Allahabad High Court Monthly Tax Digest: April 2024

INDEX

M/S United Spirits Limited v. State Of U.P. And 3 Others 2024 LiveLaw (AB) 222

The Commissioner, Commercial Tax U.P. v. M/S Godfrey Philips India Limited 2024 LiveLaw (AB) 223

M/S Eco Plus Steels Pvt. Ltd. v. State Of U.P. And 3 Others 2024 LiveLaw (AB) 224

Commissioner, Commercial Tax v. S/S Soma Enterprises Ltd 2024 LiveLaw (AB) 225

Durga Steel Rolling Mills Thru. Partner Amit Arora v. Commissioner Of Commercial Taxes UP Lucknow 2024 LiveLaw (AB) 228

Dipak Kumar Agarwal v. Assessing Officer And 4 Others 2024 LiveLaw (AB) 248

M/S Arvind Kumar Shivhare v. Union Of India And Another 2024 LiveLaw (AB) 249

Hotel President Through Its Partner / Proprietor And Another v. State Of Up And 2 Others 2024 LiveLaw (AB) 251

Mukesh Kumar Jha vs. Union of India 2024 LiveLaw (AB) 261

Ram Kishan Bairwa v. Central Excise Service Tax Appellate Tribunal And 2 Others 2024 LiveLaw (AB) 262

Meera Pandey Thru. Her Attorney v. Union Of India, Ministry Of Finance Deptt. Of Revenue (Cbdt) , New Delhi And Others 2024 LiveLaw (AB) 271

Sandeep Singh v. State Of U.P. And 2 Others 2024 LiveLaw (AB) 278

ORDERS/ JUDGMENTS OF THE MONTH

Entry Tax | Indian Made Foreign Liquor Not Taxable Under UP Entry Of Goods Into Local Area Act 2007: Allahabad High Court

Case Title: M/S United Spirits Limited v. State Of U.P. And 3 Others

Case Citation: 2024 LiveLaw (AB) 222

The Court held that since Indian Made Foreign Liquor was not provided in the schedule of taxable goods under the UP Entry of goods into Local Area Act 2007, authorities had no jurisdiction to impose tax on it.

S.58 UPVAT | In Revisional Jurisdiction, HC Must Uphold Sanctity Of Judgments/Orders, Must Intervene Only When There Are Compelling Reasons: Allahabad HC

Case Title: The Commissioner, Commercial Tax U.P. V. M/S Godfrey Philips India Limited

Case Citation: 2024 LiveLaw (AB) 223

The Allahabad High Court held that 'appeals' includes a comprehensive review encompassing both law and fact whereas 'revision' is like the power of superintendence of the High Court where the Court can only see if the decision was passed in accordance with law.

While elaborating the difference between 'appeal' and 'revision', the Court has held that in exercise of its revisional jurisdiction, the High court must uphold the sanctity of judgments and orders and intervene only when there are compelling reasons to do so.

Confiscation & Penalty Order Must Be Quashed If Quantification Of Stock Based On Eye Estimate: Allahabad High Court

Case Title: M/S Eco Plus Steels Pvt. Ltd. v. State Of U.P. And 3 Others

Case Citation: 2024 LiveLaw (AB) 224

The Allahabad High Court has held that once the Appellate Authority has recorded a specific finding that quantification of stock was based on eye estimate and not in accordance with law, the confiscation order as well as the penalty order are liable to be set aside.

The Court further held that the authorities had acted in a callous manner by issuing the confiscation order 11 months after the survey had been conducted. The Court held that such inordinate delay in issuing show cause notice goes to the root of the matter.

S.16 UPVAT Act | Invoices, RTGS Details Not Sufficient For Deciding ITC Claim, Transportation Details Must Be Produced: Allahabad High Court

Case Title: Commissioner, Commercial Tax v. S/S Soma Enterprises Ltd

Case Citation: 2024 LiveLaw (AB) 225

Placing reliance on the judgment of the Supreme Court in State of Karnataka vs. M/s Ecom Gill Coffee Trading Private Limited, the Allahabad High Court has held that input tax credit cannot be granted based solely on invoices and RTGS payment details.

The Court observed that Tribunal had recorded a specific finding that certain dealers from whom goods had been purchased were not entitled to issue of tax invoices as they were following compounding scheme. Further, it had been recorded that registration of certain dealers had been cancelled. The Court observed that despite recording such findings, the Tribunal had allowed the claim of ITC solely based on the fact that payments were made through RTGS and the assesee had submitted invoices which was not permissible.

UPVAT | Intention To Evade Tax Essential For Imposition Of Penalty U/S 54(1)(2): Allahabad High Court

Case Title: Durga Steel Rolling Mills Thru. Partner Amit Arora v. Commissioner Of Commercial Taxes UP Lucknow

Case Citation: 2024 LiveLaw (AB) 228

The Allahabad High Court has held that intention to evade tax is essential condition for imposing penalty under Section 54(1)(2) of the Uttar Pradesh Value Added Tax Act, 2008. Emphasizing on the word “wilful”, the Court held that order of the Assessing Authority under Section 28(2) of the UPVAT Act was based on cogent material does not indicate wilful attempt to defeat or circumvent the tax law to reduce the tax liability. The Court held that intention to evade tax is a must for imposition of penalty.

S.132B(1)(i) Income Tax Act | Power Of Assessing Authority To Decide Application For Release Of Seized Assets Not Automatically Abated After 120 Days: Allahabad HC

Case Title: Dipak Kumar Agarwal vs. Assessing Officer And 4 Others

Case Citation: 2024 LiveLaw (AB) 248

The Allahabad High Court has held that the jurisdiction of the Assessing Authority to decide the application for release of seized assets under Section 132B (1)(i) does not abate after a period of 120 days from the date on which the last of the authorizations for search under section 132 or for requisition under section 132-A was executed.

The Court held that the word “shall” in 2nd proviso to Section 132B (1)(i) is directory in nature as no stipulation is made for the automatic release of goods after the period of 120 days. It held that a levy of interest on the seized asset contemplated under Section 132B (4) does not make the “shall” in 2nd proviso to Section 132B (1)(i) mandatory in nature.

[Income Tax Act] Supreme Court Decision In UOI v. Ashish Agarwal Applicable To Parties Who Challenged Notice U/S 148: Allahabad High Court

Case Title: M/S Arvind Kumar Shivhare vs. Union Of India And Another

Case Citation: 2024 LiveLaw (AB) 249

The Allahabad High Court has held that Supreme Court in Union of India v. Ashish Agarwal had not issued a general mandamus quashing all notices issued under Section 148 of the Income Tax Act, 1961. The Court observed that the order of Supreme Court was limited to those notices which had been challenged before the Apex Court and various High Courts in India.

[House Tax] Authorities Acted In Undue Haste By Giving Only One Day's Notice For Hearing: Allahabad High Court Quashes Assessment Order

Case Title: Hotel President Through Its Partner / Proprietor And Another v. State Of Up And 2 Others

Case Citation: 2024 LiveLaw (AB) 251

The Allahabad High Court held that the authorities acted in undue haste by giving one day's notice for the hearing, which is not sufficient notice. The Court held that

“Issuance of notice is not an empty formality to be completed only to protect the record from a technical vice of violation of rules of natural justice. Issuance of notice and giving opportunity to respond to the notice is a real safeguard against arbitrary and capricious exercise of power by quasi judicial authorities. It runs parallel to the obligation of the quasi judicial authorities to confront the noticee with adverse material and therefore the likely reasoning that he has to meet for which such notice has been issued.”

Wrongful Utilization Of Input Tax Credit Amounting To ₹315 Cr May Affect County's Economy: Allahabad High Court Denies Bail

Case Title: Mukesh Kumar Jha vs. Union of India

Case Citation: 2024 LiveLaw (AB) 261

The Allahabad High Court has rejected bail to four persons accused of wrongfully availing input tax credit of about Rs. 315 crores on grounds that an economic offence of such magnitude may affect the economy of the country.

The Court relied on Tarun Kumar vs. Assistant Director Directorate of Enforcement where the Supreme Court held that serious view must be taken in economic offences which have deep-rooted controversies and can seriously affect the economy of the country.

[Central Excise Act] Mandatory Pre-Deposit U/S 35F For Filing Appeal Before CESTAT Can't Be Waived In Writ Jurisdiction: Allahabad High Court

Case Title: Ram Kishan Bairwa vs. Central Excise Service Tax Appellate Tribunal And 2 Others

Case Citation: 2024 LiveLaw (AB) 262

The Allahabad High Court has held that mandatory condition of pre-deposit prescribed under Section 35F of the Central Excise Act for filing appeals before the Customs Excise and Service Tax Appellate Tribunal cannot be waived under Article 226 of the Constitution of India. The Court relied on Shri Subhash Jain v. Commissioner of Central Goods And Service Tax, where a division bench of the Allahabad High Court had refused to waive the pre-deposit under the Central Excise Act.

Statement Of Contractor Without Supporting Material Not Enough To Declare Transaction Benami: Allahabad HC Quashes Benami Transaction Proceedings

Case Title: Meera Pandey Thru. Her Attorney vs. Union Of India, Ministry Of Finance Deptt. Of Revenue (Cbdt) , New Delhi And Others

Case Citation: 2024 LiveLaw (AB) 271

The Allahabad High Court has held that mere statement of the contractor doing construction work cannot be relied upon to declare such construction as benami transaction under the Prohibition of Benami Property Transactions Act, 1988. The Court held that “reasons to believe” in Section 24(1) of the Act must be based on cogent and relevant material.

The Court held that for invoking jurisdiction under Section 24(1) of the Act, there are two essential conditions:

“ (i) The Initiating Officer should have material in his possession and;

(ii) the material should be sufficient to cause a reason to believe.”

[United Provinces Excise Act 1910] Cancellation Of License Can't Be Due To Suspicion, Must Be Based On Cogent Material: Allahabad High Court

Case Title: Sandeep Singh v. State Of U.P. And 2 Others

Case Citation: 2024 LiveLaw (AB) 278

The Allahabad High Court has held that the cancellation of license under Section 34(2) of the United Provinces Excise Act, 1910 cannot be based on suspicion. The Court held that without there being any cogent material or evidence such harsh penalty of cancellation of license must not be invoked. The Court held that Section 34(2) of the Act is discretionary and not mandatory and it cannot be applied automatically resulting in cancellation of another excise license of a licensee.