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 21, 2025 to December 27, 2025.

SUPREME COURT

Income of the Association of Persons (Syndicates) cannot be clubbed with Members': Supreme Court

PRINCIPAL COMMISSIONER OF INCOME TAX (CENTRAL) MP AND CG vsRAMSWAROOP SHIVHARE CITATION : 2025 TAXSCAN (SC) 414

The Supreme Court upheld the decision of the Madhya Pradesh High Court, ITAT, and CIT(A) regarding the taxation of income earned by an Association of Persons (AOP) or syndicate. The legal issue dealt with was whether the income of such syndicates could be directly clubbed with or taxed in the hands of its individual members. The High Court had analyzed the scheme of Sections 67A, 86, and 167B of the Income Tax Act, 1961, and held that once an AOP or syndicate is recognized as a separate taxable entity under Section 2(31), its income must be assessed at the syndicate level and cannot be included in the total income of individual members.

The bench of Justice Pankaj Mithal and S.V.N. Bhatti dismissed the Income Tax Department’s Special Leave Petition, confirming that the High Court had not erred in its judgment. The Court ruled that the income of the Association of Persons (Syndicates) cannot be clubbed with the assessees, and any issue regarding the admissibility of expenditure incurred by the syndicates must be examined at the syndicate level, not at the individual member level. The Court observed that such parallel or direct assessment in the hands of members is impermissible and would result in double taxation, contrary to the statutory scheme of the Income Tax Act.

Failure to Meet NCLT Timelines Justifies Full Forfeiture of Deposits: Supreme Court Rejects Purchaser’s Challenge in Liquidation Sale

M/s. Shri Karshni Alloys Private Limited vs RamakrishnanSadasivan CITATION : 2025 TAXSCAN (SC) 415

The Supreme Court addressed the validity of full forfeiture of ₹37.80 crore deposited by M/s Shri Karshni Alloys Pvt. Ltd. towards purchasing the Raichur plant of Surana Industries Ltd. in liquidation. The core legal issue was whether the purchaser's failure to meet NCLT-mandated timelines justified automatic forfeiture of the entire amount under the Insolvency and Bankruptcy Code, 2016 (IBC). The Court examined the sale process under Regulation 33(2)(d) of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016, which required NCLT approval, and Rule 15 of the NCLT Rules, 2016, empowering the Tribunal to impose conditions for time extensions.

The Division Bench comprising Justice Sanjay Kumar and Justice Alok Aradhe dismissed the appeals under Section 62 of the IBC, upholding the NCLT and NCLAT orders. The Court ruled that the appellant, having accepted the NCLT's extension order with its explicit forfeiture clause, could not approbate and reprobate by later challenging it. Emphasizing that time is essential to the IBC's scheme, the Bench relied on its precedent in Kridhan Infrastructure Pvt. Ltd. v. Venkatesan Sankaranarayan (2021) to affirm that delays defeat the statute's object. It further condemned the appellant's suppression of prior NCLAT proceedings in a Madras High Court writ petition as an abuse of process, holding the appeals bereft of merit on facts and law, thereby confirming the full forfeiture.

HIGH COURT

Madras HC affirms CBIC Notifications Extending Time limit to Issue order u/s 73 Ultra vires to S. 168A, says both ‘Illegal’

Tvl Voylla Fashions Private Limited vs The AssistantCommissioner (ST) (FAC) CITATION : 2025 TAXSCAN (HC) 2714

The Madurai Bench of the Madras High Court ruled that the Central Board of Indirect Taxes and Customs (CBIC) exceeded its statutory powers under Section 168A ofthe Central Goods and Services Tax Act, 2017 (CGST Act) by issuing Notifications No. 09/2023-Central Tax dated 31.03.2023 and No. 56/2023-Central Tax dated 28.12.2023. These notifications sought to extend the time limit for passing adjudication orders under Section 73 for A.Y. 2019-20, operating retrospectively and curtailing benefits from the Supreme Court's COVID-19 limitation extension directions.

Justice Krishnan Ramasamy followed a coordinate Bench's ruling from 12 June 2025, quashing both notifications and the consequential assessment order dated 28 August 2024 passed against Tvl. Voylla Fashions Private Limited. The Bench clarified that while GST authorities could exclude the COVID period as per Supreme Court orders under Article 142, the CBIC overstepped by extinguishing vested rights and misinterpreting those directions. It remanded the matter to the assessing authority, directing treatment of the impugned order as a show cause notice, with fresh opportunity for the assessee to file objections and be heard before a new order. The Court held the notifications ultra vires, arbitrary, and procedurally illegal, as they reworked the limitation period beyond force majeure scenarios, ignored the GST Council's mandatory role, and relied on invalid recommendations from the GST Implementation Committee instead.

Cancellation of GST Registration for Return Default Reversible if Returns Filed and Dues Cleared: Gujarat HC

M/S DURGA GOPAL SHINDE SOLE PROPRIETORSHIP CONCERN OF DURGAGOPAL SHINDE Vs STATE OF GUJARAT & ORS CITATION : 2025 TAXSCAN (HC) 2715

The Gujarat High Court ruled that cancellation of GST registration under Section 29(2)(b) of the Central Goods and Services Tax Act, 2017 (CGST Act) and Gujarat Goods and Services Tax Act due to non-filing of returns is not irreversible. The legal issue centered on whether such cancellation serves punitive purposes or merely ensures tax compliance, holding that revocation is warranted once the taxpayer files pending returns and clears all dues including interest and late fees.

Justice A.S. Supehia and Justice Pranav Trivedi emphasized that the provision's objective under Section 29(2)(b) is to secure revenue realization rather than permanently shutting down businesses ready to regularize defaults. In the case, M/s Durga Gopal Shinde registration was cancelled retrospectively from 1.04.2022 via order dated 20.09. 2022, the Division Bench directed restoration upon compliance. Noting the petitioner's deposit of ₹16.12 lakh covering self-assessed tax, interest, and late fees for April 2022 to December 2024 in the Electronic Cash Ledger per Section 49 and Rule 87, the Court permitted filing of all pending returns. It mandated payment of any additional demands arising from scrutiny, after which the cancellation order stands revoked, affirming that denying revival after full payment would be unjustified.

Income Tax Hearing Date cannot be Advanced without Intimating Assessee: Orissa HC sets aside Order rejecting S. 154 Application

Viswa Bharati Foundation Trust vs The Chairman, Central Board ofDirect Taxes CITATION : 2025 TAXSCAN (HC) 2716

The Orissa High Court ruled that income tax authorities cannot advance a scheduled hearing date and pass an adverse rectification order under Section 154 of theIncome Tax Act, 1961, without informing the assessee, as this violates principles of natural justice. The legal issue involved whether the Assessing Officer (AO) could reject a rectification application prejudicial to the assessee prior to the fixed hearing date without evidence of communication regarding the advancement.

Chief Justice Harish Tandon and Justice M.S. Raman held that Section 154(3) mandates a reasonable opportunity of being heard, and once a hearing is scheduled such as on 28 July 2025 at 11:00 a.m., the authority must ensure any change is duly intimated to the assessee before proceeding ex parte. Despite Revenue's concession on the procedural lapse, the Division Bench set aside the order, observing no material showed communication of the advancement. It remanded the matter to the Assistant Commissioner of Income Tax (Exemption Circle) for fresh adjudication after granting the Trust a proper hearing opportunity, emphasizing that such procedural adherence is obligatory to sustain orders under Section 154.

P&H HC upholds Transfer of Assessment From Chandigarh to Goa u/s 127 of Income Tax Act, Citing Efficient Tax Collection and Public Interest

Bhupinder Singh vs Principal Commissioner of Income TaxChandigarh and others CITATION : 2025 TAXSCAN (HC) 2717

The Punjab and Haryana High Court upheld the Principal Commissioner of Income Tax (PCIT), Chandigarh-I's order transferring assessment jurisdiction of Bhupinder Singh from Chandigarh to Panaji, Goa, under Section 127 of the Income Tax Act, 1961. The legal issue concerned whether such transfer was justified given alleged undisclosed cash transactions of ₹10 crore linked to the sale of Queen Distillers and Bottlers Pvt. Ltd., discovered during search and survey operations under Sections 132 and 133A against Blue Ocean Beverages Pvt. Ltd. (Panaji) and its distributor Aaroha Alcobev Distribution Pvt. Ltd. (New Delhi).

Justice Deepak Sibal and Justice Lapita Banerji dismissed Singh's challenge, affirming the PCIT followed due process by issuing show-cause notice under Section 131(1A), hearing objections, and recording reasons despite reliance on CBDT circulars against routine centralization. Citing Panalal Binraj v. Union of India (1956) on the provision's constitutionality and IDS Infotech Ltd. v. PCIT Central-1 (2020) on reasoned public interest transfers, the Court held that modern digital proceedings minimize hardship. It rejected discrimination claims regarding other parties' jurisdictions, emphasizing Section 127's administrative aim to prevent fragmented inquiries into interconnected matters. The Division Bench ruled the transfer served efficient tax collection and public interest, as WhatsApp chats and statements established a nexus to the centralized Blue Ocean investigation, overriding claims of hardship or lack of linkage.

GST Demands for Pre‑Resolution Periods Extinguished Once Plan Approved: Delhi HC

M/S ERA INFRA ENGINEERING LIMITED vs JOINT COMMISSIONER CGSTDELHI SOUTH COMMISSIONERATE & ORS CITATION : 2025 TAXSCAN (HC) 2718

The Delhi High Court quashed demand-cum-show cause notices and consequential orders issued by the GST Department against ERA Infra Engineering Limited, holding that statutory dues for periods prior to NCLT approval of a resolution plan under the Insolvency and Bankruptcy Code, 2016 (IBC) stand extinguished. The legal issue centered on whether government authorities could raise fresh demands exceeding ₹8-9 crore for F.Y. 2017-18 to 2019-20 after participating in the Corporate Insolvency Resolution Process (CIRP), where their ₹4.02 crore claim was crystallized to ₹1.94 crore and bindingly resolved.

Relying on Ghanashyam Mishra & Sons v. Edelweiss Asset Reconstruction Co. (2021) and Sundaresh Bhatt v. CBIC (2023), the Division Bench held that resolution plans achieve finality, extinguishing prior claims not included therein and shielding new management from legacy liabilities. It rejected the Department's argument for post-CIRP assessment jurisdiction, clarifying authorities may quantify operational debts during insolvency but cannot pursue fresh recoveries afterward. The impugned orders were set aside without examining merits, affirming that government participation in CIRP precludes subsequent demands for pre-resolution periods. Justice Prathiba M. Singh and Justice Shail Jain ruled that post-approval on June 11, 2024, by S.A. Infrastructure Consultants Pvt. Ltd., creditors including the GST Department are bound, preventing recovery beyond the plan's scope under Section 53 of the IBC.

Delhi HC Rules Six‑Year Limit u/s 153C Runs From Handing Over of Seized Documents to AO, Not Search Date

PR. COMMISSIONER OF INCOME TAX (CENTRAL), vs DEEPAK KUMARAGGARWAL CITATION : 2025 TAXSCAN (HC) 2719

The Delhi High Court dismissed the Principal Commissioner of Income Tax (Central), Gurugram's appeal, upholding that the six-year limitation under Section 153C of the Income Tax Act, 1961, for "other person" assessments commences from the date seized documents are handed over to the assessee's Assessing Officer (AO), not the original search date. The legal issue arose from a November 2, 2017, search on Prahlad Kumar Aggarwal (Rajesh Jain Group), where documents pertaining to Deepak Kumar Aggarwal were seized and handed over to his AO only on June 24, 2021. This triggered a satisfaction note and assessment for A.Y. 2013-14, which CIT(A) and ITAT quashed as time-barred, covering only A.Y. 2016-17 to 2021-22 per the first proviso to Section 153C.

Justice V. Kameswar Rao and Justice Vinod Kumar rejected Revenue's plea to count from the 2017 search, affirming ITAT's reliance on PCIT v. Ojjus Medicare Pvt. Ltd. (2024) noting the latter awaits Supreme Court scrutiny but aligns with settled law. The Division Bench held no substantial question of law arose, emphasizing strict statutory timelines to prevent indefinite reopening and ensure taxpayer certainty.

ITAT Penalty Confirmation Not Mandatory for Criminal Prosecution in High-Value Income Tax Evasion Cases: Delhi HC

SAUMYA CHAURASIA vs UNION OF INDIA & OTHERS CITATION : 2025 TAXSCAN (HC) 2720

The Delhi High Court ruled that criminal prosecution under Sections 276C and 278E of the Income Tax Act, 1961, for high-value tax evasion does not require confirmation of penalty proceedings or finality from the Income Tax Appellate Tribunal (ITAT). The legal issue arose from sanction orders dated February 10, 11, and 19, 2025, issued by the Principal Commissioner of Income Tax (Central-1), Delhi, under Section 279(1) following a February 2020 search under Section 153C, leading to assessments for A.Y. 2011-12 to 2022-23.

Justice V. Kameswar Rao and Justice Vinod Kumar held no statutory embargo exists linking prosecution to appellate outcomes, as assessment, penalty, and criminal proceedings operate independently, rejecting claims of prematurity despite pending CIT(A) appeals. Dismissing Saumya Chaurasia's writ petition challenging the sanctions and CBDT Circular No. 5/2020 dated January 23, 2020, the Division Bench affirmed Section 279(1) empowers PCIT to authorize prosecution notwithstanding appeal pendency. It found the sanctions reflected due application of mind, not unfettered discretion, violative of Article 14, emphasizing the circular's role in curbing evasion without mandating ITAT finality. The Court declined interference, holding prosecution valid for substantial evasion post-search, with criminal complaints properly filed before the Additional Chief Judicial Magistrate (Special Acts), Tis Hazari Courts, Delhi.

Criminal Prosecution under Companies Act cannot be Sought Directly through Writ Jurisdiction: Delhi HC

SHIV KUMAR BHARDWAJ vs UNION OF INDIA & ANR CITATION : 2025 TAXSCAN (HC) 2721

The Delhi High Court ruled that criminal prosecution for alleged Companies Act, 2013 violations cannot be directly ordered through a writ petition under Article 226 of the Constitution, as such relief is not maintainable in writ jurisdiction. The legal issue involved whether Shiv Kumar Bhardwaj could seek judicial directions compelling the Registrar of Companies (ROC) to initiate prosecution against companies and directors despite his January 2024 complaint and reminders going unaddressed.

Dismissing the petition seeking direct prosecution orders, the Court clarified that writ jurisdiction does not extend to mandating criminal proceedings based solely on a complainant's allegations. It emphasized adherence to the Act's specific processes over collateral constitutional challenges for inaction. While declining interference with ROC functions, the Bench granted liberty to pursue lawful remedies under the Companies Act, upholding procedural sanctity in corporate enforcement. Justice Neena Bansal Krishna held that statutory mechanisms under the Companies Act govern complaint examination and prosecution initiation, rejecting reliance on Article 226 read with Section 482 CrPC to bypass prescribed procedures.

Sanction u/s 151 of Income Tax Act Neither Appealable nor Revisable, Attains Finality: Uttarakhand HC

Principal Commissioner of Income Tax (Central), Kanpur vs RajanRajesh Kumar CITATION : 2025 TAXSCAN (HC) 2722

The Uttarakhand High Court ruled that sanctions granted or refused under Section 151 of the Income Tax Act, 1961, for reassessment proceedings attain finality, being neither appealable nor revisable under the Act. The legal issue concerned whether the Assessing Officer (AO) could repeatedly resubmit proposals for sanction after prior refusals by the competent authority, particularly when based on the same material like loose sheets from third-party searches.

Chief Justice G. Narendar and Justice Subhash Upadhyay held that Chapter XX (Sections 246, 246A, 253, 263, 264) provides no remedies against Section 151 orders, reflecting parliamentary intent for finality to prevent review-like mechanisms absent statutory conferral. Dismissing the Principal Commissioner of Income Tax's appeal against ITAT's quashing of reassessments for A.Y. 2015-16 and 2016-17, the Division Bench found the fifth sanction mechanically granted without fresh material or independent application of mind, despite earlier rejections for lack of corroboration. It emphasized strict compliance with Sections 147-151 safeguards, given reassessment's civil consequences, and clarified Section 263 revises only subordinate orders, not those of the sanctioning authority. Absent corroboration for Revenue assumptions contradicting prior Department records, the proceedings stood vitiated ab initio.

Gujarat HC Orders Interim Disbursement in Liquidation, Directs Independent CA to Re-Verify Workmen Claims

GUJARAT ENGINEERING AND GENERAL KAMDAR UNION vs OFFICIALLIQUIDATOR, APS STAR INDUSTRIES LIMITED IN LIQUIDATION & ANR CITATION : 2025 TAXSCAN (HC) 2723

The Gujarat High Court permitted interim disbursement of ₹50.22 crore from liquidation sale proceeds of APS Star Industries Limited (wound up in 2008) to secured creditors and workmen, while directing re-verification of Vadodara-based workers' claims under Sections 529 and 529A of the Companies Act, 1956. The legal issue involved objections by the Gujarat Engineering & General Kamdar Union to prior Chartered Accountant verification, alleging discrepancies in wages, allowances, gratuity adjustments, and inclusion of retired/deceased workers amid ₹58 crore additional proceeds from Nashik and Dharwad asset sales in 2024.

Justice Mauna M. Bhatt approved interim distribution per the January 2023 approved ratio (post-₹75 crore prior payouts), holding back ₹7.77 crore for Vadodara claims pending fresh scrutiny. The Court mandated appointment of an independent Chartered Accountant (distinct from the prior verifier) for transparent re-verification, granting unions opportunity to submit documents and be heard within a stipulated timeframe, followed by Official Liquidator's fresh report. Recipients must furnish refund undertakings with interest for any excess determined later. Justice Bhatt clarified the disbursement as purely interim, preserving all final distribution rights without prejudice, to be finalized post-remaining asset sales, balancing stakeholder equity with procedural fairness in prolonged liquidation.

Mere Testing of Goods at CRCL Delhi or Presence of DRI Office Does Not Create Jurisdiction: Delhi HC

M/S RR FASHION vs UNION OF INDIA AND ORS CITATION : 2025 TAXSCAN (HC) 2724

The Delhi High Court ruled that the mere location of the Directorate of Revenue Intelligence (DRI) office or Central Revenue Control Laboratory (CRCL) in Delhi does not confer territorial jurisdiction over writ petitions challenging seizures of imported goods when the import, seizure, storage, and importer's location all occur outside Delhi. The legal issue arose from May 2025 seizure memos issued by DRI Delhi against RR Fashion, Yashi Fashion, and SS Impex for PVC-coated fabrics imported via a Tamil Nadu SEZ, warehoused there, and served in Chennai.

Justice Prathiba M. Singh and Justice Renu Bhatnagar held that samples sent to CRCL Delhi for testing represent an insignificant cause of action, as the real dispute of import, seizure, and service unfolded entirely in Tamil Nadu. Rejecting petitioners' reliance on DRI/CRCL presence under Article 226, the Division Bench applied the forum conveniens doctrine, emphasizing substantial cause of action over peripheral elements like testing at a specialized facility. It dismissed the petitions for lack of jurisdiction, granting liberty to approach the Madras High Court or appropriate forum, clarifying that writ relief must align with where core facts arise to prevent forum shopping in customs enforcement matters.

Bhagavad Gita, Vedanta and Yoga Not Religious activities Per Se: Madras HC sets aside FCRA rejection of Trust Teaching Gita, Yoga

Arsha Vidya Parampara vs Union of India CITATION : 2025 TAXSCAN (HC) 2725

The Madurai Bench of the Madras High Court ruled that activities involving the study of the Bhagavad Gita, Vedanta philosophy, and Yoga do not automatically qualify as “religious activities” under Section 11 of the Foreign Contribution (Regulation) Act, 2010 (FCRA), disqualifying organizations from registration. The legal issue arose from the Ministry of Home Affairs' rejection of Arsha Vidya Parampara Trust's FCRA application in September 2025, citing unauthorized foreign fund receipts and perceived religious nature due to its teachings on these subjects.

Justice GR Swaminathan held that the Bhagavad Gita constitutes moral science and civilizational heritage are not confined to religion citing the Allahabad High Court's observation in Shyamal Renjan Mukherjee v. Nirmal Ranjan Mukherjee linked it to freedom struggle ideals under Articles 51-A(b) and (f) of the Constitution. Setting aside the rejection, the Court noted the trust's compounding of unauthorized receipts under Section 41 FCRA wiped the slate clean, precluding its use as grounds, while a new allegation of fund transfers violated natural justice by lacking prior notice. It mandated authorities to assess organizational nature per FCRA Section 11 with evidence-based conclusions, not assumptions. The matter stands remitted for fresh consideration, emphasizing administrative decisions require substantial evidence over superficial labels.

IPL Broadcast Equipment Removed from SEZ as for ‘DEMO’ instead of ‘Commercial Purpose’: Delhi HC Upholds ₹9.8 Cr Customs Duty, Cuts Penalty

EASTERN BROADCAST SOLUTIONS PVT. LTD & ORS.vs THECOMMISSIONER OF CUSTOMS CITATION : 2025 TAXSCAN (HC) 2726

The Delhi High Court upheld a customs duty demand of nearly ₹9.8 crore against Eastern Broadcast Solutions Pvt. Ltd. for improperly removing broadcasting equipment from the Arshiya Free Trade and Warehousing Zone (SEZ) at Panvel, Maharashtra, into the Domestic Tariff Area by declaring it for “DEMO” purposes, when it was actually used for commercial IPL broadcasting under a BCCI contract with Broadcast Solutions Pvt. Ltd., Singapore. The legal issue centered on violation of SEZ exemption conditions, as investigated by the Directorate of Revenue Intelligence (DRI), which revealed revenue-generating live cricket broadcasts rather than mere demonstration, denying duty-free treatment and triggering full liability on imports from December 2012 to March 2013.

Justice Prathiba M. Singh and Justice Shail Jain affirmed the Customs, Central Excise and Service Tax Settlement Commission's order, holding exemptions conditional on accurate end-use declarations. Granting partial relief, the Division Bench restricted the penalty on the petitioner to ₹50 lakh, quashing remaining penalties subject to compliance. It emphasized SEZ procedural relaxations demand strict adherence, with inconsistent declarations vitiating benefits upon proven commercial deployment. The ruling reinforces that duty liability crystallizes on misuse, irrespective of settlement proceedings.

Virtual Service PE Not Recognised under DTAA: Delhi HC Rules in Clifford Chance Case

COMMISSIONER OF INCOME TAX vs CLIFFORD CHANCE PTE LTD CITATION : 2025 TAXSCAN (HC) 2727

The Delhi High Court ruled in favor of Clifford Chance Pte Ltd, holding that a "virtual service permanent establishment (PE)" is not recognized under Article 5(6) of the India-Singapore Double Taxation Avoidance Agreement (DTAA), rendering the firm's legal advisory receipts of ₹15.55 crore (AY 2020-21) and ₹7.97 crore (AY 2021-22) non-taxable in India absent a PE. The legal issue stemmed from the Assessing Officer's (AO) attribution of income to a service PE, claiming 120 employee days in India exceeded the 90-day threshold under Article 5(6)(a) for A.Y. 2020-21, and invoking a virtual PE for A.Y. 2021-22 despite no physical presence.

Justice V. Kameswar Rao and Justice Vinod Kumar upheld ITAT's deletion of additions, clarifying that only actual client services "furnished within India through employees or other personnel" count, excluding vacation (36 days), business development (35 days), and overlapping (5 days) yielding just 44 qualifying days below the threshold. Rejecting Revenue's pleas based on OECD reports, foreign precedents (South Africa, Spain, ABB FZ-LLC, Verizon, Hyatt), and domestic "Significant Economic Presence" amendments, the Division Bench emphasized Article 5(6)'s plain text mandates physical nexus and actual service rendition within India. Section 90(2) ensures DTAA precedence over unilateral changes, precluding judicial importation of virtual PEs absent treaty language. For A.Y. 2021-22, zero presence meant no PE whatsoever. Business connection profits thus escaped Indian tax, reinforcing treaty interpretation fidelity over policy expansions.

₹95 Crore GST Evasion via Online Gaming Transactions: Rajasthan HC Rejects Bail to Payment Aggregator Facilitators

Manoj Kumar vs Jagdish CITATION : 2025 TAXSCAN (HC) 2728

The Rajasthan High Court denied bail to Manoj Kumar and Jagdish, accused of facilitating ₹95.77 crore GST evasion through online gaming revenues routed via payment aggregators under Sections 132(1)(i) and 132(5) of the Central Goods and Services Tax Act, 2017. The legal issue involved whether facilitators onboarding entities like M/s Invoestr Global Pvt. Ltd. and others with UPI/virtual payment addresses despite NIL returns and cancelled registrations qualified as "deemed suppliers," exceeding the ₹5 crore cognizable/non-bailable threshold.

Justice Sameer Jain held the economic offence's scale, electronic trails, cross-border links, and tampering risks (digital records, third-party intermediaries) justified denial, distinguishing it from ordinary crimes impacting national revenue. Rejecting claims of mere commission-based service provision and completed investigation, the Court noted statements under Section 70 CGST Act admitted credential exchanges for onboarding, with evasion escalating from ₹53.21 crore initial receipts to ₹342 crore total flows. It condemned the accused's "unclean hands" in minimizing evasion magnitude, emphasizing strict bail approach for deep financial conspiracies. Observations remain bail-stage limited, without prejudice to trial merits.

Exporter Seeks Manual Credit of Drawback Benefits after ICEGATE Portal Fails to Enable Credit: Madras HC Orders to file Representation before Customs

Monesh Bhajalal Hinduja vs Commissioner of Customs CITATION : 2025 TAXSCAN (HC) 2729

The Madras High Court declined to directly mandate manual crediting of Drawback and RoSCTL benefits (Scheme Code 60) to exporter Monesh Bhajalal Hinduja (proprietor, Kartar Exim) despite ICEGATE portal failure, directing a prior formal representation to Customs authorities under the unchallenged Order-in-Original, by Commissioner of Customs, Chennai IV. The legal issue involved enforcement of converted shipping bills from Drawback Scheme (Code 19) to Drawback plus RoSCTL, where technical glitches prevented bank crediting post-finality.

Justice Abdul Quddhose held writ of mandamus premature absent exhaustion of administrative remedies. Instead, the Court ordered the petitioner to submit a fresh representation within two weeks, mandating Customs and Directorate General of Systems & Data Management to afford proper hearing and decide within a fixed timeframe per law. This procedural safeguard ensures technical implementation aligns with statutory mechanisms before judicial intervention, preserving departmental autonomy in benefit disbursal.

Even Ordinary Act of Parliament Cannot Override Final Court Orders: Madras HC sets aside Compounding Demand Based on 2024 CBDT Guidelines

K.M.Mammen vs The Principal Commissioner of Income Tax CITATION : 2025 TAXSCAN (HC) 2730

The Madras High Court ruled that CBDT compounding guidelines, including the revised version dated 17.10.2024, cannot override or dilute final judicial orders attaining finality between parties, even as subordinate legislation under the Explanation to Section 279(6) of the Income Tax Act, 1961. The legal issue arose from a fresh ₹1.29 crore demand raised in June 2025 against senior citizen K.M. Mamen for prosecution compounding under Sections 276C and 277, despite prior Madras High Court and Supreme Court directives mandating application of 2008 CBDT Guidelines prevailing at the first application.

Justice C. Saravan held that such retrospective imposition nullifies crystallized rights, rejecting the Department's plea for guideline precedence. Relying on Supreme Court's Madan Mohan Pathak v. Union of India, the Court observed that even parliamentary Acts cannot touch court orders, let alone circulars like F.No.285/08/2014-IT(Inv.V). It clarified Section 279(6) empowers administrative guidelines but not judicial override post-finality across litigation rounds. Setting aside the 11.06.2025 communication, the Bench directed recomputation strictly per 2008 Guidelines adjusting prior payments within three months, reinforcing judicial supremacy over executive revisions in tax prosecutions.

New Compounding Guidelines of CBDT apply Only to Fresh Applications: Madras HC Clarifies Scope of S. 279

K.M.Mammen vs The Principal Commissioner of Income Tax CITATION : 2025 TAXSCAN (HC) 2730

The Madras High Court ruled that revised CBDT Compounding Guidelines dated 17.10.2024 cannot be retrospectively applied to pending or remanded proceedings under Section 279 of the Income Tax Act, 1961, applying only to fresh applications as per Paragraph 3.2 of the guidelines. The legal issue arose from a 2025 demand of ₹1.29 crore against senior citizen K.M. Mamen in his decade-long prosecution under Sections 276C and 277 (undisclosed foreign accounts), despite judicial finality across High Court, Division Bench, and Supreme Court directing application of 2008 CBDT Guidelines prevailing at his 2011 application post tax, interest, penalty payments, and age considerations.

Justice C. Saravanan held the Explanation to Section 279(6) enables administrative instructions but not override of vested rights from court orders. Setting aside the impugned communication, the Court clarified refiled applications per judicial remand do not constitute "fresh applications," precluding new guideline imposition. It directed recomputation strictly under 2008 Guidelines, adjusting prior payments, reinforcing that executive revisions yield to crystallized judicial entitlements in concluded matters.

Foreign-Marked Nearly 20 Kg Gold Seized in Town Area Not Presumptively Smuggled Without Corroborative Evidence: Delhi HC quashes Penalty

COMMISSIONER OF CUSTOMS vs RAJESH KUMAR CITATION : 2025 TAXSCAN (HC) 2731

The Delhi High Court ruled that foreign-marked gold seized in a town area like Kucha Mahajani, Chandni Chowk, cannot be presumed smuggled absent corroborative evidence linking it to cross-border movement, and penalty proceedings under Section 112(b) of the Customs Act, 1962, abate upon the accused's death. The legal issue arose from the Commissioner of Customs (Preventive)'s appeal against CESTAT's order setting aside confiscation and penalty on 20 kg gold and currency seized from bullion broker Rajesh Kumar by the Directorate of Revenue Intelligence.

Justice Prathiba M. Singh and Justice Shail Jain upheld CESTAT's finding of no mens rea or smuggling proof for town seizures, distinguishing them from border/customs area cases. Noting Rajesh Kumar's death on 4 November 2025 during appeal pendency and prior gold disposal, the Division Bench held penalty abated entirely, while setting aside CESTAT's confiscation interference as moot neither party claimed ownership, rendering questions of law non-adjudicable. It rejected the Department's unclaimed possession argument, emphasizing evidentiary burden remains on Revenue. All pending applications closed, balancing procedural abatement with substantive evidentiary deficits.

Once Refund upheld in Appeal, GST Dept Cannot Initiate Recovery Proceedings on Same Issue: Orissa HC

Auroglobal Comtrade Pvt. Ltd vs Joint Commissioner CITATION : 2025 TAXSCAN (HC) 2732

The Orissa High Court ruled that GST authorities cannot invoke Section 73 of the Central Goods and Services Tax Act, 2017, to recover a refund already sanctioned and upheld on merits by the appellate authority, as subordinate officers remain bound by such decisions absent higher forum reversal. The legal issue arose from a demand-cum-show cause notice targeting Auroglobal Comtrade Pvt. Ltd.'s refund of accumulated ITC on zero-rated exports, initially partially rejected for short shipment but sanctioned post-response, affirmed by Additional Commissioner (Appeals) despite departmental appeal prompted by Commissioner's review under Section 107.

Chief Justice Chakradhari Sharan Singh and Justice M.S. Sahoo held the fresh proceedings bypassed judicial finality, attempting indirectly what appeal failure precluded directly. Quashing the notice and demand summary, the Division Bench clarified the Commissioner's review power under Section 107 serves only administrative appeal authorization, losing force post-adjudication. It condemned the maneuver as violating judicial discipline, fostering uncertainty and endless litigation contrary to the tax administration's statutory scheme. Subordinate authorities must honor appellate merits until overturned, preventing collateral nullification through parallel recovery.

ITRs are Authentic Proof of Income in MACT Claims: Calcutta HC enhances Compensation from ₹15 Lakh to ₹39 Lakh

SANDHYA RANI JANA AND ANR vs ICICI LOMBARD GENERAL INSURANCE CO.LTD. AND ANOTHER CITATION : 2025 TAXSCAN (HC) 2733

The Calcutta High Court enhanced compensation from ₹15.05 lakh to ₹39 lakh for a goldsmith killed in a 2014 road accident under Section 166 of the Motor Vehicles Act, 1988, holding Income Tax Returns (ITRs) as statutory, authentic proof of self-employed income that tribunals cannot arbitrarily disregard or review. The legal issue arose from the Fast Track Court, Paschim Medinipur's flat ₹10,000 monthly assessment despite three years' ITRs showing ₹3,18,470 annual income for A.Y. 2014-15, demanding unfiled bank passbooks.

Justice Biswaroop Chowdhury ruled ITRs filed lifetime preclude inflation scope, binding tribunals post-tax authority acceptance, distinguishing self-employed declarations from salaried slips. Relying on Supreme Court precedents including Surendar Kaur Singh v. United India Insurance Co. Ltd. (2020), the Court adopted A.Y. 2014-15 income, adding 40% future prospects and 17x multiplier, plus funeral expenses and filial consortium. It rejected insurer ICICI Lombard's bank statement insistence, as tribunals lack jurisdiction to reassess tax-verified earnings. The enhanced award carries 6% interest from claim filing, directing balance deposit.

Benami Attachment Cannot Breach the “Impregnable Firewall” of NCLT‑Approved Resolution Plan: Madras HC

Milan Textile Enterprises Pvt. Ltd vs The Initiating Officer CITATION : 2025 TAXSCAN (HC) 2734

The Madras High Court ruled that an NCLT-approved Resolution Plan creates an "impregnable firewall" under Section 32A(2) of the Insolvency and Bankruptcy Code, 2016 (IBC), shielding corporate debtor property including benami-attached assets from enforcement under Section 24 of the Prohibition of Benami Property Transactions Act, 1988 (PBPT Act). The legal issue involved Milan Textile Enterprises Pvt. Ltd.'s challenge to provisional (01.11.2019) and continuation (28.01.2020) attachments over "Milanem Mall," where new CIRP management invoked IBC Section 32A protection despite a pending PBPT Appellate Tribunal appeal by erstwhile promoters.

Justice Swaminathan upheld writ maintainability per S.J.S. Business Enterprises v. State of Bihar (2004), as the Tribunal lacks IBC jurisdiction, rejecting parallel remedy bars from Jai Singh v. Union of India (1977). Applying Solidaire India Ltd. v. Fairgrowth Financial Services Ltd. (2001), the Court held IBC's later enactment (2016) prevails over PBPT Act (1988) via Section 238's non-obstante clause against Section 67, reaffirmed in Kotak Mahindra Bank Ltd. v. Girnar Corrugators Pvt. Ltd. (2023). Section 32A(2) bars "any action" on pre-CIRP offence-related "property of the corporate debtor", unqualifiedly encompassing benami holdings where the benamidar retains title pre-confiscation—like a "temple hundiyal" coin. Rejecting Revenue's exclusions and Section 57 nullification, the Bench clarified resolution management changes are not equal to "transfer."

Service Tax on Access to Amusement Facilities Unconstitutional: Kerala HC sets aside Demand VENGAD RESORTS vs GOPIKRISHNAN NAMBIAR CITATION : 2025 TAXSCAN (HC) 2735

The Kerala High Court declared the levy of service tax on "access to amusement facilities" unconstitutional, holding Parliament lacks legislative competence under Entry 97 of List I (residuary powers) when such activities fall squarely under the State's exclusive domain via Entry 62 of List II (entertainment tax). The Division Bench of Justice A. Muhamed Mustaque and Justice Harisankar V. Menon set aside a Single Judge's upholding of the demand against Vengad Resorts & Retreats Ltd., an amusement park operator, post the omission of Section 66D(j) from the Finance Act, 1994's negative list effective June 1, 2015. The Court ruled the Kerala Local Authorities Entertainments Tax Act, 1961, comprehensively covers admission and amusement itself, leaving no distinct "service" aspect for Union taxation.

Rejecting Revenue's "aspect theory" application, the Bench held it cannot justify double taxation where subject matter, incidence, and measure overlap substantially between state entry tax and proposed service tax. It emphasized taxing powers differ from regulatory ones, precluding re-characterization of state-assigned subjects as Union "services" absent statutory segregation mechanisms in the Finance Act. Citing Supreme Court principles on federal division, the ruling upholds states' primacy over entertainment/amusement levies, deeming the service tax effort an ultra vires encroachment.

GST Clearance Certificate Issued by CA Not Acceptable when Tender Involves Services: Bombay HC

RAJESH PRAFUL CHORDIYA vs THE STATE OF MAHARASHTRA CITATION : 2025 TAXSCAN (HC) 2736

The Bombay High Court ruled that for government tenders involving compulsory GST services like pendal, furniture rental for 2025 Zilla Parishad elections, a GST clearance certificate must emanate from the GST Department itself, not a Chartered Accountant, as the latter lacks verification of actual tax payments. The legal issue arose from rejection of Rajesh Praful Chordiya's technical bid by District Collector, Chhatrapati Sambhajinagar, solely for submitting a CA-issued certificate despite the tender mandating a "GST clearance certificate" valid to March 2025.

Justice Vibha Kankanwadi and Justice Hiten S. Venegavkar held this an ineliminable, substantial condition, rejecting pleas for flexibility despite petitioner's possession of a valid departmental certificate dated 17.10.2025 as unuploaded without explanation and acceptance elsewhere. Dismissing the writ at threshold, the Division Bench clarified CA certificates cannot substitute official ones, especially sans personal tax payment knowledge. It distinguished election tenders' strict compliance needs, unbound by other districts' leniency, and precluded challenge to rival bidder post-invalidity. Supreme Court tender rigidity precedents yielded to unambiguous departmental mandate, upholding bid disqualification.

Bombay HC Refuses to Interfere with Anti-Corruption Bureau Summons at Enquiry Stage

Nitin Mahadev Kale vs Union Of India & Ors CITATION : 2025 TAXSCAN (HC) 2737

The Bombay High Court refused to quash summons issued by the Anti-Corruption Bureau (ACB) to Nitin Mahadev Kale during an ongoing enquiry triggered by his own 22.08.2018 complaint, holding judicial intervention premature absent conclusion or coercive action. The legal issue involved whether writ relief under Article 226 was warranted at the enquiry stage for summons by an ACB Police Officer.

Justice M.S. Karnik and Justice Ajit B. Kadethankar ruled enquiries must proceed to logical conclusion without interference, as no finality exists and the process stems from the petitioner's initiation. Dismissing the writ, the Division Bench clarified ACB summons facilitate legitimate investigation, not harassment, while directing the petitioner to pursue his separate Income Tax complaint against his brother through appropriate departmental remedies.

No Interest on Belated Excise Duty where Situation is Revenue-Neutral: Calcutta HC Upholds CESTAT Order in SAIL Case

Commissioner of Central Excise Bolpur Commissionerate vs SteelAuthority of India Limited CITATION : 2025 TAXSCAN (HC) 2738

The Calcutta High Court upheld CESTAT's order denying interest under Section 11AB of the Central Excise Act, 1944, on belated duty payments exceeding ₹15 crore confirmed under Section 11A for excisable goods cleared by Steel Authority of India Limited (SAIL) to job workers, where the situation remained revenue-neutral due to full Cenvat credit availability to downstream units. The legal issue post-Supreme Court remand centered on whether mandatory interest survives as compensatory despite no exchequer loss, following valuation disputes attaining finality.

Justice Rajarshi Bharadwaj and Justice Uday Kumar affirmed CESTAT's factual finding of revenue neutrality, rejecting Revenue's reliance on SKF India Ltd. and SAIL v. CCE, Raipur for automatic levy irrespective of credit flow. Dismissing the Commissioner of Central Excise, Bolpur's appeal, the Division Bench held interest presupposes pecuniary prejudice absent in credit-neutral chains, distinguishing it from non-waivable duty demands (where refund stood barred). CESTAT appropriately confined relief to interest alone, committing no error in waiving it where no compensatory purpose serves, reinforcing that revenue-neutral delays warrant no penal accretion.

Infringements Allegedly Occurred in Delhi, Not WB: Calcutta HC Dismisses Kuwait Based Company’s Challenge to DGTR ADD Findings

Equate Petrochemical Company K.S.C.C. vs Directorate General ofTrade Remedies (DGRT) & Anr CITATION : 2025 TAXSCAN (HC) 2739

The Calcutta High Court dismissed a writ petition by Kuwait-based Equate Petrochemical Company K.S.C.C. challenging DGTR's final findings, recommending anti-dumping duty (ADD) on Mono Ethylene Glycol (MEG) imports from Kuwait, Saudi Arabia, and Singapore under the Customs Tariff Act, 1975, and Anti-Dumping Rules, 1995. The legal issue centered on territorial jurisdiction under Article 226, where the petitioner alleged procedural lapses like non-disclosure of facts, arbitrary dumping margins, and natural justice violations, claiming downstream business injury in West Bengal via Haldia Port imports.

Justice Om Narayan Rai held no part of the cause of action arose in the State, as DGTR's Delhi-headquartered investigation, communications, and findings occurred entirely outside West Bengal. Rejecting the commercial injury argument as mere "consequential effect" rather than legally cognizable cause of action, the Court distinguished anticipated Kolkata business loss from core lis involving Article 14 fair treatment claims tied to out-of-state proceedings. It clarified import destinations or customer locations hold no jurisdictional weight against Designated Authority's location and recommendatory nature, with statutory appeals lying to CESTAT under Section 9C. Without merits adjudication, the petition stood dismissed on threshold maintainability grounds.

Passenger Carrying 250 gm Undeclared Gold Bar through Green Channel Liable to Confiscation: Delhi HC

RUMAN KHAN vs UNION OF INDIA & ORS CITATION : 2025 TAXSCAN (HC) 2740

The Delhi High Court upheld the confiscation of a 250-gram undeclared gold bar and ₹1,40,000 penalty imposed on passenger Ruman Khan under the Customs Act, 1962, for passing through the green channel at Indira Gandhi International Airport (Terminal-3) after arriving from Saudi Arabia. The legal issue involved whether the gold qualified as a "personal effect" under Baggage Rules, 2016, absent declaration, and procedural challenges to Section 110(2) compliance, including alleged inconsistencies in oral/written show cause notice and waiver.

Justice Prathiba M. Singh and Justice Shail Jain affirmed the Order-in-Original dated 14 October 2025, holding green channel misuse evidenced smuggling intent, with the bar's weight precluding personal effect status. Rejecting procedural lapse claims, the Division Bench noted the petitioner received personal hearing, filed submissions during writ pendency (where disposal was stayed), and himself requested written notice waiver findings supported by statements, travel history, and airport conduct. It emphasized deliberate non-declaration triggers absolute confiscation, warranting no interference absent material perversity. The writ stood dismissed, preserving appellate remedies.

Gold Bent into Kada Shape is Raw Gold, Not Jewellery: Delhi HC directs to avail Statutory Appeal against Customs Seizure

ZUBAIDA AZIZ THROUGH SPA PARVEZ MALIK vs THE COMMISSIONER OFCUSTOM CITATION : 2025 TAXSCAN (HC) 2741

The Delhi High Court ruled that gold bent into the shape of a kada constitutes raw gold, not jewellery, upholding confiscation of 116 grams seized from pilgrim Zubaida Aziz at Indira Gandhi International Airport on 29 February 2024, while directing her to pursue statutory appeal against the Order-in-Original by Assistant Commissioner of Customs, Terminal-3. The legal issue involved classification under Baggage Rules, 2016, and procedural claims of no show cause notice or personal hearing under Section 110(2) of the Customs Act, 1962.

Justice Prathiba M. Singh and Justice Shail Jain physically inspected the items, confirming raw form absent ornamentation, rejecting jewellery status. Dismissing writ interference post-adjudication, the Division Bench noted waiver of notice/hearing, with Revenue producing records. It granted liberty to appeal to the Commissioner (Appeals) by 31.01.2026, condoning limitation for merits hearing, preserving natural justice.

Old used Gold Chain is Personal Effect, One New iPhone Permissible to Import: Delhi HC Orders Immediate Release

PAWAN SHARMA vs THE COMMISSIONER OF CUSTOMS CITATION : 2025 TAXSCAN (HC) 2742

The Delhi High Court ruled that an old, used gold chain qualifies as a personal effect exempt from confiscation under Baggage Rules, 2016, and one new iPhone 15 Pro Max is permissible for import without duty, ordering immediate release of both items seized at Indira Gandhi International Airport on 10 January 2024. The legal issue challenged the Order-in-Original by Commissioner of Customs, imposing absolute confiscation of the chain, ₹15,000 redemption fine on the iPhone, and ₹55,000 penalty.

Justice Prathiba M. Singh and Justice Shail Jain physically inspected the sealed items, confirming the chain's worn condition as personal use not commercial and the phone's single-unit allowance. Setting aside the order, the Division Bench held confiscation, fine, and penalty unsustainable absent smuggling intent or excess quantity, distinguishing used personal effects from new/dutiable goods. Release stands directed sans duty/penalty-warehousing charges only, with petitioner to complete formalities by 7.01.2026. The writ disposed preserves Customs' procedural discretion while enforcing evidentiary classification.

Worn Rolex Watch Carried by Passenger is ‘Personal Effect’, Cannot be Detained as Import: Delhi HC

RANVIR SRA vs COMMISSIONER OF CUSTOMS CITATION : 2025 TAXSCAN (HC) 2743

The Delhi High Court ruled that a worn Rolex watch qualifies as a "personal effect" under Baggage Rules, 2016, exempt from detention or customs import treatment, directing its immediate release to Canadian OCI cardholder Ranvir Sra seized at Indira Gandhi International Airport. The legal issue challenged prolonged detention absent show cause notice, supported by purchase invoice and serial number match confirming pre-travel ownership and personal use.

Justice Prathiba M. Singh and Justice Shail Jain physically inspected the sealed item, verifying its worn condition not new/commercial distinguishing it from dutiable imports.Setting aside detention, the Division Bench held customs must differentiate personal valuables/jewellery for individual use from commercial goods, with settled law precluding arbitrary seizure of worn items. It waived warehousing charges, mandating formalities completion. The writ disposed reinforces evidentiary thresholds for personal effects, barring indefinite holds sans proceedings.

SVLDR Benefit Not Available For Service Tax SCN Issued After 30 June 2019: Delhi HC

VARNER RETAIL SERVICES SOUTH ASIA PVT. LTD vs ASSISTANTCOMMISSIONER DIVISION CITATION : 2025 TAXSCAN (HC) 2745

The Delhi High Court ruled that Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDR) benefits cannot extend to show cause notices issued after the 30 June 2019 cut-off, even if linked to earlier disputes like CENVAT credit refunds under 2004 Rules, upholding rejection of Varner Retail Services South Asia Pvt. Ltd.'s declaration for a second notice dated 19.12.2019 . The legal issue challenged Designated Committee's 2.03.2020 rejection and adjudication order dated 30.06.2023 confirming ₹46.86 lakh service tax demand plus interest/penalties, arguing the second notice continued the first.

Justice Prathiba M. Singh and Justice Shail Jain held eligibility hinges strictly on issuance date and pre-cut-off quantification, not factual overlap or CBIC circular/FAQs permitting post-deadline filings in limited cases. Affirming independent notice status despite refund origins, the Division Bench rejected "splitting" claims, as the second SCN quantified fresh demands leading to separate adjudication. It clarified mere references to prior proceedings do not merge them for SVLDR purposes. Granting procedural relief for prolonged writ pendency, the Court permitted statutory appeal against the 2023 order by 31.01.2026.

Subsidy from Govt Rehabilitation Scheme Milk Producers’ Co-operative is Capital Receipt, Not Taxable as Revenue Receipt: Madras HC

Dharmapuri District Co-operative vs Deputy Commissioner ofIncome Tax CITATION : 2025 TAXSCAN (HC) 2746

The Madras High Court directed the Income Tax Department to treat ₹3.5 crore government grant-in-aid under the Central Sector "Assistance to Cooperatives" scheme as a capital receipt, not taxable revenue, for Dharmapuri District Co-operative Milk Producers Union Ltd for A.Y. 2007-08. The legal issue challenged ITAT/CIT(A) treatment of rehabilitation subsidies equally funded by Union/State governments as performance-linked income, despite administrative approval explicitly for liability clearance (DCS loans, other unions, employers) amid financial distress.

Chief Justice Manindra Mohan Shrivatsava and Justice G. Arul Murugan applied the Supreme Court's "purpose test" from CIT v. Ponni Sugars & Chemicals Ltd., holding grant nature determined by object (rehabilitation via debt payoff), not disbursement mechanisms or oversight conditions. Rejecting Revenue's performance-link argument, the Division Bench viewed stipulations as utilization safeguards, not revenue character-alterers. The Union's farmer-support role (milch animals, infrastructure, veterinary services) reinforced capital infusion for revival, pulling it from crunch without trading augmentation. Reversing assessment under Section 143(1), the Court allowed the appeal, mandating capital receipt classification over revenue, aligning with subsidy precedents prioritizing rehabilitative intent.

CPC fails to issue Intimation before Passing Rectification Order w.r.t. Defective Form 3CD: Madras HC directs to Issue Fresh Intimation

NLC Tamil Nadu Power Limited vs Centralized Processing Centre CITATION : 2025 TAXSCAN (HC) 2747

The Madras High Court directed the Centralized Processing Centre (CPC) to issue a fresh intimation under Section 143(1) of the Income Tax Act, 1961, following a rectification order dated 01.06.2023 under Section 154(3) passed without prior notice to NLC Tamil Nadu Power Limited. The legal issue stemmed from defects in the original Form No.3CD filed under Section 44AB on 29.12.2020, leading to rectification of a prior 143(1) intimation dated 29.12.2021 itself uncommunicated due to technical glitches.

Justice C. Saravanan excluded the writ pendency period until proper notification from Section 153 limitation calculations, noting the petitioner's post-order revised Form 3CD filing on 02.03.2024. Acknowledging departmental concessions on procedural lapses via Senior Standing Counsel Mrs. S. Premalatha, the Court remitted the matter for fresh CPC intimation, ensuring compliance with notice requirements. It disposed of the writ without costs, balancing taxpayer rectification rights against administrative delays while preserving statutory timelines post-remand.

Pre-Consultative Process under Central Excise Act is Mandatory Except in Cases of Intention to Evade Tax: Madras HC

M/s.Tamilnadu Transmission Corporation Ltd. vs The CommissionerOf GST Central Excise (audit) CITATION : 2025 TAXSCAN (HC) 2748

The Madras High Court ruled that the pre-consultation process under CBIC Master Circular No.1053/02/2017-CX is mandatory for Central Excise disputes except where fraud, collusion, willful misstatement, suppression, or tax evasion intent is proven precluding unilateral departmental exemption claims. In a batch of 30 matters, Dr. Justice Anita Sumanth and Justice Mummineni Sudheer Kumar quashed impugned show cause notices/assessment orders, remanding proceedings to the pre-consultation stage. The legal issue challenged Revenue's bypass of this alternate dispute resolution mechanism, assuming evasion without evidence.

Relying on Bombay HC's Rochem Separation Systems (India) Pvt. Ltd. v. Union of India mandating pre-consultation as non-formal, the Division Bench held CBIC circulars binding per precedents including Back Office IT Solutions Pvt. Ltd. v. Union of India. It clarified extended limitation invocation under the Central Excise Act, 1944, requires factual proof of evasion intent, not unilateral assumption, affording assessees judicial challenge opportunity. Absent such evidence, pre-consultation remains obligatory, preventing circumvention via self-serving classifications.

Parallel Summons by State Excise & SCN by CGST: Himachal Pradesh HC Directs Authorities to Coordinate to Avoid Multiple Adjudication

M/s J.B. Rolling Mills Limited vs Union of India & others CITATION : 2025 TAXSCAN (HC) 2749

The Himachal Pradesh High Court addressed parallel proceedings under Section 6(2)(b) of the Central Goods and Services Tax Act, 2017, directing State Excise and Central GST authorities to coordinate and avoid multiple adjudications on the same subject matter. The legal issue arose from M/s J.B. Rolling Mills Limited's challenge to overlapping summons/notices State and Central issuing, and a SCN under Section 74 CGST Act. Justice Vivek Singh Thakur and Justice Sushil Kukreja applied Supreme Court's Armour Security (India) v. Commissioner, CGST, Delhi East (2025 TAXSCAN (SC) 240), prohibiting duplicate probes once one authority commences.

Mandating compliance per Armour Security paragraphs 97(a)-(c), the Division Bench instructed the petitioner to honor State summons, disclose Central SCN, and prompt State-Central verification. It preserved all merits contentions without opining on notice validity, emphasizing intelligence-based initiation permissible but parallel adjudication barred. Respondents affirmed statutory adherence, ensuring coordinated enforcement absent forum shopping.

COFEPOSA Detention Sustained: Karnataka HC Rejects Habeas Corpus Plea in ₹12.56 Crore Gold Smuggling Case

RAMA RAJU vs JOINT SECRETARY COFEPOSA GOVERNMENT OF INDIA CITATION : 2025 TAXSCAN (HC) 2750

The Karnataka High Court upheld a preventive detention order under Section 3 of the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 (COFEPOSA), against Tarun Konduru Raju for alleged abetment in transnational gold smuggling involving 14.21 kg foreign-marked bars worth ₹12.56 crore intercepted at Kempegowda International Airport, Bengaluru. The legal issue challenged the detaining authority's subjective satisfaction, claiming false implication via co-accused statements under Section 108 of the Customs Act, 1962, absent independent evidence, procedural lapses as incomplete/ untranslated documents, representation delays, and no live nexus to past acts violating Baggage Rules, 2016.

Justice Anu Sivaraman and Justice Vijaykumar A. Patil dismissed Smt. Rama Raju's habeas corpus writ, finding cogent material statements, electronic/travel records, seizure documents, establishing syndicate role in Dubai-linked operations evading customs duty. Rejecting Article 22 violations, the Division Bench held courts cannot re-appraise material sufficiency in preventive detention, with all safeguards complied: evidence supplied, representations timely considered, Advisory Board opinion obtained, and confirmation by Central Government. It affirmed ongoing threat justification despite pending criminal proceedings, as COFEPOSA targets future prejudicial activity likelihood. No procedural infirmity warranted interference, upholding detention to conserve foreign exchange and curb smuggling.

Illness of Firm's Partner is Sufficient Cause for Condonation of Delay: Calcutta HC Quashes GST Appellate Order

Ramaa Engineering & Anr vs The State of West Bengal &Ors. CITATION : 2025 TAXSCAN (HC) 2751

The Calcutta High Court ruled that a partnership firm's partner's illness constitutes sufficient cause for condoning delay in filing a statutory appeal under Section 107 of the West Bengal GST Act, 2017, and Central GST Act, 2017, setting aside the appellate authority's dismissal of Ramaa Engineering's appeal against a Section 73 assessment order. The legal issue arose from rejection solely on limitation grounds despite medical evidence of petitioner no. 2's illness impacting timely filing.

Justice Om Narayan Rai held marginal delay, unsupported by gross negligence, warranted condonation where the explanation accepted but disregarded the directly impaired firm operations. Noting the authority acknowledged illness and documents yet threshold-dismissed without disbelief, the Court restored the appeal for merits adjudication, emphasizing bona fide reasons in GST appeals preclude mechanical rejection. It clarified partner incapacity affects firm compliance, distinguishing deliberate inaction. The writ disposed without costs, reinforcing equitable delay condonation in tax proceedings.

Income Tax Dept fails to pass Consequential Order for 11 years: Madras HC says Time Limit u/s 153(2A) Elapsed, Ends Proceedings

MKR Palanisamy vs Assistant Commissioner of Income Tax CITATION : 2025 TAXSCAN (HC) 2752

The Madras High Court dismissed the assessee's appeal against ITAT's order for A.Y. 2001-02 to 2007-08, confirming remand directions for fresh assessments under Section 143(3) r/w Section 153C while noting the Department's 13-year inaction rendered consequential orders time-barred under Section 153(2A). The legal issue challenged ITAT's revival of "irregular" assessments, potential defeat of Section 153B(1) limitation via appellate directions, and non-adherence to coordinate bench precedents annulling similar cases.

Justice Dr. Anita Sumanth and Justice K. Govindarajan Thilakavadi held the one-year limit under Section 153(2A) expiring 31.03.2014 post-Tribunal order receipt long lapsed without Departmental notices or action, mooting substantial questions of law. No consequential proceedings materialized despite 2013 admission of appeal questions, with Revenue confirming absence of records. Uniformity across group assessees where Revenue withdrew low-effect appeals or abstained precluded deviant stance. The Court returned questions unanswered, disposing of the stale matter sans utility, as limitation extinguished revival possibility.

Air Purifiers Qualify as Medical Devices: Delhi HC Seeks GST Council Review of 18% GST Amid Pollution Crisis

KAPIL MADAN vs UNION OF INDIA CITATION : 2025 TAXSCAN (HC) 2753

The Delhi High Court urged the GST Council to urgently examine reducing or abolishing 18% GST on air purifiers (HSN 84213920) and HEPA filters, observing no prima facie justification for higher rates when they perform health-protective functions akin to notified medical devices attracting 5% GST under Notification dated 11.02.2020 issued per Section 3(b)(iv) of the Drugs and Cosmetics Act, 1940 especially amid Delhi's severe air pollution crisis. In Kapil Madan's public interest writ, Senior Advocate Arvind Nayar highlighted Parliamentary Standing Committee recommendations criticizing the levy and seeking abolition/reduction.

Chief Justice Devendra Kumar Upadhyaya and Justice Tushar Rao Gedela validated concerns via committee findings and local air quality, directing earliest Council consideration. The Division Bench acknowledged the GST Council's constitutional role while listing the matter before the vacation bench for timeline compliance, preserving judicial restraint on rate-setting. It emphasized arbitrary classification amid public health imperatives, reinforcing policy review without mandating relief.

Delhi HC Grants TRQ Exemption to Importer of Crude Soyabean Oil, Directs Refund of ₹24 Lakh Customs Duty Paid During Policy Gap Period

PITAMBER SOLVEX PRIVATE LIMITED vs UNION OF INDIA & ORS. CITATION : 2025 TAXSCAN (HC) 2754

The Delhi High Court ruled that crude soyabean oil imports qualify for Tariff Rate Quota (TRQ) exemption where the Bill of Lading falls within the protected period, on or before 31.12.2023 per Public Notice dated 11.01.2023, directing refund of ₹24.03 lakh customs duty paid under protest to Pitamber Solvex Private Limited despite arrival post-1 April 2023 and Notification No. 37/2023-Customs. The legal issue challenged denial under Notification No. 30/2022-Customs (TRQ licence) amid a "gap period" created by TRQ discontinuation, with Jaipur-based petitioner clearing at Kandla Port invoking coordinate bench precedent in Ajanta Soya Ltd. v. Union of India.

Justice Prathiba M. Singh and Justice Shail Jain upheld jurisdiction despite two-year pendency sans prior objection, noting Supreme Court dismissal of SLP against Ajanta Soya on merits/delay. Affirming Bill of Lading date governs eligibility not arrival, the Division Bench held arbitrary denial unsustainable, mandating refund processing within three months. It clarified the unique factual disposition precludes precedential value, balancing jurisdictional restraint with settled law on TRQ continuity.

Telangana HC Allows Conditional Provisional Release of Seized Multi-Functional Devices, Orders Adjudication to Proceed Independently

Marjaan Traders vs Union of lndia CITATION : 2025 TAXSCAN (HC) 2755

The Telangana High Court ruled that seized Multi-Functional Devices, 107 units imported under Bill of Entry dated 22.09.2025, qualify for conditional provisional release despite seizure memo dated 29.09.2025 by Superintendent of Customs, ICD Timmapur, while permitting independent adjudication proceedings. Marjaan Traders invoked Article 226 relief citing financial hardship, arguing preliminary seizure lacked jurisdiction mirroring prior writs where provisional release was granted subject to conditions.

Justice P. Sam Koshy and Justice Suddala Chalapathi Rao disposed of the petition at the admission stage, equating facts to precedents. Directing release upon enhanced duty payment, 10% bank guarantee of goods value, and standard safeguards, the Division Bench held provisional access prejudices no investigation, preserving Customs' evidentiary/adjudicatory autonomy uninfluenced by release order. It clarified ongoing probe rights sans costs, balancing importer liquidity against revenue safeguards in identical disputes.

Karnataka HC Directs DGFT to Reconsider Duty Credit Scrip Claim above ₹1 Cr under Incremental Export Incentivisation Scheme

OSWAL ALLOYS PVT LTD vs UNION OF INDIA CITATION : 2025 TAXSCAN (HC) 2756

The Karnataka High Court directed the Joint Director General of the Directorate General of Foreign Trade (DGFT) to reconsider M/s Oswal Alloys Pvt. Ltd.'s application for Duty Credit Scrip benefits exceeding ₹1 crore under the Incremental Export Incentivisation Scheme (IEIS), following Supreme Court clarification permitting such claims subject to enhanced Regional Authority scrutiny. The legal issue challenged DGFT's 30.03.2023 order capping entitlement at ₹1 crore per IEC under amended paragraph 3.14.5(c) of Foreign Trade Policy 2009-14, despite verified ₹1.43 crore claim ignoring prior High Court directions in W.P. No.12826/2018.

Justice B.M. Shyam Prasad quashed the restriction, aligning with SC rulings against the Union of India on IEIS caps. Mandating fresh adjudication within eight weeks of certified copy receipt, the Court enabled petitioner submission of manufacturing/purchase records, excise/sales tax returns, and supplier export data for growth verification. Noting 12-year pendency, it emphasized expeditious resolution sans prejudice to higher scrutiny protocols. The order restores application post-impugned rejection, enforcing SC-mandated flexibility over rigid IEC limits.

GST Dept Recovers Over 20% of Disputed Tax During Pendency of Rectification Application: Calcutta HC Stays Recovery

Tirupati Traders & Anr vs The Union of India & Ors. CITATION : 2025 TAXSCAN (HC) 2757

The Calcutta High Court stayed GST recovery proceedings under Section 73 of the West Bengal GST Act, 2017, and Central GST Act, 2017, where adjudicating authority recovered over 20% disputed tax from Tirupati Traders' electronic credit ledger despite a pending rectification application challenging the Order-in-Original for natural justice violations on unconsidered SCN reply, denied personal hearing, wrong provision application. The legal issue balanced statutory appeal remedies against premature recovery amid rectification, with petitioners arguing demand survival hinges on application outcome.

Justice Om Narayan Rai directed the decision within four weeks, halting further recovery conditions on 20% plus pre-recovery. Rejecting departmental pleas on writ maintainability and delay in the light of availability of alternate appeal, the Court held rectification pendency capable of nullifying demand warrants restraint, especially post-partial realization. It preserved >20% security adequacy sans costs, disposing the writ while enforcing procedural fairness over mechanical enforcement.

GST Appellate Authority Fails to consider Transportation Bills and Related Documents: Calcutta HC Quashes Order

Soumyendu Bikash Jana vs The State Of West Bengal CITATION : 2025 TAXSCAN (HC) 2759

The Calcutta High Court quashed a GST appellate order under Section 107 of the West Bengal GST Act, 2017, for failing to consider transportation bills and supporting documents submitted by Soumyendu Bikash Jana proving no excess Input Tax Credit (ITC) availment or short tax payment on outward supplies for the period April 2018-March 2019. The legal issue challenged mechanical rejection despite petitioner's GTA role and exempt goods dealings, post-adjudication order on unanswered SCN alleging ITC reversal.

Justice Om Narayan Rai held that non-application of mind rendered the order perverse, as authorities could not deny document presentation. Remanding for fresh consideration within six weeks with liberty for additional submissions, the Court clarified no merits adjudication, preserving GST authorities' probe while enforcing natural justice. Post-order differential tax payments underscored bona fides. The writ disposed of sans costs, reinforcing evidentiary scrutiny obligations in appeals.

Madras HC Quashes Income Tax Reassessment Against Cognizant, Upholds 60% Depreciation on Computer Software for AY 2002-03

The Commissioner of Income Tax vs M/s. Cognizant TechnologySolutions India Pvt ltd CITATION : 2025 TAXSCAN (HC) 2760

The Madras High Court quashed reassessment proceedings under Section 148 for AY 2002-03 against Cognizant Technology Solutions India Pvt. Ltd. as time-barred, upholding 60% depreciation entitlement on computer software claimed under the "computers" entry, accepted in original scrutiny assessment under Section 143(3) dated 17.03.2005. The legal issue challenged AO's 30.03.2009 notice alleging 25% rate post-AY 2003-04 amendment, with Revenue arguing limitation from 2007 Section 263 revision (unrelated to depreciation).

Justice Anita Sumanth and Justice K. Govindarajan Thilakavadi held full or true disclosure in return or financials precluded beyond-four-year reopening absent fresh material, counting limitation from original order. On merits, the Division Bench affirmed pre-2003-04 absence of separate software entry justified "computers" classification at 60%, consistently allowed in prior years and undisturbed by revision. Dismissing Revenue's appeal, it upheld ITAT, ruling reassessment impermissible on recycled facts post-scrutiny. No costs awarded.

GST officers must Comply with BNSS Procedures during arrest under GST Act despite Revenue Nature of Investigation: Gauhati HC

SAMEER MALIK vs UNION OF INDIA REPRESENTED CITATION : 2025 TAXSCAN (HC) 2761

The Gauhati High Court reiterated the Supreme Court’s Radhika Agarwal ruling, emphasizing that GST officers must strictly comply with BNSS (Bharatiya Nagarik Suraksha Sanhita) arrest procedures under Sections 35, 47, or 48 during GST Act, 2017 offences, any procedural lapse renders the arrest bad in law. In Sameer Malik’s bail application under Section 483 BNSS for Section 135 GST offences involving ₹8 crore fake ITC fraud via non-existent firms and invoices.

Justice Pranjal Das granted bail, noting the arrest notice under Section 35(3) BNSS contained a typographical error (appearance date after actual arrest), undermining procedural validity. The Court cited Supreme Court’s Arnesh Kumar v. State of Bihar, 2014, requiring investigating officers to justify non-issuance of appearance notice. While prosecution claimed permission under Section 69 GST, and argued notice error was clerical, the Court held compliance with criminal procedure is mandatory for revenue authorities, even if not trained police. Bail was granted with conditions: ₹1 lakh surety, no absconding, full cooperation, and no evidence tampering or witness influence. The judgment stressed ongoing procedural training for revenue officials to prevent technical defeats in genuine investigations.

Liquidated Damages for Breach of Contract Not Taxable under GST: Karnataka HC Orders Refund of Rs. 5 Crore Paid under Protest

M/S KRAZYBEE SERVICES PRIVATE LIMITED vs ADDITIONAL DIRECTOR,DGGI, BZU CITATION : 2025 TAXSCAN (HC) 2762

The Karnataka High Court ruled that liquidated damages received for breach of contract are not taxable under GST, directing refund of ₹5 crore collected during investigation and paid under protest by KrazyBee Services Private Limited. The legal issue challenged the Directorate General of GST Intelligence's show cause notice proposing GST on compensation from lending service providers for contractual breach, with petitioner arguing such amounts are purely compensatory, not consideration for supply, per CBIC Circular dated 3.03.2022, paragraphs 7.1-7.1.6.

Justice S.R. Krishna Kumar observed no agreement to tolerate breach as a service, clarifying breach compensation cannot be treated as taxable consideration. Rejecting Revenue's "deficiency service fees" characterization, the Division Bench held show cause notice contrary to binding circular and quashed it. It directed refund of ₹5 crore plus interest within eight weeks, clarifying collection during investigation without adjudication is impermissible and not voluntary. The writ petition was allowed, reinforcing compensatory payments' non-taxability under GST.

Taxpayer Not Required to Prove ‘Source of Source’ Once Creditor Identity is Established: Patna HC on S. 68 Addition, sets aside ITAT Order

Rajnandani Projects Pvt. Ltd vs Principal Commissioner of IncomeTax-1 CITATION : 2025 TAXSCAN (HC) 2763

The Patna High Court ruled that once an assessee proves the identity of the creditor and the banking trail, the Revenue cannot demand proof of the "source of the source" for additions under Section 68 of the Income Tax Act, 1961. In Rajnandani Projects Pvt. Ltd. for A.Y. 2015-16, the Court set aside the ITAT order restoring a ₹1.91 crore addition, restoring the CIT(A)'s deletion after examining confirmations, PAN details, bank statements, ledger accounts, and a remand report supporting the transaction's genuineness.

Justice Bibek Chaudhuri and Justice Dr. Anshuman observed that once debit entries in the creditor's account are established, the origin of funds in the creditor’s account becomes a Revenue investigation matter, not the assessee's burden. The High Court noted the ITAT did not find documents false or transactions sham, nor did it specify why the banking trail or remand report were insufficient. It held the Tribunal applied a higher evidentiary standard than Section 68 requires, placing an impermissible burden on the assessee. The Court restored the CIT(A)'s order, emphasizing that the Revenue must investigate further if it disputes the creditor’s creditworthiness, not shift the burden to the assessee beyond statutory limits

Creditworthiness of Creditor cannot be Denied merely due to Non-Filing of ITR: Patna HC deletes Addition u/s 68

Rajnandani Projects Pvt. Ltd vs Principal Commissioner of IncomeTax-1 CITATION : 2025 TAXSCAN (HC) 2763

The Patna High Court held that a creditor's creditworthiness cannot be disbelieved solely because they did not file an Income Tax Return (ITR) for the relevant assessment year, when the identity of the creditor and the banking trail are established. In the case of Rajnandani Projects Pvt. Ltd., the Court restored the CIT(A)'s order deleting a Section 68 addition, overturning the ITAT's confirmation.

Justice Bibek Chaudhuri and Justice Dr. Anshuman observed that the assessee produced confirmations, PAN details, bank statements, ledger accounts, and the creditor’s ITRs for other years, with the transaction routed through banking channels, satisfying the requirements under Section 68. The Court clarified that while filing an ITR is a relevant factor, it cannot be the sole determinant of creditworthiness, especially when the transaction is genuine and the creditor's identity is undisputed. It emphasized that if the Revenue doubts the source, it must investigate further, not shift the burden to the assessee to prove the "source of the source" or the creditor's financial capacity beyond the evidence submitted.

Information Technology Act Provisions on Electronic Service cannot be Applied to Determine Valid Service under GST Act: Allahabad HC

M/S Bambino Agro Industries Ltd vs State of Uttar Pradesh andanother CITATION : 2025 TAXSCAN (HC) 2764

The Allahabad High Court dealt with the legal issue of whether the provisions of the Information Technology Act, 2000 relating to electronic records and deemed receipt can be applied to determine valid service or communication of notices and orders under the Goods and Services Tax (GST) Act. The petitioners challenged adjudication orders passed under Sections 73 and 74 of the Uttar Pradesh GST Act, 2017, and the Central GST Act, 2017, contending that mere uploading of notices or orders on the GST Common Portal, along with automated email or SMS alerts, does not amount to proper communication as envisaged under Section 107 of the GST Act, which prescribes its own service mechanism under Section 169.

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The Division Bench of the Allahabad High Court held that the GST Act’s service mechanism must be strictly followed and that the deeming provisions of the Information Technology Act, 2000 cannot be imported to presume service or start the limitation period for filing appeals. The Court set aside the reliance on deemed receipt through electronic means, affirming that physical or proper service as per Section 169 of the GST Act is necessary for valid communication of notices and orders.

One-Third of ICC Sponsorship Fee Paid by LG Electronics relates to Trademark Use, Taxable as Royalty: Delhi HC Upholds 15% TDS

M/S LG ELECTRONICS INDIA P.LTD & ANR vs DIRECTOR OF INCOMETAX(INTERNATIONAL TAXATION) & ANR CITATION : 2025 TAXSCAN (HC) 2765

The Delhi High Court addressed the legal issue of whether a portion of the ICC sponsorship fee paid by LG Electronics India Pvt. Ltd. to a Singapore-based entity for the right to use the ICC trademark constituted royalty under Section 9(1)(vi) of the Income Tax Act, 1961, and Article 12 of the India-Singapore Double Taxation Avoidance Agreement (DTAA), thereby requiring tax deduction at source at 15%. The dispute arose from proceedings under Section 195 concerning payments made for advertising and promotional rights in ICC cricket events, where the Assessing Officer and the Director of Income Tax (International Taxation) held that one-third of the payment was for the use of ICC trademarks and thus taxable as royalty, while the remaining two-thirds related to advertising and was not taxable as such.

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The Division Bench comprising Justice V. Kameswar Rao and Justice Vinod Kumar upheld the order passed under Section 264 of the Income Tax Act, 1961, confirming that the right to use the ICC trademark was not incidental but substantive, and that the consideration paid for this right fell within the definition of royalty under both the Income Tax Act and the DTAA. The Court observed that the revisional authority had already granted significant relief by excluding two-thirds of the payment from royalty taxation and found no serious challenge to the apportionment method. The writ petition was dismissed, affirming the validity of the order and the requirement to deduct tax at source at 15% on the royalty portion.

GST ITC Cannot be Denied to Recipient Once Supplier Pays Tax with Interest: Himachal Pradesh HC Orders Re-adjudication

M/s Shivalik Containers Pvt. Ltd. vs The Assistant Commissioner& Another CITATION : 2025 TAXSCAN (HC) 2768

The Himachal Pradesh High Court ruled that Input Tax Credit (ITC) under the Goods and Services Tax (GST) Act cannot be denied to a recipient solely because the supplier initially failed to pay tax, provided the supplier subsequently discharges the liability with applicable interest. The case involved M/s Shivalik Containers Pvt. Ltd., which challenged a Section 74 order demanding ₹16,72,140 for non-payment of tax by its supplier, for which ITC had been claimed.

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The Division Bench comprising Justice Vivek Singh Thakur set aside the impugned Section 74 order and directed the Assistant Commissioner, State Taxes and Excise, Nahan, to re-open and re-adjudicate the matter strictly in accordance with the GST Act. The Court ordered that the Assistant Commissioner must either accept the ITC claim or determine the liability afresh, with the final decision to be taken on or before 31st January 2026. The Court observed that once the supplier filed pending returns and paid the tax with interest, the ITC became available to the recipient, and the department could not sustain the denial merely on account of the initial delay. The Court emphasized that the authority does not have the jurisdiction to re-adjudicate the ITC claim unless directed by the Court, and the matter was disposed of accordingly.

Senior Citizen could not Track GST Notices uploaded in ‘Additional Notices’ Tab: Calcutta HC restores Appeal on Rs. 15k Deposit

Debapriya Chatterjee vs The State of West Bengal & Ors. CITATION : 2025 TAXSCAN (HC) 2769

The Calcutta High Court restored the Goods and Services Tax (GST) appeal of Debapriya Chatterjee, a senior citizen, who failed to track GST notices uploaded in the ‘Additional Notices’ Tab of the GST portal. The petitioner challenged the order passed by the appellate authority under Section 107 of the GST Act, 2017, which dismissed his statutory appeal on grounds of delay. ​

Justice Om Narayan Rai, considering the petitioner’s age and technological limitations, held that the circumstances warranted an opportunity for the appeal to be decided on merits. The Court set aside the appellate authority’s order and directed that the appeal be restored, subject to the petitioner depositing ₹15,000 with the High Court Legal Services Committee within three weeks.

AO's Withholding on Software Receipts Nullified by ITAT Ruling on No PE: Delhi HC Grants Relief to Zscaler Inc

ZSCALER INC vs DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 3(1)(1) CITATION : 2025 TAXSCAN (HC) 2770

The Delhi High Court quashed the Assessing Officer’s (AO) order imposing an 8.75% withholding tax on software receipts received by Zscaler Inc., a US-based technology company, from Indian clients. The AO had issued the order under Section 197 of the Income Tax Act, 1961, relying on earlier assessment orders that attributed 25% of Zscaler’s Indian revenues to a Dependent Agent Permanent Establishment (DAPE) through its Indian subsidiary. However, the Income Tax Appellate Tribunal (ITAT) had already set aside these assessment orders, holding that the Indian subsidiary did not constitute a DAPE, thereby undermining the AO’s basis for the withholding tax.

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The Division Bench comprising Justice V. Kameshwar Rao and Justice Vinod Kumar held that Section 197 certificates must be based on a prima facie assessment of facts and law, and cannot rely solely on past assessments invalidated by higher appellate authorities. The Court observed that, absent a Permanent Establishment (PE) in India, Zscaler’s software receipts could not be taxed as business income, and following the Supreme Court’s ruling in Engineering Analysis Centre of Excellence v. CIT (2021), such receipts do not constitute royalty under the India-US Double Taxation Avoidance Agreement (DTAA). The AO’s flat 25% attribution of profits was found arbitrary, and the Court directed the AO to reconsider Zscaler’s application afresh, taking into account the ITAT’s findings and requiring Zscaler to submit relevant agreements and financial documents for the current year.

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