SUPREME COURT Subsequent Purchaser Of Imported Vehicle Cannot Be Asked To Pay Customs Duty; Liability On Importer : Supreme Court Case Title: Nalin Choksey v. The Commissioner Of Customs, Kochi The Supreme Court ruled that the 'subsequent purchaser' of an imported motor car cannot be called an 'importer' to attract the liability under the Customs Act, 1962 to pay customs duty on...
SUPREME COURT
Case Title: Nalin Choksey v. The Commissioner Of Customs, Kochi
The Supreme Court ruled that the 'subsequent purchaser' of an imported motor car cannot be called an 'importer' to attract the liability under the Customs Act, 1962 to pay customs duty on the import of the vehicle.
The bench comprising Justice BV Nagarathna and Justice N Kotiswar Singh heard the appeal preferred by the subsequent purchaser of a Porsche Car against the High Court's decision upholding the demand of custom duty of ₹17,92,847 from the appellant along with other individuals on the allegation of misdeclaration of the car's model, tampering with its chassis number, and undervaluation to evade customs duty.
Case : Commissioner of Central Excise, Salem v. M/s Madhan Agro Industries (Pvt) Ltd
Case no.: CIVIL APPEAL NO. 1766 OF 2009
The Supreme Court has held that pure coconut oil, packaged and sold in small quantities ranging from 5 ml to 2 litres, would be classifiable as 'Edible oil' for the purposes of the Central Excise Tariff Act, 1985. It will be classifiable as "hair oil" if it is packaged and sold as a cosmetic.
"we are of the opinion that pure coconut oil sold in small quantities as 'edible oil' would be classifiable under Heading 1513 in Section III-Chapter 15 of the First Schedule to the Central Excise Tariff Act, 1985, unless the packaging thereof satisfies all the requirements set out in Chapter Note 3 in Section VI-Chapter 33 of the First Schedule to the Central Excise Tariff Act, 1985, read with the General/Explanatory Notes under the corresponding Chapter Note 3 in Chapter 33 of the Harmonized System of Nomenclature, whereupon it would be classifiable as 'hair oil' under Heading 3305 in Section VI- Chapter 33 thereof," the Court held.
HIGH COURTS
Allahabad HC
Case Title: M/S New Okhla Industrial Development Authority v. Union Of India And 3 Others
Case no.: WRIT TAX No. - 1733 of 2024
The Allahabad High Court has held that once the High Court has directed the assessee to approach the appellate authority under Section 107 of the Central Goods and Service Tax Act, 2017, the appeal cannot be dismissed as not maintainable.
“Once the Division Bench of this Court has directed the petitioner to avail of alternative remedy as provided under Section 107 of the Act, the impugned order cannot be sustained in the eyes of law and therefore, the matter requires reconsideration by the appellate authority,” held Justice Piyush Agrawal.
Case Title: Principal Commissioner of Income Tax, Bareilly, U.P. v. Dharam Singh
Case no.: INCOME TAX APPEAL No. - 85 of 2024
While entertaining an Income Tax Appeal, the Allahabad High Court has held that an appeal under Section 260A of the Income Tax Act, 1961 cannot be sustained without establishing a perversity with the fact finding of the Tribunal.
“In the instant appeal the department has only challenged the fact finding off the Tribunal. A catena of Supreme Court judgments have concluded that in relation to facts, no substantial question of law would arise unless the finding of fact is perverse,” held the division bench comprising Justice Shekhar B. Saraf and Justice Vipin Chandra Dixit.
Case Title: M/S S. G. Plastic Industries v. Principal Commissioner, Central Goods And Services Tax And 2 Others
Case no.: WRIT TAX No. - 1576 of 2024]
The Allahabad High Court has directed the State Goods and Service Tax Authorities to not take action for any assessment year in which the Central Goods and Service Tax Authorities have already taken action.
Petitioner approached the High Court under Article 226 of the Constitution of India against the actions taken by the State and Central GST Authorities for the same assessment year, 2017-18. It was argued that once State GST Authorities had completed assessment proceedings under Section 74, the Central GST Authorities could not have issued notice for the assessment year.
Case Title: The Pr. Commissioner of Income Tax, Aaykar Bhawab, Noida and Anr. v. M/s Sampark Management Consultancy LL
Case no.: INCOME TAX APPEAL No. - 78 of 2024
The Allahabad High Court has held that no substantial question of law arises in a case where no perversity can be shown in the order passed by the Income Tax Tribunal in appeal under Section 260A of the Income Tax Act, 1961.
Section 260A of the Income Tax Act, 1961 provides for an appeal to be filed before the High Court against the decision of an Appellate Tribunal.
Case Title: The Pr. Commissioner of Income Tax and Anr. v Sushil Kumar Sharma [
Case no.: INCOME TAX APPEAL No. - 86 of 2024
The Allahabad High Court has upheld the finding of the Income Tax Appellate Tribunal and Commissioner of Income Tax (Appeals) that when an agreement between parties specifies a direct transfer of money, doing so indirectly by keeping the funds in a distinct account before sending them to the final account, does not place the money under the definition of 'unexplained money' as per Section 69A of the Income Tax Act, 1961.
“The CIT(A) and the Tribunal were justified in coming to the conclusion that only on account of purported infraction of the Agreement between the FRB and the assessee, without there being any dispute regarding the amount collected by the assessee which, in turn, has been deposited with the FRB, the deposits in the bank account of assessee cannot be termed as unexplained cash deposits by the assessee,” held Chief Justice Arun Bhansali and Justice Vikas Budhwar.
Case Title: M/s Laxmi Telecom v. State of U.P. and Anr.
Case no.: WRIT TAX No. - 2160 of 2
The Allahabad High Court has held that an assessee cannot file for the supply of requisite documents after the adjudicating body has accepted the plea placed by them and issued notice pursuant to it. The bench of Chief Justice Arun Bhansali and Justice Vikas Budhwar held that the same would be impermissible, especially in a case where statutory appeal was available to the filing party.
Case Title: Dish TV India Limited v. Commissioner of Income Tax (TDS) and 2 Ors.
Case no.: WRIT TAX No. - 1953 of 2024
The Allahabad High Court has held that an assessee claiming refund of excess TDS (tax deduction at source) is not required to fill Form 26B under the Income Tax Rules once Form 5 of the Vivad Se Vishwas Act, 2020 has been issued to them.
“A perusal of the Rules would reveal that Form 26B is required to filled up if the assessee claims refund paid under Chapter XXVII-B of the Act, 1961. The Stage of requirement of filling up the Form 26B was long over in the year 2008-09 itself and the present refund was being sought by the petitioner in terms of the provisions of the VSV Act, 2020, which did not require filling up any form, as claimed by the respondents, and as such, the demand made has no sanction in law”, held Chief Justice Arun Bhansali and Justice Kshitij Shailendra.
Case Title: M/S NS Papers Limited And Another v. Union Of India Through Secretary And Others
Case no.: WRIT TAX No. - 408 of 2021
The Allahabad High Court has held that the resolution applicant cannot be burdened with new claims after approval of a resolution plan.
The bench comprising Justice Shekhar B. Saraf and Justice Vipin Chandra Dixit held that the principle underlying the Insolvency and Bankruptcy Code, 2016 is to give a fresh start to the successful resolution applicant. It held that any action obstructing the aforementioned principle is illegal and beyond the 'Lakshman Rekha' of the Code.
Bombay HC
Case Title: Imperial Consultants and Securities vs. Deputy CIT
Case no.: Writ Petition No. 1783 of 2022
While setting aside the reassessment proceedings, the Bombay High Court held that 'change of opinion' or 'review of already completed assessment', is not permitted to AO.
While holding so, the Division Bench of Justice G.S Kulkarni and Justice Advait M Sethna observed that there is no whisper of allegations against the assessee that income that has escaped assessment was attributable to the assessee for not disclosing fully & truly all material facts necessary for assessment.
Case Title: Shri Saibaba Sansthan Trust (Shirdi) vs. Union of India
Case no.: Writ Petition No. 4817 of 2022
The Bombay High Court ruled that the materials which were already available before AO and which ultimately were considered in passing assessment order u/s 143(3), cannot form basis of reopening, on ground that such materials were ignored in finalizing assessment. Section 147 does not postulate review jurisdiction, so that assessment can be reviewed by the Assessing Officer intending to form different and/or a new opinion, added the Court.
The Division Bench of Justice G S Kulkarni and Justice Firdosh P Pooniwalla observed that AO cannot assume jurisdiction under garb of re-assessment u/s 147, to reopen assessment merely on basis of change of opinion and/or review assessment order passed against assessee.
Case Title: Nav Chetna Charitable Trust vs, CIT (Exemption)
Case no.: Writ Petition No. 470 of 2024)
The Bombay High Court held that bonafide delay in filing Form 9A on part of trust, has to be construed as procedural lapse and shall be condoned by exercising powers u/s 119(2) of Income tax Act.
The Division Bench of Justice G S Kulkarni and Justice Advait M Sethna observed that that the jurisdictional AO completely lost sight of the fact that at the time when assessee claimed deductions towards depreciation and capital expenditure u/s 11(1) by filing the revised computation, the time limit for submission of Form 9A had lapsed, due to change of procedure.
Calcutta HC
Case title: Ashok Sharma v. State of West Benal & Ors.
Case no.: W.P.A 26591 of 2024
The Calcutta High Court has held that regulatory measures under the Goods and Services Tax Act cannot be labeled as violative of an assessee's right to trade/ business under Article 19(1)(g) of the Constitution.
Justice Rajarshi Bharadwaj reasoned that such regulatory measures are “necessary to ensure compliance and prevent tax evasion”.
Case Title: Britannia Industries Limited vs. Union of India
Case no.: W.P.A 24534 of 2024
While reiterating that it shall not interfere in matters requiring fact-finding and adjudication, which fall squarely within the statutory domain, the Calcutta High Court advised the manufacturer/ supplier to exhaust the statutory remedies provided under the CGST Act, 2017 including submitting a detailed response to the SCN.
“The statutory framework under the CGST Act provides adequate mechanisms for addressing the petitioner's concerns, including responding to the SCN, participating in adjudication proceedings and availing appellate remedies if dissatisfied with the outcome”, observed a Single Judge Bench of Justice Rajarshi Bharadwaj.
Case Title: Pradeep Kumar Naredi vs. Union of India
Case Number: MAT 375 of 2002
The Calcutta High Court recently reiterated that when the settlement applications were filed before the date on which the Finance Act 2021 did not come into effect, then taxpayers had vested right of preferring the application in absence of any statute prohibiting the said application.
The Division Bench of Justice Harish Tandon and Justice Hiranmay Bhattacharyya reiterated that retrospective legislation cannot affect the vested rights.
Delhi HC
Case title: Niraj Silk Mills v. Commissioner Of Customs (ICD) (and other connected matters)
Case no.: CUSAA 26/2022
The Delhi High Court has held that the proper officer under the Customs Act, 1962 must provide “reasons to doubt” the declared value of imported goods, before proceeding with reassessment under Section 17.
The High Court said that it is manifest from Section 17(4) that before the proper officer commences the process of reassessment, it must come to form an opinion on the basis of verification and examination of goods that the self-assessed declarations submitted by the importer are incorrect.
Case title: HCL Infosystems Ltd. v. Commissioner Of State Tax & Anr.
Case no.: W.P.(C) 7391/2024
The Delhi High Court has made it clear that neither Section 160 nor Section 87 of the Central Goods and Services Tax Act, 2017 enable the Department to issue notice in the name of an entity which ceased to exist post amalgamation.
Section 160 is pari materia to Section 292-B of the Income Tax Act, 1961 which provides that no notice or assessment or any proceedings can be deemed to be invalid merely for the reason of any mistake, defect or omission in such notice, assessment or other proceedings. However, a plethora of precedents have laid down that notice issued in the name of non-existent company, despite the Department being aware of amalgamation, is not a defect curable under Section 292B.
So far as Section 87 is concerned, it provides that notwithstanding an order of amalgamation coming to be approved, for the purposes of the CGST Act, the two entities would be treated as a distinct companies for the period up to the date of the order of the competent court or tribunal approving the scheme and the registration certificate of the companies being cancelled. The High Court said the provision only seeks to preserve and identify the transactions which may have occurred between two or more companies which ultimately amalgamate and merge.
Case title: Principal Commissioner, Cgst Principal Commissioner, CGST v. M/S. Federal Mogul Goetze India Limited & Anr.
Case no.: SERTA 6/2024
The Delhi High Court has held that an audit report determining liability towards tax dues is not a notice or an order of determination as contemplated under Section 106(1) of the Finance Act, 2013.
Section 106 talks about Person who may make declaration of tax dues. Sub-section (1) states that any person may declare his tax dues in respect of which no notice or an order of determination under section 72 or section 73 or section 73A of the Chapter has been issued or made before the cut-off date, i.e., 1st March, 2013.
A division bench of Justices Vibhu Bakhru and Swarana Kanta Sharma held, “…for the said exception to apply, it would be necessary that an order of determination under Section 72, Section 73 or Section 73A of the 1994 Act had been issued. Clearly, an audit report is not an order of determination under either of the aforesaid sections, as mentioned in the opening sentence of Section 106 (1) of the 2013 Act.”
Case title: Pr. Commissioner Of Income Tax -7 v. Sunlight Tour And Travels Pvt. Ltd.
Case no.: ITA 222/2022
The Delhi High Court has made it clear that an Assessing Officer (AO) cannot assess other incomes of an Assessee in a case where no addition is made on account of the “reasons” for which reassessment under Section 147 of the Income Tax Act, 1961 was initiated.
A division bench of Justices Vibhu Bakhru and Swarana Kanta Sharma observed, “It is well established that Section 147 of the Act enables the reopening of concluded assessments only in exceptional cases, where there the AO has reason to believe that Assessee's income for the relevant period has escaped assessment. It is trite law that concluded assessment should not be lightly interfered with. If the ground on which the concluded assessment is sought to be re-opened, cannot be sustained, there would be little rationale for expanding the reassessment proceedings. In our view, it would not be apposite to accept an expansive interpretation to the provision of Section 147 of the Act. Given that the nature of the proceedings is to unsettle concluded assessment, a strict interpretation of the plain language of Section 147 of the Act, is warranted. ”
Case title: Pr. Commissioner Of Income Tax (Central)-3 v. M/S TDI Infrastructure Ltd
Case no.: ITA 494/2022
The Delhi High Court has answered in the affirmative the question whether Section 153C of the Income Tax Act, 1961 restricts an assessing officer from enquiring beyond the documents considered for deriving satisfaction note for initiating assessment/ re-assessment of the 'other person'.
In this case division bench of Justices Yashwant Varma and Ravinder Dudeja held, “None of the additions made in the impugned assessment orders are based on any seized/ incriminating material either found during the course of search or has been recorded in the 'satisfaction note' by the Assessing Officer, and therefore, none of these additions can be made in the proceedings u/s. 153C.”
"Personal Jewellery" Of Person Coming To India Not Subjected To Customs Duty: Delhi High Court
Case title: Saba Simran vs. Union of India & Ors.
Case no.: W.P. (C) 3612/2024
The Delhi High Court recently granted relief to a woman whose over 200 gm gold jewellery was confiscated by the Customs on her return from Dubai.
In doing so, a division bench of Justices Yashwant Varma and Ravinder Dudeja held that “personal jewellery” which is not found to have been acquired on an overseas trip and was always a “used personal effect” of the passenger would not be subject to duty under the Baggage Rules, 2016.
Foreign National Wearing Personal Jewellery To India Not Subject To Import Duty: Delhi High Court
Case title: Luvleen Maingi v. UoI
Case no.: W.P.(C) 11877/2018
The Delhi High Court has held that the personal jewellery worn to India by a foreign national is not subject to customs duty.
A division bench of Justices Yashwant Varma and Ravinder Dudeja thus declared as illegal the action of the Customs Department, confiscating a Thai national's gold chain and kara.
Case title: Telecommunications Consultants India Limited v. UoI & Ors.
Case no.: W.P.(C) 3016/2019
The Delhi High Court recently declared that Telecommunications Consultants India Limited, a central public sector undertaking which secured a Project floated by BSNL for laying down Optical Fibre Cable Network, is exempt from service tax since the service is in the nature of setting up a civil infrastructure so as to benefit the defence forces in having a better communication network.
A division bench of Justices Yashwant Varma and Dharmesh Sharma observed, “The said services are clearly exempted from imposition of services tax for the ultimate beneficiary being the Government of India.”
Case title: Commissioner Of Central Tax, GST Delhi East v. ASP Metal Industries
Case no.: CEAC 6/2019
The Delhi High Court has held that where a manufacturer is booked by the tax authorities for clandestinely clearing its goods to escape tax, the charge must be based on “tangible evidence”.
A division bench of Justices Yashwant Varma and Ravinder Dudeja further observed, “In adjudication proceedings to establish the charge of clandestine removal and under valuation, Revenue is not required to prove the case with mathematical precision. Such charges are to be established on the basis of “preponderance of probabilities.” However, the conclusions to be drawn are necessarily to be logical and not on the basis of presumptions and assumptions. Suspicion, howsoever grave, cannot replace the test of proof.”
Case title: M/S VOS Technologies India Pvt. Ltd. v. The Principal Additional Director General & Anr. (and batch)
Case no.: W.P.(C) 4831/2021 and connected matters
The Delhi High Court has made it clear that Show Cause Notices and adjudication proceedings under the Customs Act, 1962 , the Finance Act, 1994 or the Central Goods and Services Tax, 2017 cannot be kept pending for years. In its 177-page judgment, a division bench of Justices Yashwant Varma and Ravinder Dudeja observed,
“Matters which have the potential of casting financial liabilities or penal consequences cannot be kept pending for years and decades together. A statute enabling an authority to conclude proceedings within a stipulated period of time “where it is possible to do so” cannot be countenanced as a license to keep matters unresolved for years. The flexibility which the statute confers is not liable to be construed as sanctioning lethargy or indolence.”
Case title: M/S VOS Technologies India Pvt. Ltd. v. The Principal Additional Director General & Anr. (and batch)
Case no.: W.P.(C) 4831/2021 and connected matters
The Delhi High Court recently discussed a 'flux' in the legal position with respect to power of officers of Directorate of Revenue Intelligence (DRI) to issue show-cause notices and recover duties under the Customs Act, 1962.
A division bench of Justices Yashwant Varma and Ravinder Dudeja was dealing with a batch of petitions seeking to quash the SCNs and pending adjudication proceedings arising out of the Customs Act, 1962 , the Finance Act, 1994 or the Central Goods and Services Tax, 2017. Some cases were initiated by the authorities as far back as 2006.
Case title: M S Ciena Communications India Pvt Ltd v. The Principal Commissioner Of Customs Import & Ors
Case no.: W.P.(C) 14512/2024
The Delhi High Court has ruled in favour of an importer who was aggrieved by insistence on provisional assessment of duty by the Customs Department, despite an order of the CESTAT with respect to classification of its imported goods.
The High Court held that mere pendency of Revenue's appeal would not entail the department to insist on provisional assessment of the goods. “Since there is no stay of the order of CESTAT, the goods would have to be released in terms of the CESTAT order dated 18th December 2023 as per the classification as directed by the CESTAT i.e.,CTH 851770,” it ordered.
Case title: Rose Wood Buildwell Private Limited v. Pr. Commissioner Of Income Tax-7 & Ors
Case no.: W.P.(C) 6097/2021
The Delhi High Court has held that under the Direct Tax Vivad Se Vishwas Act, 2020, an Assessee is entitled to confine the settlement of disputes which were subject matter of its appeal, and exclude the disputes which were subject matter of the Revenue's appeal for the same assessment year.
It thus allowed a real estate company's plea against the certificate issued by Commissioner of Income Tax, whereby the declaration furnished by the Assessee under Section 3 of the DTVSV Act was modified to include settlement of certain disputes that were not the subject matter of appeal preferred by the Assessee.
Case title: Nokia Solutions And Networks India Pvt. Ltd v. Joint Commissioner Of Income Tax, & Ors.
Case no.: W.P.(C) 11115/2019
Granting relief to telecom equipment company Nokia, the Delhi High Court disallowed the Income Tax Department from adjusting the outstanding demand raised against the company, towards a previous refund due to it.
A division bench of Justices Vibhu Bakhru and Swarana Kanta Sharma pointed towards stay of recovery proceedings and said, “there is no allegation that the petitioner is alienating its assets so as to frustrate the recovery of any demand or that it would be unable to pay the disputed demand in the event the same was confirmed in the appellate proceedings.”
Case title: Sanjay Singhal v. Assistant Commissioner Of Income Tax, Central Circle 15, Delhi
Case no.: W.P.(C) 16459/2024
The Delhi High Court has reiterated that the Supreme Court's judgment in Abhisar Buildwell does not permit reopening of assessments under Section 147/148 of the Income Tax Act, 1961 beyond the period stipulated under Section 149(1).
It said the judgment does not permit reopening of assessments, even in cases where necessary conditions for invoking Sections 147 and 148 of the Act are not satisfied.
Case title: Jackson Square Aviation Ireland Limited v. Assistant Commissioner Of Income Tax Circle Int Tax 2(1)(2) & Anr
Case no.: W.P.(C) 11636/2024
The Delhi High Court has made it clear that a Final Assessment order passed by the Income Tax Authorities under Section 143 of the Income Tax Act, 1961 is not sustainable, if it is passed in ignorance of pending objections before the Dispute Resolution Panel.
A division bench of Acting Chief Justice Vibhu Bakhru and Justice Tushar Rao Gedela further clarified that lack of information with the Assessing Officer regarding pendency of the objections is of no consequence.
Case title: Farida Aliyeva v. Commissioner Of Customs
Case no.: W.P.(C) 16113/2024
Reinforcing its stand that the 'personal' gold jewellery of a foreign national coming to India is not subject to duty, the Delhi High Court ordered the Customs department to release an Azerbaijan national's belongings.
A division bench of Justices Prathiba M. Singh and Amit Sharma however restrained the foreign national from selling the jewels in India.
Case title: Chetak Logistics Ltd v. Union of India
Case no.: W.P.(C) 17270/2024
The Delhi High Court recently granted relief to a logistics company aggrieved by the decision of Assistant Commissioner, GST, rejecting its reply to a show cause notice by way of a 'template' order.
A division bench of Justices Prathiba M. Singh and Amit Sharma observed that a SCN, which seeks to impose further liabilities (including penalties) upon assesses, has to be decided on merits.
Case title: Pr. Commissioner Of Income Tax-7, Delhi v. UK Paints India Pvt. Ltd.
Case no.: ITA 24/2024
The Delhi High Court has held that recourse to Rule 8D of the Income Tax Rules, 1962 for computing disallowance under Section 14A of the Income Tax Act is available only if the Assessee's computation of expenses attributable to earning exempt income, is found to be inadequate.Rule 8D provides a mechanism to determine the expenditure in relation to exempt income.
Case title: M/S Bharti Airtel Limited v. Commissioner, CGST Appeals-1 Delhi (and batch)
Case no.: W.P.(C) 13211/2024
The Delhi High Court has held that mobile/ telecommunication towers are movable properties, eligible for availing input tax credit under the Central Goods and Services Tax Act, 2017.
A division bench of Justices Yashwant Varma and Girish Kathpalia further held that telecom towers fall outside the scope of Section 17(5) of the CGST Act which sets out various goods and services which are not liable to be taken into consideration for the purposes of availing input tax credit.
Case title: Just Click Travels Private Limited v. Union Of India & Ors.
Case no.: W.P.(C) 8896/2023
The Delhi High Court has prima facie observed that service tax is not leviable on amounts claimed by an Assessee as commission or performance linked benefit. A division bench of Justices Yashwant Varma and Dharmesh Sharma cited the decision of a Larger Bench of the CESTAT in Kafila Hospitality & Travels Pvt. Ltd. vs. Commr. Of S.T., Delhi (2023). In that case, the Tribunal dealt with the issue of whether the incentives paid by airlines to travel agents for achieving targets was liable to service tax under the category of 'Business Auxiliary Service'. It had concluded that Service tax is leviable on “consideration” and incentives cannot be construed as consideration and therefore cannot be subjected to levy of service tax.
Case title: Subhash Chander Dabas v. Assistant Commissioner Of Income Tax
Case no.: W.P.(C) 12784/2019
The Delhi High Court has held that only 'original reasons' which formed the basis for initiating reassessment proceedings under Section 147 of the Income Tax Act can be taken into consideration by the Assessing Officer, for coming to the conclusion that income had escaped assessment.
A division bench of Justice Yashwant Varma Hon'ble Mr. Justice Dharmesh Sharma observed that there cannot be a 'disconnect' between the reasons which had been originally recorded for initiation of reassessment action and the findings on the basis of which the final assessment order is passed.
Case title: Kshitij Ghildiyal v. Director General Of Gst Intelligence, Delhi
Case no.: W.P.(CRL) 3770/2024
The Delhi High Court has held that grounds of arrest must be furnished to a person arrested under Section 69 of the Central Goods and Services Tax Act, 2017, 'in writing'.
Justice Anish Dayal held that the Supreme Court's judgments in Pankaj Bansal and Arvind Kejriwal with respect to offence under PMLA and in Prabir Purkayastha with respect to offences under UAPA will also apply to offences under the CGST Act.
Case title: Director Of Income Tax Intn'l v. Western Union Financial Services Inc. (and batch)
Case no.: ITA 1288/2006
The Delhi High Court has reiterated that “activities such as market research, promotional activities, training or deployment of software would clearly not breach the threshold of auxiliary functions as are envisaged under the DTAA.”
Double Taxation Avoidance Agreement (DTAA) was signed between India and the US to prevent International Double Taxation and encourage international trade. Determination of core or auxiliary activity is a relevant factor to ascertain whether a unit of a foreign entity constitutes 'Permanent establishment' in India, exigible to tax. Entities performing auxiliary functions are excluded under Article 5 of DTAA.
Case title: Director Of Income Tax Intn'l v. Western Union Financial Services Inc. (and batch)
Case no.: ITA 1288/2006
The Delhi High Court has held that 'software' being an intangible property, cannot alone constitute 'Permanent Establishment' (PE) of a foreign entity in India.
PE is defined under Article 5 of the Double Taxation Avoidance Agreement (DTAA) between India and the United States of America as- a fixed place of business through which businesses of an enterprise are wholly or partly carried on. A foreign entity's PE in India would exigible to tax. Some examples of fixed places are given in Article 5(2), by way of an inclusion. Article 5(3), on the other hand, excludes certain places which would not be treated as PE.
Case title: Tavrur Oils And Fats Pvt Ltd v. Commissioner Central Goods And Service Tax & Anr.
Case no.: W.P.(C) 17146/2022
The Delhi High Court ordered the GST Department to refund the service tax paid by certain importers on ocean freight (transportation of goods by vessel).
In doing so, a division bench Justices Yashwant Varma and Dharmesh Sharma cited the Gujarat High Court's judgment in M/s Sal Steel Ltd. & Anr. vs. Union of India (2019) where it was declared that levy of service tax on ocean freight is unconstitutional.
Case title: M/S Pawan Hans Limited (Formerly Known As Pawan Hans Helicopters Limited) v. Commissioner Of Trade And Taxes
Case no.: ST.APPL. 1/2023
The Delhi High Court has held that the supply of helicopters by Pawan Hans Ltd. to the Andaman & Nicobar Islands administration, under an agreement executed in the year 2003, is not exigible to tax under the Central Sales Tax Act, 1956.
A division bench of Justices Yashwant Varma and Ravinder Dudeja reasoned that the agreement did not qualify as a 'sale' between the parties. It noted that while Pawan Hans (appellant) was obliged to place a helicopter at the service of the A&N Administration, the right to operate and maintain it remained with the appellant.
Case Title: Pr. CIT vs. International Coal Ventures Pvt Ltd
Case Number: ITA 1174/2018
The Delhi High Court recently accepted that the interest received on borrowed funds, which were temporarily held in interest bearing deposit, is a part of the capital cost and is required to be credited to Capital Work In Progress.
The Division Bench of Acting Chief Justice Vibhu Bakhru and Justice Swarana Kanta Sharma observed that if the interest is earned on the amounts temporarily kept in fixed deposits in course of acquisition of coal mine to set up its business, then interest earned would require to be accounted for as part of capital value of business/ asset.
Case Title: MS Enterprises vs. Sales Tax Officer
Case Number: W.P.(C) No. 10496/2024
The Delhi High Court held that the application for revocation of cancellation of GST registration could not have been dismissed, when apart from using the phrase “any supporting documents” and “others”, no further reason was assigned as to why the said application was dismissed.
The High Court held so, while observing that the solitary reason which has weighed upon the respondent to reject that application was a failure on the part of petitioner to respond to a SCN.
Case Title: Principal CIT vs. M/s Hespera Reality Pvt Ltd
Case Number: ITA 468/2024
The Delhi High Court held that proviso to Sec 10(38) cannot be read in reverse to mean that if gains are not included as book profits u/s 115JB, the same are liable to be included as income for purposes of assessment to tax under the normal provisions. Even though, the gains are required to be excluded from income chargeable to tax u/s 10(38), added the Court.
As per Section 10(38) of Income tax Act, in computing the total income of a previous year of any person, any income arising from the transfer of a long-term capital asset, being an equity share in a company or a unit of an equity-oriented fund or a unit of a business trust, shall not be included. The Division Bench of Acting Chief Justice Vibhu Bakhru and Justice Swarana Kanta Sharma observed that the income from capital gains on certain assets, which are excluded from income u/s 10(38), would nonetheless, be included in computing book profits for the purposes of Sec 115JB.
Case title: MS L. R. Sharma And Co v. Union Of India & Ors.
Case no.: W.P.(C) 13689/2024
The Delhi High Court has held that the usage of expression "where it is possible to do so" doesn't make the timeline stipulated under Section 73(4B) of the Finance Act, 1994 to determine service tax dues 'suggestive' in nature.
A division bench of Acting Chief Justice Vibhu Bakhru and Justice Swarana Kanta Sharma observed, “...Section 73(4B) was framed and introduced in the Finance Act to ensure effective administration of taxation. While there cannot be denying that the taxation forms the backbone of a nation's economy, any inordinate delay by the Revenue itself in prosecuting its own cases cannot be construed in their favour by stretching the period of limitation to nine years especially when the provision requires the proceedings to be concluded within six months / one year.”
Gauhati HC
Case title: Abhishek Mittal v. UoI & Ors.
Case no.: WP(C)/7014/2022
The Gauhati High Court has dismissed a challenge to an order under Section 148A(d) of the Income Tax Act, 1961, deeming the Petitioners' case fit for issuance of notice for escapement of income assessment under Section 148.
In doing so, it held that the order cannot be faulted merely because the alleged bogus transactions, whose existence the Petitioners (X and Y) did not deny in their reply, were perceived to be that of sale instead of purchase.
Case Title: Udit Tibrewal v. The State of Assam & Ors.
Case Number: WP(C)/5233/2024
The Gauhati High Court stated that issuance of summary of Show Cause Notice in GST DRC-01 cannot substitute requirement for issuance of show cause notice under section 73(1) of CSGT Act.
The Bench of Justice Manish Choudhury observed that “…….the issuance of the Summary of the Show Cause Notice, Summary of the Statement and Summary of the Order do not dispense with the requirement of issuance of a proper Show Cause Notice and Statement as well as passing of the Order as per the mandate of Section 73 by the Proper Officer. As initiation of a proceedings under Section 73 and passing of an order under the same provision have consequences. The Show Cause Notice, Statement as well as the Order are all required to be authenticated in the manner stipulated in Rule 26 [3] of the Rules of 2017.”
Case title: Commissioner of Income Tax v. M/s Goldstone Cements Limited
Case no.: INCOME TAX APPEAL NO.08 OF 2022
The Gauhati High Court refused to entertain an appeal with respect to genuineness of credit received by an assessee from share application money, holding that the same would require it to venture into factual matrix of the case which is beyond its jurisdiction under Section 260A of the Income Tax Act, 1961.
The appeal was preferred by the Revenue, following CIT(A) reversing the additions made by it on the strength of alleged share application money received by the Assessee. Its second appeal against the said order was dismissed by the ITAT (making HC the third appellate forum).
Kerala HC
Case Title: The Principal Commissioner of Income Tax Kochi v. M/s Dewa Projects Pvt. Ltd.
Case Number: I.T.A.NO.82 OF 2018
The Kerala High Court stated that loss in derivatives is not a speculative transaction and can be set off against business income of the assessee. Further, this is not a case where Section 73 of Income Tax Act is attracted since it deals with losses in speculation business.
The Bench of Justice A.K. Jayasankaran Nambiar observed that “…a loss in the derivative business would consequently be a business loss for the purposes of Section 72, and a set off of such business loss would have to be permitted against profits and gains of business as computed in terms of the I.T. Act…”
Case Title: Braddock Infotech Private Limited v. Joint Director General Of Foreign Trade
Case Number: WP(C) NO. 16812 OF 2024
The Kerala High Court stated that the provisions of the Foreign Trade Policy cannot by itself authorise the levy of interest under Section 28AA of the Foreign Trade (Development and Regulation) Act, 1992, as such levy must be supported by plenary legislation.
The Bench of Justice Gopinath P. was considering a case where the assessee challenged the interest imposed upon him under the provisions of Section 28AA of the Customs Act, 1962 on the amounts repaid by the assessee on the assessee being found ineligible for the benefit of the Scheme introduced by the Foreign Trade Policy.
Case Title: Rejimon Padickapparambil Alex v. Union Of India
Case Number: WA NO. 54 OF 2024
The Kerala High Court while quashing the demand order stated that there has been no wrong availment of credit, and that the only mistake committed by the assessee was an inadvertent and technical one, where he had omitted to mention the IGST figures separately in Form GSTR 3B.
The Division Bench of Justices A.K. Jayasankaran Nambiar and K.V. Jayakumar observed that “……The mistake was also insignificant because it is not in dispute that there was no outward supply attracting IGST that was effected by him…”
Case Title: M/s Fortune Service v. Union Of India
Case Number: WP(C) NO. 20656 OF 2024
The Kerala High Court stated that orders issued under Section 73 of the CGST/SGST Acts must carry the digital or manual signature of the officer passing the order in order to treat the order to be a valid order.
The Bench of Justice Gopinath P. was considering the issue that whether orders issued under Section 73 of the CGST/SGST Acts must carry the digital or manual signature of the officer passing the order in order to treat the order to be a valid order for the purposes of the CGST/SGST Acts.
Case Title: N. Binoj v. Income Tax Officer
Case Number: WA NO. 2093 OF 2023
The Kerala High Court stated that notice issued against a dead person is invalid and participation of legal heirs of deceased in the proceedings won't make it legal.
The Division Bench of Justices A.K. Jayasankaran Nambiar and K.V. Jayakumar observed that “the consent of the parties cannot confer jurisdiction to the assessing authority for initiation of an action which is otherwise illegal and 'non-est'.”
Case Title: CHAVAKKAD SERVICE COOPERATIVE BANK vs. ITO
Case Number: ITA No.9 of 2023
The Kerala High Court held that circumstances under which AO can absolve a taxpayer from payment of penalty u/s 271B are discernible from a reading of Sec 273B, which states that no penalty can be imposed on an assessee u/s 271B for breach of the provisions, if he proves that there was "reasonable cause" for the said failure.
The provision of Section 44AB of Income tax Act prescribes a procedure of audit of accounts by certain categories of assessees and deals inter alia with the manner in which reports of such audit have to be submitted before the AO.
Case Title: The Kerala State -Ex-Services League State Committee, Thiruvanthapuram v. Commissioner of Central Excise Customs and Service Tax, Trivandrum
Case Number: C.E. APPEAL. NO. 16 OF 2018
The Kerala High Court stated that services by charitable society who look after socio-economic and welfare matters of ex-serviceman and their families is liable to service tax.
The Division Bench of Justices A.K. Jayasankaran Nambiar and Easwaran S. observed that “for an association like the assessee, the embarking on a transaction that is designed to earn income for its members, would have to be seen as a commercial venture and the assessee who embarks on such a venture, a 'commercial concern'.”
Orissa HC
Case Title: M/s. Ganni Ajay Dora, Cuttack v. Chief Commissioner of CT and GST, Cuttack and others
Case Number: W.P.(C) No.22850 of 2024
The Orissa High Court, considered that the assessee was unwell and undergoing medical treatment at the time the notices regarding his appeal were served and accordingly quashed the order demanding liability for unpaid tax.
The Bench consisting of Justices Arindam Sinha and M.S. Sahoo was considering a case in which the assessee/petitioner failed to reply to the notice regarding his appeal due to health issues.
Patna HC
Case Title: M/S Silverline v. The State of Bihar
Case Number: Civil Writ Jurisdiction Case No.14454 of 2024
The Patna High Court stated that the Appellate Authority has a duty and an obligation to examine grounds raised by assessee in memorandum of appeal and decide issue on merits even if appeal is filed ex parte.
The Bench consisting of Chief Justice K. Vinod Chandran and Justice Partha Sarthy, stated that “the Appellate Authority even while considering the appeal ex parte will have to consider the grounds raised in the memorandum of appeal, deciding the appeal on merits…”
Punjab & Haryana HC
Case Title: M/s. Imaging Solutions (P) Ltd. v. State of Haryana and others
Case Number: CWP-28643-2024
The Punjab and Haryana High Court stated that appeal cannot be dismissed as not maintainable on account of non-payment of requisite fee.
The Division Bench consisting of Justices Sanjeev Prakash Sharma and Sanjay Vashisth was considering a case where the Appellate Authority dismissed the appeal as not maintainable on the ground that the assessee/petitioner had failed to pay Rs. 10,000/- as fee for hearing the appeal while the assessee was required to deposit a total sum of Rs. 20,000/- as fee.
Rajasthan HC
Case Title: Manoj Kumar Jain v. Union Of India
Case Number: S.B. Criminal Miscellaneous Bail Application No. 4191/2024
The Rajasthan High Court granted bail to the assessee charged for issuing fake invoices to the firms on the ground that the department failed to prove that these firms are not in existence and their GST registration have been cancelled.
The Bench of Justice Ganesh Ram Meena observed that “…there is nothing on record that who claimed how much input tax credit on the basis of alleged fake invoices said to have been issued by the accused”.
Case title: Dharnia Motors v. UoI & Ors.
Case no.: Civil Writ Petition No. 9717/2018
The Rajasthan High Court has held that Rules prescribing the 'time and manner' for claiming transitional credit, in addition to the statutory procedure provided under Section 140 of the Central Goods and Services Tax Act 2017, are mandatory in nature.
A division bench of Chief Justice Manindra Mohan Shrivastava and Justice Munnuri Laxman thus held that prescriptions under Section 117 of CGST Rules are mandatory in nature, and non-compliance thereof would lead to rejection of a trader/dealer's claim of transitional credit.
Telangana HC
Case title: AP State Civil Supplies Corporation Limited v. Income Tax Officer
Case no.: I.T.T.A.Nos.325, 326, 327 AND 328 OF 2007, 79, 80, 81, 82 AND 83 OF 2008
The Telangana High Court has held that the benefit of exemption under Section 11 of the Income Tax Act, 1961, can be denied only on income from such investments made by charitable or religious institutions, which are in violation of Section 13(1)(d) of the Act.
A division bench of Chief Justice Alok Aradhe and Justice J.Sreenivas Rao held that the Legislature did not contemplate the benefit of denial of Section 11 of the Act, to the entire income.
Case title: Aloor Venkat Rohan Rao v. State of Telangana & Ors.
Case no.: WRIT PETITION No. 33567 OF 2024
The Telangana High Court recently set aside Moosarambagh RTO's direction imposing 2% additional tax on a resident's purchase of a Mahindra XUV 700 car by labelling it to be his 'second vehicle'.
Justice Nagesh Bheemapaka clarified that the additional tax on a second vehicle is applicable only if an individual owns two vehicles at the time of registration of the new vehicle (not at the time of its purchase).
TRIBUNALS
Case Title: ACIT versus Ranu Vohra
Case Number: ITA No.412/MUM/2024
The Mumbai ITAT held that a taxpayer is not prevented from arranging her affairs within the legal framework and through legitimate means to reduce his tax liability.
While pointing that the Income Tax Statute does not require the assessee to pay more tax, the Division Bench of Saktijit Dey (Vice President) and Amarjit Singh (Accountant Member) observed that “short-term capital loss derived by assessee from sale of shares cannot be prevented from being set off against the long-term capital gain by alleging adoption of colourable device”.
Case Title: Medley Pharmaceuticals vs. DCIT
Case Number: ITA. No. 1387 to 1390/Mum/2009
The Mumbai ITAT recently clarified that an industrial undertaking was not required to set off the losses incurred by it in one eligible unit against the profits earned from another eligible unit for the purpose of calculating deduction u/s 80-IB.
Referring to the decision in case of CIT v. Dewan Kraft Systems [2008] 297 ITR 305, the Division Bench of Saktijit Dey (Vice President) and Narendra Kumar Billaiya (Accountant Member) reiterated that “in computing the gross total income of assessee, the same has to be determined after adjusting the losses and that, if the gross total income of the assessee so determined turns out to be 'Nil', then the assessee would not be entitled to deduction under Chapter VI-A of the said Act”.
The New Delhi Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has stated that discounts/incentives received from manufacturer and passed on to customers during car sales constitute sale of goods, not service, hence not liable to service tax.
The Bench of Binu Tamta (Judicial Member) and Rajeev Tandon (Technical Member) has observed that “sale/target incentive/incentive on sale of vehicles and incentive on sale of spare parts received by assessee, could not be considered as rendering of business auxiliary service.”
The New Delhi Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has stated that mark-up earned by purchasing and selling cargo space to importers/exporters on principal-to-principal basis in freight business is not liable to service tax as it amounts to trading activity and not provision of service as intermediary.
The Bench of Binu Tamta (Judicial Member) and Rajeev Tandon (Technical Member) has observed that “when the assessee is acting on a principal to principal basis, as regards purchase and selling of space from shipping line/airline and selling to importers the said act would not amount to an activity liable to Service Tax.”
OTHER DEVELOPMENTS
ICEGATE E-Payment Platform Enables Voluntary Payment Electronically: Finance Ministry
The CBIC on 23.12.2024 has issued a circular informing that the ICEGATE e-payment platform has enabled voluntary payments electronically. As per the circular, the new functionality will replace the existing TR-6 payments which are currently being done manually at various Customs Stations. The functionality will enable the users to generate a self-initiated challan for voluntary payments and then make payments through the ICEGATE e-payment platform without any further approval by officers of Customs.
GST To Remain @5% On Popcorn Sold In Theatres, Clarifies Govt
The Finance Ministry in its 55th Meeting of the GST Council, clarified that ready to eat popcorn which is mixed with salt and spices are classifiable under HS 2106 90 99 and attracts 5% GST if supplied as other than pre-packaged and labelled and 12% GST if supplied as pre-packaged and labelled.
However, when popcorn is mixed with sugar thereby changing its character to sugar confectionary (e.g. caramel popcorn), it would be classifiable under HS 1704 90 90 and attract 18% GST. By this recommendation, the government decided to regularize the issues for the past on “as is where is” basis.