Indirect Tax Cases Monthly Round Up: May 2024

Update: 2024-06-01 09:20 GMT
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Supreme CourtSupreme Court Seeks Data Of GST Arrests, Says Citizens' Harassment Won't Be Allowed Due To Any Ambiguity In Arrest ProvisionsCase Title: Radhika Agarwal v. Union of India and Ors., W.P.(Crl.) No. 336/2018 (and connected matters)While hearing a batch of petitions challenging penal provisions of GST Act, Customs Act, etc. as non-compatible with the CrPC and the Constitution,...

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Supreme Court

Supreme Court Seeks Data Of GST Arrests, Says Citizens' Harassment Won't Be Allowed Due To Any Ambiguity In Arrest Provisions

Case Title: Radhika Agarwal v. Union of India and Ors., W.P.(Crl.) No. 336/2018 (and connected matters)

While hearing a batch of petitions challenging penal provisions of GST Act, Customs Act, etc. as non-compatible with the CrPC and the Constitution, the Supreme Court on Thursday (May 2) expressed concerns about the ambiguity in Section 69 of the GST Act (dealing with power with arrest) and conveyed that it would interpret the law to "strengthen" liberty, if need be, but not allow citizens to be harassed.

Labelling and Re-Labelling of Containers Qualifies as 'Manufacture' for CENVAT Credit Under Excise Act: Supreme Court

Case Details: Commissioner Of Central Excise Belapur Vs Jindal Drugs Ltd.

Citation : 2024 LiveLaw (SC) 374

The Supreme Court has held that labelling or re-labelling of containers amounts to 'manufacture' under the Central Excise Act for availing cenvat credit.

Delhi High Court

Life Of Provisional Attachment Order Is Only One Year: Delhi High Court

Case Title: M/S Krish Overseas Versus Commissioner Central Tax-Delhi West & Ors.

The Delhi High Court has held that the life of an order of provisional attachment is only one year.

Delhi High Court Quashes MOOWR Instructions Denying Benefit To Solar Power Generation Units

Case Title: Acme Heergarh Powertech Private Limited Versus CBIC

The Delhi High Court has held that the statutory scheme underlying the Manufacture and Other Operations in Warehouse Regulations, 2019 (MOOWR) cannot be construed as seeking to exclude solar power generation in terms of permissions granted under Section 65 of the Customs Act, 1962.

Non-Compliance Of Notification Conditions For Export Of Banned Non-Basmati White Rice; Delhi High Court Dismisses Exporter's Appeal

Case Title: VI Exports India Private Limited Versus Union Of India

The Delhi High Court while dismissing the rice exporter's appeal, upheld the decision of the single bench holding that the exporter cannot be permitted to export 11,000 MT of banned non- basmati white rice, due to the non-fulfilment of the conditions entitling it to an exemption from the ban on export imposed by Notification bearing no. 20/2023 dated 20th July, 2023 issued by the Department of Commerce, Government of India.

Condition Of Pre-Deposit Duly Complied, Delhi High Court Restores Appeal On Board Of CESTAT

Case Title: Ankit Madan Versus Registrar, Customs, Excise And Service Tax Appellate Tribunal & Ors.

The Delhi High Court has held that the appeal itself may be restored on the Board of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), bearing in mind the undisputed position that the condition of pre-deposit has been duly complied with.

Show Cause Notice Not Adjudicated For Nearly 14 Years; Delhi High Court Issues Notice To Dept.

Case Title: M/S Durga Trading Company And Ors Versus The Additional Director General (Adjudication) And Anr.

A division bench of the Delhi High Court, comprising Justice Sanjeev Sachdeva and Justice Ravinder Dudeja, has issued the notice to the department in a petition assailing the jurisdiction to adjudicate the Show Cause Notice, which has not been adjudicated for nearly 14 years.

Unexplained Expenditure Addition Merely Based On CBIC Instruction Not Sustainable: Delhi High Court

Case Title: Bausch And Lomb India Private Limited Versus Assessment Unit, National Faceless Assessment Centre, Delhi

The Delhi High Court has deleted the addition for unexplained expenditure, which was based on the instruction issued by the Central Board of Indirect Taxes and Customs (CBIC).

Monetary Limit Of Rs. 1 Crore For Appeals To High Court; Delhi High Court Dismisses Dept's Appeal

Case Title: The Principal Commissioner Of Customs, ACC Imports New Delhi Versus M/S. Salasar Synthetics

The Delhi High Court has dismissed the challenging redemption fine of Rs. 40 lakhs, citing instructions issued by the Central Board of Indirect Taxes and Customs (CBIC), which set the monetary limit of Rs. 1 crore for appeals to the high court.

Unexplained Expenditure Addition Merely Based On CBIC Instruction Not Sustainable: Delhi High Court

Case Title: Bausch And Lomb India Private Limited Versus Assessment Unit, National Faceless Assessment Centre, Delhi

The Delhi High Court has deleted the addition for unexplained expenditure, which was based on the instruction issued by the Central Board of Indirect Taxes and Customs (CBIC).

Additions U/s 69C Based Merely On CBIC Information Can't Be Sustained: Delhi High Court

Case Title: Bausch And Lomb India Private Limited Vs Assessment Unit

The Delhi High Court sets aside the assessment order and remits the matter to AO on the ground that the additions of Rs.70.10 Cr. made under Section 69C as unexplained expenditure based merely on information received from Central Board of Indirect Taxes & Customs (CBIC) is unsustainable.

Bombay High Court

Lender Bank Registered With CERSAI Has 1st Priority Over DCST Against Proceeds Of Enforcement Under SARFAESI Act: Bombay High Court

Case Title: Purushottam Prabhakar Chavan Versus Deputy Commissioner of Sales Tax (GST)

The Bombay High Court has held that lender bank registration with the Central Registry of Securitisation and Security Interest of India (CERSAI) has first priority over Deputy Commissioner of Sales Tax (GST) (DCST) against proceeds of enforcement under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act).

Bombay High Court Quashes Reassessment Notices Issued Merely On Basis Of Information Received From Directorate General Of GST

Case Title: KEC International Ltd. Versus UOI

The Bombay High Court has quashed the reassessment notices issued merely on the basis of information received from the Directorate General of GST.

Madras High Court

No Embargo On Commercial Tax Dept. From Summoning To Furnish Records Even If Assessment Is Completed: Madras High Court

Case Title: M/s.V.R.Muthu & Bros. Versus State Tax Officer

Citation: 2024 LiveLaw (Mad) 225

The Madras High Court has held that merely because the assessment is deemed to have been completed in both cases, it does not mean that the officers are precluded from exercising the power under Section 25 or Section 27 of the TNVAT Act, 2006.

Calcutta High Court

Service Recipient Not Liable For Seller's Default: Calcutta High Court Directs Dept. To 1st Proceed Against Supplier

Case Title: Lokenath Construction Private Limited Versus Tax/Revenue Government Of West Bengal And Others

The Calcutta High Court has held that the adjudicating authority, without resorting to any action against the supplier, who is the selling dealer, ignored the tax invoices produced by the appellant as well as the certificates issued by the Chartered Accountants, which are erroneous and wholly without jurisdiction.

Retracted Statement Can't Be Said To Be Involuntary Without Being Examined By Court: Calcutta High Court

Case Title: Commissioner Of Customs (Preventive) Versus Shri Rajendra Kumar Damani @ Raju Damani

The Calcutta High Court has held that it is the duty cast upon the court to examine the correctness of the validity of the retraction, the point of time at which the retraction was made, whether the retraction was consistent, and whether it was merely a ruse.

Glenmark To Follow Prescribed Procedure For Claiming Budgetary Support And Not Different One For Authorities To Follow: Sikkim High Court

Case Title: Glenmark Pharmaceuticals Limited Versus Union of India

The Sikkim High Court has held that when a procedure is prescribed, the petitioner, while seeking the grant of budgetary support, is required to follow that procedure and not work out a different procedure for the authorities to follow.

Retraction After A Period Of 3 Years And 9 Months Was Rightly Rejected By Commissioner Of Appeals: Calcutta High Court

Case Title: M/S. Anurag Steel Enterprise Versus Commissioner Of Cgst & Central Excise, Howrah Cgst & Cx Commissionerate

The Calcutta High Court has held that the alleged retraction on the grounds of the appeal filed before the Commissioner after a period of three years and nine months was rightly rejected by the Commissioner of Appeals.

Jharkhand High Court

Refusal By JBVNL To Reimburse Contractor GST Impact On Indirect Transactions Violative Of Article 14: Jharkhand High Court

Case Title: Sri Gopikrishna Infrastructure Pvt. Ltd. & Ors. Versus The State of Jharkhand

LL Citation: 2024 LiveLaw (Jha) 72

The Jharkhand High Court has held that the action of Jharkhand Bijli Vitran Nigam (JBVNL) offends Article 14 of the Constitution of India by refusing to reimburse contractor GST impact on indirect transactions.

Orissa High Court

Reassessment Order Can't Merely Be Based On Tax Evasion Report Or An Audit Report: Orissa High Court

Case Title: M/s.Hindustan Tyre House Versus Dy. Commissioner of Sales Tax

The Orissa High Court has held that reassessment orders cannot merely be based on a tax evasion report or an audit report.

Punjab And Haryana High Court

Punjab And Haryana High Court Stays CBIC-Circular Concerning Taxability Of Corporate Guarantees

Case Title: M/S Acme Cleantech Solutions Pvt Ltd V/S Union Of India And Others

The Punjab and Haryana High Court has stayed the circular issued by the Central Board of Indirect Taxes and Customs (CBIC) concerning the taxability of corporate guarantees.

Allahabad High Court

Tax Dues Can't Be Collected From Director Of Company Under Liquidation Unless Provided By Some Statute: Allahabad High Court Reiterates

Case Title: Mr. Pranay Dhabhai v. State Of U.P. And 2 Others

Citation: 2024 LiveLaw (AB) 299

Relying on its earlier decision in A.S. Solanki Vs. State of U.P. and others, the Allahabad High Court has reiterated that tax dues cannot be collected from the director of a company under liquidation unless it has been provided in any statute.

UPVAT | Computation Of Correct ITC Be Examined By Assessing Authority Not Later Than Stage Of Making Regular Assessment Order: Allahabad High Court

Case Title: Mentha And Allied Products Ltd vs. State Of U.P. And 3 Others

Citation: 2024 LiveLaw (AB) 300

The Allahabad High Court has held that computation of correct input tax credit can only be done till the passing of the regular assessment order by the Assessing Authority and not at a later stage. The Court held that reverse input tax credit is neither a 'rate of tax' nor a 'turnover' which can be subjected to reassessment under Section 29 of the Uttar Pradesh Value Added Tax Act, 2008.

S.129(3) UPGST | Burden To Prove Double Movement Of Goods Based On Same Documents Lies On Department: Allahabad High Court Reiterates

Case Title: M/S K Y Tobacco Works Pvt. Ltd. v. State Of U.P. And 4 Others

Relying on its earlier decision in M/s Anandeshwar Traders v. State of U.P. and Others, the Allahabad High Court has held that the burden to prove double movement of goods based on same documents lies on the department.

S.16 GST | Authorities Not Estopped From Taking Action Against Wrongful Claim Of ITC Based On Non-Existent Firms: Allahabad High Court

Case Title: M/S Rajshi Processors Raebareli Thru. Its Partner Ashok Kumar Lakhotia v. State Of U.P. Thru. Prin. Secy. Deptt. Of State Tax,Lko. And 2 Others

The Allahabad High Court has held that the authorities are not estopped from taking action against wrongful claim of input tax credit merely because the firms with which transactions were alleged to have been done were registered at the time of the alleged transactions.

S.2(e) UPVAT | Plant, Machinery Sold After Closure Of Business Are Capital Goods, Excluded From Levy Of Tax: Allahabad High Court

Case Title: The Commissioner, Commercial Tax U.P. v. M/S R.P. Milk Made Products (P) Ltd.

Case citation: 2024 LiveLaw (AB) 328

The Allahabad High Court has held that plant and machinery sold after the closure of business are capital goods under Section 2(f) of the Uttar Pradesh Value Added Tax Act, 2008 and are excluded from levy of tax under the amended definition of 'business' under Section 2(e) of the Act.

[S.85 Finance Act 1994] Limitation Period Prescribed In Special Statutes Prevails Over Limitation Act: Allahabad High Court

Case Title: M/S S Kumar Construction v. Commissioner Of Central Excise (Appeals), Central Goods And Services Tax (Appeals) And Another

The Allahabad High Court has held that the limitations prescribed under special statutes, such as Finance Act, 1994 will prevail over the limitations mentioned in the Limitation Act, 1963.

S.75(4) CGST | Allahabad HC Directs Commissioner To Take Disciplinary Action Against Adjudicating Authorities Violating PONJ Without Justifiable Reasons

Case Title: Ns Agro And Engineering Products v. State of U.P. and Another

While dealing with the non-compliance of mandatory provision for opportunity of hearing under Section 75(4) of the Central Goods and Services Tax Act, 2017, the Allahabad High Court directed the Commissioner, Commercial Tax, Uttar Pradesh to take remedial action, including disciplinary proceedings against erring adjudicating authorities for violating principles of natural justice without justifiable reasons.

Option Once Exercised For A Financial Year May Not Be Withdrawn Midway: Allahabad High Court

Case Title: M/S.Raman Ispat Pvt. Ltd. Versus Cce Meerut

The Allahabad High Court has held that an option, once exercised for a financial year, may not be withdrawn midway.

Franchise Agreement Granted Non-Exclusive Licence Rather Than Transfer Of Right To Use Goods, VAT Not Payable: Allahabad High Court

Case Title: Commissioner Commercial Tax, U.P. At Lucknow V. M/S Pan Parag India Limited

The Allahabad High Court has held that the franchise agreement granted a non-exclusive licence rather than a transfer of the right to use goods and the transaction does not attract Value Added Tax under the Uttar Pradesh Value Added Tax Act (UPVAT Act).

Failure To Cite Judgment Does Not Render Original Judgement Flawed: Allahabad High Court

Case Title: M/S Tata Steel Ltd. versus Commissioner Trade Tax U.P. Lucknow

The Allahabad High Court has held that mere failure to cite a judgement does not, in and of itself, render the original judgement flawed.

Over Dimensional Cargo Can't Be Penalized For Reaching Earlier Than Estimated Time: Allahabad High Court

Case Title: M/S Ace Manufacturing Systems Limited v. State Of U P And 3 Others

The Allahabad High Court has held that Over Dimensional Cargo cannot be penalized by the authorities for reaching its destination in less time than estimated by travelling at a higher speed when there is no intention to evade tax.

Rajasthan High Court

Rajasthan High Court Dismisses Petition Challenging GST Demand On Exhibition Services

Case Title: M/s. Savio Jewellery Versus Commissioner, Central Goods And Service Tax

The Jaipur Bench of the Rajasthan High Court has dismissed the petition challenging the GST demand on exhibition services.

Crane Services To Transport Department Does Not Constitute Sale: Rajasthan High Court

Case Title: Assistant Commercial Taxes Officer Versus M/s Agarwal Carriers And Lifters

The Rajasthan High Court, Jaipur Bench has held that crane services to the transport department does not constitute sale.

Gujarat High Court

Notified Area Authority, Vapi Is Neither A 'Local Authority' Nor 'Governmental Authority: Gujarat High Court

Case Title: NEPRA Resources Management Pvt. Ltd. & Anr. Vs State of Gujarat & Anr.

LL Citation: 2024 LiveLaw (Guj) 69

The Gujarat High Court has ruled that the Notified Area Authority, Vapi, does not qualify as a local authority or governmental authority. As a result, the Solid Waste Management and recycling services provided to it are not eligible for exemption under Notification No. 12/2017-State Tax (Rate) dated 30th June 2017.

Gujarat High Court Upholds 12% GST On Mango Pulp Since GST Inception, Rejects Petitioner's Claims For Lower Tax Rate

Case Title: Vimal Agro Products Pvt. Ltd. & Anr. Vs Union of India & Ors

LL Citation: 2024 LiveLaw (Guj) 70

The Gujarat High Court has upheld the imposition of a 12 percent tax on Mango Pulp since the inception of GST. The court clarified that Circular No. 179/11/2022-GST dated August 3, 2022, and Notification No. 06/2022 dated July 13, 2022, simply reinforce that mango pulp falls under the 12 percent GST bracket, specifically after the inclusion of "Mangoes (other than mangoes, sliced, dried)" following guava.

Gujarat High Court Grants Bail To Metal Industries Proprietor In Rs. 6.67 Crore GST Evasion Case

Case Title: Dipen Champaklal Shah Vs State of Gujarat

LL Citation: 2024 LiveLaw (Guj) 71

The Gujarat High Court has granted bail in a case of GST evasion amounting to Rs. 6.67 Crores to the proprietor of Metal Industries, a business engaged in manufacturing and trading brass products, metal scrap, etc. in Jamnagar after 79 days of cost.

Meghalaya High Court

Right Of Appeal Relating To Value Of Service Maintainable Before Supreme Court: Meghalaya High Court

Case Title: The Commissioner of Central Goods & Services Tax and Central Excise Versus M/s Walchandnagar Industries Limited

The Meghalaya High Court has held that the right of appeal relating to the value of service is maintainable before the Supreme Court.

AAR

18% GST Payable On Amount Received From Mercedes Benz India Towards Reimbursement Of “Loss On Sale Of Demo Car”: AAR

Applicant's Name: Landmark Cars East Private Limited

The West Bengal Authority of Advance Ruling (AAR) has ruled that 18% GST is payable on the amount received by the applicant from Mercedes-Benz India towards reimbursement of “Loss on Sale of Demo Car.”

Opting To Pay Tax At Lower Rate By Not Availing ITC Forfeits Right To Avail Input Tax Credit: AAR

Applicant's Name: Noori Travels

The Telangana Authority of Advance Ruling (AAR) has held that the applicant by opting to pay tax at a lower rate by not availing input tax credit on the goods and services used in his supplies has forfeited his right to avail input tax credit.

Supply Of Disposable Paper Cup Attracts 18% GST: AAR

Applicant's Name: Sekandar Sardar

The West Bengal Authority of Advance Ruling (AAR) has held that the supply of disposable paper cups attracts 18% GST.

Marketing/Recruitment/Referral Consultant To Foreign Universities On Principal To Principal Basis Is Not 'Intermediary Service': AAR

Applicant's Name: M/s. Center for International Admission and Visas (CIAV)

The Telangana Bench of the Authority of Advance Ruling (AAR) has held that marketing, recruiting, or referring consultants to foreign universities on a principal-to-principal basis is not 'intermediary service'.

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