Tax Weekly Round-Up: December 02 - December 08, 2024
Kapil Dhyani
10 Dec 2024 5:02 PM IST
SUPREME COURT Subsequent Purchaser Of Imported Vehicle Cannot Be Asked To Pay Customs Duty; Liability On Importer : Supreme Court Case Title: NALIN CHOKSEY VERSUS 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...
SUPREME COURT
Case Title: NALIN CHOKSEY VERSUS 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.
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.
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.”
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.”
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.
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”.
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).
