Top Stories Annual Digest 2024: Supreme Court and High Court Cases on Taxation [Part 1] A Round-Up of all the Supreme Court and High Court Tax Decisions in 2024 By Manu Sharma – On December 3, 2024 8:58 pm – 23 mins read This annual round-up analytically summarizes the key Direct and Indirect Tax Judgments of the Supreme Court and all High Courts of India reported at Taxscan.in during 2024. Breach of Law in All Cases Does Not Lead to Public Disorder: Supreme Court on Test of Legality of Preventive Detention AMEENA BEGUM vs THE STATE OF TELANGANA & ORS. CITATION: 2024 TAXSCAN (SC) 101 The Supreme Court of India has observed that a breach of law in all cases does not lead to public disorder. The two-judge bench observed the test of the legality of preventive detention in a petition challenging the detention under the Telangana Preventive Detention Act, 1986. The bench of Justice Dipankar Datta and Justice Surya Kant observed that a breach of law in all cases does not lead to public disorder. The bench referred to the decision of the Constitution Bench of the Court in Ram Manohar Lohia vs. the State of Bihar, where the difference between “law and order” and “public order” It was observed that just as ‘public order’ was said to comprehend disorders of less gravity than those affecting ‘security of State’, ‘law and order’ also comprehends disorders of less gravity than those affecting ‘public order’.

One has to imagine three concentric circles. The court held that the activities attributed to the appellant’s husband as such cannot be branded as prejudicial to the maintenance of public order. And quashed the Detention Order and the impugned judgment. Supreme Court Seeks Income Tax Department’s Response to News Click’s Tax Demand Stay Plea PPK NEWSCLICK STUDIO PVT. LTD vs PRINCIPAL CHIEF COMMISSIONER OF INCOME-TAX (CENTRAL) CITATION: 2024 TAXSCAN (SC) 102 NewsClick, an Online news portal has taken the legal fight to a higher level by taking the case to the Supreme Court, contesting tax notices that the Income Tax (IT) department has sent out, and pressing for the stay of the related tax demand. The online news portal is requesting an ad-interim ex-parte stay of the High Court ruling and the tax demand in a Special Leave Petition (SLP) that it filed with the Supreme Court The two-judge bench, led by Justice BV Nagarathna and also including Justice Augustine George Masih, has taken cognizance of the case and issued a notice, mandating a detailed response from the IT Department within a two-week period following the hearing of NewsClick’s plea. A Division Bench of Acting Chief Justice Manmohan and Justice Mini Pushkarna of Delhi High Court observed that “this Court is of the view that the petitioner has not been able to make out a prima facie case in its favor. To put it mildly, the petitioner has a ‘lot to answer’ in the appeal.

The petitioner’s plea of financial stringency based on its balance-sheet also inspires no confidence as according to the Assessing Officer, the accounts have not been properly maintained.” No SLP maintainable avoiding Limitation when Statutory Appeal Available: Supreme Court GOPAL KRISHNAN MS & ANR vs RAVINDRA BELEYUR & ANR CITATION: 2024 TAXSCAN (SC) 103 The Supreme Court Division Bench of Chief Justice DY Chandrachud, Justice JB Pardiwala and Justice Manoj Misra held that no Special Leave Petition under Article 136 is maintainable when statutory appeal remedy is available to the aggrieved party The Bench, in its discernment, emphasized that the impugned order fell within the purview of the apex court’s appellate jurisdiction under Section 62 of the Insolvency and Bankruptcy Code, 2016. Consequently, the court declined to entertain the petition filed under Article 136 of the Constitution, emphasizing the availability of alternative legal remedies. Supreme Court issues Notice to Income Tax Dept in Tamil Actor-Director SJ Suryah’s Plea against Prosecution for non-filing of ITR S.J. SURYAH vs THE DEPUTY COMMISSIONER OF INCOME TAX CITATION: 2024 TAXSCAN (SC) 104 The Supreme Court has issued notice to the Income Tax Department, in Actor-Director S J Suryah’s plea against prosecution for non-filing of Income Tax Returns and non-payment of advance tax. The bench directed to Issue notice on the application for condonation of delay in filing special leave petitions as well as on the special leave petitions and prayer for interim relief, returnable in four weeks. The Supreme Court Bench of Justice B.R. Gavai and Justice Sandeep Mehta added that, “Until further orders, by way of an ad interim order, the interim orders dated 07.12.2015 passed by the High Court shall continue to operate.” As the legal battle intensifies, Mr. S J Suryah awaits the Supreme Court’s decision on his plea. The proceedings will shed light on the interplay between income tax proceedings and criminal prosecution, setting a potential precedent for cases involving similar allegations.

The actor’s legal team remains optimistic about the outcome, emphasizing the need for a fair trial and arguing against the imposition of criminal charges before the conclusion of departmental proceedings. Supreme Court’s Criticism on ‘Quality of Tribunal Members, Impacts on Slow Resolution and Quality Orders: Legal Experts After the Criticism of the Supreme Court on the National Company Law Appellate Tribunal (NCLAT) and National Company Law Tribunal (NCLT) which have pointed out the quality of members and their impact on the resolution of cases under the Insolvency and Bankruptcy Code (IBC). The Supreme Court questioned the practice of appointing bureaucrats as members of quasi-judicial tribunals. It highlighted the need to keep the tribunal immune from executive interference by stopping the appointment of bureaucrats to such bodies. Recently in October, a three-judge bench of the Supreme Court issued show-cause notices to NCLAT members Rakesh Kumar and Alok Srivastava for disregarding its order. Dissatisfied with their explanations, the court, led by CJI D.Y. Chandrachud, set aside the NCLAT’s 13 October order, citing Article 142. The court criticized the NCLAT’s decline and established that members were aware of the Supreme Court’s judgment. On 30 October, Rakesh Kumar resigned following the Supreme Court’s decision and Alok Srivastava submitted an unconditional apology for non-compliance.

The quality of members and the recent appointment of members, according to experts, can be reflected in the increased average resolution time, which is the highest in 2023 as compared to previous financial years. Carry Forward of Losses of Vodafone Idea: Supreme Court issues Notice in Income Tax Dept’s SLP on Delay Condonation THE COMMISSIONER OF INCOME TAX & ANR vs MESSERS VODAFONE IDEA LTD. CITATION: 2024 TAXSCAN (SC) 105 The Supreme Court directed to issue notice in Income Tax Department’s special leave petition (SLP) on Delay Condonation in the matter regarding Carry Forward of losses of Vodafone Idea The Supreme Court in Wipro’s case noted that “For claiming the benefit under Section 10B (8) of the Income Tax Act, the twin conditions of furnishing a declaration before the assessing officer and that too before the due date of filing the original return of income under Section 139(1) of the Income Tax are to be satisfied and both are mandatorily to be complied with. A Two-Judge Bench comprising Justice BV Nagarathna and Justice Augustine George Masih observed that “Issue notice to the respondent on the special leave petition as well as on the application seeking condonation of delay in filing the same.” Delhi HC quashes writ petition by Ultra Tech against CCI order on Cartelisation by Manufacturers causing increase of Grey Cement Price ULTRATECH CEMENT LTD vs COMPETITION COMMISSION OF INDIA & ANR CITATION: 2024 TAXSCAN (HC) 123 The Delhi High Court quashed the writ petition filed by Ultra Tech against the order of the Competition Commission on cartelisation by manufacturers causing increase of gray cement prices. A Single Bench of Justice Subramonium Prasad observed that “Therefore, at the present stage of proceedings in the Suo Moto Case No. 2 of 2019, invoking Section 53N is neither an option for the Petitioner, nor is there any reason to prefer an application for compensation when there exists a carved out provision in the form of Regulation 25 which allows the party to take part in the proceedings before the CCI after its satisfaction. The fact that the proceedings under the Competition Act apply in rem is of no consequence when the CCI is adjudicating the allegations regarding the cartelization and price manipulation.”

TNGST Demand Order on Suppressed Turnover and Seigniorage Fees: Madras HC directs Expeditious Disposal of Rectification Application M.Venkataraju vs The Assistant Commissioner (ST) CITATION: 2024 TAXSCAN (HC) 121 A Single Bench of the Madras High Court has disposed of a writ petition recently, directing the disposal of the TNGST rectification application filed by the petitioner within three months. Considering the submissions made by the counsel for the petitioner, as well as the Government Advocate (Taxes) appearing for the respondent, since the petitioner has restricted his submission to the extent of disposal of the rectification application dated 30.05.2023 filed by him or any other applications, if any already filed, the respondent was directed by the Madras High Court Bench to dispose of the rectification application filed by the petitioner, within a period of three months from the date of receipt of a copy of this order. Rejection of ITC on Failure of Supplier to file GSTR- 1 on Time: Kerala HC Remands Matter to Assessing Authority THE COMMISSIONER OF INCOME TAX & ANR vs MESSERS VODAFONE IDEA LTD. CITATION: 2024 TAXSCAN (SC) 105 The Kerala High Court remanded the matter to the Assessing Officer as there was rejection of input tax credit (ITC) on failure of supplier to file GSTR-1 on time.

A Single Bench of Justice Dinesh Kumar Singh observed that “Considering the aforesaid fact, the matter is remitting back to the file of the assessing authority, 1st respondent to consider the issue afresh in the light of judgment in Diya Agencies and pass a fresh order after hearing the petitioner. The petitioner is directed to appear before the Assessing officer on 05.01.2024, with all evidence and report denying the input tax credit, which is evident in order”. Use of Trademark incidental to Advertisement is Business Income, Not Royalty and FTS: Delhi HC grants relief to Hyatt International HYATT INTERNATIONAL-SOUTHWEST ASIA LTD. vs ADDITIONAL DIRECTOR OF INCOME TAX CITATION: 2024 TAXSCAN (HC) 125 In a major relief to Hyatt International Southwest Asia, the Delhi High Court ruled that the use of trademark incidental to advertisement is business income and not Royalty and fees for technical services (FTS). A Division Bench comprising Justices Vibhu Bakhru and Amit Mahajan observed that “It is relevant to note that the Assessee had contended before the authorities that the amount received under SOSA was Fees for Technical Services (FTS). We are unable to accept the same. This is also inconsistent with the submissions advanced before this Court. The fee received is not fees for technical services but in consideration for a wide range of services as discussed above. Since, the Assessee is in the business of providing such services for management of Hotels, the income is required to be classified as income from business.

In view of the above, the consideration received by the Assessee in terms of SOSA cannot be termed as Royalty under Article 12 of the DTAA. It is clearly in the nature of business income” the Bench concluded. Accounting ITC as IGST instead of CGST and SGST: Kerala High Court directs GST Dept to Consider GSTR-3B Rectification Application CHUKKATH KRISHNAN PRAVEEN vs STATE OF KERALA CITATION: 2024 TAXSCAN (HC) 122 The Kerala High Court has allowed a petitioner to rectify the GSTR-3B returns filed for the inadvertent error of classifying Input Tax Credit (ITC) as Integrated GST (IGST) instead of Central GST and State GST. The High Court’s decision serves as a positive development for Mr. Praveen, as it directs tax authorities to review the rectification application promptly. This case highlights the importance of procedural fairness in tax matters and the legal avenues available to taxpayers for rectification of inadvertent errors in compliance documents. Recently, the Bombay High Court had directed the department to permit the petitioner or assessee to amend or rectify Form GSTR-1 for July 2021 either online or manually. Scheme of Amalgamation is not Floated by Assessee with sole object of Avoidance of Income Tax: SC Condones Delay in SLP filed by Income Tax Dept COMMISSIONER OF INCOME TAX KOLKATA vs PURBANCHAL POWER CO. LTD CITATION: 2024 TAXSCAN (SC) 107 The Supreme Court condoned delay in the special leave petition filed by the Income Tax Department in the matter concerning the ruling that the scheme of amalgamation is not floated by assessee with sole object of avoidance of income tax.

A Two-Judge Bench of the Supreme Court comprising Justice BV Nagarathna and Justice Augustine George Maasih observed that “Delay condoned. Issue notice to the respondent.” Cross examination not necessary when Statements of Officers are not going to be Relied: Madras HC upholds order of Principal Commissioner of Customs Avana Surgical Systems Private Limited vs Principal Commissioner of Customs CITATION: 2024 TAXSCAN (HC) 103 The Madras High Court upheld the order of the Principal Commissioner of Customs and observed that since the respondent is not at all going to rely upon the statements of the said officers, there is no need for cross-examination of those officers. A Single Bench of Justice Krishnan Ramaswamy observed that “The cross-examination of the said officers is necessary only when their statements are against the petitioner. In the present case, the statements of the said officers are said to have been in favor of the petitioner and hence, there is no necessity of cross-examination of those officers. That apart, it is up to the respondent to rely on the statements of the said officers or not. In such a case, since the respondent is not at all going to rely upon the statements of the said officers, there is no need for cross-examination of those officers.” “In the present case, as stated above, the respondent is not bound to rely upon the statements of the said officers. That apart, the statements of the said officers are in favor of the petitioner. Hence, there is no necessity to consider the request made by the petitioner for cross-examination. In such view of the matter, this Court does not find any illegality in the impugned communication dated 30.09.2023 issued by the respondent” the Court concluded. Imposition of Penalty under GST Act: Madras HC extends Time Limit fixed for filing Appeal with required Pre-Deposit Avana Surgical Systems Private Limited vs Principal Commissioner of Custom

s CITATION: 2024 TAXSCAN (HC) 103 The Madras High Court extended the time limit fixed for filing appeal with required pre-deposit, in the matter of imposition of penalty under the Goods and Service Tax (GST Act), 2017 A Division Bench comprising Justices R Mahadevan and Mohammed Shaffiq observed that “The time limit fixed by the learned Judge for filing appeal with required pre-deposit, is extended by a further period of eight weeks, which will take effect from today. Accordingly, the appellant shall file an appeal before the first respondent along with pre-deposit of 10% of Rs.14,88,370/-, as directed by the learned Judge in the impugned order passed in the writ petition, within the time extended today.” Issuance of refund on account of ISS of Cigarettes and Cement: Punjab and Haryana HC grants Bail to Retd Joint Commissioner Excise and Taxation considering Old Age The Punjab and Haryana High Court granted bail to the Retired Joint Commissioner Excise and Taxation considering old age, who was arrested in the allegation of Issuance of refund issued on account of ISS of cigarettes and cement. A Single Bench of Justice NS Shekhawat observed that “Admittedly, the petitioner is a senior citizen and has been in custody since 22.08.2023. The challan has already been presented against the petitioner and his co-accused. Without commenting on the merits of the case, the present petition is allowed and the petitioner is ordered to be released on bail subject to his furnishing bail bonds/surety bonds to the satisfaction of the trial Court/Duty Magistrate/Chief Judicial Magistrate, concerned.”

Cross examination not necessary when Statements of Officers are not going to be Relied: Madras HC upholds order of Principal Commissioner of Customs Gopi Chand Chaudhary vs State of Haryana CITATION: 2024 TAXSCAN (HC) 104 The Madras High Court upheld the order of the Principal Commissioner of Customs and observed that since the respondent is not at all going to rely upon the statements of the said officers, there is no need for cross-examination of those officers. A Single Bench of Justice Krishnan Ramaswamy observed that “The cross-examination of the said officers is necessary only when their statements are against the petitioner. In the present case, the statements of the said officers are said to have been in favour of the petitioner and hence, there is no necessity of cross-examination of those officers. That apart, it is up to the respondent to rely on the statements of the said officers or not. In such a case, since the respondent is not at all going to rely upon the statements of the said officers, there is no need for cross-examination of those officers.” Issuance of DRC-01 Notice Twice and Overlapping: Madras HC directs to approach Assistant Commissioner The Madras High Court directed to approach the Assistant Commissioner (ST) in the matter of issuance of DRC-01 notice twice and overlapping. A Single Judge Krishnan Ramaswamy observed that “Considering the above submissions, at this stage, this Court is not inclined to interfere with the show cause notice issued by the respondent. Hence, this Court is of the view that it would be appropriate for the petitioner to approach and raise all their grievances before the respondent.

Accordingly, all the grievances raised by the petitioner shall be considered by the respondent in accordance with law.” Imposition of Penalty under GST Act: Madras HC extends Time Limit fixed for filing Appeal with required Pre-Deposit Gopi Chand Chaudhary vs State of Haryana CITATION: 2024 TAXSCAN (HC) 104 The Madras High Court extended the time limit fixed for filing appeal with required pre-deposit, in the matter of imposition of penalty under the Goods and Service Tax (GST Act), 2017. A Division Bench comprising Justices R Mahadevan and Mohammed Shaffiq observed that “The time limit fixed by the learned Judge for filing appeal with required pre-deposit, is extended by further period of eight weeks, which will take effect from today. Accordingly, the appellant shall file an appeal before the first respondent along with pre-deposit of 10% of Rs.14,88,370/-, as directed by the learned Judge in the impugned order passed in the writ petition, within the time extended today.” Mere opening, breaking or uncorking of liquor bottle by twisting seal not amounts to “Scrap” from “Mechanical Working of Material” u/s 206C of Income Tax Act: Madras HC Gopi Chand Chaudhary vs State of Haryana CITATION: 2024 TAXSCAN (HC) 104 In a recent decision the Madras High Court observed that mere opening, breaking or uncorking of liquor bottles by twisting the seal does not amount to “scrap” from “mechanical working of material” under Section 206C of the Income Tax Act, 1961. A Single Bench of Justice C Saravanan observed that “Mere opening, breaking or uncorking of a liquor bottle by mere twisting the seal in a liquor bottle will not amount to generation of “scrap” from “mechanical working of material” for the purpose of explanation to Section 206C of the Income Tax Act.”

Penalty Proceedings under Income Tax Act initiated on wrong assumption: Madras HC sets aside the proceedings Anamallais Bus Transports P Ltd vs .The Principal Commissioner of Income Tax CITATION: 2024 TAXSCAN (HC) 124 The Madras High Court set aside the penalty proceedings under the Income Tax Act, 1961 initiated on the wrong assumption. A single-member bench comprising Justice Krishnan Ramasamy set aside the entire penalty proceedings passed under Section 271-E of the Act. The Court directs the Appellate Authority concerned to take the petitioner’s Appeal on file without insisting upon any pre-deposit and consider the issues that were discussed by this Court in this order and thereafter, shall dispose of the appeal by law, within eight (8) weeks. Applicability of Sub-Section 115JB of Income Tax Act on Banking Company: SC condones Delay in SLP filed by Income Tax Dept The Supreme Court condoned the delay in the special leave petition filed by the Income Tax Department in the matter arising from the ruling regarding the applicability of sub-section 115JB of the Income Tax Act, 1961 on banking companies. A Two-Judge Bench of Justice Abhay S Oka and Justice Ujjal Bhuyan observed that “Applications for exemption from filing a certified copy of the impugned judgments are allowed. Delay condoned. Issue notice.”

Payment of Management Fees to ATS can be added to Income of Assessee: Delhi HC upholds Deletion of Disallowance The Delhi High Court upheld the deletion of disallowance and noted that the payment of management fees to ATS Infrastructure can be added to the income of the assessee, Anand Divine Developers Private Limited. A Division Bench comprising Justices Rajiv Shakdher and Girish Kathpalia observed that “Having regard to the finding of fact returned by CIT(A), and sustained by the Tribunal, we are of the view that no interference is called for with the impugned order since no perversity has been pointed out in the order passed by the CIT(A). Areca Nut Confiscated due to non-submission of E waybill: Karnataka HC directs to Release Goods on Condition The Karnataka High Court directed the department to release the confiscated Areca Nut on condition specified. The goods were confiscated due to non-submission of E waybill. The bench modified the conditions imposed by the single judge. A division bench comprising Justice S Sunil Dutt Yadav And Justice Vijaykumar Aspatil modified  the interim order dated 25.09.2023  passed by the Single Judge as follows “a) The appellants are to make good the 25% deposit provided for in appeal proceedings as regards the order impugned in the writ proceedings. It is made clear that the deposit- made in the earlier appeals by the appellant could be adjusted.  b) The appellants are to make good tax and penalty as per the orders impugned before the learned Single Judge by securing the same by way of bank guarantee

.  c) The appellants are to furnish a bank guarantee insofar as the value of goods as per his invoice. d) The appellants are to furnish a personal bond of the Proprietor representing the appellants to the extent of the differential value of the goods as per the invoice of the appellants vis-å-vis the valuation by CAMPCO made on behalf of the State. No Income Tax Leviable on Interest-Free Project Completion Refundable Security Deposit made by Developer: Andhra Pradesh HC The Andhra Pradesh High Court has ruled that no income tax shall be levied on the interest-free refundable security deposit provided by the developer upon the due completion of the project. The High Court has instructed the income tax department to cease the tax proceedings. The bench of Justice U.Durga Prasad Rao and Justice Venkata Jyothirmai Pratapa directed in the writ petition filed by the Petitioner M/s Coastal Ceramics and Clay Works Private Ltd that “the petitioner shall hereafter show the amount of Rs.50.00 lakhs as interest free security deposit in its books of accounts till the same is refunded to the builder viz., M/s. Royal Mindz Infra Pvt. Ltd. and the respondent Department is directed to drop the proceedings against the petitioner to collect tax in respect of the said amount.” No Exemption from Compensation Cess to SEZ:  Andhra Pradesh HC The Andhra Pradesh High Court(HC) has held that exemption from compensation cess is not allowable for Special Economic Zones (SEZ) as per the Special Economic Zones Act, 2005 (‘the SEZ Act’). A division bench comprising Justice U Durga Prasad Rao and Justice Venkata Jyothirmai Pratapa observed that conjunctive study of Section 26(1)(a), 2(zd) of SEZ Act, 2005 and Section 2(15) of Customs Act, 1962 would pellucidly tell us that the phrase ‘duty of customs’ used in Section 26(1)(a) of SEZ Act only refers to duty leviable under Customs Act, 1962  but the said phrase does not include cess under GST Compensation Act.

Madras HC upholds Proceedings u/s 276CC of the Income Tax Act due to Non-Filing of ITR even After Issuing Notice The Madras High Court upheld the Proceedings under section 276CC of the Income Tax Act, 1961 due to the Non-Filing of Income Tax Return(ITR) even after issuing notice. Even after issuing repeated notices, the assessee failed to file a return on proper time and filed belatedly without stating any valid reason for delay. A single bench of Justice G K Ilanthiraiyan held that the respondent rightly initiated prosecution against the petitioner and the Court found no grounds to quash the same. Accordingly, this criminal original petition is dismissed. Cancellation of GST Registration due to Non-Payment of Tax: Madras HC directs to Revive GST Registration The Madras High Court directed to revive the Goods and Service Tax (GST) registration once canceled due to Non-Payment of Tax. The revival happens only after payment of tax dues. While allowing the petition, it was viewed that if the petitioner is liable to pay any tax or penalty, he must pay the same by law. A Single Bench of Justice Krishnan Ramasamy set aside the impugned proceedings and directed the respondent department to restore the GST registration of the petitioner.

To Read the full text of the Order CLICK HERE Provision u/s 5 of Amended Act of  Prohibition of Benami Property Transaction Act being Punitive Nature can only be Applied Prospectively: Madras HC The Madras High Court Provision under section 5 of the Amended Act of  Prohibition of Benami Property Transaction Act, 1988 (Amended 2016) being Punitive Nature can only be Applied Prospectively. A division bench of Justice R Mahadevan and Justice Mohammed Shaffiq held that “all these civil miscellaneous appeals are disposed of, leaving it open to the appellants herein to proceed further based on the outcome of the Review Petition in Diary No. 34619 of 2022 (Review Petition No. (Civil) 359 of 2023) filed by them before the Honourable Supreme Court.” Supreme Court Seeks Income Tax Department’s Response to News Click’s Tax Demand Stay Plea NewsClick, an Online news portal has taken the legal fight to a higher level by taking the case to the Supreme Court, contesting tax notices that the Income Tax (IT) department has sent out, and pressing for the stay of the related tax demand. The online news portal is requesting an ad-interim ex-parte stay of the High Court ruling and the tax demand in a Special Leave Petition (SLP) that it filed with the Supreme Court. A Division Bench of Acting Chief Justice Manmohan and Justice Mini Pushkarna of Delhi High Court observed that “this Court is of the view that the petitioner has not been able to make out a prima facie case in its favour. To put it mildly, the petitioner has a ‘lot to answer’ in the appeal. The petitioner’s plea of financial stringency based on its balance-sheet also inspires no confidence as according to the Assessing Officer, the accounts have not been properly maintained.” Tax Evasion Case by MRF Chairman & Managing Director: Madras HC permits Compounding of Prosecution The Madras High Court permitted compounding of prosecution in the tax evasion case by MRF Chairman and Managing Director.

A Division Bench comprising Justice R Mahadevan and Justice Mohammed Shaffiq observed that “The respondent herein is entitled to compound under Section 279(2) of the Act in respect of the offences under Sections 276C and 277 of the Income Tax Act. We say so inasmuch as in our view the respondent’s entitlement to compound in terms of Section 279(2) of the Income Tax Act stands resolved conclusively by the order of the learned Single Judge in the previous round of litigation, the same having not been challenged by the revenue, is bound by it, nor is it open to them to water down those directions/observations in the Contempt jurisdiction.” 10% of Disputed Tax Amount to be Deposited for filing Appeal u/s 107(6) of GST Act: Karnataka HC In a recent decision, the Karnataka High Court observed that 10% of disputed tax amount to be deposited for filing appeal under Section 107(6) of the CGST Act, 2017 A Single Bench of Justice Sachin Shankar Magadum observed that “Therefore, the order under challenge is not sustainable. There is no need for the petitioner to deposit any percentage of disputed interest, fine, fee and penalty arising from the impugned order. In essence, the legislative intent as construed from Section 107(6)(b) of the CGST Act is that aggrieved party has to pre-deposit 10% of the tax liability and it does not extend to penalties, fees or interest when the petitioner has contested the entirety of the tax liability.”

Pendency of CIRP before NCLT: Delhi HC closes writ petition In a recent case, the Delhi High Court closed a writ petition due to a process for resolving corporate insolvencies pending before the National Company Law Tribunal. The writ petition was filed by the petitioner, Commissioner of Income Tax, challenging the rejection of resolution professionals. After analyzing the facts, the bench observed that the moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016, is operative. Therefore, there was no purpose served. The division bench of Justice Rajiv Shakdher and Justice Girish Kathpalia held that, depending on the outcome of the proceedings pending before the NCLT for reviving the petition, the petitioner can approach the court. Gaurav Gupta, senior standing counsel represented the petitioner/revenue. Confiscation of Digital Multifunction Equipment due to Non-payment of Enhanced Customs Duty: Madras HC directs to Release Goods on payment of Duty The Madras High Court directed the Commissioner of Customs to release the confiscated Digital Multifunction Equipment due to Non-payment of Enhanced Customs Duty.

The court held that the goods can be released on payment of customs duty. A single-member bench of Justice Krishnan Ramasamy directed the respondents to consider the plea of the petitioners to release the goods by way of provisional release on the condition that, the petitioner shall pay/deposit the enhanced duty amount. On receipt of such enhanced duty amount paid by the petitioners, the goods in question shall be released within three (3) weeks. To Read the full text of the Order CLICK HERE Penalty Proceedings under Income Tax Act initiated on Wrong Assumption: Madras HC sets Aside the Proceedings The Madras High Court set aside the penalty proceedings under the Income Tax Act, 1961 initiated on the wrong assumption. A single-member bench comprising Justice Krishnan Ramasamy set aside the entire penalty proceedings passed under Section 271-E of the Act. The Court directs the Appellate Authority concerned to take the petitioner’s Appeal on file without insisting upon any pre-deposit and consider the issues that were discussed by this Court in this order and thereafter, shall dispose of the appeal by law, within eight (8) weeks. Proper Computation of PLI: Delhi HC upholds order of ITAT The Delhi High Court upheld the order of the Income Tax Appellate Tribunal (ITAT) as the computation of Profit Level Indicator(PLI) was Proper.

The Tribunal upheld the calculation of the Transfer Pricing Officer(TPO). A division bench comprising Justice Rajiv Shakdher and Justice Girish Kathpalia observed that the DRP did not attempt to establish how Korus was functionally comparable with the respondent/assessee.  It is for this reason perhaps that the Tribunal stated that the information which was obtained from the website of Korus was “sketchy” and therefore Korus could not be used as comparable to benchmark international transactions entered into between the respondent/assessee and its AEs. AO has no Jurisdiction to Impose Penalty under TNVAT Act Unless There is A Definite Finding on Wilful Non-disclosure of Taxable Turnover: Madras HC Quashes Assessment Order The Madras High Court has held that the Assessing Officer(AO) has no Jurisdiction to Impose Penalty under the Tamil Nadu Value Added Tax Act, 2006 ( ‘the TNVAT Act’) unless there is a definite finding on wilful non-disclosure of taxable turnover. A single-member bench Justice Krishnan Ramasamy observed that no penalty proceedings can be initiated independently in terms of provisions of Section 16 (2) of the Tamil Nadu General Sales Tax Act, 1959 (‘the TNGST Act’).  It was viewed the penalty proceedings were initiated under Section 27 (3) of the TNVAT Act and the provisions of Section 27 (3) of the TNVAT Act and Section 16(2) of the TNGST Act are similar Breach of Law in All Cases Does Not Lead to Public Disorder: Supreme Court on Test of Legality of Preventive Detention The Supreme Court of India has observed that a breach of law in all cases does not lead to public disorder.

The two-judge bench observed the test of the legality of preventive detention in a petition challenging the detention under the Telangana Preventive Detention Act, 1986. The bench of Justice Dipankar Datta and Justice Surya Kant observed that a breach of law in all cases does not lead to public disorder. The bench referred to the decision of the Constitution Bench of the Court in Ram Manohar Lohia vs. the State of Bihar, where the difference between “law and order” and “public order” Failure to Issue Notice and Order for Attachment under TNGST Act before expiry of limitation period: Madras HC allows to file Statutory Appeal The Madras High Court in a recent case, allowed to file a statutory appeal even after the limitation period expired as the goods and service tax (GST) department failed to issue notice and order for attachment under Tamil Nadu Goods and Service Tax (TNGST) Act, 2017 before expiry of the limitation period.

A single bench comprising Justice Krishnan Ramasamy granted liberty to the petitioner to file the appeal before the Appellate Authority within 30 days and the Appellate Authority was directed to consider the said appeal without insisting on the issue of limitation. Failure to appear for Personal Hearing on late receipt of GST Notice: Madras HC stays Recovery Proceedings The Madras High Court stayed the recovery proceedings taking into consideration that there was failure to appear for personal hearing on late receipt of GST Notice. A Single Bench of Justice Krishnan Ramaswamy observed that “In view of the above, this Court grants liberty to the petitioner to approach the Appellate Authority by filing the appeal within a period of 30 days from the date of receipt of copy of this order. In such a case, the Appellate Authority is also directed to entertain the appeal filed by the petitioner without insisting on the issue of limitation and pass orders in accordance with law.”

“In the meantime, there shall be an order of interim stay of the recovery proceedings until the filing of appeal” the Court added. Issuance of refund on account of ISS of Cigarettes and Cement: Punjab and Haryana HC grants Bail to Retd Joint Commissioner Excise and Taxation considering Old Age The Punjab and Haryana High Court granted bail to the Retired Joint Commissioner Excise and Taxation considering old age, who was arrested in the allegation of Issuance of refund issued on account of ISS of cigarettes and cement. A Single Bench of Justice NS Shekhawat observed that “Admittedly, the petitioner is a senior citizen and has been in custody since 22.08.2023. The challan has already been presented against the petitioner and his co-accused. Without commenting on the merits of the case, the present petition is allowed and the petitioner is ordered to be released on bail subject to his furnishing bail bonds/surety bonds to the satisfaction of the trial Court/Duty Magistrate/Chief Judicial Magistrate, concerned. Cross examination not necessary when Statements of Officers are not going to be Relied: Madras HC upholds order of Principal Commissioner of Customs

The Madras High Court upheld the order of the Principal Commissioner of Customs and observed that since the respondent is not at all going to rely upon the statements of the said officers, there is no need for cross-examination of those officers. A Single Bench of Justice Krishnan Ramaswamy observed that “The cross-examination of the said officers is necessary only when their statements are against the petitioner. In the present case, the statements of the said officers are said to have been in favour of the petitioner and hence, there is no necessity of cross-examination of those officers. That apart, it is up to the respondent to rely on the statements of the said officers or not. In such a case, since the respondent is not at all going to rely upon the statements of the said officers, there is no need for cross-examination of those officers.” Issuance of DRC-01 Notice Twice and Overlapping: Madras HC directs to approach Assistant Commissioner The Madras High Court directed to approach the Assistant Commissioner (ST) in the matter of issuance of DRC-01 notice twice and overlapping.

A Single Judge Krishnan Ramaswamy observed that “Considering the above submissions, at this stage, this Court is not inclined to interfere with the show cause notice issued by the respondent. Hence, this Court is of the view that it would be appropriate for the petitioner to approach and raise all their grievances before the respondent. Accordingly, all the grievances raised by the petitioner shall be considered by the respondent in accordance with law.” Imposition of Penalty under GST Act: Madras HC extends Time Limit fixed for filing Appeal with required Pre-Deposit The Madras High Court extended the time limit fixed for filing appeal with required pre-deposit, in the matter of imposition of penalty under the Goods and Service Tax (GST Act), 2017. A Division Bench comprising Justices R Mahadevan and Mohammed Shaffiq observed that “The time limit fixed by the learned Judge for filing appeal with required pre-deposit, is extended by a further period of eight weeks, which will take effect from today. Accordingly, the appellant shall file an appeal before the first respondent along with pre-deposit of 10% of Rs.14,88,370/-, as directed by the learned Judge in the impugned order passed in the writ petition, within the time extended today.”

Mere opening, breaking or uncorking of liquor bottle by twisting seal not amounts to “Scrap” from “Mechanical Working of Material” u/s 206C of Income Tax Act: Madras HC Tamil Nadu State Marketing Corporation Ltd vs The Deputy Commissioner of Income Tax CITATION:   2024 TAXSCAN (HC) 2084 In a recent decision the Madras High Court observed that mere opening, breaking or uncorking of liquor bottles by twisting the seal does not amount to “scrap” from “mechanical working of material” under Section 206C of the Income Tax Act, 1961.

A Single Bench of Justice C Saravanan observed that “Mere opening, breaking or uncorking of a liquor bottle by mere twisting the seal in a liquor bottle will not amount to generation of “scrap” from “mechanical working of material” for the purpose of explanation to Section 206C of the Income Tax Act. No Profit can be Attributed if Commission Paid to Ricardo India is Adjusted Against Profit Attributed to PE: Delhi HC COMMISSIONER OF INCOME TAX (INTERNATIONAL TAXATION) vs RICARDO U.K. LIMITED CITATION: 2023 TAXSCAN (HC) 2082 In a landmark decision, the Delhi High Court has ruled that no additional profit can be attributed to the Permanent Establishment (PE) of a UK-based company operating in India when adjusting the commission paid to its domestic subsidiary, Ricardo India Pvt. Ltd. A Division Bench of the Delhi High Court comprising Justices Rajiv Shakdher and Girish Kathpalia observed that the contentions presented by the counsel were valid and relied on the Tribunal’s finding of fact that reducing the commission paid to the domestic subsidiary, Ricardo India Pvt. Ltd., from the profit attributed to the PE rendered no taxable income in the hands of the PE.

Consequently, the court affirmed that the addition made by the Assessing Officer and confirmed by the Commissioner of Income Tax (Appeals) was not sustainable in the eyes of the law, leading to the allowance of all appeals filed by the assessee. Supreme Court’s Criticism on ‘Quality of Tribunal Members, Impacts on Slow Resolution and Quality Orders: Legal Experts After the Criticism of the Supreme Court on the National Company Law Appellate Tribunal (NCLAT) and National Company Law Tribunal (NCLT) which have pointed out the quality of members and their impact on the resolution of cases under the Insolvency and Bankruptcy Code (IBC). The Legal experts recommend appointing members with judicial training and increasing the number of judges to address delays and improve efficiency. Further suggested that bureaucrats appointed as technical members must undergo judicial training before being appointed to NCLT.

The Supreme Court questioned the practice of appointing bureaucrats as members of quasi-judicial tribunals. It highlighted the need to keep the tribunal immune from executive interference by stopping the appointment of bureaucrats to such bodies. Challenge on Condonation of 987 days Delay in filing Income Tax Appeal: Supreme Court issues Notice for Hearing COMMERCIAL TAX OFFICER & ORS. vs K V SAI RAM CITATION: 2024 TAXSCAN (SC) 131 The two-judge bench of Justice Abhay S Oka and Justice Ujjal Bhuyan issued notice returnable on 01.03.2024. Further held that In the meantime, there shall be a stay of the operation of the impugned order. The Supreme Court issued notice for hearing in a challenge on condonation of 987 days delay in filing Income Tax appeal. The challenge arose out of the impugned final judgment and order passed by the High Court of Andhra Pradesh.