This weekly round-up analytically summarizes the key stories related to the Supreme Court and High Court reported at Taxscan.in during the previous week 8th February 2025 to 14th February 2025) Charitable Trusts Eligible for S. 12-AA Registration Based on Proposed Activities, Not Just Actual Work: Supreme Court COMMISSIONER OF INCOME TAX EXEMPTIONS vs M/S INTERNATIONAL HEALTH CARE CITATION: 2025 TAXSCAN (SC) 124 The Supreme Court of India ruled that a trust’s eligibility for Section 12-AA registration should be determined based on its proposed activities rather than the actual charitable work undertaken before registration. The court held that requiring trusts to show actual charitable work before registration would defeat the purpose of Section 12-AA. The Supreme Court dismissed the Revenue’s petition, upholding the Rajasthan High Court’s ruling in favor of the respondent. ITC Benefit cannot be Reduced without Statutory Sanction: Supreme Court STATE OF PUNJAB & ORS. VS TRISHALA ALLOYS PVT. LTD. CITATION: 2025 TAXSCAN (SC) 123 The Supreme Court in an important judgement held that the benefit of input tax credit (ITC) is traceable to the statute and the same cannot be reduced without the statutory sanction. It was viewed that there was no corresponding provision in Punjab VAT Act which permitted availing of ITC  at the lower rate of tax on the existing stock in trade though the purchase of such input was already made at a higher rate of tax thereby reducing the quantum of credit. “The benefit of input tax credit is traceable to the statute.

If the same has to be reduced, which will have an adverse civil consequence upon the beneficiary, it must have the requisite statutory sanction. In this case, the statutory sanction came on and from 01.04.2014 with the amendment of the first proviso to Section 13(1) of the Punjab VAT Act. Therefore, the High Court was justified in holding that prior to 01.04.2014, there was no statutory sanction to allow applicability of Rule 21(8) on the stock in trade i.e. on inputs already purchased for which transactions stood concluded at a higher rate of tax.”, the bench ruled while upholding the ruling of High Court. Delayed Trial & Prolonged Custody of Accused of PMLA Offence: Supreme Court Grants Bail UDHAW SINGH vs ENFORCEMENT DIRECTORATE CITATION: 2025 TAXSCAN (SC) 122 The Supreme Court granted bail to the accused of the offence under the Prevention of Money Laundering Act, 2002 (PMLA), citing prolonged incarceration and the likelihood of delay in the completion of the trial. “The respondent-accused therein was arrested on 18th September, 2023 and the High Court granted him bail on 6th May, 2024. He was in custody for less than 7 months before he was granted bail. There was no fining recorded that the trial is not likely to be concluded in a reasonable time. In the facts of the case, this Court cancelled the bail granted by the High Court.

Therefore, there was no departure made from the law laid down in the case of Union of India v. K.A.Najeeb and V.Senthil Balaji.”, the court observed AO must issue Speaking Orders Against Assessee’s Written Objections: Calcutta HC Upholds ITAT Order PRINCIPAL COMMISSIONER OF INCOME TAX 13 KOLKATA vs CHAMPALAL OMPRAKASH CITATION: 2025 TAXSCAN (HC) 235 The Calcutta High Court recently affirmed an ITAT ruling that removed an assessee’s income addition of more than ₹4 crore made in a reassessment proceeding under the Income Tax Act, 1961. The Assessing Officer (AO) must give oral directions in response to the assessee’s written objections, the court said. The assessing officer is then required to provide justifications in a fair amount of time. The Apex  Court ruled that the assessee has the right to object to the notice being issued after receiving reasons, and the assessing officer must address the objections by issuing a spoken order. Inappropriate Serving of SCN under CGST Act: Calcutta HC Dismisses Petition on Availability of Statutory Remedy S. N. Tiwari vs The Union of India and Others CITATION: 2025 TAXSCAN (HC) 237 In a recent case, the Calcutta High Court dismissed the writ appeal on availability of statutory remedy against the inappropriate serving of show cause notice (SCN) under the Central Goods and Service Tax (CGST) Act, 2017. In view of availability of efficacious alternative remedy, the single bench of Justice Saugata Bhattacharyya grants leave to the petitioner to prefer an appeal under section 107 of the said Act of 2017 against the order dated 7th December, 2023 by fortnight from date.

If appeal is preferred within the aforesaid time, the appellate authority without raising the issue of limitation shall decide the same on merits in accordance with law by twelve weeks thereafter. No Restriction on GST Registration to Assessee Belongs to Another State: Andhra Pradesh HC Tirumala Balaji Marbles And Granites vs The Assistant Commissioner St and Others CITATION: 2025 TAXSCAN (HC) 238 The Andhra Pradesh High Court stated that  Goods and Service Tax (GST) registration cannot be refused because the assessee belongs to another state. It was viewed that there does not appear to be any restriction for persons outside the State to come into the State of Andhra Pradesh(AP) and seek registration under the  APGST Act, 2017. While allowing the petition, the bench opined that mere apprehension, however well founded, cannot deprive the assessee of his right to carry on trade and business in the State of Andhra Pradesh. Article 19 of the Constitution of India, grants every citizen of this Country, the right to set up and do business anywhere in the country. In such circumstances, the order of rejection is clearly without any basis in law No Cancellation of GST Registration on mere Allegation without providing Reasoning to Aggrieved Business: Delhi HC RASHID PROPRIETOR OF MS ENTERPRISES vs UNION OF INDIA AND ORS CITATION: 2025 TAXSCAN (HC) 239 The Delhi High Court recently quashed an order cancelling the Goods and Services Tax ( GST ) registration of a business observing that such cancellation cannot be effected on mere allegations without providing adequate reasoning and evidence to the aggrieved Business. In the light of such an event, the Bench set aside the cancellation of GST registration and ordered that the concerned letter be furnished to the Petitioner within four weeks while directing that the Petitioner be given due opportunity for hearing before any order is passed.

GST SCN citing No Business at Premises conflicts with Physical Verification Report: Delhi HC quashes GST Registration Cancellation RASHID PROPRIETOR OF MS ENTERPRISES vs UNION OF INDIA AND ORS CITATION: 2025 TAXSCAN (HC) 239 The Delhi High Court recently quashed an order cancelling the Goods and Services Tax (GST) registration of a business observing that the allegation of no actual business being conducted at the concerned premises contradicts the findings of the GST Inspector in the physical verification report. The Bench proceeded to set aside the Order of Cancellation of GST Registration while directing the Revenue to give a reasonable opportunity of hearing to the Petitioner. Karnataka High Court Remands Case, Grants Accused Final Opportunity to Defend Cheque Bounce Allegations MR.K S AMEER JAN vs MR.MAQBOOL AHMED CITATION: 2025 TAXSCAN (HC) 240 The Karnataka High Court has set aside the conviction orders in three cheque bounce cases, granting the accused a final opportunity to cross-examine the complainant and present his defense. The court ruled that the principles of natural justice warranted a fresh hearing, provided the accused deposits 50% of the fine amount before the trial court. In conclusion, the Karnataka High Court upheld the principles of natural justice by granting the accused a final opportunity to present his defense while imposing strict conditions to ensure timely proceedings.

The court set aside the lower court’s conviction orders and directed the accused to deposit 50% of the fine amount before the case could be reheard. No TDS on Payment to Facebook, Amazon Web-Services for Advertisements: Karnataka HC rules in Favour of Urban Ladder Home Décor THE COMMISSIONER OF INCOME TAX vs THE ASSISTANT COMMISSIONER OF INCOME TAX CITATION: 2025 TAXSCAN (HC) 241 In a recent case, the Karnataka High Court has upheld the order of Income tax appellate tribunal (ITAT) which was in favour of asseessee and held that Tax Deduct at source (TDS) is not applicable  on payments made to Facebook, Amazon Web-Services for advertisements. The payments made to the three non-resident companies mentioned above do not qualify as “royalty” under the DTAA, the court ruled in rejecting the department’s appeal against the ITAT’s ruling. GST on BOT Model Construction Agreement: Rajasthan HC directs Appeal before Proper Authority in light of Audit Reports and Govt. Circular CG Tollway Ltd vs The Union Of India CITATION: 2025 TAXSCAN (HC) 242 The Rajasthan High Court recently directed a special purpose vehicle, indulged in the construction of governmental projects under a Build-Operate-Transfer (BOT) agreement to pursue an appeal against the impugned goods and services tax (GST) orders, while directing the adjudicating authority to consider relevant audit reports and a government circular clarifying taxability on toll collection rights under the BOT model.

A division bench of Justice Pushpendra Singh Bhati and Justice Chandra Prakash Shrimali disposed of the writ petitions, directing CG Tollway Ltd. to file an appeal within 15 days. It further instructed the revenue authorities to adjudicate the appeal within three months, considering the CBIC circular and audit reports. Cenvat Credit of Service Tax Refund Rejected in GST Regime: Madras HC directs to allow Recredit M/s.SRC Projects Private Limited vs The Assistant Commissioner of GST and and Central Excise CITATION: 2025 TAXSCAN (HC) 244 In a recent case, the Madras High Court directed to allow recredit Cenvat Credit of service tax refund rejected in In GST regime. The taxpayer couldnot avail the cenvat credit due to the introduction of GST as the Service Tax paid for the period 2016-17, which was payable under RCM, on 30.12.2017. A single bench of Justice C. Saravanan found that it is evident that although the petitioner was not entitled to cash refund under Section 142(3) of the CGST Act, 2017, the petitioner is entitled to recredit.  While allowing the Writ Petition , the Court  directed the respondent  to allow the petitioner to take recredit of the amount paid by the petitioner on reverse charge basis belatedly on 30.12.2017 as the Input Tax Credit in its Electronic Credit Ledger. Madras HC Directs to Allow Refund of Wrongly Paid GST under RCM, treating it as supply of “service” M/s.United Breweries Limited vs The Joint Commissioner of GST CITATION: 2025 TAXSCAN (HC) 243

In a recent case, the High Court of Madras has directed to allow refund of wrongly paid Goods and service tax ( GST ) under the Reverse Charge Mechanism ( RCM ) treating it as supply of service. The court directred the 2nd respondent to process the refund claims of the petitioner and refund the amounts paid by the petitioner, strictly in accordance with Section 54 of the respective GST Acts read with Rule 89 of the respective GST rules in the light of the above observations, within a period of 3 months from the date of receipt of a copy of this order. Power to Arrest under PMLA: Punjab & Haryana HC rejects Bail Citing Prospective Applicability of Pankaj Bansal Verdict RAVINDER vs STATE OF HARYANA CITATION: 2025 TAXSCAN (HC) 246 The accused was arrested without providing written justification, and the Punjab and Haryana High Court denied him bail, citing the potential applicability of the Supreme Court’s ruling in the Pankaj Bansal case, which held that simply reading out the grounds for arrest would not satisfy the requirements of Article 22(1) of the Constitution and Section 19(1) of the Prevention of Money Laundering Act, which deal with the authority to make arrests. The petitioner argued that at the time of his detention, he was not informed of the grounds for his arrest. The trial of the current case was not anticipated to be finished anytime soon, and the petitioner was entitled to the concession of bail because he had been detained since February 23, 2022, and only two of the 29 prosecution witnesses had been questioned thus far.

The current petition is dismissed because the court determined that the petitioner is not entitled to the concession of bail. Relief to BCCI: Bombay HC quashes Revenue Order Prohibiting Income Tax Exemption for Lack of Statutory Power The Board of Control for Cricket in India vs The Assistant Commissioner of Income Tax CITATION: 2025 TAXSCAN (HC) 245 The Bombay High Court delivered a significant ruling on Tuesday (18 February, 2025), quashing an order by the Commissioner of Income Tax (Exemptions)  ( CIT(E) ) which deemed the Board of Control for Cricket in India ( BCCI ) ineligible for tax exemption under Section 12A of the Income Tax Act, 1961; the Bombay High Court observed the lack of statutory power exercisable by the CIT(E) to deny such exemption. The Bombay High Court proceeded to quash the impugned December 28, 2009 communication while reiterating that the question of BCCI’’s eligibility for income tax exemption or cancellation of registration is one to be determined by the prescribed statutory authorities in the manner prescribed under the statute without being influenced by either the impugned communication of the Revenue or the ITAT order therein.

Karnataka HC Confirms VAT on Set-Top Boxes, Says Providing Them to Customers is Taxable Transfer of Right to Use M/S ATRIA CONVERGENCE TECHNOLOGIES LTD vs DEPUTY COMMISSIONER OF COMMERCIAL TAX CITATION: 2025 TAXSCAN (HC) 248 In a recent ruling, the Karnataka High Court has upheld the imposition of Value Added Tax ( VAT ) on Set-Top Boxes ( STBs) provided by digital cable service providers, ruling that their supply to subscribers constitutes a “transfer of right to use”, making it a taxable sale under the Karnataka Value Added Tax Act, 2003 ( KVAT Act, 2003 ). The court also clarified that VAT and Service Tax are not mutually exclusive, explaining that VAT applies to the sale of goods (STBs), whereas Service Tax applies to the broadcasting service. The court upheld the retrospective application of the Karnataka Goods and Services Tax (KGST) Act, 2017, stating that the law preserves tax liabilities under the repealed KVAT Act, allowing tax authorities to continue enforcing VAT demands.