This half-yearly round-up analytically summarizes the key Direct and Indirect Tax Judgments of the Supreme Court and all High Courts of India reported at Taxscan.in during the First half of 2024.
The Delhi High Court set aside the order and Show Cause Notice ( SCN ) against Federal Bank Ltd alleging an illegal Input Tax Credit ( ITC ) Claim. The Goods and Service Tax ( GST ) order was passed without providing adequate opportunity to reply to SCN.
The Court was of the view that adequate opportunity had not been granted to the petitioner to defend the show cause notice by way of a hearing. While allowing the petition the division bench comprising justice Sanjeev Sachdeva and Justice Ravinder Dudeja remitted the matter to the Proper Officer for readjudication. The impugned order and show cause notice was set aside.
The Delhi High Court has held that merely because proceedings under the Prevention of Money Laundering Act, 2002 ( PMLA Act ) have been dropped against some individuals does not drop proceedings against co-accused.
A single bench of Justice Subramonium Prasad observed that “Merely because proceedings have been dropped against some individuals does not mean that the proceedings against the Petitioner should or will be dropped. The offenses under the PMLA Act are distinct from offenses under the IPC. The companies can still be convicted for the predicate offense and the Petitioner can be prosecuted under the PMLA Act.” The Court dismissed the writ petition.
The Delhi High Court was directed to issue a valid show cause notice ( SCN ) since the same was issued without mentioning details of invoices or bills on alleged Goods and Service Tax ( GST ) evasion is invalid.
A division bench comprising Justice Sanjeev Sachdeva and Justice Ravinder Dudeja held that the petitioner shall be entitled to avail of such remedies as may be available in law in case aggrieved by any further order passed by the Proper Officer.
In a major setback to Reebok Company, the Delhi High Court upheld the rejection of conversion to limited liability company.
A Single Bench of Justice Subramonium Prasad observed that “The right of the Petitioner for conversion from unlimited company to limited company has not been taken away. In fact, the petitioner/company had no vested right to be granted a certification of conversion to a limited liability company. The rules have only become more stringent inasmuch as the RoC has additional criteria to satisfy himself regarding the networth of the company and as to whether any investigation/inspection is pending against the company or not and only on being satisfied, the permission for conversion can be granted.”
The Delhi High Court observed that the taxpayer’s GST registration can be cancelled with retrospective effect only where such consequences are intended and are warranted.
A Division Bench of Justices Sanjeev Sachdeva and Ravinder Dudeja observed that “In terms of Section 29(2) of the Central Goods and Services Tax Act, 2017, the proper officer may cancel the GST registration of a person from such date including any retrospective date, as he may deem fit if the circumstances set out in the said sub-section are satisfied. The registration cannot be cancelled with retrospective effect mechanically. It can be cancelled only if the proper officer deems it fit to do so. Such satisfaction cannot be subjective but must be based on some objective criteria.”
The Delhi High Court allowed NRI businessman facing investigation under Black Money Act, 2015 to travel abroad and observed that Look Out Circular ( LOC ) cannot be continued for long period without any cogent and valid reason.
A Single Bench of Justice Subramonium Prasad observed that “An LOC cannot be permitted to continue for such a long period without there being any cogent and valid reason. The Petitioner has not been called for investigation since March 2022 and the counter affidavit filed by the Respondents does not indicate as to how the Petitioner has not cooperated with the investigation. In fact, material on record discloses that the petitioner has complied with the summons and has cooperated with the ongoing investigations against him by the IT Department.”
The Delhi High Court set aside the order passed under Section 73 of the Central Goods and Service Tax Act, 2017 ( CGST Act ) even though there was mentioning of input tax credit ( ITC ) in wrong column.
A Division Bench of Justices Sanjeev Sachdeva and Ravinder Dudeja observed that “None of the averments of the petitioner have been taken into account while passing the impugned order dated 05.12.2023. Accordingly, we are of the view that said order cannot be sustained and the matter calls for a remit.”
The Delhi High Court granted interim bail to Lava Managing Director in the Prevention of Money Laundering Act, 2002 ( PMLA ) and commented that delicate balance between life and death in cardiac emergencies underscores importance for prioritization.
A Single Bench of Justice Swarna Kanta Sharma observed that “The delicate balance between life and death in cardiac emergencies underscores the importance for prioritization and specialized care required in such cases, for mitigating the profound risks posed by these medical conditions. Each passing moment in the face of cardiac distress is fraught with the peril of irreversible harm, and in case of any eventuality that may occur in applicant not getting proper and specialised treatment, this Court will have to bear the weight of regret.”
Kerala HC Disposes of Writ Petition Assessee Request to Take up the Matter with the Assessing Authority under Section 154 of Income Tax Act. The assessee themself requested that they would proceed with the matter with the assessing authority. The Kerala HC disposed of the writ petition as per assessee’s prayer.
The writ petition was disposed of by Justice Dinesh Kumar Singh considering the assessee’s point that he would pursue the matter under section 154 of Income Tax Act with assessing authority.
In a single judge verdict of the Kerala High Court rejected the assessee’s writ petition as the conditions prescribed in the provisions of Section 245C(1) of Income Tax Act have not been fulfilled.
In a single judge verdict the court held that the assessee has not approached the Settlement Commission, with his application under Section 245-C of the Income Tax Act, with clean hands and has failed to disclose true and correct facts and had not offered full and true particulars of his income. Section 245C(1) of the Income Tax Act provides disclosure of full and true particulars of the income and the manner in which that income had been derived and apportioned in order to get the settlement. As the conditions prescribed in the provisions of Section 245C(1) of the Income Tax Act have not been fulfilled in the case, the application was rejected by the impugned order.
The single judge of the Kerala High Court dismissed a writ petition seeking appropriate action against the erring supplier after being informed by Revenue that necessary measures had already been taken against the erring supplier.
In a single judge verdict of the Kerala High Court, Justice Dinesh Kumar Singh held that since appropriate action had been taken against M/s. Spanila Sanitary Ware nothing survives in the present writ petition, hence the petition is dismissed.
The Kerala High Court has instructed the Goods and Services Tax (GST) Department to review rectification applications for Input Tax Credit (ITC) that were erroneously claimed under the incorrect categories of Central Goods and Service Tax (CGST) and State Goods and Service Tax (SGST) instead of being claimed under the Integrated Goods and Service Tax (IGST) category.
The single bench of Justice Dinesh Kumar Singh disposed of the writ petition with a direction to the 6th respondent to promptly consider the rectification application filed by the petitioner and pass necessary orders expeditiously in accordance with the law
The Supreme Court of India has held that, “the assessees would not be under a legal obligation to deduct tax at source on the income/profit component in the payments received by the distributors/franchisees from the third parties/customers, or while selling/transferring the pre-paid coupons or starter-kits to the distributors.”
The court noted that the obligation to deduct tax at source arises when the legal relationship of principal-agent is established, as per Section 182 of the Contract Act, 1872. It observed that although the discounted price is negotiated between the assessees and franchisee/distributor, the sale price received by the latter is at their sole discretion, and the assessees have no control over it. The income of franchisee/distributor is not credited by the assessees, and they are not privy to transactions between distributors/franchisees and third parties.
The Supreme Court dismissed the Special Leave Petition ( SLP ) against the challenge on the Income Tax Appeal. The SLP arose out of the impugned final judgment and order passed by the Delhi High Court.
A two-judge bench comprising Justice Abhay S Oka and Justice Ujjal Bhuyan observed that “there is no case for interference is made out in the exercise of our jurisdiction under Article 136 of the Constitution of India. The Special Leave Petition is, accordingly, dismissed. The pending application also stands disposed of.”
The Supreme Court dismissed the Special Leave Petition ( SLP ) against the Customs Excise and Service Tax Appellate Tribunal( CESTAT ) and allowed one month time to avail of statutory appellate remedy. The SLP arose out of the impugned final judgment and order passed by the High Court of Madras.
A two-judge bench comprising Justice B V Nagarathna and Justice Augustine George Masih disposed of the special leave petitions reserving liberty to the petitioners herein to file the statutory appeal within one month from today. If such an appeal is filed within the aforesaid time frame, the Tribunal shall not raise the issue of limitation in filing the said appeal.
The Supreme Court has issued notice to Deloitte Consulting India in a Special Leave Petition filed by the Income Tax Department in matters related to a Telangana High Court verdict that quashed the issuance of notice and reopening of proceedings under Section 148 of the Income Tax Act.
The Supreme Court’s decision to grant hearing to a special leave petition in this tax dispute against Deloitte Consulting India Pvt. Ltd. sets the stage for further court proceedings. This development will be closely monitored for its implications on taxation matters and the broader legal, finance and audit landscape.
The Supreme Court dismissed the Special Leave Petition ( SLP ) filed by the Income Tax Department regarding the Long Term Capital Gain ( LTCG ) on shares. The apex court refused to condone the delay of 273 days.
Upon careful consideration of the arguments and reviewing the orders of the AO, CIT(A), and ITAT, the Orissa High Court concurred with the lower tribunals’ findings. It observed that both the denial of the opportunity to cross-examine witnesses and the failure to consider the CBDT circular were centred in the case. Consequently, the High Court upheld the ITAT’s decision, dismissing the Revenue’s appeals.
The Supreme Court dismissed the Special Leave Petition ( SLP ) filed by the Income Tax Department regarding the Long Term Capital Gain ( LTCG ) on shares. The apex court refused to condone the delay of 273 days.
Upon careful consideration of the arguments and reviewing the orders of the AO, CIT(A), and ITAT, the Orissa High Court concurred with the lower tribunals’ findings. It observed that both the denial of the opportunity to cross-examine witnesses and the failure to consider the CBDT circular were centred in the case. Consequently, the High Court upheld the ITAT’s decision, dismissing the Revenue’s appeals. Following this, the Income Tax department lodged an SLP ( Special Leave Petition ) before the Supreme Court, accompanied by an application to excuse the 273-day delay, which was ultimately rejected. As a result, the special leave petition was also dismissed, with the question of law, if any, left open for future consideration.
A Two-Judge Bench of the Supreme Court has dismissed a Special Leave Petition filed by the Income Tax Department against Apple India being inclined not to interfere with the impugned judgment and order passed by the High Court.
During the recent Supreme Court hearing, N Venkatraman, A.S.G., and Nisha Bagchi, representing the petitioner, argued for the case. However, the Court, after considering the submissions, chose not to interfere with the impugned judgment of the High Court, leading to the dismissal of the Special Leave Petition by the Income Tax Department.
The Supreme Court, in a recent ruling, declared that the ‘enemy property’ under the control of the government-appointed ‘custodian,’ as outlined in the Enemy Property Act of 1968, cannot be deemed as belonging to the Union Government for the purpose of claiming exemption from municipal taxes as per Article 285(1) of the Indian Constitution.
The Supreme Court overturned the High Court’s decision and allowed the appeal filed by Lucknow Nagar Nigam, establishing that enemy property managed by the custodian is not exempt from state taxes as per Article 285(1) of the Constitution of India.
The Supreme Court dismissed the Special leave petition on the claim of appointment of son of the deceased Commercial Taxes Officer. The special leave petition ( SLP ) arose out of an impugned judgment and order passed by the High Court of Judicature at Patna which dismissed the compassionate appointment after 23 years the death of the employee.
The two-judge bench comprising Justice Hrishikesh Roy and Justice Prashant Kumar Mishra observed that the concerned employee died 23 years back and dismissed the Special Leave Petition.
The Supreme Court observed that re-opening of assessment under Income Tax is not allowable in the absence of valid satisfaction on income escapement and dismissed the Special Leave Petition ( SLP ). The SLP arose out of the impugned final judgment and order dated passed by the High Court Of Gujarat At Ahmedabad
The two-judge bench comprising Justice Pamidighantam Sri Narasimha and Justice Aravind Kumar refused to interfere with the impugned judgment passed by the High Court. The Court dismissed the Special Leave Petition
A 9-judge Constitution Bench of the Supreme Court, led by CJI DY Chandrachud, initiated hearings on February 27 regarding the taxation of mineral-bearing lands.
The bench is actively delving into intricate issues related to the taxation of mineral-bearing lands and the interplay of constitutional entries. The case involves a meticulous examination of conflicting judgments and seeks to bring clarity to the nature of royalty and its implications for taxation.
THE STATE OF KERALA REPRESENTED BY THE ADDITIONAL CHIEF SECRETARY(TAXES) vs KALLADA HOTELS AND RESORTS 2024 TAXSCAN (HC) 417
The Kerala High Court dismissed the review petition as the assessee paid the Central Goods and Service Tax (CGST) Act, 2017 as ordered by a Single Judge. Since there was no error apparent on the face of the record, the single bench dismissed the review petition.
The exemption from payment of tax up to 5% by the Bar attached Hotels on their parcel sales, would not mean that they were not required to pay the tax @ 10%, but they could have claimed a refund of the 5% tax and, therefore, they were liable to pay the interest on delayed payment of turnover tax.
The Kerala High Court directed re-adjudication under Kerala State Goods and Services Tax/Central Goods and Services Tax Act, 2017KGST Act. It was found that the assessee cannot reply without details on the alleged Violation of Rule 10 of Rule 96 of CGST Rules.
A division bench of the Dr Justice A K Jayasankaran Nambiar & Dr Justice Kauser Edappagath viewed that the appellant must, at least at the first instance, appear before the officer and show cause against the proposals. However, the counsel for the appellant is right in contending that the appellant is entitled to the materials based on which show cause notice was issued to it and without such materials, it may not be possible for the appellant to give a proper reply.
The Delhi High Court set aside the order demanding sales tax passed without providing adequate opportunity for a hearing. It was noted that the petitioner was not provided with an adequate opportunity to defend the show cause notice by hearing.
The division bench comprising Justice Sanjeev Sachdeva and Justice Ravinder Dudeja order cannot be sustained and the matter is liable to be remitted to the Proper Officer for readjudication. The court set aside the impugned order and show cause notice, Further, remanded the matter to the Proper Officer for re-adjudication.
The Kerala High Court in a recent judgement dismissed the review petition filed by the revenue department against the hotel owners in relation to sales tax exemption on bar-attached hotels and shops. The Court viewed that review jurisdiction is to be exercised in a very limited manner where there is an error apparent on the face of the record which was not present in the case.
The single bench of Justice Dinesh Kumar Singh found no error apparent on the face of the record which warrants the Court to reconsider the Judgment under review. There is no substance in these review petitions and the same are hereby dismissed.
The Allahabad High Court rejected the application filed under Section 5 of the Limitation Act, 1963 in appeals filed under Section 107 of the Uttar Pradesh Goods and Service Tax Act, 2017 (UPGST Act).
A Single Bench of Justice Shekhar B. Saraf observed that “Section 107 of the GST Act prescribes a specific limitation period within which appeals against certain decisions must be filed. This limitation period is integral to the functioning of the appellate mechanism under the GST Act and reflects the legislative intent to expedite the resolution of tax disputes. By imposing a time limit on the filling of appeals, Section 107 aims to prevent undue delayed in the adjudication process and promote the efficient administration of the GST regime. On the other hand, Section 5 of the Limitation Act provides for the extension of prescribed periods in certain exceptional circumstances, such as when sufficient cause is shown for the delay.”
The Allahabad High Court in a recent judgement dismissed the writ petition as there was no explanation for the absence of an invoice and e-way bill on Intercepted goods. The court viewed that the petitioner has not been able to rebut the presumption of evasion of taxes, as he has not been able to explain the absence of an invoice and the E-Way Bill.
Justice Shekhar B. Saraf concluded that the petitioner has not been able to rebut the presumption of evasion of taxes, as he has not been able to explain the absence of the invoice and the E-Way Bill.
A division bench of the Delhi High Court held that no TDS prosecution can be initiated against any corporate office holder without establishing administrative connection.
The Court of Justices Yashwant Varma and Purushaindra Kumar Kaurav observed that “In our considered opinion merely because a person holds an office in a corporate entity would not be sufficient to place that individual in clause (b). The intention of the respondent to treat an individual as the “Principal Officer” must be based on it being satisfied that the person was connected with the management or administration of the company.”
The Delhi High Court has observed that stamping of registration of a Memorandum of Understanding ( MOU ) is not relevant for adjudication of an application under section 8 of the Arbitration & Conciliation Act, 1996.
The court comprising Justice Subramonium Prasad viewed that the interest of justice would be served by permitting the Petitioner to approach the Chief Controlling Revenue Authority as to the amount of duty with which the instrument in question is chargeable and proceed ahead per law.
The Kerala High Court quashed the Income Tax order passed without providing an opportunity for a hearing. The appellate authority is required to pass orders after considering the reply and after affording an opportunity of hearing to the petitioner.
A single bench of Justice Gopinath P observed that though the submissions of the petitioner were uploaded on 23-08-2023, the appeal was decided by the appellate authority on the basis that no such submissions were filed before 08-09-2023 and without affording an opportunity of hearing to the petitioner. The appellate authority is required to pass orders after considering the reply and after affording an opportunity of hearing to the petitioner.
A Single Bench of the Madras High Court has quashed the rejection of a Goods and Services Tax ( GST ) Input Tax Credit ( ITC ) claim based solely on non-inclusion of the same in GST Return – GSTR-3B.
The Single Bench of the Madras High Court observed that, “When the registered person asserts that he is eligible for ITC by referring to GSTR-2A and GSTR-9 returns, the assessing officer should examine whether the ITC claim is valid by examining all relevant documents, including by calling upon the registered person to provide such documents. In this case, it appears that the claim was rejected entirely on the ground that the GSTR-3B returns did not reflect the ITC claim. Therefore, interference is warranted with the orders impugned herein.”
The Single Bench of Senthilkumar Ramamoorthy added that, “Upon receipt thereof, the respondent is directed to provide a reasonable opportunity to the petitioner, including a personal hearing, and thereafter issue fresh assessment orders..”
The Delhi High Court has held that Goods and Service Tax ( GST ) registration cannot be cancelled retrospectively merely because of non-filing of return for some period. The Court viewed that merely, because a taxpayer has not filed the returns for some period does not mean that the taxpayer’s registration is required to be cancelled with a retrospective date also covering the period when the returns were filed and the taxpayer was compliant.
A division bench comprising Justice Sanjeev Sachdeva and Justice Ravinder Dudeja modified the order of cancellation to the extent that the same shall operate with effect from 25.08.2023, i.e., the date on which the Show Cause Notice was issued.
The Delhi High Court dismissed the appeal regarding the exemption from payment of customs duty for aircraft used for flying training purposes or non-scheduled services.
Additionally, the respondent’s counsel stated that if the petitioner wishes to pursue further remedies, they must approach the Supreme Court through an appeal under Section 35L of the Central Excise Act, 1944. The coram of Justice Sanjeev Sachdeva and Justice Ravinder Dudeja noted the petitioner’s request to withdraw the petition while reserving the right to pursue appropriate legal remedies. Accordingly, the Petition was dismissed as withdrawn, with all rights and contentions of the parties are reserved.
The Delhi High Court granted an additional one-week period for reply due to the failure to provide the required 7-days’ time frame to file the Goods and Service Tax ( GST ) reply notice.
The coram of Justice Sanjeev Sachdeva and Justice Ravinder Dudeja sets aside the impugned order dated 16.01.2024. The Petitioner was granted one week time to file reply to the Show Cause Notice with the office of the Principal Commissioner of Goods and Service Tax, West Delhi i.e. the respondent, who shall thereafter have the same forwarded to the Proper Officer for adjudication of Show Cause Notice.
The Supreme Court condoned delay in special leave petition ( SLP ) filed by Income Tax Department in the matter regarding a challenge on disallowance under Section 14A of the Income Tax Act, 1961 to be restricted to exempt income earned.
A Two-Judge Bench of Justice Abhay S Oka and Justice Ujjal Bhuyan observed that “Application seeking exemption from filing certified copy of the impugned order is allowed. Delay condoned. Issue notice.”
In a single judge verdict the Kerala High Court set aside Income Tax assessment order passed without considering written submission of the assessee.
In a single judge verdict Dinesh Kumar Singh held that “The petitioner was given a liberty to file written submission which was to be taken into consideration before deciding upon the application for condoning the delay of 7 days in filing the return. The petitioner filed a written submission on 03.11.2023. The impugned order has been passed without taking note of the fact that the petitioner had submitted written submission. The order shows that neither the petitioner appeared in person nor submitted the written submission. Prima facie, the said finding is incorrect on the basis of the report.” The impugned order was set aside
The Kerala High Court ruled that there is no bar for assessing authority to issue more than one notice under Income Tax Act, 1961.
A Single Bench of Justice Dinesh Kumar Singh observed that “I find no substance in the submission. There is no bar for the assessing authority to issue more than one notice. This Court has directed for re-doing the process and if the authority has information and materiel regarding other unexplained income of the petitioner, the assessing authority is well within the power to ask for explanation in respect of those income and it cannot be said that the notices impugned are without jurisdiction.”
It was observed by the Single Bench of the Madras High Court that, “Under Section 107 of the CGST Act, the Appellate Authority does not have the power to condone delay beyond 120 days. In this case, the period of further delay is only 24 days and the petitioner has provided cogent reasons to explain such delay. It is pertinent to note that the petitioner has paid the entire tax liability and the proposed appeal is limited to penalty and interest.”
The Karnataka High Court observed that mere reason to believe, cannot be a ground for carrying out assessment under Section 147 of the Income Tax Act, 1961.
The Bench of Justice Krishna S Dixit observed that, “For conducting assessment under section 147, there should be not only escapement but also the reason to believe that there is such escapement, the reason being the information itself. Hence, a plausible view could be taken that post-amendment of the provision, the escapement has to be established with concrete information. Section 148A would only assist the Assessing Officer in coming to a conclusion whether such information is good enough to allow a notice to be issued under Section 148.”
The Madras High Court quashed revision order passed under the Tamil Nadu Goods and Service Tax Act, 2017 ( TNGST Act ).
A Single Bench of Justice Senthilkumar Ramamoorthy observed that “No findings were recorded with regard to this objection in the impugned order. The petitioner also contended that interest was not leviable under Section 50(3) of the TNGST Act and that penalty should not be levied in the facts and circumstances. While these contentions were noticed in the impugned order, the respondent did not engage with these contentions and record reasons for not accepting the same. For such reason, the order impugned herein warrants interference.”
The Bombay High Court allowed the provisional release of premium cold coffee and noted that harsh and unreasonable conditions cannot be imposed by the Customs Department.
A Division Bench of Justices GS Kulkarni and Firdosh P Pooniwalla observed that “We may also observe that the petitioner is a proprietorship and a small importer, the pattern of imports has also been quite consistent. The goods in question are certainly edible goods which are perishable. The petitioner ought not to have been meted out such discriminatory treatment of denying clearance. Also, it is imperative that harsh and unreasonable conditions cannot be imposed and more so when there is not an iota of material on the part of the department, as placed before the Court indicating as to why a different yardstick would be required to be applied to the present consignments when earlier seven consignments were released at 16% to 28% bank guarantee.”
The Gujarat High Court observed that lender banks must furnish copy of audit reports before classifying loan account as fraud.
A Single Bench of Justice Sangeeta K Vishen observed that “Undisputedly, in the present case, no such steps have been taken by the respondent lender banks and therefore, on this limited ground of violation of principles of natural justice, the decision of the respondent banks declaring the account of the company as fraud is hereby quashed and set aside. The matter is remitted and let the respondents concerned, after furnishing the copies of the forensic audit report and supplementary forensic audit report so also reasonable opportunity to the petitioners to submit the representation, complete the proceedings by passing order.”
The Delhi High Court, while allowing Customs Commissioner’s appeal, sets aside the decision of Customs Excise and Service Tax Appellate Tribunal ( CESTAT ) extending settlement immunity to the noticee who didn’t approach before the settlement commissioner.
The bench of Justices Sanjeev Sachdeva and Ravinder Dudeja, overturned the CESTAT’s decision to grant immunity to the respondent, similar to the co-noticees, was found unsustainable. As a result, the order granting immunity to the respondent on May 10, 2023, has been revoked.
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