Tax Weekly Round-Up [16th December - 22nd December 2024]
Kapil Dhyani
23 Dec 2024 12:13 PM IST
![Tax Weekly Round-Up [16th December - 22nd December 2024]](https://www.livelaw.in/h-upload/2024/12/02/750x450_574161-tax-weekly-round-up.webp "Tax Weekly Round-Up [16th December - 22nd December 2024]")
SUPREME COURT
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 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.
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”.
Delhi HC
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.
Gauhati HC
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: 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'.”
