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 December 14, 2025 to December 20, 2025, Part-I.

SUPREME COURT

Supreme Court Orders SBI, PNB to Clarify Loan Status After Man Alleges Wrongful Negative CIBIL Score

The Supreme Court while hearing a Special Leave Petition arising from a judgment of the Uttarakhand High Court, dealt with serious concerns relating to wrongful credit reporting linked to alleged duplication of the petitioner’s Permanent Account Number (PAN) and its impact on his CIBIL score. The matter touches upon the integrity of financial data reporting and potential violation of statutory obligations under the Income-tax Act, 1961, since PAN is a statutory identifier for financial transactions.

The Bench comprising Justice K.V. Viswanathan and Justice S.V.N. Bhatti took cognisance of the allegations and noted that Punjab National Bank and State Bank of India had not been heard on whether the petitioner had ever availed loans or committed defaults. In its order, the Supreme Court directed both banks to file affidavits clarifying these aspects and permitted an impleadment application to ensure all necessary parties were present. The Court condoned the delay in refiling, dispensed with personal appearances of respondents, issued notice, and posted the matter for further hearing on 9.01.2026, emphasising the need for clarity before proceeding further.

Foreign Company’s Head Office Expenses For Indian Branches Subject to S. 44C Even if Incurred Exclusively: Supreme Court

The Supreme Court concerning interpretation of deduction provisions under the Income Tax Act, 1961, examined whether Section 44C applies even to head office expenditure incurred exclusively for Indian branch operations of foreign companies. The legal issue concerned whether foreign assessees could circumvent the statutory cap on deduction of head office expenses by characterising them as expenses solely related to their Indian business. The dispute arose in appeals filed by the Revenue against decisions of the Bombay High Court in matters involving American Express Bank Ltd. and another foreign banking company, where the High Court had allowed full deduction for such exclusive expenditures, holding that Section 44C applied only to common or apportioned head office expenses.

The Bench comprising Justice Abhay S. Oka and Justice Ujjal Bhuyan held that Section 44C draws no distinction between common and exclusive head office expenditure, and that the phrase “attributable to” in the provision is wide enough to include expenses incurred exclusively for Indian branch operations. The Court found that earlier High Court decisions reflected an incorrect interpretation and ran contrary to the legislative intent of imposing a statutory cap on deductions of foreign head office expenses. Allowing the Revenue’s appeals, the Supreme Court ruled that the ceiling under Section 44C applies even to exclusive head office expenditure incurred abroad and remanded the matters to the Income Tax Appellate Tribunal for fresh consideration limited to determining whether the expenses in question fall within the scope of “head office expenditure” as defined in the statute.

Pre- Existing Dispute Defence Mere "Moonshine": Supreme Court Restores CIRP Admission Against Engineering Company

The Supreme Court under Section 9 of the Insolvency and Bankruptcy Code (IBC), 2016, restored the admission of an application filed by M/s. Saraswati Wire and Cable Industries against the corporate debtor Dhanlaxmi Electricals Pvt. Ltd. The legal issue centered on whether the corporate debtor had a bona fide pre‑existing dispute to resist the Section 9 application. The dispute arose from supplies of pipes and cables under various purchase orders, with admitted outstanding liability corroborated by ledger acknowledgements and partial payments made by the corporate debtor.

The Division Bench comprising Justice Sanjay Kumar and Justice Alok Aradhe applied the legal principles from Mobilox Innovations Pvt. Ltd. v. Kirusa Software Pvt. Ltd. (2018) and other precedents, emphasizing that only bona fide disputes can prevent initiation of insolvency proceedings. The Court observed that the corporate debtor’s defence, including allegations of non‑supply and sub‑standard material, was contradicted by contemporaneous evidence such as delivery challans, e‑way bills, transport documents, and payments made after issuance of the Section 8 notice. Noting that the NCLAT erred in relying on an unauthorised reply and ignoring ledger acknowledgements, the Supreme Court set aside the NCLAT’s judgment, restored the NCLT’s admission order, and directed that the CIRP proceedings resume in accordance with law.

AO’s Knowledge of ITAT Order Triggers Limitation u/s 153(2A): Supreme Court Declines to Interfere With Delhi HC Ruling Against Revenue

The Supreme Court upheld the Delhi High Court’s interpretation of Section 153(2A) of the Income Tax Act, 1961, holding that “knowledge” of an appellate order by the Assessing Officer (AO) triggers the statutory limitation period for issuing fresh assessments. The legal issue arose from appeals filed by the Commissioner of Income Tax (International Taxation) challenging the ITAT’s conclusion that both the draft and final assessment orders for A.Y.s 2005-06 and 2006-07 were barred by limitation. The dispute centered on whether the limitation period begins from the AO’s actual knowledge of the ITAT’s order, as evidenced by the appeal‑effect order, or only upon formal receipt of the ITAT order by the jurisdictional Commissioner.

The Division Bench comprising Justice K. Vinod Chandran and Justice Ahsannudin Amanullah dismissed the Revenue’s Special Leave Petition, noting that an identical matter had previously been rejected. The Court observed that the AO’s issuance of the appeal‑effect order constituted conclusive proof of knowledge of the ITAT’s decision, thereby triggering the limitation period under Section 153(2A). Following this reasoning, the draft assessment and the final assessment were held to be beyond the permissible statutory period and invalid. By refusing to interfere, the Supreme Court effectively affirmed the Delhi High Court’s ruling that internal administrative delays cannot indefinitely postpone the commencement of limitation under the statute.

State Cannot ‘Carve Out Its Own Limitation Period’: Supreme Court Dismisses Income Tax Dept’s Time-Barred SLP against Shriram Finance

The Supreme Court dismissed time-barred Special Leave Petitions filed by the Income Tax Department against Shriram City Union Finance Co. Ltd., arising from the Madras High Court’s judgment dated 30 June 2022 in TCA No. 360 of 2014. The legal issue concerned whether the Department could seek indulgence for administrative delays and effectively “carve out its own limitation period” in contravention of statutory timelines under the Income Tax Act, 1961. The Court emphasized that statutory limitation periods are binding on all parties, including State authorities, and cannot be bypassed on the pretext of internal approvals or administrative processes.

The Bench comprising Justice Manoj Misra and Justice Ujjal Bhuyan rejected the Income Tax Department’s interlocutory applications seeking condonation of delays of 892 days and 911 days in filing the SLPs. The Court underscored that State authorities are not entitled to special leniency in matters of limitation. Observing a “lethargic and negligent attitude” on the part of government departments attempting to create their own timelines, the Supreme Court held that limitation statutes apply equally to private litigants and the State. Consequently, the SLPs were dismissed solely on the ground of limitation, without adjudicating the merits of the underlying tax dispute, and all pending applications were disposed of accordingly.

CAM Charges Not ‘Rent’ u/s 194‑I of IT Act: SC Upholds Delhi HC Ruling, ₹4.4 Lakh TDS Demand on Fashion Retailer Set Aside

The Supreme Court dismissed the Revenue’s Special Leave Petition (SLP) challenging the Delhi High Court’s decision that Common Area Maintenance (CAM) charges are not “rent” under Section 194‑I of the Income Tax Act, 1961. The legal issue arose from a TDS demand of ₹4,41,121 and interest of ₹4,23,477 raised against a fashion retailer operating from Ambience Mall, Vasant Kunj. The dispute centered on whether CAM charges paid by tenants, which cover cleaning, utilities, and upkeep of common areas, constitute “rent” attracting TDS at 10% under Section 194‑I, or are payments for maintenance services subject to TDS at 2% under Section 194‑C.

The Bench comprising Justice Pankaj Mithal and Justice S.V.N. Bhatti dismissed the Revenue’s SLP, upholding the Delhi High Court’s reasoning in its detailed judgment dated 22.05,2025. The Court agreed with the ITAT’s conclusion that CAM charges are independent of rent and may be provided by third-party agencies, emphasizing that these charges are shared expenses for maintaining common facilities and cannot be construed as rent. Observing that there was “no error or illegality” in the High Court’s order, the Supreme Court declined to interfere, thereby affirming that CAM charges are fundamentally contractual payments for maintenance services and not consideration for the use of land or building under Section 194‑I.

Non-Compete Fee Paid to Ward Off Competition is Revenue Expenditure, Not Capital Asset: Supreme Court

The Supreme Court addressed the issue of whether non-compete fees paid by an assessee to prevent competition are allowable as revenue expenditure under the Income Tax Act, 1961, or must be treated as capital expenditure. The legal question arose from the case of Sharp Business System v. Commissioner of Income Tax, where the Delhi High Court had held that the non-compete fee paid to Larsen & Toubro for seven years was capital in nature and not eligible for deduction under Section 37(1). The assessee challenged this decision, contending that the payment was made wholly and exclusively for business purposes and did not result in the creation of any capital asset.

The Bench comprising Justice Ujjal Bhuyan and Justice Manoj Misra examined the matter and held that the test of “enduring benefit” must be applied in a practical and commercial manner. The Court observed that the non-compete payment merely facilitated the efficient conduct of business by reducing competition, without creating a new asset or altering the profit-earning structure. Accordingly, the Supreme Court set aside the Delhi High Court judgment and held that the non-compete fee is allowable as revenue expenditure under Section 37(1). The Court remanded connected appeals to the respective ITATs to be decided in accordance with this principle. The assessee was represented by Senior Advocate Ajay Vohra, while Additional Solicitor General S. Dwarakanath appeared for the Revenue.

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HIGH COURT

Writ Petition Founded on Misrepresentation and Suppression: Calcutta HC Upholds WBIDC’s Transfer Fee Demand and Dismisses Appeal

The Calcutta High Court dismissed an appeal filed by S.S. Natural Resources Pvt. Ltd., affirming the Single Judge’s refusal to interfere with the West Bengal Industrial Development Corporation’s (WBIDC) demand for a transfer fee in relation to 315 acres of industrial land at Kharagpur. The legal issue arose from the appellants’ attempt, as successful resolution applicants of Ramsarup Industries Ltd. (RIL), to claim that the transfer fee, penalties, and statutory dues were extinguished under the “clean slate” principle embodied in Section 31 of the Insolvency and Bankruptcy Code (IBC), 2016.

The Division Bench comprising Justice Madhuresh Prasad and Justice Supratim Bhattacharya found that the appellants had deliberately misrepresented paragraphs from the NCLAT judgment as judicial observations and falsely claimed Supreme Court affirmation. The Court held that a litigant guilty of misleading the court or suppressing material facts cannot claim equitable relief. On merits, the Bench confirmed that the transfer-fee claim had never been waived or extinguished, and that Clause 15.15.5 of the resolution plan was explicitly rejected by the NCLT. The Court emphasized that the “clean slate” doctrine under Section 31 IBC applies only to claims dealt with in the resolution plan, not to claims left open for statutory determination. Accordingly, the appeal was dismissed, and WBIDC’s demand for the transfer fee, quantified at ₹6,45,66,626, was upheld.

Resolution Plan Shields New Management, Mesne Profit Claim Lies Only Against Erstwhile Management: Calcutta HC Dismisses Appeal by Assam Company

The Calcutta High Court dismissed an appeal filed by The Assam Company India Limited (ACIL), affirming that under an approved Resolution Plan (RP) sanctioned by the National Company Law Tribunal (NCLT), Guwahati, no mesne profit claim can be enforced against the corporate debtor or its new management. The legal issue arose from a civil suit filed by Numazar Dorab Mehta and others seeking eviction and mesne profits, where possession had been handed over in May 2019 but quantification of mesne profits remained pending.

The Division Bench comprising Justice Debangsu Basak and Justice Md. Shabbar Rashidi held that the Resolution Plan expressly insulated ACIL and its new management from any liability, redirecting responsibility to the prior management. The Court observed that the term “existing management” in the RP could only refer to the erstwhile management preceding the successful resolution applicant. Distinguishing Electrosteel Steel Ltd. v. Ispat Carrier Pvt. Ltd. (2025), the Bench noted that the mesne profit claim was included and specifically addressed in the RP, and therefore was not extinguished. Consequently, the High Court ruled that the suit cannot proceed against ACIL or its new management, permitting the respondents to pursue recovery only against the former management within two weeks, and dismissed the appeal, upholding the RP’s protective provisions for the new management.

Writ Not Maintainable when Alternate Remedy Exists in Same High Court: Allahabad HC Rejects Developer’s Challenge to Consumer Forum Orders

The Allahabad High Court has dismissed a writ petition filed by Sahu Land Developers Pvt. Ltd., holding that challenges to concurrent orders of consumer commissions are not maintainable under Article 226 of the Constitution of India when an alternative statutory remedy exists before the same High Court under Article 227. The legal issue arose from orders directing the developer to refund amounts collected from plot buyers of the residential scheme “Sahu City Phase‑2”, along with interest, following consolidation proceedings that halted the project. The Court emphasized that writ jurisdiction is discretionary and ordinarily not exercised to bypass statutory hierarchies when supervisory remedies are available.

The Bench comprising Justice Shekhar B. Saraf and Justice Prashant Kumar relied on Supreme Court precedents, to hold that writs may lie only in exceptional situations such as violation of natural justice or patent lack of jurisdiction. The Court noted that the petitioner sought re-examination of factual issues already conclusively determined by the District, State, and National Consumer Commissions, including non-delivery of possession and unfair trade practices. Finding no exceptional grounds to invoke Article 226, the High Court dismissed the petition, leaving the consumer forum orders and subsequent recovery proceedings undisturbed.

BFAR Ruling on DDT Erroneous: Bombay HC Holds Colorcon Asia Entitled to 10% Cap on Dividend Tax to UK Parent under India-UK DTAA

The Bombay High Court set aside the order of the Board for Advance Rulings (BFAR) and held that Colorcon Asia Pvt. Ltd. is entitled to restrict the tax on dividends distributed to its UK parent company to 10% under Article 11 of the India-UK Double Taxation Avoidance Agreement (DTAA). The legal issue arose from dividend distributions made by Colorcon Asia to Colorcon Limited, UK, between A.Y.s 2016‑17 and 2019‑20, where DDT was paid at effective rates exceeding 20% under Section 115‑O of the Income Tax Act, 1961. The Court examined whether the DDT, though levied on the domestic company, is substantively a tax on shareholder income, and whether Article 11 of the DTAA caps India’s taxing rights at 10% for dividends paid to the beneficial owner resident in the UK.

The Division Bench comprising Justice Bharati Dangre and Justice Nivedita P. Mehta allowed the appeal, holding that Section 115‑O merely shifts the collection mechanism of dividend tax from shareholders to companies without altering the substantive character of the levy. The Court observed that DDT is an “additional income tax” on distributed profits, which constitute shareholder income, and therefore falls within the scope of “income tax, including surcharge” under the DTAA. Relying on Articles 11 and 2 of the India–UK DTAA and Section 90(2) of the Income Tax Act, the Bench held that India’s taxing rights on dividends were restricted to 10% and that excess DDT collected beyond this cap was contrary to law, violating Article 265 of the Constitution. Consequently, the BFAR ruling was set aside, and Colorcon Asia Pvt. Ltd. was entitled to apply the 10% treaty rate on dividends paid to its UK parent.

‘Amount was Towards Tax Arrears not Bribe’: Bombay HC Rejects State’s Plea in ‘Gramsevak’ Bribery Case

The Bombay High Court has dismissed the State’s application seeking leave to appeal against the acquittal of a Gramsevak in an Anti-Corruption Bureau (ACB) trap case. The legal issue concerned allegations that the accused, Balu s/o Kashinath More, had demanded and accepted a bribe in violation of Sections 7 and 13(1)(d) read with Section 13(2) of the Prevention of Corruption Act, 1988. The Court examined whether the amount of ₹3,000 received by the Gramsevak constituted an illegal gratification or was legitimately towards pending property tax dues of the complainant.

The Single Bench Justice Abhay S. Waghwase upheld the trial court’s 2018 judgment acquitting the accused. The High Court observed that the complainant’s own admissions, along with testimony from the shadow panch and investigative officer, established that the payment related to outstanding property tax and not an illegal demand. The Court also noted that the Investigating Officer failed to examine the civil dispute or the tax assessment process, which cast further doubt on the prosecution’s case. Finding no perversity or illegality in the acquittal, the High Court rejected the State’s application for leave to appeal, thereby maintaining the acquittal of the Gramsevak.

“Myopic Vision” would Create Hostility Between S.129 and S.130 of CGST Act, Says Gujarat HC as It Remands Batch of Petitions for Reconsideration

The Gujarat High Court, in a comprehensive judgment covering nearly fifty petitions, addressed the proper interpretation and interplay of Sections 129 and 130 of the Central Goods and Services Tax Act, 2017 (CGST). The legal issue arose from MOV‑10 notices issued under Section 130 proposing confiscation of goods and conveyances intercepted during transit under Section 129. The Court examined whether confiscation under Section 130 is contingent upon the completion of Section 129 processes, and whether the statutory amendments altered the mutual independence of the two provisions.

The Division Bench comprising Justice A.S. Supehia and Justice Pranav Trivedi rejected the petitioners’ narrow interpretation and held that Sections 129 and 130 are distinct remedies, with Section 129 addressing detention and release, and Section 130 providing for confiscation based on prima facie intent to evade tax. The Court reaffirmed that confiscation under Section 130 may be invoked at the interception stage if strong reasons are recorded indicating intent to evade tax, but cautioned against mechanical issuance of MOV‑10 notices. The Court remanded all petitions to the authorities for fresh consideration in accordance with its interpretative framework, directing the release of goods under Section 129 where appropriate and withdrawal of any confiscation contrary to the principles laid down. The Bench emphasized that confiscation is a severe measure, warned officials against acting in defiance of the judgment, and clarified that failure to comply could attract contempt proceedings.

Change of Opinion Bars Reopening: Calcutta HC sets aside Income Tax Notice against Coal Manufacturer on alleged Cash Return

The Calcutta High Court has quashed a reassessment notice issued under Section 148 of the Income Tax Act, 1961 to Himadri Speciality Chemical Limited, holding that reopening proceedings based on identical allegations already scrutinised amounted to an impermissible change of opinion. The dispute arose from a notice dated June 26, 2025, alleging that Himadri had received ₹80.62 lakh in cash from its transporter, Liquid Gold Carriers Pvt. Ltd., against purportedly bogus bills.

The Bench of Justice Om Narayan Rai, relied on Supreme Court precedent in ACIT v. Marico Ltd. (2020), emphasizing that reassessment cannot be initiated on the same information already considered by the AO. It further referred to Kelvinator of India Ltd. to underscore the distinction between review and reassessment powers, cautioning that reopening in such circumstances effectively amounts to a prohibited review. The Court rejected the revenue’s reliance on Anshul Jain v. PCIT (2022), noting that Himadri’s case fell within the exception where reopening was patently without jurisdiction. Consequently, the Court allowed the writ petition and set aside the Section 148 notice, effectively protecting the assessee from an impermissible change of opinion in reassessment.

Calcutta HC Drops Charges Against Vijaya Bank's Panel Advocate Accused in Loan Fraud Says Trial Court Acted as Prosecution’s "Mouthpiece"

The Calcutta High Court dealt with the legal issue of criminal liability of a bank panel advocate for alleged professional lapses while conducting legal scrutiny of property offered as security for a housing loan. The case involved the framing of charges under Sections 420, 467, 468, and 120B of the Indian Penal Code, 1860, with the trial court having rejected the petitioner’s discharge plea under Section 227 of the Code of Criminal Procedure, 1973. The central question before the Court was whether the petitioner’s failure to detect an equitable mortgage and issue a non‑encumbrance certificate without verification amounted to criminal misconduct or was merely professional negligence.

The Bench comprising Justice Dr. Ajoy Kumar Mukherjee, quashed the criminal proceedings in Special Case No. 02 of 2013 against the petitioner. The Court observed that the materials on record did not disclose any involvement in conspiracy, wrongful gain, or active participation in the alleged fraud. Relying on Supreme Court precedents including Jacob Mathew v. State of Punjab (2005), the Court held that the petitioner’s conduct, at worst, constituted professional negligence, which cannot sustain criminal prosecution. The High Court found “basic infirmities” in the trial court’s decision to frame charges and emphasized that mere errors of judgment without mens rea do not attract penal consequences, thereby allowing the revision and quashing the proceedings against the advocate.

Calcutta HC Appoints Arbitrator to Resolve Long-Pending Lease-Renewal Dispute between DGGI and Property Owner

The Calcutta High Court addressed a legal dispute concerning lease renewal and the scope of arbitration, specifically whether an arbitration clause survives the expiry of a lease and whether limitation issues fall within the arbitral tribunal’s domain. The case arose under the contractual framework between G.E.T. Properties Private Limited (petitioner) and the Directorate General of Goods and Services Tax (Intelligence), Kolkata Zonal Unit (respondent), relating to non-execution of fresh lease deeds and non-payment of enhanced rent.

The single bench of Justice Shampa Sarkar appointed Mr. Druva Ghosh, Senior Advocate, as the sole arbitrator to adjudicate the dispute. The Court held that the arbitration clause survived the termination of the lease under the doctrine of separability and that ongoing occupation and rent payments indicated that the contractual obligations continued to be in effect. The bench also clarified that questions of limitation and monetary claims were mixed issues of law and fact for the arbitral tribunal to decide, and that the claims were not ex facie barred. All issues were left open for determination by the arbitrator, and the High Court disposed of the petition accordingly.

Disproportionate Assets in Husband’s Name and Joint Holdings Raise Abetment Charge: Madras HC Dismisses Wife’s Plea for Discharge

The Madras High Court dealt with a legal issue concerning the discharge of a petitioner implicated as an abettor in a disproportionate assets case under the Prevention of Corruption framework. The case arose against Harshitha Annapragada, wife of Dhara Prasad, Assistant Manager (Finance & Accounts) at Bharat Electronics Limited (BEL), in connection with alleged acquisition of assets disproportionate to known sources of income during 01.04.2017 to 04.02.2020, in violation of relevant anti-corruption provisions.

The single bench of Justice M. Nirmal Kumar dismissed the discharge plea, holding that disputed questions regarding ownership, source of income, and alleged abetment could only be examined during trial. The Court noted that prima facie materials indicated some assets were held jointly or in the petitioner’s name, and that her claims of independent earnings and legitimate acquisition lacked documentary support at the discharge stage. Reliance was placed on Supreme Court precedents such as P. Nallammal v. State (1999) and Saju v. State of Kerala (2001), affirming that discharge is not a forum for detailed fact-finding. The High Court clarified that its observations were confined to the discharge stage, leaving the trial court to adjudicate the matter on merits.

CCI Orders in Rem Bind Industry: Madras HC Directs Swift Decision on Theatre Partner’s Impleadment Application in Case against PVR INOX

The Madras High Court a matter concerning the participation of an interested party in ongoing competition proceedings under the Competition Act, 2002. The case involved P. Nikilesh Surya, a partner in Rohini Movie Park, Chennai, who filed a writ petition seeking impleadment in the investigation initiated by the Competition Commission of India (CCI) against PVR INOX Ltd. The legal issue revolved around the petitioner’s right to be heard under Regulation 26 of the Competition Commission of India (General Regulations), 2024, given that any CCI order in the matter would be in rem and binding across the industry, particularly impacting smaller theatre exhibitors under the Virtual Print Fee (VPF) regime.

The single bench of Justice N. Sathish Kumar directed the CCI to expeditiously decide the petitioner’s impleadment application, emphasizing that the Commission must consider it strictly in accordance with Regulation 26. The Court refrained from delving into the merits of the underlying competition dispute but highlighted that the petitioner’s concerns warranted participation due to the binding effect of any eventual orders on all persons in the industry. The writ petition was disposed of with no costs, and the connected miscellaneous petition was closed, with the CCI instructed to decide the impleadment within four weeks of receiving the Court’s order.

Revenue cannot proceed Against Wife’s Properties for Sales Tax Arrears of Husband: Kerala HC

The Kerala High Court addressed a writ petition concerning the protection of a wife’s property from recovery proceedings initiated for her husband’s sales tax arrears. The legal issue revolved around whether the revenue authorities could proceed against the petitioner, Lincy Jojo, for amounts assessed on her husband, and the Court clarified that liability for sales tax is personal to the assessee under the relevant tax laws, and cannot extend to the property of a third party, including a spouse.

The single judge Bench of Justice Ziyad Rahman A.A. noted that the State, through Senior Government Pleader Reshmitha R. Chandran, had clarified that no proceedings had been initiated against the petitioner or her property, and that all recovery actions were confined to her husband, the defaulter. Accordingly, the Court observed that there was no subsisting cause of action and closed the writ petition while preserving the petitioner’s right to seek redress if any notice were issued in the future against her property for her husband’s tax liability.

Misclassified Textile Imports Seized: Madras HC Directs Customs to Permit Re‑Export on Execution of Bond for Differential Customs Duty

The Madras High Court addressed a customs law issue concerning the re‑export of seized textile imports by Jai Enterprises. The legal matter involved alleged misclassification and undervaluation of 202,700 square meters of fusible interlining textile-coated fabrics imported from China in January 2025. The Directorate of Revenue Intelligence (DRI) had seized the goods under the Customs Act, 1962, claiming they were liable for confiscation due to misclassification under Customs Tariff Heading (CTH) 59039090, following a report from the Central Revenue Control Laboratory (CRCL), New Delhi. The petitioner sought relief to re‑export the goods to the supplier, citing prolonged detention and the supplier’s willingness to take back the shipment.

The single judge bench of Justice N. Anand Venkatesh allowed Jai Enterprises to re‑export the goods, subject to execution of a bond covering the differential customs duty and furnishing a bank guarantee of 20% of the re‑determined value. The Court relied on precedents including Siemens Ltd. v. Collector of Customs (1999), holding that retention of goods in India was unnecessary if conditions secured the revenue. The Court directed Customs authorities to permit re‑export within 12 days upon compliance and disposed of the writ petition and connected miscellaneous petitions with no costs awarded.

Relief to Importer: Madras HC Holds Contemporaneous Documents Qualify as “On Record” for S. 149 Corrections under Customs Act

The Madras High Court addressed the scope of Section 149 of the Customs Act, 1962, in relation to correction of a Bill of Entry. The issue concerned M/s Harris and Menuk Chemicals Pvt. Ltd., which sought amendment of a Bill of Entry due to a mistakenly declared invoice number. The legal question was whether contemporaneous documents available at the time of import, though not physically submitted, qualify as “on record” for the purpose of seeking amendments under Section 149.

The single judge bench of Justice Abdul Quddhose directed the petitioner to submit a fresh representation enclosing the correct invoice and all contemporaneous documents. The Court relied on the precedent in Hindustan Unilever Ltd. v. Union of India (2021), holding that “on record” includes documents contemporaneous with the import, even if not physically filed initially. Customs was directed to re-examine the matter afresh in light of the submitted records, ensuring the petitioner an opportunity to correct genuine procedural errors. The Court did not decide the merits of the invoice itself but focused on ensuring a legally proper reconsideration under Section 149.

CBIC Circular on GSTR-2A vs 3B ITC Difference Ignored by GST Dept: Karnataka HC sets aside orders

The Karnataka High Court dealt with the legality of GST demand orders arising solely from mismatches between Input Tax Credit (ITC) claimed in GSTR-3B and reflected in GSTR-2A, under Section 73(9) of the CGST Act, 2017. The legal issue revolved around whether the GST authorities could disallow ITC without following the procedure prescribed in CBIC Circular No. 183/15/2022-GST dated 27.12.2022, which provides a stepwise mechanism for verifying ITC mismatches for F.Y. 2017‑18 and 2018‑19.

The single judge bench of Justice S.R. Krishna Kumar quashed the GST demand order passed against M/s Abhimaani Structures and Engineering Pvt. Ltd., noting that the adjudicating authority had ignored the binding CBIC circular. The Court held that failure to comply with the circular spoils the adjudication process and prejudices the taxpayer. Accordingly, the matter was remanded to the jurisdictional officer for fresh consideration strictly in accordance with the procedure outlined in the circular, and all consequential communications issued by the GST department were set aside.

Commercial Tribunal allows ITC Solely on Seller’s Registration Ignoring Core Finding of Circular Money Transactions: Allahabad HC Remands Matter

The Allahabad High Court addressed the issue of Input Tax Credit (ITC) claims under the GST framework, focusing on whether ITC can be allowed when payments to sellers are returned immediately, suggesting circular transactions. The legal question revolved around the Assessing Officer’s finding that S/S Vasu Steels’ payments to registered sellers were withdrawn or transferred on the same or next day, leaving negligible bank balances, indicating that no real movement of goods occurred and that the transactions were paper-based attempts to claim ITC.

The single judge bench of Justice Piyush Agrawal set aside the order of the Commercial Tax Tribunal, observing that it had relied solely on the seller’s registration status and documents filed for the first time before it, without addressing the Assessing Officer’s core factual findings. The Court noted that the department was not given an opportunity to respond to these new documents. Accordingly, the Court remanded the matter to the Tribunal for fresh consideration, directing it to hear all parties and examine the Assessing Officer’s findings along with all material evidence. The revisions filed by the State were partly allowed.

Vehicle Registered in Puducherry but used in Kerala: Kerala HC upholds ₹15.37 Lakh Motor Vehicle Tax Demand

The Kerala High Court dealt with a dispute under the Kerala Motor Vehicles Taxation Act, concerning whether a vehicle registered in Puducherry but used in Kerala was liable to motor vehicle tax. The legal issue centered on whether the appellant, T P Trading Company, a plywood manufacturer with multiple branches could claim exemption from Kerala tax based on Puducherry registration and GST filings, despite the vehicle being used exclusively in Kerala and NIL GST returns showing no business activity in Puducherry.

The Division Bench comprising Justice A. Muhamed Mustaque and Justice Harisankar V. Menon upheld the tax demand of ₹15.37 lakh issued by the Kerala authorities. The Court relied on multiple factors, including returned notices to the Puducherry address, proper service in Kerala, six overspeeding tickets issued in Kerala, and inspection reports confirming the vehicle’s presence in Kerala. Observing that the appellant failed to produce any evidence disputing these facts, the Court dismissed the writ appeal, affirming that the vehicle’s use in Kerala attracted tax liability and that the proceedings initiated by the transport authorities were valid.

Revenue Cannot Rely on Call Book to Justify 9-Year Delay: Bombay HC Quashes Excise SCNs Linked to NPV Sales Tax Retention

The Bombay High Court addressed the issue of inordinate delay in adjudicating Central Excise show cause notices under Section 4(3)(d) of the Central Excise Act, 1944, read with Rule 6 of the Central Excise Valuation Rules. The legal question concerned whether the Revenue could rely on the Call Book as justification for delaying adjudication for nearly nine years, which the petitioner, Computer Graphics Private Limited, argued was unreasonable and prejudicial. The petitioner challenged two show cause notices issued in 2016 and 2017, alleging improper inclusion of VAT/CST collected under a deferment/NPV scheme in the transaction value.

The Division Bench comprising Justice Bharati Dangre and Justice Ashish S. Chavan quashed the impugned notices, observing that the pendency of related matters before the Supreme Court did not justify such prolonged inaction. The Court noted that even after the Supreme Court disposed of the related appeal in September 2024, the Department failed to act for over a year, causing prejudice to the assessee due to potential loss of records and fading of evidence. Holding that continuing the proceedings would defeat the purpose of adjudication, the Court set aside both show cause notices and allowed the writ petitions.

ED Summons Missed Due to Distance, Not Ignored: Gauhati HC directs ED to grant Bail to GST Accused with Aadhar, PAN and Voter ID Surrender

The Gauhati High Court dealt with an anticipatory bail application in the context of a Goods and Services Tax (GST)-linked investigation conducted by the Enforcement Directorate (ED). The legal issue revolved around whether the accused, Atish Kumar Tiwari, who had failed to appear before the ED as per summons dated 23 September 2025, could be granted anticipatory bail. The matter concerned ensuring cooperation with the ED’s investigation while balancing the personal circumstances of the accused.

The Bench, after considering the facts and the willingness of the accused to appear before the ED on the next scheduled date, granted anticipatory bail. The Court directed that in the event of arrest, Tiwari would be released on furnishing a bond of ₹50,000 with two sureties of the like amount. Strict conditions were imposed, including mandatory appearance before the ED on 15 December 2025, full cooperation with the investigation, and surrender of his Passport, Aadhaar, PAN, and Voter ID to ensure availability. The bail was made conditional, with any violation entitling the ED to seek cancellation. The application was accordingly disposed of.

GST Orders without ‘Application of Mind’ Violates Article 14: Allahabad HC Sets Aside Ex-Parte Order, Directs to Deposit Rs. 2L

The Allahabad High Court addressed the legality of ex-parte GST demand orders under the Goods and Services Tax Act, 2017, emphasizing the importance of reasoned decision-making and adherence to Article 14 of the Constitution of India. The case involved M/s Mishra Agencies, which challenged a recovery order issued under Section 73 of the GST Act, 2017 and a subsequent appellate order dismissing the appeal on limitation grounds. The legal issue centered on whether a GST demand passed without granting an effective opportunity of hearing and without proper application of mind could be sustained.

The bench of Justice Jaspreet Singh held that the impugned order was patently ex-parte and devoid of reasoning, failing the basic test of fairness required in quasi-judicial proceedings. The Court observed that reasons form the “heart and soul” of administrative orders, and a non-speaking order affecting taxpayer rights cannot be upheld. The High Court quashed both the original GST demand order dated 25 April 2024 and the appellate order dated 18 February 2025, while directing the petitioner to deposit ₹2 lakh and file a reply to the show cause notice within three weeks. The adjudicating authority was instructed to pass a fresh, reasoned order after granting a proper hearing.

GST on Solar EPC Contracts to be Levied at 8.9% Under 70:30 Formula: Andhra Pradesh HC Sets aside ₹18% Assessment

The Andhra Pradesh High Court addressed the applicability of GST (Goods and Services Tax) on Solar Engineering, Procurement, and Construction (EPC) contracts, clarifying that the effective GST rate is 8.9%, as determined by the 70:30 valuation formula under the relevant GST notifications, and not 18% as assessed by the department. The case arose from a writ petition filed by Vikram Solar Limited, engaged in the supply, installation, commissioning, and operation of solar power generating systems, challenging the departmental assessment for the period April 2018 to March 2020. The department had treated the contracts as works contracts involving immovable property, applying the full 18% GST, whereas the petitioner contended that the contracts primarily involved supply of solar modules and components taxed at 5% under Notification No. 1/2017 dated 28 June 2017, with the balance 30% as services at 18%, resulting in a weighted effective rate of 8.9% under Notification No. 24/2018 dated 31 December 2018.

The Division Bench of Justices R. Raghunandan Rao and T.C.D. Sekar held that the concessional rate prescribed in Entry No. 234 of Schedule I to Notification No. 1/2017, along with the explanatory provision effective from 01.01.2019, applied to contracts involving erection and commissioning of solar systems, irrespective of whether they were characterized as composite supplies or works contracts relating to immovable property. The High Court observed that the petitioner had already self-assessed GST at 8.9% and paid the differential tax along with interest shortfall. Consequently, the Court set aside the assessment order and remanded the matter to the assessing authority with directions to recompute tax liability applying the uniform GST rate of 8.9% on the gross consideration. The question of whether the contracts involved movable or immovable property was left open, and the writ petition was allowed with no order as to costs.

Debtors’ Consent to Auction Waives Procedural Objections Under SARFAESI Act: Delhi HC Sets Aside DRAT Order in Favour of Canara Bank

The Delhi High Court addressed the legal issue of whether borrowers who have expressly consented to the auction of a mortgaged property can later challenge the sale on procedural grounds under the SARFAESI Act, 2002. The case involved Canara Bank and the borrowers, M/s Karishma Enterprises and its guarantor, in the context of recovery of dues from a credit facility secured by mortgaged properties. The Court examined whether the borrowers’ voluntary consent to the auction, given before the Debts Recovery Tribunal (DRT), could operate as a waiver of objections related to procedural irregularities under the SARFAESI framework, including compliance with Rules 8 and 9 concerning valuation and sale notices.

The Division Bench of Justice Anil Kshetrapal and Justice Harish Vaidyanathan Shankar held that the Debts Recovery Appellate Tribunal (DRAT) had erred in disregarding the borrowers’ explicit consent. The Court restored the DRT’s findings, upholding the auction sale of one of the mortgaged properties and confirming the lawfulness of the bank’s Non-Performing Asset (NPA) classification. The bench observed that procedural safeguards under the SARFAESI Act exist for the benefit of the borrower, and voluntary assent to the sale precludes challenges on technical grounds unless mala fide intent or actual prejudice is demonstrated. Consequently, the High Court set aside the DRAT’s order, reinforcing the principle that borrower consent can override procedural objections in recovery proceedings.

Delay in GSTAT Appointments Stops Appeal Clock: Chhattisgarh HC Grants Liberty to File Appeal with Statutory Stay

The Chhattisgarh High Court dealt with the legal issue of limitation for filing a second appeal under Section 112 of the Chhattisgarh GST Act, 2017, in circumstances where the Goods and Services Tax Appellate Tribunal (GSTAT) has not yet become functional due to the non‑appointment of the President and Members. The Court considered whether the statutory limitation period for filing an appeal should commence despite the Tribunal being non-operational, and whether the stay under Section 112(9) continues to protect the assessee during this period.

The bench of Justice Naresh Kumar Chandravanshi, who held that the limitation period for filing the second appeal stands deferred until the GSTAT becomes functional. The Court directed that the petitioner, M/s JP Construction Co., may file the appeal along with the statutory pre‑deposit as soon as the President or State President assumes office. The High Court also clarified that the statutory stay under Section 112(9) will operate automatically until the appeal is decided, thereby preventing any coercive recovery during the pendency of the proceedings. The writ petition was disposed of with these directions, ensuring protection for the petitioner while cautioning that the benefit would lapse if the pre‑deposit is not made within 30 days of the order.

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