a second pre-deposit would be impermissible under Section 6(2)(b) of the CGST Act and relevant Supreme Court precedent.

The Division Bench of Justice Prathiba M. Singh and Justice Shail Jain observed that the petitioner could pursue the appellate remedy under Section 107 of the CGST Act without being required to make any additional pre-deposit. The Court directed that the appeal be filed on or before 31 January 2026, clarified that it shall not be dismissed on the ground of limitation if filed within the granted period, and mandated that a personal hearing be provided to the petitioner. The writ petition was accordingly disposed of.

Faceless Reassessment Mandatory for International Tax Cases: Bombay HC Quashes S.148 Notice Issued by Jurisdictional AO

Shabana Aijaz Khan vs Income Tax Officer CITATION : 2025 TAXSCAN (HC) 2376

The Bombay High Court has held that faceless reassessment under Section 148 of the Income Tax Act, 1961 is mandatory, including in cases involving international taxation. The Court quashed a reassessment notice issued by the Jurisdictional Assessing Officer (JAO) to Shabana Aijaz Khan, holding it invalid because notices under the faceless reassessment scheme must be issued by the Faceless Assessing Officer.

The Division Bench of Justice B. P. Colabawalla and Justice Amit S. Jamsandekar held that the faceless procedure applies even to central charges and international taxation. The Court set aside the Section 148 notice and all proceedings arising from it but granted the Revenue liberty to revive the petition if the Supreme Court overturns Hexaware, with the quashed notice remaining stayed until further orders. The writ petition was allowed with no order as to costs.

Kerala HC Clarifies Retrospective Application of Extended GST Return Filing Deadline in ITC Cases

LIZ ENTERPRISES vs THE STATE OF KERALA CITATION : 2025 TAXSCAN (HC) 2377

The Kerala High Court has disposed of a batch of writ petitions concerning Goods and Services Tax (GST) Input Tax Credit (ITC), granting relief to assessees facing procedural and technical difficulties in claiming ITC. The petitions involved taxpayers whose ITC claims were rejected due to GST not being reflected in returns, suppliers not remitting GST, or lack of clear proof of tax payment. The Court referred to Circular No.183/15/2022-GST and Circular No.193/05/2023-GST, allowing assessees to claim ITC upon submitting proof of payment by the supplier, and granted them thirty days to approach the authorities to avail of these circulars.

The Court also ruled that the amendment to Section 39 by the Finance Act 2022, which extended the September return filing deadline from September 30 to November 30, should be applied retrospectively from 01.07.2017, ensuring ITC claims filed before November 30 are processed. The constitutional validity of Sections 16(2)(c) and 16(4) of the CGST/SGST Act was upheld. A single bench of Justice Dinesh Kumar Singh adopted the reasoning of its earlier judgment directing that petitioners eligible under the circulars make their claims within one month, and clarified that September returns filed by November 30 in each financial year from 01.07.2017 shall be treated as timely.

SBI could Not be Treated as an "Assessee in Default" for Non-deduction of TDS on LTC Payments: Kerala HC

STATE BANK OF INDIA vs COMMISSIONER OF INCOME TAX CITATION : 2025 TAXSCAN (HC) 2378

The Kerala High Court allowed the appeal filed by the State Bank of India (SBI), holding that the bank could not be treated as an “assessee in default” under Sections 201(1) and 201(1A) of the Income Tax Act, 1961 for non-deduction of Tax Deducted at Source (TDS) on Leave Travel Concession (LTC) payments to employees for F.Y. 2015-16 (A.Y. 2016-17). The Court observed that the LTC payments were made pursuant to interim directions issued by the Madras High Court, which explicitly stated that such payments would not constitute taxable income for employees and prohibited SBI from deducting TDS. Consequently, SBI had no statutory obligation to deduct tax under Section 192, making the Income Tax Department’s action inapplicable.

The Division Bench of Justice A. Muhamed Mustaque and Justice Harisankar V. Menon relied on precedents to hold that compliance with a valid court order shields a payer from liability as an assessee in default. The Court emphasized that the interim directions were binding nationwide under the Income Tax Act, rendering SBI justified in not deducting TDS. Accordingly, the High Court set aside the demand and interest under Sections 201(1) and 201(1A), ruling in favour of SBI and against the revenue.

Merely Agents and Not Suppliers: Calcutta HC Quashes GST Appellate Order for Non-Application of Mind

Indrani Dhar & Anr. vs The State of West Bengal & Ors. CITATION : 2025 TAXSCAN (HC) 2379

The Calcutta High Court dealt with a writ petition concerning the liability to pay Goods and Services Tax (GST) under the West Bengal Goods and Services Tax Act, 2017 (WBGST Act). The legal issue revolved around whether the petitioners, Indrani Dhar & Anr., who acted merely as agents of the supplier, could be held responsible for GST liability. The matter specifically involved the appellate authority’s dismissal of the petitioners’ appeal against an adjudication order issued under Section 74(9) of the WBGST Act, which addresses cases of tax not paid or short paid due to fraud, misstatement, or suppression of facts. The Court examined whether the appellate authority had properly applied its mind and provided sufficient reasoning in confirming the adjudication order.

The bench comprising Justice Om Narayan Rai observed that the appellate order dated June 26, 2025 lacked substantive reasoning and merely echoed the adjudicating authority’s order, making it unsustainable under Article 226 of the Constitution of India. The High Court held that the petitioners, being agents and not suppliers, were not liable to pay the GST and therefore quashed the appellate order. The matter was remanded to the Appellate Authority for fresh consideration of the appeal in accordance with law, leaving all substantive points open for determination. The writ petition was disposed of without any order as to costs.

Relief to Aditya Birla Capital: Himachal Pradesh HC Sets Two-Month Deadline for Pending SARFAESI Plea

Aditya Birla Capital Ltd vs State of H.P & ors CITATION : 2025 TAXSCAN (HC) 2380

The Himachal Pradesh High Court dealt with a writ petition filed by Aditya Birla Capital Ltd. seeking intervention in the delayed adjudication of its application under Section 14 of the SARFAESI Act, 2002, which pertains to the possession of secured assets. The legal issue before the Court was the pendency of the application before the Assistant Chief Judicial Magistrate (ACJM), Nalagarh, and the petitioner’s request for directions to expedite the hearing in a time-bound manner.

The division bench comprising Justice Sandeep Sharma and Justice Jiya Lal Bhardwaj observed that, while the writ petition was prima facie not maintainable, the Court could pass a direction in light of the innocuous prayer. The High Court directed the ACJM, Nalagarh, to decide the SARFAESI application expeditiously, preferably within two months, ensuring that the petitioner and other stakeholders were given an opportunity of being heard. The Court clarified that it had not expressed any opinion on the merits, and the lower court was to decide the matter independently.

Service of Notice before Income Tax Reassessment is Mandatory: Jharkhand HCC Quashes Penalty u/s 271(1)(b)

Principal Chief Commissioner of Income Tax vs AssistantCommissioner of Income Tax CITATION : 2025 TAXSCAN (HC) 2381

The Jharkhand High Court addressed a writ petition filed by General Traders, concerning the mandatory requirement of valid service of notice before initiating reassessment proceedings under the Income Tax Act, 1961. The legal issue involved whether reassessment and penalty proceedings under Sections 147, 148, 142(1), 271(1)(b), and 271(1)(c) could be sustained when statutory notices were allegedly not properly served on the assessee. The Court emphasized that valid service is a jurisdictional prerequisite, not a mere procedural formality.

The Division Bench comprising Chief Justice Tarlok Singh Chauhan and Justice Rajesh Shankar held that the reassessment proceedings, ex parte assessment orders, and penalty orders were vitiated due to improper service, as the notices were sent to an outdated email despite the assessee having updated its registered email with the Department. The Court quashed all impugned notices, assessment orders, and penalties, and remanded the matter to the Assessing Officer to proceed afresh after ensuring proper service and affording the petitioner an opportunity of hearing.

Re-Export Cannot be Denied When Importer Never Intended Domestic Clearance: Allahabad HC Dismisses Revenue Appeal

"Principal Commissioner Noida Customs Commissionerate vsBest Crop Science Private Ltd." CITATION : 2025 TAXSCAN (HC) 2382

The Allahabad High Court addressed an appeal filed by the Revenue under Section 130 of the Customs Act, 1962, concerning the re-export of imported goods. The legal issue revolved around whether an importer can re-export goods without provisional release or adjudication when the importer had no intention to clear or distribute the goods in the domestic market, and whether Customs authorities could insist on preconditions under Sections 110A and 124 of the Act.

The Division Bench comprising Justice Dayal Singh and Justice Indrajeet Shukla upheld the order of the CESTAT, noting that the factual finding that the importer sought re-export before any detention or seizure was unchallenged. The Court held that technical requirements like provisional release were immaterial in such circumstances and confirmed that the importer could re-export the consignment unconditionally. Consequently, the Revenue’s appeal was dismissed, and no duty, penalty, or redemption fine was payable.

ITC Reversal u/r 29(2) of UP VAT Rules Unsustainable When Books of Account Accepted: Allahabad HC Remands BP Oil Mills Case

M/S B.P. Oil Mills Ltd. vs The Commissioner Of Commercial Tax CITATION : 2025 TAXSCAN (HC) 2383

The Allahabad High Court dealt with a dispute under Rule 29(2) of the U.P. VAT Rules concerning the reversal of Input Tax Credit (ITC). The issue arose when the Assessing Authority denied ITC to B.P. Oil Mills Ltd., alleging that the dealer failed to maintain separate accounts of goods consigned outside the State, as required under Section 21(1)(v) of the U.P. VAT Act. The Court examined whether ITC can be denied when the dealer’s books of account are otherwise complete, accepted, and free from defects.

The bench comprising Justice Piyush Agarwal held that reversal of ITC solely for alleged non-compliance with Rule 29(2) was unsustainable when the dealer maintained defect-free records. The Court emphasized that Section 21(1)(v) allows flexibility by requiring separate accounts “as far as possible,” and procedural lapses cannot override substantive rights. The matter was remanded to the Tribunal for fresh consideration in light of this interpretation, ensuring ITC is not denied where statutory obligations are otherwise met.

ITAT’s Reasonless Rejection of Second Adjournment Leads to Ex-Parte Order Being Quashed by Allahabad HC

Ashok Kumar Agarwal vs The Assistant Commissioner Of Income Tax CITATION : 2025 TAXSCAN (HC) 2384

The Allahabad High Court addressed a case concerning the principles of natural justice in appellate proceedings before the Income Tax Appellate Tribunal (ITAT), Agra Bench. The legal issue involved the ITAT’s ex-parte disposal of Revenue appeals for Assessment Year 2015-16 after rejecting the assessee’s second adjournment request without assigning any reasons, which the Court held violated natural justice. The matter arose in an appeal by Ashok Kumar Agarwal challenging ITAT’s ex-parte order on two Revenue appeals where the Tribunal failed to consider the assessee’s adjournment application.

The Division Bench of Justice Saumitra Dayal Singh and Justice Indrajeet Shukla held that the ITAT’s reasonless denial of the adjournment was impermissible. While emphasizing the need for expeditious disposal, the Court noted that appellate authorities must provide a reasoned order and grant fair opportunity of hearing. The High Court set aside the ex-parte ITAT order and directed the Tribunal to issue fresh notice, hear both parties, and pass a reasoned order within six months.

No Error in Assessment as AO Examined All Expenses and Made Due Inquiry: Allahabad HC Upholds ITAT Order

The Pr Commissioner Of Income Tax-1 vs Anjali Singhal CITATION : 2025 TAXSCAN (HC) 2385

The Allahabad High Court examined the legality of a revisional action under Section 263 of the Income Tax Act, 1961 in the case of Pr. Commissioner of Income Tax-1 vs. Anjali Singhal. The legal issue revolved around whether the Assessing Officer (AO) had conducted proper inquiry while scrutinizing the assessee’s A.Y. 2018-19 returns, particularly regarding cash salary payments and business promotion expenses, and whether the PCIT was justified in treating the assessment as erroneous and prejudicial to Revenue.

The Division Bench of Justice Saumitra Dayal Singh and Justice Arun Kumar upheld the ITAT’s decision, agreeing that the AO had conducted adequate inquiries. The Court noted that cash payments to employees did not exceed ₹10,000 per individual, negating the applicability of Section 40A(3), and business promotion expenses were properly scrutinized. The High Court held that in the presence of two plausible views, the AO’s decision could not be overturned under Section 263, and thus the PCIT’s revisional order was unsustainable. The Revenue’s appeal was dismissed as no substantial question of law arose.

GAIL India’s Goods Detained by GST dept: Allahabad HC Quashes Detention noting Technical Error not Tax Evasion

Gail (India) Ltd. vs State Of U.P. And 2 Others CITATION : 2025 TAXSCAN (HC) 2386

The Allahabad High Court addressed the legality of seizure and penalty proceedings under Section 129(3) of the Central Goods and Services Tax (CGST) Act, 2017 in the case of GAIL (India) Ltd. The legal issue concerned whether minor clerical errors in an e-way bill could justify detention of goods and imposition of penalties when the movement involved a stock transfer between two units of the same government-owned enterprise, with no sale or consideration involved.

The Single Bench of Justice Piyush Agarwal quashed the seizure and penalty order, holding that technical discrepancies in invoices and vehicle details cannot constitute tax evasion. The Court relied on CBIC guidance and earlier precedents, noting that all goods belonged to GAIL’s Raigarh unit and were being transferred internally to its Pata unit for operational purposes. Since no sale or supply was involved, the detention and penalties were unsustainable, and the authorities were directed to release the consignment.

No Error in Treating ₹122.31 Lakh Cash Deposits as Sales: Allahabad HC Backs AO’s Approach

The Pr. Commissioner Of Income Tax vs Rukmani Devi Jain CITATION : 2025 TAXSCAN (HC) 2387

The Allahabad High Court considered the applicability of Section 263 of the Income Tax Act, 1961 in the case of Rukmani Devi Jain, addressing whether the Principal Commissioner of Income Tax (PCIT) could revise an assessment for A.Y. 2015-16 on the ground that the Assessing Officer (AO) had allegedly failed to make adequate inquiries into cash deposits totaling ₹122.31 lakh. The key legal issue was whether the AO’s treatment of the deposits as sales receipts could be deemed erroneous or prejudicial to the Revenue, thereby justifying revision under Section 263.

The Division Bench of Justice Saumitra Dayal Singh and Justice Arun Kumar upheld the ITAT’s Agra Bench decision quashing the PCIT’s revision. The Court held that the AO had conducted proper inquiries, disbelieved the assessee’s explanations, and adopted one of two permissible views. Observing no perversity in the AO’s assessment or the Tribunal’s findings, the High Court ruled that the assessment was neither erroneous nor prejudicial to the Revenue, and therefore, the PCIT’s invocation of Section 263 was without jurisdiction. The Revenue’s appeal was accordingly dismissed.

GST Exemption on Pure Services to Statutory Medical University: Allahabad HC to decide Issue

M/S A. N. Kapoor Janitors Private Limited vs The AdditionalCommissioner CITATION : 2025 TAXSCAN (HC) 2388

The Allahabad High Court is set to examine whether Goods and Services Tax (GST) can be levied on pure services provided to a statutory medical university under state legislation. The legal issue arises from a writ petition filed by M/s A.N. Kapoor Janitors Pvt. Ltd., challenging the appellate order dated 16 July 2025, which denied its claim for GST exemption under Notification No. 12/2017–Central Tax (Rate). The petitioner contends that its services to the Sanjay Gandhi Post Graduate Institute of Medical Sciences (SGPGI) are “pure services” under Chapter 99 and fall within the exemption granted to “Government authorities” under Entry No. 3 of the notification, as SGPGI is a statutory body established under the Sanjay Gandhi Post Graduate Medical College Act, 1983.

Justice Jaspreet Singh granted interim protection, staying the operation of the adjudicating authority’s order dated 16 July 2025, noting that the petitioner’s claim regarding statutory exemption appeared to have merit and warranted judicial scrutiny. The State was allowed time to file a counter affidavit, and the matter will be considered in detail on the next date of listing.

Rajasthan HC Denies Excise Duty Exemption, Holds that Benefits Cannot be claimed when Goods are Sold and Not Actually Exported

M/s Natural Lights Pvt. Ltd vs Principal Commissioner CITATION : 2025 TAXSCAN (HC) 2389

The Rajasthan High Court upheld the order of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), addressing the legal issue of whether a manufacturer can claim excise duty exemption on goods purportedly exported when the goods were actually sold to another company. The case involved M/s Natural Lights Pvt. Ltd., which contended that its goods, handed over to M/s Central Electronics Ltd. (CEL) for onward export under a contract with M/s Angelique International Ltd., entitled it to export-based duty exemption. The High Court considered this claim in light of ARE-1 provisions under the Excise Act, which require direct export to qualify for such exemption.

The Division Bench of Justices Sanjeev Prakash Sharma and Baljinder Singh Sandhu dismissed the appeal, observing that the Tribunal had carefully examined the records and correctly concluded that the appellant sold the goods to CEL rather than exporting them directly. The Bench held that the findings were factual in nature, with no substantial question of law involved, and emphasized that excise duty exemption linked to exports cannot be claimed merely by onward sale through a supply chain. Accordingly, the High Court confirmed the CESTAT order denying the exemption.

GST Appellate Orders Cannot be Reserved and Pronounced Later without Notifying Assessee: Allahabad HC Calls Order ‘Unsustainable’

M/S Sun Glass Works Private Limited vs The State Of U.P. CITATION : 2025 TAXSCAN (HC) 2390

The Allahabad High Court addressed the legal issue of whether GST appellate orders can be reserved and pronounced on a later date without notifying or hearing the assessee, holding such a practice legally unsustainable under the principles of natural justice. The case involved M/s Sun Glass Works Private Limited, which challenged the appellate order passed by the Additional Commissioner (Appeals), Mainpuri, and the original order under Section 74(1) of the GST Act, alleging wrongful availment of Input Tax Credit (ITC). The petitioner contended that despite submitting all supporting documents, including tax invoices, bank statements, and GSTR-2A, it was neither supplied with the survey report nor granted a personal hearing, resulting in demands of tax and penalty.

The Bench of Justice Piyush Agarwal, observed that the appellate authority had reserved the order on 18.09.2024 and pronounced it on 25.09.2024 without notifying the petitioner, a practice unsupported by any statutory provision. Relying on the precedent in M/s Wonder Enterprises v. Additional Commissioner, Grade-2, the Court held that passing orders without giving notice and opportunity to be heard violates procedural safeguards and principles of natural justice. Consequently, the High Court quashed the appellate order and remanded the matter to the Additional Commissioner (Appeals), directing a fresh decision after affording the petitioner and other stakeholders a proper hearing.

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