Tax Weekly Round-Up: November 11 To November 17, 2024
Kapil Dhyani
20 Nov 2024 10:00 AM IST
HIGH COURTS Allahabad HC 1. GST | Assessee Entitled To Fresh Notice If Initial Notice U/S 73 Was Missed Due To Being Uploaded Under 'Additional Notices' Tab: Allahabad HC Case title: M/S Ashish Traders v. State of U.P. Case no.: WRIT TAX No. - 1882 of 2024 The Allahabad High Court has held that an assessee is entitled to fresh notices demanding unpaid tax or short tax...
HIGH COURTS
Allahabad HC
Case title: M/S Ashish Traders v. State of U.P.
Case no.: WRIT TAX No. - 1882 of 2024
The Allahabad High Court has held that an assessee is entitled to fresh notices demanding unpaid tax or short tax under Section 73 of the Goods and Service Tax Act, 2017, if the initial notices were not duly communicated to the assessee.
A division bench of Chief Justice Arun Bhansali and Justice Vikas Budhwar relied on Ola Fleet Technologies Pvt. Ltd. v. State of UP (2024) whereby “benefit of doubt” was given to the assessee since notices issued to it did not show up on the assessee's portal under the tab "view notices and orders".
Case title: Ankur Vikram Singh Respondent v. State of UP
Case no.: WRIT TAX No. - 1869 of 2024
The Allahabad High Court has held that the owner of an electric vehicle which was purchased prior to October 14, 2022 cannot seek refund of tax citing a subsequent notification exempting the payment of One Time Tax.
Petitioner had sought refund of One Time Tax paid in respect of his Hybrid Vehicle purchased on October 13, 2022. The relief was sought on the strength of a notification issued by the State providing tax exemption for electric vehicles purchased and registered from the date of notification of the Uttar Pradesh Electric Vehicle Manufacturing and Mobility Policy, 2022 i.e. October 14, 2022.
Case title: M/S Lakhdatar Traders v. State Of Up And 2 Others
Case no.: WRIT TAX No. - 1852 of 2024
The Allahabad High Court has set aside the demand and penalty order passed under Section 129 of the Central Goods and Services Tax Act 2017 against a trader whose GST registration came to be suspended, after it found that the goods in transit were accompanied with proper tax invoice and e-way bill.
A division bench of Chief Justice Arun Bhansali and Justice Vikas Budhwar relied on M/s Sahil Traders v. State of U.P. and another, 2023 wherein a coordinate bench had held that once the goods were found with proper tax invoice and E-way bill, the consignee will be deemed owner and goods will have to be released in terms of Section 129(1)(a) of the CGST Act.
Bombay HC
Case Title: Credit Agricole CIB Services Private Limited v. Union of India & Ors
Case Number: WPL.No.23325 of 2024
The Bombay High Court stated that refund rejection order passed without hearing opportunity violates rule 92(3) of CGST Rules, 2017 and principles of natural justice.
The Bench of Justices M. S. Sonak and Jitendra Jain observed that “……in any event, proviso to Rule 92(3) of the CGST Rules, 2017, contemplates reasonable opportunity to be heard, implying that such hearing should be after the assessee files the reply within the time prescribed in the show cause notice.”
Calcutta HC
Case title: Principal Commissioner Of Income Tax-5, Kolkata Vs M/S. Delta Dealers Private Limited
Case no.: ITAT/148/2024
The Calcutta High Court has held that it cannot indulge in factual examination of the material produced or not produced by an assessee-company to explain the share capital and premium received by it, in an appeal filed under Section 260A of the Income Tax Act.
A division bench of Chief Justice T.S. Sivagnanam and Justice Hiranmay Bhattacharyya thus refused to interfere with an ITAT order which deleted additions made by the Assessing Officer towards “unexplained” share capital and share premium of Rs.15,51,00,000/- under Section 68.
Case title: Principal Commissioner Of Income Tax Central 2 Kolkata Vs Gpt Sons Pvt Ltd
Case no.: ITAT/195/2024
The Calcutta High Court has refused to apply Section 292B of the Income Tax Act, 1961 to a scrutiny notice issued in an amalgamating company's name, despite the Assessing Officer being aware about the company's amalgamation.
Department claimed that neither the assessee nor the amalgamating company informed the Assessing Officer about the scheme of amalgamation being approved by the High Court. However, the Court noted that in the reasons to believe which was appended to the notice the assessing officer has specifically referred to the details regarding the amalgamation.
Delhi HC
The Delhi High Court has made it clear that once scrutiny assessment is held under Section 143 of the Income Tax Act but due to a mistake of the Assessing Officer there is under assessment of income, reopening assessment under Section 147 of the Income Tax Act, 1961 is not permissible.
“...AO specifically records in the reasons that it was a 'mistake' which resulted in under assessment of the income…It is, therefore, manifest that AO has not attributed the alleged escapement of income to any failure on the part of petitioner but to a mistake and lack of verification on its own part. Petitioner cannot be allowed to suffer because of lapse of the AO.,” a division bench of Justices Yashwant Varma and Ravinder Dudeja observed.
Case title: Pr. Commissioner Of Income Tax Delhi -11 v. Sangeeta Jain
Case no.: ITA 1092/2018
The Delhi High Court has held that in order to invoke Section 263 of the Income Tax Act, 1961, the Principal Commissioner must satisfy “twin conditions”, i.e. form an opinion that the order passed by the Assessing Officer is “erroneous” and “prejudicial” to the interests of the Revenue.
The provision confers power of revision upon the Principal Commissioner or Commissioner, as the case may be.
A division bench of Justices Vibhu Bakhru and Swarana Kanta Sharma observed, “Twin conditions have to be met for assuming jurisdiction under Section 263 of the Act, and the PCIT has to form an opinion that the order passed by the AO is “erroneous” and “prejudicial to the interests of the Revenue.”
Case title: Commissioner Of Income Tax (Tds)-2 Delhi v. Turner General Entertainment Networks India Pvt. Ltd.
Case no.: ITA 547/2024
The Delhi High Court recently explained when an action for imposition of penalty under Section 271C of the Income Tax Act, 1961 can be said to have been “initiated”. Court held that the expression 'action for imposition of penalty is initiated' clearly refers to the date on which the first introductory step for such action is taken.
Case title: Commissioner Of Income Tax (Tds)-1 v. M/S Adma Solutions Pvt. Ltd.(Formerly Known As M/S Infovision Information Services Pvt.Ltd.)
Case no.: ITA 272/2019
The Delhi High Court has made it clear that incorrect mention of assessee's name in a notice issued to it for default in deduction of tax at source is a mere clerical error.
A division bench of Justices Yashwant Varma and Ravinder Dudeja thus held that show cause notice and penalty order passed under the previous name of a company cannot be rendered void.
Case title: Sanjay Bhandari v. Income Tax Office
Case no.: CRL.M.C. 805/2020, CRL.M.A. 3314/2020, CRL.M.A. 10806/2020, CRL.M.A. 10808/2020
The Delhi High Court has held that initiation of prosecution under Section 51 of the Black Money (Undisclosed Foreign Income and Assets and Imposition of Tax) Act, 2015 is not dependent on completion of assessment proceedings initiated against an accused under Section 10 to determine tax evasion.
Justice Dinesh Kumar Sharma observed, “Section 48 of the Black Money Act makes it clear that the offences and prosecution which falls in Chapter V of the Black Money Act are independent of any order made under this Act. It is relevant to note that the assessment under the Black Money Act is being made under Section 10, which falls in Chapter III of the Act…The initiation of the prosecution is not dependent on the completion of assessment, if the conditions as required under Section 51 Black Money Act are fulfilled.”
Case title: Commissioner Of Income Tax (TDS) - 2 v. National Highway Authority Of India
Case no.: ITA 1145/2017
The Delhi High Court has held that 'capital grant subsidy' which may be extended by the National Highways Authority of India to its contractors is not liable to TDS deduction under Section 194C of the Income Tax Act, since such grant cannot be construed as payment for a “work”.
Section 194C requires deduction of tax at source on any sum which may be paid to a contractor for carrying out any work. Capital grant subsidy is financial support which is rendered by NHAI to its Concessionaires in relation to projects where the revenue that the Concessionaire generates is less than the expected projection, rendering it unable to recover the total project cost.
13. [Confiscation] No Provision For Waiver Of Show Cause Notice U/S 124 Of Customs Act: Delhi High Court
Case title: Ms Shubhangi Gupta v. Commissioner Of Customs & Ors.
Cae no.: W.P.(C) 10772/2024
The Delhi High Court recently came to the rescue of an OCI cardholder whose luxury watch was confiscated by the Customs Department when she landed at IGI Airport, without issuance of any show cause notice under Section 124 of the Customs Act, 1962.
A division bench of Justices Vibhu Bakhru and Swarana Kanta Sharma rejected the Department's contention that the woman had herself waived the notice. It observed, “The seized goods are required to be returned, if a notice under Section 124 of the Act is not issued within the period as prescribed…Concededly, there is no provision for waiver of the notice as prescribed under the statute.”
Case title: M/S Hcc Vccl Joint Venture v. Union of India
Case no.: W.P.(C) 10940/2023
The Delhi High Court has held that refunds, be it from the balance left in Electronic Cash or the Electronic Credit Ledger, are treated at par and the Commissioner under the Central Goods and Services Tax Act may withhold both in exercise of its powers under Section 108.
Section 108 empowers the revisional authority to place in abeyance “any order” made under the CGST Act, which in its opinion could be said to be illegal, improper or prejudicial to the interest of the Revenue.
Case title: Rakesh Kumar Saini v. The Power Finance Corporation Ltd
Case no.: W.P.(C) 12196/2024
The Delhi High Court has made it clear that an investor of 'Capital Gain Tax Exemption Bonds' cannot seek premature withdrawal through judicial intervention. A single bench of Justice Sanjeev Narula ruled that such an act would defeat the legislative intent behind Section 54EC of Income Tax Act, 1961.
The provision stipulates that long-term capital gain will not be charged on an assessee if he invests in certain specified bonds (which come with a lock-in period).
Gauhati HC
Case title: M/s Surya Construction v. Union of India and others
Case No.: WP(C)/6469/2021
The Gauhati High Court has made it clear that interest on refund under Section 244A of the Income Tax Act, 1961 applies only to those cases where refund is delayed by the Income Tax Department.
Justice Devashis Baruah thus declined interest to a construction contractor, whose TDS was deposited in the wrong PAN number by the Defence Ministry's Border Roads Organisation.
Gujarat HC
Case Title: Venus Macro Prints Pvt. Ltd. v/s State of Gujarat
Case no.: R/SPECIAL CIVIL APPLICATION NO. 14547 of 2024
Quashing an order of the tax authority which rejected a GST Appeal due to non-submission of a certified copy, the Gujarat High Court said that when an appealed order is available on a common portal and can be directly accessed by the Appellate Authority, there should be no need to submit a “certified copy” to confirm its authenticity.
The court further underscored that in today's age insistence on certified copy of orders which can be obtained directly from the website of judicial and quasi-judicial bodies is "regressive in nature and puts a premium on needless archaism".
Himachal Pradesh HC
Case title: M/s Lakhwinder Singh Stone Crusher v. Union of India & ors.
Case no.: CWP No. 8637/2023
The Himachal Pradesh High Court has dismissed a writ petition challenging notifications issued by the Central government for levy of GST on Royalty paid by a Mineral Concession Holder for mining concession granted by the State.
A division bench of Acting Chief Justice Tarlok Singh Chauhan and Justice Satyen Vaidya observed that a nine-Judge Bench of the Supreme Court in Mineral Area Development Authority & anr. vs. M/s Steel Authority of India & anr. (2024) said there is no specific provision in the Mines and Minerals (Development and Regulation) Act 1957 imposing limitations on the taxing powers of the State. Royalty under Section 9 of the MMDR Act is not in the nature of a tax. Section 9 MMDR Act does not impose any limitation on the power of States to tax minerals. The limitations imposed by Section 9 on royalties do not amount to limitations on the State's powers.
Case title: General Manager, Punjab Roadways Pathankot v. Excise & Taxation Commissioner-cum-Revisional Authority and ors.
Case no.: CWP No. 9777 of 2014
The Himachal Pradesh High Court recently directed the Punjab Roadways to clear the interest due upon it for delayed payment of passenger tax and surcharge to the HP government.
A division bench of Acting Chief Justice Tarlok Singh Chauhan and Justice Satyen Vaidya observed that the body first failed to deposit any tax with the authorities of Himachal Pradesh despite the fact that it had been running its buses within its territory, and then disputed liability of interest.
Kerala HC
Case Title: Manjoo and Company v. The Assistant Commissioner of Income Tax Central Circle
Case Number: I.T.A.NO.40 OF 2020
The Division Bench of Kerala High Court comprising Justices A.K. Jayasankaran Nambiar and Syam Kumar V.M. observed that “the concern of the Assessing Authority, while passing a consequential order, has to be limited to those specific issues that have been remanded to it for consideration by the Commissioner…”
Section 263 of the Income Tax Act, 1961 empowers the Commissioner of Income Tax to revise any order passed under the Income-tax Act, 1961, which is erroneous insofar as it is prejudicial to the interest of the revenue.
Case Title: Kings Infra Ventures Ltd. v. The Assistant Commissioner of Income Tax
Case Number: ITA NO. 28 OF 2023
The Kerala High Court stated that while determining the assessment of relevant years assessing authority cannot determine the assessment for earlier years without enquiry.
The Division Bench of Justices A.K. Jayasankaran Nambiar and Syam Kumar V.M. observed that “…….we fail to understand how the assessing authority, as well as the First Appellate Authority, while considering assessment proceedings for the assessment years 2011-12 could have embarked upon an enquiry with regard to the nature and extent of business that was carried on by the assessee during the assessment years from 1999- 2000 to 2009-10…”
Orissa HC
Case title: Alok Kumar Mohapatra v. Income Tax Officer, Khurda and others
Case no.: WP(C) No.4470 of 2023
The Orissa High Court has made it clear that an entry in the dispatch register maintained by the Revenue is not primary evidence to show service of notice on an assessee.
Petitioner claimed the said intimation of adjustment of refund never saw the light of the day. The Revenue on the other hand submitted that intimation was sent to the Petitioner and the system clearly says date of service to have been on 5th April, 2012.
Division bench of Justices Arindam Sinha and MS Sahoo observed, “Entry made in the system is not primary evidence. It has to be based on something to show that the assessment order denying the exemption claim was informed to petitioner.”
Madhya Pradesh HC
Case title: Rakesh Agrawal v. Central Board Of Direct Taxes And Others
Case no.: WRIT PETITION No. 16139 of 2024
The Madhya Pradesh High Court has held that an order passed under Section 148A(d) of the Income Tax Act 1961 is not an appealable order, therefore, the only remedy with an aggrieved party is to invoke writ jurisdiction of the High Court.
Proceedings under Section 148A are initiated when Income Tax officers suspect that a taxpayer may have concealed income during any assessment year. Section 148(1)(b) contemplates issue of show cause to provide an opportunity of hearing to the assessee. Sub-section (1)(d) empowers the Assessing Officer to decide whether reassessment notice under section 148 should be issued to the assessee.
Hence, an order passed under Section 148(1)(d) is not final determination of escapement of income.
Madras HC
Case Title: The Commissioner of Income Tax, Chennai v. M/s. Johnson Lifts Pvt. Ltd.
Case Number: T.C.A.No.54 of 2015
The Madras High Court ruled that any amount received in advance for services should be treated as the income of the assessee and is, therefore, subject to income tax.
The Division Bench of Justices R. Suresh Kumar and C. Saravanan observed that “if “Accounting Standards” are properly applied by an assessee, the “accounting income” for the payment of income tax will be available. However, if an assessee fails to adopt “Accounting Standards” properly for computation of income, the discretion is vested with the Assessing Officer under Section 145(3) of the Income Tax Act, 1961.”
Case Title: The Triplicane Permanent Fund Ltd. v. The Tamil Nadu Sales Tax Appellate Tribunal
Case Number: W.P.Nos.11208
The Madras High Court stated that assessee is liable to tax on consideration received from sale of unredeemed articles by auctioneers.
The Division Bench of Justices Anita Sumanth and G. Arul Murugan observed that “the levy of penalty under Section 12(3)(a), in the case of non-filing of returns, is, automatic. Admittedly, the assessee has not filed the returns and hence, the basis of assessment would be irrelevant.”
Case Title: Nalin Gupta v. Commissioner of Customs
Case Number: W.A.No.2542 of 2024
The Madras High Court stated that a request for cross-examination of a witness in a Show Cause proceeding cannot be allowed if no reply on merits has been provided by the noticee.
The Division Bench of Justices R. Suresh Kumar and C. Saravanan observed that “………the question of entertaining an application for cross-examination of the witnesses without any reply on merits by a notice in a show cause proceeding is to be eschewed and should not to be allowed.”
Case Title: Lakshana Cotton Spinning Mills Limited v. The Commercial Tax Officer
Case Number: W.P.Nos.33613
The Madras High Court ruled that recovery actions against the directors of a company cannot be initiated if the status of the assessee is non-existent.
The Division Bench of Justices Anita Sumanth and G. Arul Murugan observed that “while in the case of amalgamation, it is only the apparent and outer shell of the company which is destroyed…. However, in the case of dissolution, the entity wholly ceases to exist.”
Case Title: EIH Associated Hotels Ltd vs. CIT
Case Number: T.C.A.No.1249 of 2010
The Madras High Court recently ruled that the expenditure incurred for payment of foreclosure premium for restructuring loan and obtaining fresh loan at a lower rate of interest is allowable as business expenditure u/s 37(1) of the Income Tax Act.
Such ruling came while dealing with a case where scrutiny proceedings were initiated, leading in revisional assessment u/s 263, based on the assumption that assessment order was prejudicial to the interest of Revenue Department, and resultant disallowance of payment of foreclosure premium as a business expenditure.
Telangana HC
Case title: Srinivasa Resorts Limited vs The Commissioner Of Income Tax, A.P.
Case no.: INCOME TAX TRIBUNAL APPEAL NO.87 OF 2008
The Telangana High Court has held that the expenditure incurred by a hotel on replacement of damaged items is a current expenditure, allowable under Section 37 of the Income Tax Act, 1961.
Section 37 of Income Tax Act states that any business expenditure, excluding capital expenditure and the individual's personal expenses, that is spent for the business's operations shall be applicable for deduction from business income.
A division bench of Justices Sujoy Paul and Namavarapu Rajeshwar Rao was dealing with a Hyderabad based 5-Star Hotel's plea to decide whether the expenditure incurred by it comes under current expenditure or capital in nature.
TRIBUNAL
Case title: M/s. Ashutosh Upadhyay v. Commissioner, CGST
Case Number: SERVICE TAX APPEAL NO. 50325 OF 2019
The New Delhi Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has stated that even if service tax is paid under reverse charge mechanism by service recipient, it is the service recipient who can take credit of tax so paid and not service provider.
The Bench of Justice Dilip Gupta (President) and P.V. Subba Rao (Technical Member) has observed that “…so long as the service tax is paid on a taxable service and such taxable service is an input service, the service recipient can take credit. There is no provision for the service provider to take credit of the service tax paid on its output service…”
Case Title: M/s. Rajasthan Co-Operative Dairy Federation Limited v. Commissioner of Central GST, Jaipur
Case Number: SERVICE TAX APPEAL No. 52954 OF 2018
The New Delhi Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has stated that once the consideration (service fee) is refunded by the Assessee to the service recipient, the transaction between the two parties no longer qualified as a 'service' and no service tax would be leviable thereupon.
The Bench of Dr. Rachna Gupta (Judicial Member) and Hemambika R. Priya (Technical Member) has observed that “…the waiver of service fee must be understood as the re-negotiation of the invoice value, which has been reduced from a fixed amount to NIL…”
32. Assessee Is Not Responsible For Disclosing Individual Transactions In ST-3 Returns: CESTAT
Case Title: Commissioner of Central Goods & Service Tax, Delhi South Commissionerate v. M/s Haamid Real Estate Pvt. Ltd.
Case Number: SERVICE TAX APPEAL NO. 52273 OF 2018
The New Delhi Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has stated that ST-3 Return does not require transaction wise details. There is neither any responsibility on the assessee nor any scope to disclose individual transactions in the ST-3 returns.
The Bench of Justice Dilip Gupta (President) and P.V. Subba Rao (Technical Member) has observed that “it is the responsibility of the Central Excise Officer with whom the Returns are filed to scrutinise them and if necessary, make the best judgment assessment under section 72 of the Finance Act and issue an SCN under Section 73 of the Finance Act within the time limit. If the officer does not do so, and any tax escapes assessment, the responsibility for it rests on the officer.”
Case Title: M/s Tripti Alcobrew Pvt. Ltd. v. Commissioner of Central Excise & CGST
Case Number: SERVICE TAX APPEAL NO. 52898 OF 2018
The New Delhi Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has stated that the transfer of a license constitutes a “deemed sale” under article 366(29A)(d) of the Constitution and, therefore, any consideration received from it cannot be subjected to service tax.
The Bench of Justice Dilip Gupta (President) and P.V. Subba Rao (Technical Member) has observed that “…..The consideration received by the assessee on the execution of the License Agreement cannot, therefore, be subjected to service tax nor can such consideration be clubbed with the consideration received by the assessee under the Lease Deed so as to be subjected to service tax under “renting of immovable property” service,”
