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-II.

HIGH COURT

VAT Liability for IMFL On‑Shop Owners Statutory Since 2015: Gauhati HC Declines Stay on Circular

SMT SANCHITA SAXENA AND 16 ORS vs THE STATE OF ASSAM AND 6 ORS CITATION : 2025 TAXSCAN (HC) 2649

The Gauhati High Court addressed a legal issue concerning the requirement for IMFL On‑Shop owners to pay Value Added Tax (VAT) under the Assam Value Added Tax Act, 2003, as a precondition for licence renewal. The petitioners, Sanchita Saxena and 16 others, challenged the circular dated 14 November 2025 issued by the Commissioner and Secretary, Finance (Taxation) Department, contending that the VAT demand was arbitrary, imposed without legal basis, and disrupted their business continuity. The Court examined whether interim relief could be granted to stay the operation of the circular while the statutory obligation to pay VAT remained in force.

The bench of Justice Sanjay Kumar Medhi, who declined to grant a stay on the circular, observing that the VAT liability arose directly from the 2015 statutory amendment and that the petitioners had not challenged the validity of the statute itself. The Court allowed limited relief by keeping in abeyance the question of past VAT liability for the period between the enactment of the amendment and issuance of the circular, pending departmental verification of returns. Justice Medhi further directed that upon registration and payment of current VAT dues, the petitioners’ licence renewals should not be withheld on account of past non‑payment. The interlocutory application was accordingly disposed of, balancing compliance with statutory obligations and the petitioners’ operational continuity.

Borrower’s Redemption u/s 13(8) of SARFEASI Act Prevails Over Unconfirmed Auction: Calcutta HC sets Aside Auction Purchaser’s Revision Against UCO Bank

GAJANAN HIGHRISE PRIVATE LIMITED vs UCO BANK & ORS CITATION : 2025 TAXSCAN (HC) 2650

The Calcutta High Court dealt with a dispute arising under Section 13(8) of the SARFAESI Act, 2002, concerning a borrower’s statutory right of redemption and the rights of an auction purchaser. The case arose after UCO Bank issued a possession-cum-sale notice for a secured property belonging to Samadhan Mercantile Pvt. Ltd., and Gajanan Highrise Pvt. Ltd. participated in the auction, depositing the full bid amount. The legal issue centered on whether the borrower could exercise its right of redemption after the auction and whether the auction purchaser acquired enforceable rights despite a restraint order from the Debt Recovery Tribunal (DRT) preventing confirmation of the sale.

The bench of Justice Chaitali Chatterjee Das, who held that the borrower’s redemption right under Section 13(8) survives until the sale is formally confirmed and a sale certificate is issued. Since the DRT had issued a restraint order on 9 February 2010 barring confirmation, the auction purchaser’s rights never crystallised. The Court set aside the revision filed by Gajanan Highrise Pvt. Ltd., upheld UCO Bank’s acceptance of the borrower’s compromise settlement, and directed the Bank to transfer ₹17.50 lakh with 5% interest to the petitioner within two months, with further interest at 8% per annum in case of default.

Issuing GST MOV-07 and MOV-09 on Same Date is Unsustainable: Punjab & Haryana HC

NAS BABU CONSTRUCTIONS PVT. LTD vs STATE OF HARYANA AND OTHERS CITATION : 2025 TAXSCAN (HC) 2651

The Punjab and Haryana High Court addressed a legal issue under the Goods and Services Tax (GST) framework, specifically concerning the issuance of show cause notices and final orders under Forms GST MOV-07 and GST MOV-09. The Court considered whether passing a final order on the same day as issuing a show cause notice complies with the principles of natural justice.

The Division Bench of Justices Lisa Gill and Parmod Goyal, who held that issuing a final order on the same day as the show cause notice violates natural justice, as the taxpayer must be granted an opportunity to respond before an adverse order is passed. The Court set aside the impugned MOV-09 order as legally unsustainable and granted liberty to the tax authorities to proceed afresh in accordance with law, after issuing a proper show cause notice.

Patna HC Orders BSBCL to Pay Manufacturer for Unsold Liquor Destroyed Under Prohibition Policy

Spicy Beverage Pvt. Ltd. vs Spicy Beverage Pvt. Ltd CITATION : 2025 TAXSCAN (HC) 2652

The Patna High Court dealt with a commercial dispute arising under the Excise and State Prohibition framework, concerning whether liquor manufacturers are entitled to payment for stock supplied to the Bihar State Beverage Corporation Limited (BSBCL) even if such stock remained unsold and was subsequently destroyed under the State’s prohibition policy. The petitioners, M/s Spicy Beverage Pvt. Ltd. and M/s Globus Spirits Ltd., contended that supplies made pursuant to valid Orders for Supply constituted completed sales to the State wholesaler under Excise Form 27 licences and tender conditions, and that the BSBCL could not deny payment merely because the stock was later destroyed.

The Division Bench of Justices Rajeev Ranjan Prasad and Sourendra Pandey, who set aside the impugned orders of the BSBCL’s Managing Director. The Court held that the suppliers’ obligation ended upon delivery against valid Orders for Supply and that there was no contractual or statutory requirement for the manufacturers to ensure retail sale. The Bench emphasized that the BSBCL, as the State wholesaler, bore the risk of non-sale or destruction of stock due to policy decisions. Accordingly, the Court directed the BSBCL to pay the admitted dues for the supplied liquor along with interest at 6% per annum from 1 April 2016 until the date of payment, within two months from receipt of the judgment.

Taxpayer Cannot be Penalised for ‘Invisible’ GST Notices: Calcutta HC Restores Right to Reply for Birla Brothers

M/s. Birla Brothers Private Limited and another vs The DeputyCommissioner of Revenue CITATION : 2025 TAXSCAN (HC) 2653

The Calcutta High Court addressed the issue of effective service of GST notices under the Goods and Services Tax Act, 2017, specifically under Sections 73 and 75(4). The Court examined whether a taxpayer could be penalised when show cause notices and adjudication orders were uploaded on the GST portal in a manner that did not ensure proper service. The petitioner, M/s Birla Brothers Private Limited, challenged an order dated 6 March 2023 imposing tax, interest, and penalty, contending that the notices were uploaded only under the “Additional Notices and Orders” tab, and therefore, the company had no effective knowledge of the proceedings and could not respond or seek a personal hearing.

The bench of Justice Om Narayan Rai, held that mere uploading of notices on a secondary or obscure tab on the GST portal does not constitute proper service and violates the principles of natural justice. The Court observed that under Section 75(4), a Proper Officer is obliged to provide an opportunity of hearing when an adverse decision is contemplated. Accordingly, the High Court set aside the adjudication order dated 6 March 2023 and granted the petitioner three weeks to file a reply to the original show cause notice dated 20 January 2023. The adjudicating authority was directed to consider the reply and pass a fresh order after granting a meaningful opportunity of hearing.

Delhi HC Declines to Entertain Writ in alleged Fake GST ITC Case Involving 18 Firms, Directs to avail Statutory Appeal

BRAHAM PRAKASH PROP vs ADDITIONAL COMMISSIONER, ADJUDICATION CITATION : 2025 TAXSCAN (HC) 2654

The Delhi High Court dealt with the issue of availability of statutory remedies under the GST regime in cases of alleged fraudulent Input Tax Credit (ITC) claims, specifically under Section 107 of the CGST Act, 2017. The matter arose from an adjudication order passed by the Additional Commissioner, Adjudication, CGST Delhi North, raising tax demands against Braham Prakash, proprietor of Shri Shyam Trading Co., for purported wrongful availment of ITC. The allegations stemmed from a DG-GST Intelligence investigation that uncovered the creation of 18 alleged fake firms in Delhi, one of which involved the petitioner, allegedly generating fraudulent ITC.

The Division Bench comprising Justice Prathiba M. Singh and Justice Shail Jain, which declined to entertain the writ petition. The Court held that writ jurisdiction under Article 226 is not appropriate in cases involving complex and voluminous factual investigations of alleged fraudulent ITC. It emphasised that the petitioner had an effective statutory remedy through an appeal under Section 107, where issues such as limitation and personal hearing could be properly adjudicated. The Bench granted liberty to the petitioner to file the appeal by 15.01.026 with the required pre-deposit, directing that it shall be decided on merits notwithstanding limitation. The writ petition was accordingly disposed of.

Pre-IBC GST Dues Stand Extinguished After Final NCLT Approval of Resolution Plan: Delhi HC in Patanjali Foods Case

PATANJALI FOODS LIMITED vs ASSISTANT COMMISSIONER CGST NARELADIVISION & ORS. CITATION : 2025 TAXSCAN (HC) 2655

The Delhi High Court addressed the issue of GST liability in the context of corporate insolvency, specifically concerning the effect of the approval of an insolvency resolution plan under Section 31 of the Insolvency and Bankruptcy Code, 2016. The case involved Patanjali Foods Limited, which challenged GST demands raised for the F.Y. 2017-18 by the Assistant Commissioner, CGST, Narela Division.

A Division Bench of Justice Prathiba M. Singh and Justice Shail Jain held that the final and unconditional approval of the resolution plan occurred on 4 September 2019, noting that an earlier NCLT order dated 24 July 2019 was conditional. The Court observed that statutory dues for periods prior to the final approval of a resolution plan cannot be enforced unless explicitly included in the plan. Accordingly, the High Court quashed the GST demand for the period prior to 4.09.2019 but permitted the GST authorities to issue fresh proceedings for the post-approval period, subject to limitation. The writ petition was disposed of on these terms.

‘Nescafé Premix’ is Instant Coffee, Not Beverage Powder: Bombay HC upholds Lower Sales Tax Rate

The Commissioner Of Sales Tax Maharashtra State vs M-s NestleIndia Ltd CITATION : 2025 TAXSCAN (HC) 2656

The Bombay High Court examined the issue of tax classification of “Nescafé Premix” under the Bombay Sales Tax Act, 1959, determining whether it should be taxed as instant coffee or as a general beverage powder. The matter arose from a reference made by the Maharashtra Sales Tax Tribunal under Section 61 of the Act, following a dispute over the proper classification of Nestlé India Ltd’s product sold through an invoice dated 7.02.1998.

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The Division Bench of Justice M.S. Sonak and Justice Advait M. Sethna held that the premix is properly classified as instant coffee under Entry C-II-3. The Court emphasized that the percentage of coffee content is not decisive; rather, classification must be based on common parlance, market perception, and the intended use of the product. Since the premix was used to prepare coffee by simply adding hot water, the Court concluded that the specific entry for coffee prevails over the general entry for beverage powders. Consequently, the High Court ruled in favor of Nestlé India Ltd, rejecting the Sales Tax Department’s reference, and disposed of the matter without costs.

Statements of Absent Witnesses Cannot Override Cross‑Examined Testimony u/s 138‑B of Customs Act: Gujarat HC Quashes Penalty Order

MITESH IMPEX & ORS vs UNION OF INDIA & ANR CITATION : 2025 TAXSCAN (HC) 2657

The Gujarat High Court addressed the issue of reliance on witness statements under Section 138‑B of the Customs Act, 1962, holding that statements of witnesses who fail to appear for cross‑examination cannot be mechanically relied upon without recording findings on their non‑availability and confronting the assessee. The case arose from a show cause notice issued in 2012 against M/s Mitesh Impex and its partners, proposing penalties under Sections 112(a) and 114(iii) of the Act. The adjudicating authority had relied on statements of six witnesses, none of whom were cross‑examined despite requests by the petitioners. On appeal, the CESTAT set aside the order and remanded the matter, directing the authority to allow cross‑examination of all witnesses before fresh adjudication.

The Division Bench of Justice A.S. Supehia and Justice Pranav Trivedi observed that the authority failed to follow statutory safeguards under Section 138‑B, particularly clause (a), which permits reliance on statements of unavailable witnesses only after recording a clear finding of impossibility and taking steps to confront the assessee. Although three witnesses did not appear, no such findings were recorded, and their untested statements were relied upon while disregarding the testimony of three cross‑examined witnesses favourable to the petitioners. The Court held this approach violated the principles of natural justice and the Tribunal’s remand directions. Consequently, the penalty orders were quashed, and the matter was remanded for fresh adjudication within 12 weeks, preserving all rights and contentions of the parties.

Erroneous TDS Paid under Income Tax Due to Ignorance of Earlier Deduction Cannot be Retained by Revenue: Karnataka HC

MURIGEPPA KASHAPPA NARA vs GOVERNMENT OF INDIA CITATION : 2025 TAXSCAN (HC) 2658

The Karnataka High Court addressed the issue of condoning delay in filing a claim for refund of tax deducted at source (TDS) under the Income Tax Act, 1961, specifically under Section 119(2)(b). The case arose from a petition by Murigeppa Kashappa Nara, a 60‑year‑old farmer, who sought a refund of excess TDS deducted by the Karnataka Mineral Development Corporation (KMDC) for A.Y. 2018-19.

Justice M. Nagaprasanna observed that the fundamental facts were undisputed: KMDC had indeed deducted TDS, and the petitioner’s delay in submission was inadvertent. The Court held that rejecting the refund solely on a technical ground would amount to unjust enrichment of the Revenue. Accordingly, the Court condoned the delay and directed that the petitioner’s representation be reconsidered afresh by the assessing authority strictly in accordance with law. The Court clarified that it was not expressing any opinion on the merits of the refund claim itself and mandated that the competent authority dispose of the claim within four months from the date of receipt.

SVLDRS Relief Cannot Be Treated as ‘Arrears’ When Central Excise Duty Not Finalised: Bombay HC Quashes ₹12.93 Lakh Demand

M/s. Unique Enterprises vs . Union of India CITATION : 2025 TAXSCAN (HC) 2659

The Bombay High Court addressed the scope of relief under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDRS) concerning the classification of tax dues as “arrears” versus “litigation.” The case arose from a petition by M/s Unique Enterprises, a manufacturer of condensers and cooling coils, challenging the issuance of Form SVLDRS-3 demanding ₹12.93 lakh.

The Division Bench comprising Justice M. S. Sonak and Justice Advait M. Sethna observed that once the tribunal remanded the matter for re‑quantification, the demand remained open and could not be bifurcated artificially as “arrears.” The Court held that the department could not ignore the earlier pre-deposit of ₹10 lakh, which had been acknowledged in Form SVLDRS-2, while computing dues under Form SVLDRS-3. Accordingly, the High Court quashed Form SVLDRS-3 and directed the designated committee to recompute the payable amount by classifying the matter under the “litigation” category, granting relief in accordance with Section 124 of the Finance Act, 2019.

Defective DIR‑12 Cannot Remove Directors: Calcutta HC Orders ROC to Reconsider After Hearing All Parties

Vimal Kumar Godha & Ors vs Registrar of Companies, WestBengal & Ors. CITATION : 2025 TAXSCAN (HC) 2660

The Calcutta High Court addressed the issue of directors’ cessation arising from a defective Form DIR‑12 filed on the MCA‑21 portal. The petitioners, Vimal Kumar Godha and others, challenged the removal of seven directors from the board of Nidhi Creative Infrastructure Pvt. Ltd. through a DIR‑12 dated 11.10.2025. The grievance was that the directors had neither tendered resignations nor authorised the filing, and that the Registrar of Companies (ROC) had mechanically accepted the form without verifying attachments or providing an opportunity of hearing, thereby violating principles of natural justice.

The bench of Justice Krishna Rao, noted that the ROC itself acknowledged the DIR‑12 as prima facie defective due to missing mandatory attachments and expressed no objection to marking it as invalid. Considering the competing allegations between the factions of directors, the Court directed the ROC or any competent authority to reconsider both the objections to the petitioners’ challenge to their removal and the respondents’ challenge to the petitioners’ director inductions after granting a full opportunity of hearing. The Court further ordered that the DIR‑12shall not be given effect until the ROC completes its decision-making process, and disposed of the writ petition with these directions.

SVLDRS-3 Cannot Ignore Pre-Deposits and Recoveries: Bombay HC Quashes ₹1.12 Crore Demand

Evershine Enterprises vs Union of India CITATION : 2025 TAXSCAN (HC) 2661

The Bombay High Court recently addressed the legal issue of determination of payable amounts under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019, specifically concerning the failure to adjust pre-deposits and amounts recovered during investigation while issuing Form SVLDRS-3. The Court examined the statutory mandate under Section 124(2) of the Finance Act, 2019, which requires that any amounts already paid as pre-deposit or recovered must be deducted from the total tax liability while computing the sum payable under the scheme. The issue arose when Evershine Enterprises’ declaration under the scheme was mechanically processed without adjusting the substantial amounts it had already remitted or which were recovered during investigation, leading to an inflated demand.

The Division Bench comprising Justice M. S. Sonak and Justice Advait M. Sethna allowed the writ petition filed by Evershine Enterprises. The Court quashed the impugned Form SVLDRS-3 to the extent it determined the payable amount at ₹1.12 crore and directed the designated committee to re-verify the petitioner’s claims of pre-deposit and recovery, after granting a fair hearing, and to pass a fresh determination in accordance with law within a stipulated timeframe. The judgment clarified that while verification under the Sabka Vishwas scheme is not an adjudicatory exercise, the authorities are nonetheless obligated to conduct a proper examination of records to ensure that the payable amount accurately reflects prior payments and recoveries.

GST Dept Liable to Pay Interest for Delayed Re-Credit of Rejected Refund Due to Technical Glitches: Delhi HC

SUMIT GUPTA vs UNION OF INDIA AND ORS CITATION : 2025 TAXSCAN (HC) 2662

The Delhi High Court addressed the legal issue of payment of interest on delayed re-credit of rejected GST refund amounts caused by technical glitches on the GST portal. The Court considered the statutory requirement that when a refund claim is rejected, the corresponding amount must be re-credited to the taxpayer’s Electronic Credit Ledger, and that any delay in such re-credit, not attributable to the taxpayer, attracts interest under the GST law. The issue arose when Sumit Gupta’s refund claims totaling Rs. 2,77,501 were rejected, but the GST department delayed re-crediting the amounts due to portal-related technical issues, prompting the petitioner to seek judicial intervention.

The Division Bench comprising Justice Prathiba M. Singh and Justice Shail Jain directed the GST authorities to process and sanction interest on the delayed refund re-credit in accordance with law and to pass a reasoned order within two months. The Court observed that the delay was admitted by the department and emphasized that the petitioner could not be deprived of interest merely because the re-credit occurred during the pendency of the writ petition. The petition was disposed of, while keeping all rights and remedies of the petitioner open.

Madras HC Strikes Down TN Govt Notification Reducing VAT Exemption For Paper Board Companies

M/s.Sennar Paper Boards P Ltd vs The State Of Tamil Nadu CITATION : 2025 TAXSCAN (HC) 2663

The Madras High Court dealt with the legal issue of whether the Tamil Nadu Government could retrospectively curtail or impose new conditions on a VAT exemption already granted to paper board manufacturers under the TNGST Act, 1959 and TNVAT Act, 2006. The Court examined Notification No. II(1)/CTR/75(b-2)/2007 issued through G.O.Ms.No.198 dated 19.12.2007, which sought to restrict exemptions previously granted under G.O.Ms.No.176 dated 28.12.2006. The petitioners, Sennar Paper Boards Pvt. Ltd. and another, challenged the notification and the assessment orders relying on it, arguing that the State could not retrospectively alter or impose additional conditions on a validly granted exemption.

The Division Bench comprising Justice Dr. Anita Sumanth and Justice Mummineni Sudheer Kumar quashed the impugned notification insofar as it applied to the petitioners and set aside the assessment orders passed on its basis. The Court held that the government could not rely on assumed intent to add conditions retrospectively and that the notification exceeded statutory powers under the relevant VAT laws. The writ petitions were allowed, connected miscellaneous petitions were closed, and no order as to costs was made.

‘Base Note’ from French Govt. is Not Incriminating Material for Income Tax Addition u/s 153A: Bombay HC

Pr. Commissioner of Income Tax-Central-1 vs Milan Kavin Parikh CITATION : 2025 TAXSCAN (HC) 2664

The Bombay High Court addressed the legal issue of whether a “base note” received from a foreign government under international information exchange arrangements can constitute incriminating material for making income tax additions under Section 153A of the Income Tax Act, 1961. The Court examined the case of Milan Kavin Parikh, where the Assessing Officer had relied solely on a base note received from the French authorities to make additions relating to alleged undisclosed foreign income, in the absence of any incriminating material found during a search under Section 132.

The Division Bench comprising Justice G.S. Kulkarni and Justice Aarti Sathe held that the base note obtained post-search could not be treated as incriminating material to sustain additions under Section 153A. The Court relied on the Supreme Court’s ruling in PCIT v. Abhisar Buildwell (P) Ltd (2023), which clarified that additions under Section 153A require incriminating material discovered during the search or requisition. Accordingly, the High Court dismissed the Revenue’s appeal, upholding the ITAT’s deletion of the additions.

GST Authorities cannot Seize Cash as ‘Goods’ under CGST Act: Calcutta HC Orders De-Sealing of ₹24 Lakh

Puspa Furniture Pvt. Ltd. & Anr. vs Union of India &Ors. CITATION : 2025 TAXSCAN (HC) 2665

The Calcutta High Court addressed the legal issue of whether cash can be treated as “goods” and seized or sealed by GST authorities under Section 67 of the Central Goods and Services Tax (CGST) Act, 2017. The case involved Puspa Furniture Pvt. Ltd., where GST officers sealed cash amounting to Rs. 24 lakh during search and seizure proceedings.

The Division Bench of Justice Om Narayan Rai held that cash cannot be treated as goods under the CGST Act and that Section 67 allows seizure of “things” only if they contain information or evidentiary value relevant to GST proceedings. The Court directed the GST authorities to immediately de-seal the Rs. 24 lakh, while clarifying that this did not bar other authorities, including the Income Tax Department, from taking lawful action. The Court allowed the investigation to continue and instructed the department to file an affidavit addressing the matter.

Income Tax Dept. cannot Deny STCL Set-off against LTCG after accepting Same Claim in Factually-Identical Connected Cases: Bombay HC

Pr. Commissioner of Income Tax-19 Mumbai vs Avinash B. Jaising CITATION : 2025 TAXSCAN (HC) 2666

The Bombay High Court adjudicated a dispute concerning the assessee’s right to set off short-term capital loss (STCL) against long-term capital gains (LTCG) under the Income Tax Act, 1961. The matter arose from a block assessment initiated following a search and seizure action under Section 132 of the Income Tax Act, where the Assessing Officer denied a set-off of STCL of ₹5.18 crore against LTCG of approximately ₹5.21 crore, treating it as undisclosed income allegedly arising from non-genuine share transactions. The principal legal issue before the Court was whether the Department could deny a benefit under capital gains when identical transactions in connected cases involving the assessee’s father and brother had already been accepted without challenge, thereby invoking the doctrine of consistency in tax matters.

The Division Bench comprising Justice G.S. Kulkarni and Justice Aarti Sathe upheld the concurrent findings of the CIT(A) and the ITAT, both of which had accepted the genuineness of the transactions and permitted the set-off of STCL against LTCG for the block period. Emphasising the principle of consistency applicable to taxing statutes, the Court observed that once the Department had accepted the same tax treatment in factually-identical cases of the assessee’s close family members, it could not adopt a contrary stance in the present case. Finding no substantial question of law arising from the ITAT order, the Bombay High Court dismissed the Revenue's appeal and affirmed the assessee’s entitlement to set off losses against gains.

GST Portal Glitches Blocking TRAN‑1 Filing cannot Defeat Transitional ITC Claim: Delhi HC Orders ₹99 Lakh Credit to be Reflected in ECL

CLYDE PUMPS PRIVATE LIMITED vs UNION OF INDIA & ORS CITATION : 2025 TAXSCAN (HC) 2667

The Delhi High Court examined whether transitional CENVAT credit could be denied to an Input Service Distributor (ISD) on the ground that the GST portal did not permit filing or utilisation of TRAN-1 during the transition to GST. The key legal issue concerned the scope and effect of Section 140(7) of the Central Goods and Services Tax Act, 2017, which expressly protects pre-GST ISD credit and permits its distribution “within such time and in such manner as may be prescribed.” Clyde Pumps Pvt. Ltd., an ISD with accumulated CENVAT credit of ₹99,18,972 for March-June 2017, had filed TRAN-1 on time but could not transition the credit due to the system’s failure to maintain an Electronic Credit Ledger for ISDs.

The Division Bench comprising Justice Prathiba M. Singh and Justice Shail Jain rejected the revenue’s objections and held that procedural or technical limitations on the GST portal cannot extinguish a vested statutory entitlement protected under Section 140(7). Relying on precedents including Siemens Ltd. v. Union of India (Bombay HC) and the Delhi HC ruling in Vision Distribution Pvt. Ltd., the Bench reiterated that taxpayers cannot be penalised for systemic shortcomings during GST transition. The Court accordingly directed the authorities to reflect Clyde Pumps’ acknowledged ITC in its Electronic Credit Ledger within three months, holding that legitimate transitional credit already declared in TRAN-1 cannot be denied on account of portal-based restrictions or “technical glitches or transitional creases.”

Excess S.80HHC Deduction can be Reopened Even if Original Order was Silent: Madras HC holds Reliance on Expl 2 to S. 142 Valid

Jasmine Towels (P) Ltd vs Asst. Commissioner Of Income TaxCircle-I CITATION : 2025 TAXSCAN (HC) 2668

The Madras High Court examined whether reassessment proceedings under Section 147 read with Section 148 of the Income Tax Act, 1961 were valid when excessive deduction under Section 80HHC had been granted in the original scrutiny assessment under Section 143(3), despite the assessment order being entirely silent on the deduction claim. The core legal issue was whether the reassessment constituted a prohibited “change of opinion,” or whether the Revenue could invoke Explanation 2(c)(iii) to Section 147, which expressly deems excessive relief or deduction as income escaping assessment, thereby justifying reopening of the assessment.

The Division Bench comprising Justice Dr. Anita Sumanth and Justice Mummieni Sudheer Kumar upheld the reopening, holding that where the original assessment order contained no discussion, reference, or indication of application of mind regarding the Section 80HHC deduction, no opinion could be said to have been formed by the Assessing Officer. Therefore, the rule against change of opinion had no application. Distinguishing prior precedents, the Court ruled that the Revenue was justified in invoking Explanation 2 to Section 147 to remedy excessive relief, answered the substantial question of law in favour of the Department, and dismissed the assessee’s appeal, affirming that the reassessment proceedings were valid in law.

Cash Deposit used for Creating FD cannot Be Clubbed to Cross ₹50 Lakh Threshold: Madras HC Quashes Section 148A Action

Krishnareddy Venkatesan vs Income Tax Officer, Ward 1,Tiruvallur CITATION : 2025 TAXSCAN (HC) 2670

The Madras High Court examined the legality of reassessment proceedings initiated under Section 148A read with Section 149 of the Income Tax Act, 1961, particularly concerning the threshold of income escapement exceeding ₹50 lakh required to invoke the extended limitation period. The core legal issue was whether the Assessing Officer could treat cash deposits and a fixed deposit created from the same funds as separate assets, and thereby aggregate them to artificially cross the ₹50 lakh ceiling for reopening beyond three years. The assessee argued that the fixed deposit of ₹27 lakh originated from the cash deposits of ₹25.90 lakh and therefore the alleged escapement could not be computed cumulatively.

The Single Judge Bench of Justice Senthilkumar Ramamoorthy held that the Assessing Officer failed to examine the bank statements and did not apply independent judgment before assuming income escapement above the statutory limit. The Court quashed the reassessment proceedings, setting aside both the notice under Section 148 and the order under Section 148A(d), ruling that mechanically clubbing cash and fixed deposits without verifying their source connection was legally untenable. The petition was allowed, and the matter was remitted to the Assessing Officer to reconsider the issue afresh, after providing proper opportunity to the assessee, and to pass a fresh order under Section 148A(d) within two months.

PMLA Attachment Lapses after 180 Days, No COVID Relaxation for ED: Bombay HC quashes attachment against Chartered Accountant

Naresh T. Jain & Ors vs The Union of India & Ors CITATION : 2025 TAXSCAN (HC) 2671

The Bombay High Court adjudicated the legality of continuing provisional attachment orders issued under Section 5 of the Prevention of Money Laundering Act, 2002 (PMLA) beyond the statutory ceiling of 180 days prescribed under Sections 5(1) and 5(3). The core legal issue before the Court was whether the limitation extensions granted by the Supreme Court during the COVID-19 pandemic issued through suo motu orders for exclusion of time could be invoked by the Enforcement Directorate to prolong the life of a provisional attachment order.

The Division Bench comprising Justice M.S. Sonak and Justice Advait M. Sethna held that the Supreme Court’s COVID limitation orders did not apply to executive actions under PMLA, particularly coercive measures like provisional attachment, which cease to have effect automatically after 180 days unless confirmed by the adjudicating authority. The Court observed that the ED continued to function during the pandemic and said that statutory protections embedded in Section 5 could not be diluted to extend attachment duration. It therefore declared that the provisional attachment dated 27 November 2020 lapsed on 26 May 2021 and was without legal effect thereafter, restraining further action based on the expired order. However, the Court clarified that ongoing adjudication proceedings under Section 8 PMLA would continue independently.

S. 153D Approvals Granted to 30+ Cases within Hours by Income Tax Dept: Bombay Slams ‘Casual’ Revenue Approach

Pr Commissioner of Income Tax Central 4 vs Citron InfraprojectsLimited AADCC3735C CITATION : 2025 TAXSCAN (HC) 2672

The Bombay High Court examined the legality of search assessment orders passed under Section 153A read with Section 153D of the Income Tax Act, 1961, specifically addressing whether prior approvals granted under Section 153D were valid when issued in a mechanical and hurried manner. The legal issue before the Court was whether approvals granted within minutes or a few hours covering more than 30 assessment orders involving diverse assessees, facts, and issues could be considered a proper application of mind as mandated under Section 153D.

The Division Bench comprising Justice M.S. Sonak and Justice Advait M. Sethna upheld the findings of the Income Tax Appellate Tribunal (ITAT), dismissing over 25 Revenue appeals under Section 260A. The Bench held that identical, template-based approvals granted en masse failed to satisfy statutory requirements and rendered the corresponding search assessments unsustainable in law. The Court concluded that the mechanical exercise of approval defeated the very object of Section 153D, which is designed to ensure scrutiny and prevent arbitrary additions following search operations. Consequently, all Revenue appeals were rejected, and the High Court affirmed that such defective approvals vitiate entire Section 153A assessments irrespective of the merits of additions proposed.

GST Return Filing u/s 16(5) Timeline Makes S 16(4) Time Bar Lose Significance: Kerala HC Orders Reconsideration of ITC Claim

PAZHASSI MOTORS vs STATE OF KERALA CITATION : 2025 TAXSCAN (HC) 2673

The Kerala High Court examined the legal issue surrounding the statutory timelines for claiming Input Tax Credit (ITC) under the Central Goods and Services Tax Act, 2017, specifically whether the new timeline introduced in Section 16(5) overrides the earlier restriction under Section 16(4). The case involved the denial of ITC for F.Y. 2018-19 on the ground that returns were filed belatedly, but the petitioner contended entitlement based on Section 16(5) introduced through the Finance Act, 2024, which, by using a non-obstante clause, allows ITC where returns were filed on or before 30.11.2021. The core legal issue therefore was whether the introduction of Section 16(5) created a fresh statutory right that supersedes the earlier time bar under Section 16(4).

A single judge bench of Justice Ziyad Rahman A.A. ruled in favour of the taxpayer, holding that Section 16(5) overrides Section 16(4) and confers an independent right to ITC if returns were filed before 30.11.2021. The Court quashed the assessment order and directed the assessing authority to reconsider the claim afresh, applying Section 16(5) and granting an opportunity of hearing. The Court rejected the State’s objection based on the earlier dismissal of the petitioner’s constitutional challenge to Section 16(4), finding that the enactment of Section 16(5) created a new cause of action. The writ petition was accordingly allowed.

No Writ Jurisdiction against Private Commercial Banks: Kerala HC notes South Indian Bank not ‘State’ under Art. 12

THE AUTHORISED OFFICER vs SHEELA FRANCIS PARAKKAL CITATION : 2025 TAXSCAN (HC) 2674

The Kerala High Court examined the legal issue of whether a private commercial bank falls within the ambit of writ jurisdiction under Article 226 of the Constitution of India, in the context of Article 12 defining “State.” The matter arose from a writ petition in which the borrowers sought a declaration that South Indian Bank, after closure of the loan account, had no authority to retain the original title deeds and sought release of the documents. The central legal question was whether a writ petition was maintainable against South Indian Bank, which is registered under the Companies Act and functions as a private commercial entity, and therefore not subject to writ jurisdiction except where discharge of a public duty is shown.

The Division Bench comprising Justice Sushrut Arvind Dharmadhikari and Justice Syam Kumar V.M. allowed the writ appeal filed by South Indian Bank and set aside the Single Judge’s order, holding that the writ petition was not maintainable against a private bank that is not “State” under Article 12. The Court relied on precedents including Federal Bank Ltd. v. Sagar Thomas (2003), reiterating that mere regulatory oversight by the RBI does not render private banks public authorities. The Bench held that the Single Judge erred in entertaining the writ petition and imposing costs without examining maintainability, and clarified that the borrowers are at liberty to pursue remedies before the appropriate forum as permitted in law.

Limitation for ITAT Rectification Begins from Date of Communication of Order to Taxpayer, Not Date of Passing: Bombay HC

Accost Media LLP vs Deputy Commissioner of Income Tax CITATION : 2025 TAXSCAN (HC) 2675

The Bombay High Court addressed the legal issue concerning the computation of limitation for filing a rectification application under Section 254(2) of the Income Tax Act, 1961. The issue arose after Accost Media LLP’s rectification application was rejected by the Income Tax Appellate Tribunal on the ground that it was filed beyond six months from the date of passing of the original order dated 10.12.2024. The High Court examined whether the limitation period must be reckoned from the date the order is passed or from the date it is communicated/received by the taxpayer, particularly in the context of Tribunal Rules requiring a copy of the order to accompany the rectification application.

The Division Bench comprising Justice B. P. Colabawalla and Justice Amit S. Jamsandekar held that the limitation period begins from the date the Tribunal order is communicated to the assessee and not the date on which it is passed. The Court ruled that a contrary interpretation would cause injustice, since no rectification application can realistically be filed without obtaining a copy of the order. Consequently, the Bench found that the Tribunal erred in rejecting the rectification application as time-barred. However, since the petitioner had already filed a substantive appeal against the original order, the High Court declined remand and permitted the petitioner to raise all grounds in the pending appeal, disposing the writ petition without costs.

Indian Currency is ‘Goods’ Under Customs Act, Seizure without issuing SCN within Six Months is Illegal: Madras HC

Vikram Jain vs Principal Commissioner Of Customs CITATION : 2025 TAXSCAN (HC) 2676

The Madras High Court examined the legal issue of whether Indian currency seized during investigation constitutes “goods” within the meaning of Section 2(22) of the Customs Act, 1962, thereby attracting the mandatory procedural safeguards prescribed under Section 110(1) and 110(2). The petitioner, Vikram Jain, sought quashing of a seizure memo and return of the seized currency on the ground that the Customs Department failed to issue a show-cause notice within six months as required under Section 110(2). The Court analysed the statutory scheme and whether the seizure could be justified under Section 110(3), which applies to documents or things useful for investigation and is not subject to the same limitation period.

The bench of Justice Abdul Quddhose held that Indian currency expressly falls within the definition of “goods” and cannot be equated with mere investigational material under Section 110(3). Once currency is seized under the authority of Section 110(1), the Department is bound to comply with the statutory obligation under Section 110(2) and issue a notice under Section 124 within six months or obtain proper extension. As no show-cause notice was issued and no extension recorded, the seizure became illegal. The Court therefore quashed the seizure memo and directed that the seized currency be returned within eight weeks, while granting liberty to initiate fresh proceedings strictly in accordance with law.

Income Tax Deductions u/s 80IA and 80HHC can be Claimed Together Subject to 100% Profit Cap: Madras HC

The Commissioner Of Income Tax vs Chennai. vs M/s MohanBreweries And Distilleries Ltd CITATION : 2025 TAXSCAN (HC) 2677

The Madras High Court dealt with the legal issue of whether simultaneous deductions under Sections 80IA and 80HHC of the Income Tax Act, 1961 can be allowed in respect of the same business profits, particularly in the context of the restriction imposed under Section 80IA(9). The Revenue filed a tax case appeal under Section 260A challenging the order of the Income Tax Appellate Tribunal, which had set aside the Commissioner’s revision order passed under Section 263, wherein it was held that deduction under Section 80HHC ought to have been reduced by the amount already allowed under Section 80IA. The central question before the Court concerned whether Section 80IA(9) restricts computation or merely the allowability of deductions so as to ensure that total deduction does not exceed 100 percent of the profits.

The Division Bench comprising Justice Dr. Anita Sumanth and Justice Mummimeni Sudheer Kumar, held that Section 80IA(9) does not affect computation of deduction under other provisions, but merely restricts the aggregate deductions to ensure they do not exceed the profits of the business. Answering all substantial questions of law in favour of the assessee, the Court dismissed the Revenue’s appeal and upheld the Tribunal’s decision permitting simultaneous deductions under Sections 80IA and 80HHC, subject to the cap of 100 percent of profits.

Non-Communication of Extension u/s 28(9) Customs Act Does Not Invalidate Adjudication Process: Delhi HC

PRANIJ HEIGHTS INDIA PVT LTD vs THE JOINT COMMISSIONER OFCUSTOMS CITATION : 2025 TAXSCAN (HC) 2678

The Delhi High Court adjudicated a writ petition involving the legal issue of limitation under Section 28(9) of the Customs Act, 1962, specifically whether an extension of time granted for completing adjudication must be communicated to the noticee. The petitioner, Pranij Heights India Pvt. Ltd., challenged the continuation of adjudication proceedings arising from a show cause notice relating to concessional duty claims under the ASEAN-India Free Trade Agreement for aluminium foil imports.

The Division Bench of Justice Prathiba M. Singh and Justice Shail Jain held that non-communication of the extension order does not vitiate the adjudication process, since Section 28(9) contains no statutory mandate requiring such communication. The Court distinguished the provision from Section 110(2) of the Act, where communication is explicitly required in case of extension. Observing that the petitioner had multiple opportunities to participate and that adjudication had culminated in an Order-in-Original, the Court declined to interfere in writ jurisdiction. The writ petition was disposed of, with liberty granted to the petitioner to pursue a statutory appeal against the Order-in-Original.

Income Tax Recovery During Pendency of ITAT Appeal Stayed: Gauhati HC Orders tribunal to Take up Interim Pleas Expeditiously

ADARSH SAMAJ KALYAN SAMITEE vs THE UNION OF INDIA AND 4 ORS CITATION : 2025 TAXSCAN (HC) 2679

The Gauhati High Court dealt with the issue of coercive recovery of income tax dues during the pendency of statutory appeals before the Income Tax Appellate Tribunal (ITAT). The writ petition was filed by Adarsh Samaj Kalyan Samitee challenging assessment orders for A.Y.s 2021-22 and 2022-23 issued under the Income Tax Act, 1961, as well as consequential recovery measures undertaken by the Income Tax Department, including freezing of bank accounts. The petitioners argued that recovery should be stayed pending disposal of their second appeals before the ITAT, particularly since obtaining urgent interim relief before the Tribunal had become difficult owing to irregular sittings.

The Single Bench of Justice Soumitra Saikia held that since the ITAT is the designated statutory appellate forum and is presently functional, the proper course is to direct expeditious disposal of the assessee’s interim relief applications. The Court granted interim relief by staying further recovery proceedings during the pendency of the ITAT appeals and directed the Tribunal to take up and consider the interim applications without delay.

Accountant fails to Submit GST Returns for 6 Months: Madras HC orders GSTN to take Necessary Actions for filing Returns

Tvl.KRM Construction vs The Assistant Commissioner CITATION : 2025 TAXSCAN (HC) 2680

The Madras High Court dealt with the issue of cancellation of GST registration for continuous non-filing of GST returns under the Central Goods and Services Tax Act, 2017. The writ petition arose when Tvl. KRM Construction challenged the cancellation order after six consecutive months of default in filing returns. The core legal issue pertained to restoration of registration and permission to file pending returns on the GST portal, which falls within the framework of statutory obligations relating to return filing and technical enablement by the Goods and Services Tax Network (GSTN).

The bench of Justice Krishnan Ramasamy, who found that the petitioner had furnished a bona fide explanation for the lapse caused by negligence of an engaged accountant. The Court revoked the cancellation of GST registration subject to strict compliance conditions, directing GSTN to enable filing of pending returns and payment of dues within four weeks. It further mandated payment of tax, interest, penalty, and late fees without adjusting unclaimed Input Tax Credit, warning that failure to comply would automatically revive the cancellation and other penal consequences.

Making Passenger approach Court for 21g Gold Ring Unreasonable: Delhi HC Slams ‘Waste of Customs Resources’, Imposes ₹5k Costs on Dept

SAYARA vs COMMISSIONER OF CUSTOMS CITATION : 2025 TAXSCAN (HC) 2681

The Delhi High Court addressed a matter concerning the unjustified detention of personal jewellery under the Customs Act, 1962, highlighting the Department’s failure to implement an adjudication order. The legal issue revolved around the release of a 21-gram gold ring seized from Ms. Sayara upon her arrival at IGI Airport, New Delhi, from Dubai. Despite an adjudication order declaring the ring as personal effects and directing its release, the Customs Department did not comply, compelling the petitioner to approach the High Court. The Court observed that detention of such a small item constituted an unreasonable and wasteful use of departmental resources.

The Division Bench comprising Justice Prathiba M. Singh and Justice Shail Jain, held that the adjudication order must be implemented immediately, directing the Customs Department to release the gold ring forthwith without requiring warehousing charges. The Court also appointed a Customs Nodal Officer to ensure compliance and imposed costs of ₹5,000 on the Department for forcing the petitioner to file the writ petition unnecessarily.

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