This weekly round-up analytically summarises the key tax judgments of the Supreme Court and all High Courts reported at Taxscan.in during the previous week from November 18 to November 24, 2023. No Income Tax Deduction allowable for Gains from Foreign Exchange Fluctuations u/s 80HHC of the Income Tax Act: Supreme Court Shah Originals vs Commissioner of Income Tax 2023 TAXSCAN (SC) 283 A two-judge bench of the Supreme Court of India has held that no deduction under Section 80HHC of the Income Tax Act is allowable for gains from foreign exchange fluctuations. It was thus held that, “Hence, for the above reasons, we hold that the gain from foreign exchange fluctuations from the EEFC account does not fall within the meaning of “derived from” the export of garments by the assessee. The profit from exchange fluctuation is independent of export earnings, and the impugned judgment correctly answers the point.” In conclusion, the Apex Court affirmed that Section 80 HHC deductions are specifically intended for profits from the business of exporting goods, and including other income would be counterproductive to the section’s purpose.
Potato Chips Case: Supreme Court issues Notice to PepsiCo India in Revenue’s Appeal against HC Decision ASSISTANT COMMISSIONER COMMERCIAL TAXES DEPARTMENT vs M/S. PEPSICO INDIA HOLDING PVT. LTD. 2023 TAXSCAN (SC) 279 The Supreme Court of India has issued notice to Pepsico India, advancing the revenue’s appeal against the Rajasthan High Court’s decision regarding the classification of Potato Chips under the Rajasthan VAT Act, 2003. However, the Rajasthan High Court, taking into account the settled nature of the issue by a Coordinate Bench, declined to entertain the revision petitions on the same question of law. In line with principles of judicial discipline, the court dismissed all revision petitions and corresponding pending applications. In the present case before the Apex Court bench of Justice B V Nagarathna and Justice Ujjal Bhuyan, notice was issued to respondents, and the matter was tagged with SLP (C) No.18731 of 2023. 12 Months Time limit on Filing Application for Compounding Offences: Madras HC strikes down CBDT Circular The Central Board of Direct Taxes vs Chief Commissioner of Income Tax-1 2023 TAXSCAN (HC) 1788 The Madras High Court struck down the Central Board of Direct Taxes (CBDT) circular which fixed 12 12-month time limit on filing applications for compounding offences.
A single bench of Justice Krishnan Ramasamy observed that the order passed by the respondent, rejecting the application for compounding of offences on the sole ground that it is barred by limitation, is liable to be set aside. Further remitted the matter back to the Authority concerned and the respondent is directed to decide the same on its own merits. The court held that the said Clause 7(ii) of the circular is beyond the scope of the Act and hence, the same is liable to be struck down. Kerala HC allows to Settle Tax Liability under KVAT on Depositing Amount under Amnesty Scheme LIJO JOSE vs THE COMMISSIONER OF STATE TAX 2023 TAXSCAN (HC) 1786 The Kerala High Court allowed the settlement of tax liability under Kerala Value Added Tax (KVAT) on depositing amounts under the amnesty scheme. Considering the said submissions, the single bench of Justice Dinesh Kumar Singh directed the petitioner to deposit Rs.1,25,000/- on or before 06.11.2023.
If the petitioner deposits Rs.1,25,000/- on or before 06.11.2023, the petitioner would be deemed to have discharged the tax liability as settled under the Amnesty Scheme and no further demand in respect of the tax liability shall remain to be discharged by the petitioner. Kerala HC directs to keep the Recovery Proceedings in Abeyance until Disposing Pending Stay Application by Income Tax Appellate Authority MKD TALUK GOVT. EMPLOYEES CO-OPERATIVE SOCIETY LTD vs COMMISSIONER OF INCOME TAX 2023 TAXSCAN (HC) 1784 The Kerala High Court directed to keep the recovery proceedings in abeyance until disposing pending stay application by the Income Tax Appellate Authority.
A division bench of Dr Justice A K Jayasankaran Nambiar & Dr Justice KauserEdappagath modified the impugned judgment of the Single Judge to the limited extent of clarifying that pending disposal of the delay condonation application, stay application or appeal whichever is earlier, by the appellate authority, the recovery proceedings against the appellant for recovery of the amounts confirmed against him by assessment order shall be kept in abeyance. Rs. 50 Lakhs Cash Seized on Search u/s132 of Income Tax: Delhi HC directs to Treat Seized Cash as Advance Tax ASHOK KUMAR AGGARWAL vs ASSTT. COMMISSIONER OF INCOME TAX CIRCLE-2 2023 TAXSCAN (HC) 1785 The Delhi High Court in a recent case held that cash seized on search under section 132 of the Income Tax Act, 1961 can be treated as advance tax.
The department had seized 50 Lakhs Cash from the premises of the assessee during the search. The division bench of Justice Rajiv Shakdher and Justice Girish Kathpalia has observed that “seized cash was offered by the assessee, under the regime which was prevailing then, to be treated as the advance tax and thus there was no default in payment of advance; although its payment /adjustment was triggered due to a search action. Lastly, for the same reason, it cannot be said there was a deferment of payment of advance tax.” Further held that “Since the petition has been pending for the last four years, we expect the amount due to be remitted to the petitioner, once computed as indicated above, at the earliest though not later than six (6) weeks from the date of receipt of a copy of the judgment by the respondents/revenue.” Income Tax Appeal Filed before Appellate Authority: Kerala HC directs Income Tax Authority to pass Order within 2 Months JALALUDEEN SHAHUL HAMEED vs THE JOINT COMMISSIONER 2023 TAXSCAN (HC) 1782 The Kerala High Court directed the Income Tax Authority to pass an appropriate order within 2 months as the appellant already filed an Income Tax appeal before the appellate authority.
A single bench of Justice Dinesh Kumar Singh directed the 2nd respondent to consider and pass an appropriate order in accordance with the law on the stay application of the petitioner expeditiously, preferably within two months. Further held that “for two months, no recovery in pursuance to the impugned assessment order shall be enforced against the petitioner.” Application to Extend Interim Order against Sales Tax Demand: Kerala HC directs KVAT Appellate Tribunal to pass Appropriate Order K.T. MANOJKUMAR vs THE STATE TAX OFFICER 2023 TAXSCAN (HC) 1779 The Kerala High Court in a recent judgement has directed the Kerala Value Added Tax (KVAT) Appellate Tribunal to pass an Appropriate Order application to extend an interim order against sales tax demand. A single bench of Justice Basant Balaji disposed of the writ petition by directing the Kerala Value Added Tax Appellate Tribunal, Kozhikode to take up the petition and pass appropriate orders within three weeks.
Kerala HC Refuses to Exercise Writ Jurisdiction parallelly when Income Tax Appellate Authority Seized the Recovery Proceedings M/S. PRATHIBHA TRADERS vs THE ADDITIONAL/JOINT/DEPUTY/ASSISTANT COMMISSIONER OF INCOME TAX 2023 TAXSCAN (HC) 1780 The Kerala High Court refused to exercise writ jurisdiction parallelly when the Income Tax Appellate Authority seized the recovery proceedings. When the appellate authority seized the matter, the single bench of Justice Dinesh Kumar Singh would not like to exercise its writ jurisdiction parallelly. It would be sufficient to direct the 2nd respondent to decide the appeal pending before it by the law within two months, and if it is not possible to decide the appeal finally within two months, the stay application be decided within two months from today by the law. Kerala HC allows to Withdraw Writ Petition to File Income Tax Appeal within Extended Period of Limitation M/S.T-CUBE PROJECTS PRIVATE LIMITED vs STATE TAX OFFICER 2023 TAXSCAN (HC) 1781 The Kerala High Court allowed the writ petitioner to withdraw the petition to file an Income Tax appeal within the extended period. A single bench of Justice Dinesh Kumar Singh dismissed the writ petition as withdrawn with the liberty to file an appeal against the order.
It was directed that the impugned revenue recovery notice shall not be enforced for fifteen (15) days. Demand of Income Tax against Kadavallor Co-operative Society: Kerala HC stays Recovery Proceeding under Income Tax Act KADAVALLOOR SERVICE CO-OPERATIVE BANK LTD vs THE INCOME TAX OFFICER 2023 TAXSCAN (HC) 1783 The Kerala High Court stayed the recovery Proceeding under the Income Tax Act, 1961 on the demand of Income Tax against Kadavallor Co-operative Society. The division bench of Dr Justice A K Jayasankaran Nambiar & Dr Justice KauserEdappagath disposed of the writ appeals, by making the interim orders absolute, and by directing the Income Tax Appellate Tribunal, Cochin Bench to consider the appeals or the stay applications preferred by the appellant as indicated in the notice of the Tribunal after hearing the appellant.
“There shall be a stay of recovery of the amounts confirmed against the appellant by the orders impugned in the writ petitions, pending disposal of the stay applications/appeals, whichever is earlier, by the Tribunal. As already noticed in our order dated 8.11.2023, the appellant shall also ensure that the amounts recredited in their account are retained as fixed deposits in the bank, pending the passing of orders by the Tribunal in the stay applications/appeals, as the case may be.”, the bench held. Kerala HC directs to Keep Recovery Proceedings under Income Tax Act still the Disposal of Stay Application or Appeal KUNNAPPILLY BUILDERS LL.P vs ADDITIONAL/JOINT/DEPUTY/ASSISTANT COMMISSIONER OF INCOME TAX 2023 TAXSCAN (HC) 1777 The Kerala High Court directed the respondent to keep recovery proceedings under the Income Tax Act, 1961 still the disposal of stay application or appeal. A division bench of Dr Justice A K Jayasankaran Nambiar & Dr Justice KauserEdappagath modified the impugned judgment of the Single Judge to the limited extent of clarifying that pending disposal of the stay application or appeal whichever is earlier, by the appellate authority, the recovery proceedings against the appellant for recovery of the amounts confirmed against him by assessment order shall be kept in abeyance. Kerala HC sets aside Order Passed u/s 148 A (d) of Income Tax Act passed without Providing Opportunity of Being Heard DINESH DINAKARAN PILLAI vs THE INCOME TAX OFFICER 2023 TAXSCAN (HC) 1778 In a recent judgement, the Kerala High Court set aside an order passed under section 148 A (d) of the Income Tax Act, 1961 which was passed without providing the opportunity to be heard. While allowing the writ petition, the single bench of Justice Dinesh Kumar Singh set aside the impugned order and remitted the matter back to the file of the respondent to pass fresh orders by the law after giving notice of hearing to the petitioner.
Proceedings u/s 153 C of Income Tax Act is not Valid in Absence of Incriminating material: Delhi HC PRINCIPAL COMMISSIONER OF INCOME TAX (CENTRAL) vs M/S VICTORY APARTMENTS PVT. LTD 2023 TAXSCAN (HC) 1775 The Delhi High Court proceedings under section 153 C of the Income Tax Act, 1961 are not valid in the absence of incriminating material. A division bench of Justice Rajiv Shakdher and Justice Girish Kathpalia held that the question of law as framed in the above-captioned appeals will have to be answered against the appellant/revenue and in favour of the respondents/assesses having regard to the finding returned by the Tribunal on the second issue. Suspicion and Conjecture cannot form a basis for triggering Reassessment Proceedings: Delhi HC quashes Impugned Notice issued u/s 148 SARASWATI PETROCHEM PVT. LTD vs INCOME TAX OFFICER 2023 TAXSCAN (HC) 1774 The Delhi High Court has quashed the impugned notice under Section 148 of the Income Tax Act, 1961, and held that the suspicion and conjecture cannot form a basis for triggering the reassessment proceedings.
After analyzing the facts, the division bench comprising of Justice Rajiv Shakdher and Justice Girish Kathpalla held that the Assessing Officer had no tangible material available with him to form a belief that income, otherwise chargeable to tax, had escaped assessment. The phraseology used by the Assessing Officer reveals that he “suspected” that income chargeable to tax had escaped assessment. The Assessing Officer did not carry forward the enquiry process once he had received communication from ITO. Thus, the bench quashed the impugned notice issued to the petitioner/assessee under Section 148 of the Income Tax Act. Therefore, the writ petition was disposed of. Appeal shall not be allowed when there is no Substantial Question of law Involved: Delhi HC PR. COMMISSIONER OF INCOME TAX vs SH. NIRMAL KUMAR MINDA 2023 TAXSCAN (HC) 1773 The Delhi High Court held that the appeal shall not be allowed when there is no substantial question of law involved.
The Division bench comprising of Justice Rajiv Shakdher and Justice Girish Kathpalia closed the appellant’s/revenue’s appeal, as according to them no substantial questions of law arose for their consideration. Since the issues in the instant appeal are the same, an identical result will follow. The appeal was therefore closed. Company liable to Pay GST for Personal Guarantee of Director under RCM: Telangana HC BST Steels Pvt. Ltd vs The Superintendent of Central Tax 2023 TAXSCAN (HC) 1776 A Division Bench of the Telangana High Court has held that the company is liable to pay Goods and Services Tax (GST) under Reverse Charge Mechanism (RCM) for personal guarantees furnished by the director of a company. The Division Bench of Justice P Sam Koshy and Justice Laxmi Narayana Alishetty observed that, “A plain reading of the notification referred to in the preceding paragraphs would clearly give an indication that the Central Government vide the said notification had specifically notified that the services provided by the Director of a company to the said company or the body corporate be leviable of tax on reverse charge basis and in the said event, the company would become liable to pay the tax for the said services.
The said notification is also not under challenge and the same still holds good.” Thus it was held that the services provided by the director of a company as personal guarantee by providing the personal properties as securities to bank for the company or body corporate is liable to Goods and Services Tax under Reverse Charge Mechanism, dismissing the writ petition against the assessee. Excess Claim of ITC under CGST: Kerala HC dismisses petition as Assessee Fails to Respond to SCN issued u/s 73(1) of the CGST Act SAKKEENA.C vs THE STATE TAX OFFICER 2023 TAXSCAN (HC) 1769 The Kerala High Court dismissed the petition as the assessee failed to respond to a Show Cause Notice (SCN) issued under section 73(1) of the Central Goods and Service Tax (CGST) Act on the excess claim of Input Tax Credit (ITC) under CGST. Since the appellant failed to respond, the respondent finalised the assessment as per the available records. The division bench comprising of Dr Justice A K Jayasankaran Nambiar & Dr Justice KauserEdappagath held that rectification under section 161 of the GST Act is permissible only when there are errors apparent on the face of the record, in a situation where the show cause notice was contested.
When a show cause notice is not contested, the resultant order passed assumes the nature of an agreed order and a rectification application will not lie to correct a factual mistake therein. The Court dismissed the appeal. Court under Writ Jurisdiction cannot direct Private Person to Issue C Form on Compliance of formalities under Central Sales Tax (Regulation and Turnover) Rules: Kerala HC SRI BALAJI GAS BOTTLING CO vs STATE TAX OFFICER 2023 TAXSCAN (HC) 1767 The Kerala High Court has held that the Court under Writ Jurisdiction cannot direct a Private Person to Issue a C Form on Compliance with formalities under Central Sales Tax (Regulation and Turnover) Rules, 1957.
A single bench of Justice Dinesh Kumar Singh held that exercising powers of writ jurisdiction under Article 226 of the Constitution of India, cannot direct a private person to issue C-forms. The court dismissed the writ petition and pending interlocutory applications. Application for Compounding Offences u/s 276C(1) and 277 of Income Tax Act Rejected on Non-Filing of Complete Bank Statement: Delhi HC directs to Consider Application SANJIV GUPTA vs CHIEF COMMISSIONER OF INCOME TAX (CENTRAL) & ANR 2023 TAXSCAN (HC) 1762 The Delhi High Court directed to consider the application for compounding offences under sections 276C(1) and 277 of the Income Tax Act, 1961 which was rejected on non-filing of a complete bank statement. The petitioner had furnished the bank statements in November 2019 as well, albeit after the impugned order was passed. A division bench of Justice Rajiv Shakdher and Justice Girish Kathpalia observed that the best way forward would be to direct the concerned officer to decide the petitioner’s compounding application afresh, since, in any event, the bank statements are now available with the respondents/revenue. The court set aside the impugned orders.
The concerned authority will adjudicate the petitioner’s compounding application dated 22.02.2016 afresh. The petitioner and/or his authorised representative will also be accorded a personal hearing in the matter by the concerned officer. Further directed to dispose of the compounding application at the earliest, though not later than eight (8) weeks. Claim of ITC under CGST Act: Kerala HC directs Assessing Authority to Consider Claim along with Relevant Document GOKUL ENTERPRISES vs DEPUTY COMMISSIONER OF STATE TAX 2023 TAXSCAN (HC) 1768 The Kerala High Court directed the assessing authority to consider the claim of Input Tax Credit (ITC) under the Central Goods and Service Tax (CGST) Act, 2017 along with relevant document. A division bench of Justice Dinesh Kumar Singh allowed the writ petition and set aside the impugned order and notice. The petitioner is directed to appear before the assessing authority within ten days with all relevant documents.
The assessing authority will examine the documents and if satisfies that the petitioner’s claim for the Input Tax Credit is bonafide, a revised order should be passed. Kerala HC allows to Withdrawal Writ Petition as to approach before Appellate Authority u/s 107 of CGST /Kerala SGST Act PRAKASH VARGHESE vs THE STATE TAX OFFICER 2023 TAXSCAN (HC) 1770 The Kerala High Court allowed to withdrawal writ petition as to approach before appellate authority under section 107 of the Central Goods and Service Tax (CGST) /Kerala State Goods and Service Tax (SGST) Act, 2017. Considering the submission, the single bench of Justice Dinesh Kumar Singh disposed of the writ petition with liberty to the petitioner to file an Appeal under Section 107 of the CGST/Kerala SGST Act, 2017 against the order within two weeks from today. If such an Appeal has been filed, the same shall be considered and decided considering it is to be on time as per Notification No. 53/2023 – Central Tax. TDS Deducted by Employer cannot be Recovered from deductee as per section 205 of Income Tax Act: Delhi HC VISHESH KHANNA vs DEPUTY COMMISSIONER OF INCOME TAX & ORS. 2023 TAXSCAN (HC) 1764 The Delhi High Court Tax Deducted at Source (TDS) deducted by the employer cannot be recovered from the deductee as per section 205 of the Income Tax Act, 1961.
A division bench of Justice Rajiv Shakdher and Justice Girish Kathpalia quashed the demand and consequentially, the show-cause notice collapsed. The writ petition is disposed of, in the aforesaid terms. Interest on Delayed GST Refunds Shall be calculated From Expiration of 60 days after Refund Application, not from date of Appellate Order: Delhi HC BANSAL INTERNATIONAL vs COMMISSIONER OF DGST AND ANR 2023 TAXSCAN (HC) 1772 A Division Bench of the Delhi High Court composed of Justice VibhuBakhru and Justice Amit Mahajan ruled that interest on delayed Goods and Services Tax (GST) refunds should be calculated from the expiration of 60 days after the refund application, not from the date of the appellate order, despite the initial denial. The court emphasized that applications for refund after Appellate Authority orders does not require fresh adjudication but serve to implement existing orders. Consequently, the court set aside the impugned order and directed the Adjudicating Authority to process the petitioner’s refund application filed on 16.05.2023. Kerala HC upholds Addition u/s 40 (3) of Income Tax Act in Absence of Material Evidence P.V. THOMAS vs THE INCOME TAX OFFICER 2023 TAXSCAN (HC) 1765 The Kerala High Court upheld the addition under section 40 (3) of the Income Tax Act, 1961 in the absence of material Evidence.
A division bench of Dr Justice A K Jayasankaran Nambiar & Dr Justice KauserEdappagath observed that “the appellant had admitted the addition under Section 40A (3) of the Income Tax Act and further, had not produced any material before any of the Appellate Authorities to suggest that the addition was not warranted, the finding of the Tribunal based on the admission of the appellant does not warrant any interference in this appeal.” The Court dismissed the appeal. Failure to Furnish Supporting Evidence against addition under Income Tax Act: Kerala HC upholds addition to Capital Account of Partner M/S. SUNNY SILKS vs ASSISTANT COMMISSIONER OF INCOME TAX 2023 TAXSCAN (HC) 1763 The Kerala High Court upheld the addition to the capital account of the partner’s failure to furnish supporting evidence against the addition under the Income Tax Act, 1961.
A single bench of Justice Dinesh Kumar Singh observed that the Appellate Authority has passed the order after considering the merit and after giving an opportunity of hearing to the petitioner and the Court cannot interfere with the said order as the Court is not sitting in appeal against the order passed by the 3rd respondent. The Court dismissed the petition. Cancellation of GST Registration Once Restored with Same Reason is not valid: Delhi HC M/S SAMAYSHRISTI ENTERPRISES vs SUPERINTENDENT, RANGE – 31, GST DIVISION NEW DELHI 2023 TAXSCAN (HC) 1761 The Delhi High Court in a recent case held that the cancellation of Goods and Service Tax (GST) registration once restored for the same reason is not valid.
A division bench of Justice VibhuBakhru and Justice Amit Mahajan observed that once the petitioner’s GST registration was restored – which was cancelled on an allegation that it was obtained by fraud, misstatement or suppression of facts – it is not open for the respondent to again cancel the petitioner’s GST registration for the same reason unless it is premised on the ground that had occurred after the petitioner’s GST registration has been cancelled on 30.09.2021. While allowing the petition, the Court set aside the impugned order and directed to restore the petitioner’s GST registration. Interim Relief to Paypal: Bombay HC stays Rs. 32.39 Crore time barred Income Tax Demand PayPal Payments Private Limited vs Assistant Commissioner of Income Tax and Ors 2023 TAXSCAN (HC) 1771 The Bombay High Court has issued an ad-interim order, staying the enforcement of a substantial tax demand amounting to Rs. 32.39 crore and all associated proceedings against PayPal Payments Private Limited. The court granted the respondents three weeks to file their replies, as requested, staying the orders until then.
Additionally, the petitioners were directed to file their rejoinder within two weeks thereafter, and the matter is scheduled for a hearing on January 8, 2024. Form-67 Filed Before Issuance of Intimation: Madras HC directs Income Tax Dept to consider FTC Claim Duraiswamy Kumaraswamy vs .The Principal Commissioner of Income Tax – 8 2023 TAXSCAN (ITAT) 2646 The Madras High Court has directed the Income Tax department to consider the Foreign Tax Credit (FTC) claim as Form 67 filed before the issuance of intimation. A single bench of Justice Krishnan Ramasamy observed that the intimation under Section 143(1) was issued on 26.03.2021, but the FTC was filed on 02.02.2021. Thus, the respondent is supposed to have provided the due credit to the FTC of the petitioner. However, the FTC was rejected by the respondent, which is not proper and the same is not in accordance with law. While setting aside the impugned order, the Court remitted the matter back to the respondent to make reassessment by taking into consideration of the FTC filed by the petitioner on 02.02.2021. The respondent is directed to give due credit to the Kenya income of the petitioner and pass the final assessment order. Delhi HC declares CBDT Instruction dated 11th May 2022 to the Extent which Propounds ‘Travel back in Time’ theory Bad in Law GANESH DASS KHANNA vs INCOME TAX OFFICER AND ANR 2023 TAXSCAN (HC) 1766 The Delhi High court has observed that the reference made in paragraphs 6.1 and 6.2(ii) of the Instruction No. 01 of 2022 dated 11.05.2022, to the extent it propounds the “travel back in time” theory, is bad in law.
The bench clearly stated that the “circulars issued by the CBDT cannot run contrary to the decision of the Supreme Court. Likewise, the delegate cannot act in contravention of the Parent Act. Thus, the circulars/instructions/notifications issued by the Central Government cannot override the Parent Act.” While quashing the reassessment notice and orders under Section 148A(d), the high Court concluded that “the reference made in paragraphs 6.1 and 6.2(ii) of the Instruction dated 11.05.2022, to the extent it propounds the “travel back in time” theory, is declared bad in law.” Pre deposit Amount paid u/s 77(4) of OVAT Act for First Appeal cannot be treated against the Second Appeal: Orissa HC M/s Swastik Agency vs Commissioner of CT & GST, Cuttack &Ors 2023 TAXSCAN (HC) 1759 The Orissa High Court has held that the pre-deposit amount paid under section 77(4) of the Orissa Value Added Tax (OVAT ) Act for the first appeal cannot be treated against the second appeal. A division bench of Acting Chief Justice Dr B R Sarangi and Justice Murahari Sri Raman viewed that as per Section 77(4), OVAT Act, the requirement of pre-deposit is for entertainment of the first appeal, but not the second appeal. Therefore, the Sales Tax Tribunal is correct in passing the order dated 02.07.2021. The petitioner stated that the pre-deposit had been made towards the entertainment of the first appeal. It was evident that the petitioner had never asked to quash the order of the first appellate authority.
The Court upheld the order and dismissed the writ petition. 10-Year Extended Limitation Period Applies to Escaped Amounts Exceeding 50 Lakhs: Delhi HC quashes Reassessment Notice GANESH DASS KHANNA vs INCOME TAX OFFICER AND ANR 2023 TAXSCAN (HC) 1766 A Division bench of the Delhi High Court, comprising Justice Rajiv Shakdher and Justice Girish Kathpalia, in the course of deciding a writ petition, emphasised that the extended 10-year limitation period for reassessment is applicable exclusively to amounts escaping Rs. 50 lakhs. The bench stated that “Thus, as per the Memorandum, in “normal cases”, no notice was intended to be issued if three (03) years had elapsed from the end of the relevant AY. Notice, beyond the prescribed three (03) years from the end of the relevant AY, could be issued only in a few specific cases; one such example which is given in the Bill is where the AO was in possession of evidence that escaped income amounted to Rs.50 lakhs or more.” It was added that “The State, perhaps, did not deem it worthwhile to chase assessees beyond three (03) years, where the alleged escaped income was less than Rs.50 lakhs. These aspects concerning legislative policy come through if one were to read the relevant provisions of the statute referred to above in the background of the speech of the Finance Minister and the Memorandum.”
Consequently, the court concluded that the orders issued under Section 148A(d) and the subsequent notices issued under Section 148 of the amended Income Tax Act, 1961, pertaining to AY 2016–17 and AY 2017–18, cannot be sustained. Crores of Income Concealment while filing ITR: Madras HC refuse to quash proceedings u/s 276CC of Income Tax Act R.P.Darrmalingam vs Assistant Commissioner of Income Tax 2023 TAXSCAN (HC) 1760 The Madras High Court refused to quash the proceedings under section 276CC of the Income Tax Act on the offence of a huge amount of income concealment while filing an Income Tax Return(ITR). The Court held that the prosecution was examined before the trial court. Therefore, all the grounds raised by the petitioner can be agitated before the trial court to rebut the presumption. The Court refused to quash criminal proceedings and dismissed the petition. Deduction u/s 80P(2)(d) of Income Tax Act Allowable on Interest Earned from Investment in Cooperative Bank: Madras HC Thorapadi Urban Co-op Credit Society Limited vs Income Tax Officer 2023 TAXSCAN (HC) 1757 In a significant case, the Madras High Court has held that deduction under section 80p(2)(d) of the Income Tax Act, 1961 is allowable on interest earned from investment in Cooperative Bank. The Court set aside the reassessment notice issued under the act.
The Division Bench of the Court in “Commissioner of Income Tax Salem v. The Salem Agricultural Producers Co-operative Marketing Society Ltd” held that the respondent therein, which is a Co-operative society, is entitled to avail the benefit under 80P(2)(d) of the Act. Since the impugned orders were passed without considering all these aspects, a single bench of Justice Krishnan Ramasamy set aside the reassessment notice while allowing the petition. Grounds for GST Registration Cancellation Unclear: Bombay HC sets aside Defective SCN, restores Registration Makersburry India Pvt. Ltd vs State of Maharashtra 2023 TAXSCAN (HC) 1758 The Bombay High Court had set aside the impugned Show Cause Notice (SCN) issued by the Goods and Services Tax (GST) authorities regarding the cancellation of GST Registration. The court criticised the vague reasons given in the show cause notice and the lack of justification in the orders.
Thus, the bench ruled that “We were inclined to impose costs on the respondents, as repeatedly we are called upon to adjudicate on such orders despite our prior pronouncements making the position very clear. However, with a final hope that the respondents would adopt an approach the law would mandate, we refrain from imposing costs on the present proceedings. Hence, no costs.” Cancellation GST Registration Ab initio from Date it was Granted due to Non-Filing of Return for 6 months is not valid: Delhi HC BALAJEE PLASTOMERS PRIVATE LIMITED vs COMMISSIONER OF DELHI GST & ANR 2023 TAXSCAN (HC) 1756 The Delhi High Court has held that Goods and Service Tax (GST) Registration Cancelled Ab initio from the date it was granted due to non-filing of Return for 6 months is not valid. In the absence of a reason for the cancellation of GST registration with a retrospective date, that is, 01.07.2017, the court comprising Justice VibhuBakhru and Justice Amit Mahajan held that respondent no.2’s decision to cancel the GST registration with a retrospective date cannot be sustained.
It was observed that the GST Registration was cancelled on the ground that had not furnished any return for six months which cannot be grounds for cancelling the GST registration ab initio from the date it was granted. The Court directed that the cancellation of the petitioner’s GST shall take effect from 28.11.2019 and not from 01.07.2017. No GST Exemption to Affiliation and Inspection Fee Paid by Colleges to Universities: Telangana HC Care College of Nursing and others vs Kaloji Narayana Rao University of Health Sciences 2023 TAXSCAN (HC) 1754 The Telangana High Court has declared that Goods and Service Tax (GST) exemption does not extend to affiliation and inspection fees paid by colleges to universities. Justices Sam Koshy and Laxmi Narayana Alishetty, comprising a Division Bench, observed that the GST exemption, as outlined in Notification No.12 of 2017 of the GST Act, 2017, for institutions offering education services, does not encompass the affiliation and inspection fees paid by colleges to universities. The bench noted that “Notification No.12 of 2017, dated 28.06.2017, which stood amended further vide Notification No.2 of 2018, dated 25.01.2018, specifically enumerates the specific nature of service rendered by the educational institutions which would stand exempted. Inspection and affiliation fees however is not part of the said notification granting exemption.
Yet another aspect which needs to be considered is that Notification No.12 of 2017, dated 28.06.2017, provides for exemption of services rendered by the educational institutions to three different categories, i.e., students, faculty and staff. It does not deal with the services rendered by the university to the educational institutions. ‘Affiliation’ and ‘inspection’ is a service rendered by the university to the educational institutions for which the university had charged the respective educational institutions.” Subsequently, the bench dismissed the writ petition and all other connected writ petitions without costs. Delhi HC stays ED proceedings in Money Laundering Case Against Hero MotoCorp Chairman & MD Pawan Kant Munjal PAWAN KANT vs DIRECTORATE OF ENFORCEMENT 2023 TAXSCAN (HC) 1753 In a recent development, the Delhi High Court has granted an interim stay in the case of Pawan Kant, a key executive at Hero MotoCorp, who is facing charges under the Prevention of Money Laundering Act, 2002 [PMLA]. Accordingly, the Single Bench of Justice Saurabh Banerjee held that, “till the next date of hearing, ECIR/DLZO-I/39/2023 dated 17.07.2023 and all proceedings emanating therefrom, including the summoning order dated 10.11.2023, shall remain stayed qua the petitioner”, allowing interim relief to the Hero Motocorp Head in the PMLA case.
Tax Research Unit cannot issue Circulars under CGST Act: Delhi HC quashes Classification of non-woven Polypropylene Bags ASSOCIATION OF TECHNICAL TEXTILES MANUFACTURERS AND PROCESSORS & ANR vs UNION OF INDIA & ORS 2023 TAXSCAN (HC) 1752 A Division Bench of the Delhi High Court has recently quashed a circular issued by the Tax Research Unit in clarification of classification of non-woven polypropylene bags, being devoid of authority under the Goods and Services Tax Act,2017 or the Customs Tariff Act, 1975.
“The writ petition shall consequently stand allowed. The impugned circular dated 31 December 2018 is hereby quashed. We leave it open to the petitioners to adopt such measures, insofar as the issue of classification is concerned, as may be permissible in law”, the Delhi High Court Division bench held. Thus, the bench quashed the circular issued, devoid of legal authority in favour of the petitioners and against the revenue. Delhi HC Upholds Deletion of Rs. 4 Crore Addition for Unexplained Investments, dismisses Revenue’s Appeal PR. COMMISSIONER OF INCOME TAX vs ELECTRICAL AND ELECTRONIC INDIA LTD 2023 TAXSCAN (HC) 1755 The Delhi High Court upheld the decision of the Income Tax Appellate Tribunal (ITAT) in deleting the addition of Rs. 4 crore for unexplained investments under Section 69 of the Income Tax Act, 1961. Considering that the Tribunal, the bench of Justice Rajiv Shakdher and Justice Girish Kathpalia dismissed the appeal due to the dropping of the substantive addition on merits, and the addition in the hands of the respondent/assessee was only on a protective basis, it is concluded that no substantial question of law necessitates consideration by the court. The bench stated that “In these circumstances, we are of the view that no substantial question of law arises for consideration by this court.
The appeal is, accordingly, closed.” Cancellation of GST Registration without specific Reason: Delhi HC directs reconsideration of Application for Amendment & Revocation of Cancellation of GST Registration M/S SAI ALUMINIUM EXIM vs PR COMMISSIONER OF GOODS AND SERVICE TAX NORTH DELHI 2023 TAXSCAN (HC) 1751 The High Court of Delhi has directed the reconsideration of the application for the amendment of Goods and Services Tax (GST) registration and revocation of cancellation of registration of the petitioner on the finding that both applications were rejected without any specific reason. The bench highlighted the importance of providing specific reasons for the cancellation of GST registrations and highlighted the need for a fair opportunity for affected parties to present their case.
The petitioner has been granted an opportunity to rectify the situation by submitting the required documents and information, ensuring due process in the proceedings. Cancellation of GST Registration without specific Reason: Delhi HC directs reconsideration of Application for Amendment & Revocation of Cancellation of GST Registration M/S SAI ALUMINIUM EXIM vs PR COMMISSIONER OF GOODS AND SERVICE TAX NORTH DELHI 2023 TAXSCAN (HC) 1751 The High Court of Delhi has directed the reconsideration of the application for the amendment of Goods and Services Tax (GST) registration and revocation of cancellation of registration of the petitioner on the finding that both applications were rejected without any specific reason. The bench emphasised that the concerned officer should satisfy themselves that the petitioner is operating its business at the claimed principal place. If the officer is convinced, the order cancelling the GST registration shall be revoked.
The bench highlighted the importance of providing specific reasons for the cancellation of GST registrations and highlighted the need for a fair opportunity for affected parties to present their case. The petitioner has been granted an opportunity to rectify the situation by submitting the required documents and information, ensuring due process in the proceedings. Cess can be levied only on Original Owner of property not Subsequent Purchaser: Rajasthan HC Stays Demand of cess against Hoteiler Khum Singh Balla S/o Shri Gopal Singh vs State Of Rajasthan 2023 TAXSCAN (HC) 1749 In a recent case, the Rajasthan High Court, while staying the demand for cess against hoteliers, held that cess could be levied only on the original owner of the property, not the subsequent purchaser.
After analyzing the facts, the bench of Justice Arun Monga recognized that the petitioner/assessee, being the subsequent purchaser, cannot be bound by prior liability and that the cess can only be imposed on the original owner. Thus, the notice was sent by the court and is due back on December 13, 2023. In the meanwhile, no coercive action should be taken against the petitioner regarding the recovery in question, the court added. Retirement amount received by partner through Arbitration Proceedings from partnership firm is not chargeable to tax: Bombay HC quashes Reassessment Proceedings Ramona Pinto vs Deputy Commissioner of Income Tax 2023 TAXSCAN (HC) 1750 In a recent case, the Bombay High Court, while quashing the reassessment proceedings, held that the retirement amount received by the partner through arbitration proceedings from the partnership firm is not chargeable to tax. After scrutinizing the arbitration award’s terms and claim statement, the court concluded that the petitioner was entitled to Rs.28 crores as per the award, relinquishing all claims against the partnership firm and partners.
The court noted Section 45(4) of the Act, applicable in the concerned assessment year, taxed distribution of capital assets upon retirement of a partner but imposed the tax liability on the firm, not the retiring partner. Following a detailed analysis, a division bench of Justice K. R. Shriram and Justice Dr.Neela Gokhale held that the Rs.28 Crores received by the petitioner, as per the arbitration award, was not chargeable to tax. Failure to Discharge Burden u/s 155 of CGST Act to Prove Eligibility on ITC Claim: Kerala HC Dismisses Writ Petition NAHASSHUKOOR vs ASSISTANT COMMISSIONER SECOND CIRCLE 2023 TAXSCAN (HC) 1632 The Kerala High Court dismissed the writ petition on failure to discharge the burden under section 155 of the Central Goods and Services Tax Act (‘the CGST Act’) to prove eligibility for Input Tax Credit (ITC) claim. A division bench of Dr Justice A K Jayasankaran Nambiar & Dr Justice KauserEdappagath observed that “One of the preconditions for the purchasing dealer to claim input tax credit under section 16 of the CGST Act is that he must produce the tax invoice issued by the supplying dealer. The appellants failed to produce the tax invoices despite sufficient opportunities extended. The appellants were issued a show cause notice under section 73(1) of the CGST/SGST Act. The appellants were called for a personal hearing. They did not appear for personal hearing either. As per section 155 of the CGST Act, the burden is on the dealer who claims the benefit of input tax credit to prove that he is eligible for such benefit.” Since the appellant failed to produce any evidence to prove that they are entitled to the benefit of input tax credit. The appellants rushed to the writ court without exhausting the alternative appellate remedy.
In such a circumstance the court dismissed the Writ petition. Setback to Platino Classic Motors: Kerala HC rules no bar u/s 14 of IBC for Finalisation of Assessment and Adjudication Proceedings PLATINO CLASSIC MOTORS INDIA PVT. LTD vs DEPUTY COMMISSIONER OF CENTRAL TAX AND CENTRAL EXCISE 2023 TAXSCAN (HC) 1748 In a setback to Platino Classic Motors India Private Ltd, the Kerala High Court ruled that no bar under Section 14 of the Insolvency and Bankruptcy Code, 2016 (IBC) for Finalisation of Assessment and Adjudication Proceedings. A Singe Bench comprising of Justice Dinesh Kumar Singh “From perusal of Section 14 of the IBC and several Judgments of the other High Courts as well as the Supreme Court, it is well settled that Section 14 of the IBC does not create a bar for finalisation of the assessment and adjudication proceedings in respect of the taxes. On the resolution once the reference has been admitted, there is moratorium for recovery of the tax dues but, there is no bar for finalisation of the assessment and adjudication proceedings.”
“It is the petitioner who was issued notice. The representative of the petitioner remained present during the hearing. His reply was also filed in the show cause notice and thereafter the orders in has been passed. Thus, I find no substance in the writ petition and the same is hereby dismissed. The Official Liquidator should consider the five claims of the petitioner in accordance with the law” the Court noted. Kerala HC Dismisses Writ Petition Challenging Revenue Recovery Notice for GST Dues Citing Failure to Avail Statutory Remedy of Appeal against Assessment Order M/S MUNDETH PLYBOARDS vs THE STATE TAX OFFICER 2023 TAXSCAN (HC) 1743 The High Court of Kerala has dismissed a writ petition challenging a revenue recovery notice for Goods and Services Tax (GST) dues amounting to Rs.1,39,35,225/- citing failure to avail statutory remedy of appeal against the assessment order.
The bench emphasised the importance of following the established statutory remedies and procedures, and the dismissal of the writ petition highlighted the necessity of following due process and exhausting all available statutory remedies before seeking judicial intervention. In result, the single bench of Justice Dinesh Kumar Singh dismissed the writ petition filed by the petitioners permitting them to approach the Commissioner under Section 80 of the GST Act, 2017 for payment of the dues in instalments. Kerala HC Directs Deposit of 10% Penalty Amount for Penalty Order u/s 67(1) of KVAT Act to Stay Recovery Proceedings, Citing Amendment to Section 55 NIRAPARA ROLLER FLOUR MILLS [P] LTD vs THE STATE TAX OFFICER 2023 TAXSCAN (HC) 1746 The High Court of Kerala has directed the petitioner to deposit 10% of the penalty amount imposed under Section 67(1)(b) and (d) of the Kerala Value Added Tax (KVAT) Act, 2003 to stay the recovery proceedings initiated against them citing the amendment made to Section 55 of the KVAT Act. The bench clarified that if the petitioner complies with this directive and deposits the balance amount, the recovery notice shall remain stayed until the disposal of the appeal pending before the second respondent, the Joint Commissioner of State Tax, Appeals.
In result, the single bench of Justice Dinesh Kumar Singh disposed of the writ petition with the above directions to the petitioner assessee and the respondent revenue stating that the pending interlocutory application, if any, in the writ petition shall stand dismissed. Time Limit For Making Payment Under SLVDRS Scheme is only Directory: Madras HC directs Dept to Issue Discharge Certificate on payment M/s.RR Housing (India) Pvt.Ltd. vs The Designated Committee 2023 TAXSCAN (HC) 1747 The Madras High Court has held that the time limit for making payment under Sabka Vishwas Legacy Dispute Resolution Scheme, 2019 (SLVDRS) is only directory. The Court viewed that the amount, that was paid by the petitioner on 02.03.2021 shall be considered as the amount paid under the SVLDRS Scheme and hence, the Department is bound to issue the Form SVLDRS- 4 about the discharge of liabilities. While allowing the writ petition, the respondents are directed to accept the payment of Rs.14,98,836/- made by the petitioner under SVLDRS-3 on 01.03.2021.
The petitioner is directed to pay interest at 15% p.a. on 14,98,836/- from 01.07.2020 till the date of payment, within four weeks and on such payment being made by the petitioner, the respondents are to issue a discharge certificate to the petitioner. PCIT has no Jurisdiction to Revise Assessment u/s 263 of the Income Tax Act When Assessment Order Attained Finality by Court Order: Madras HC R.Revathy vs The Assistant Commissioner of Income Tax 2023 TAXSCAN (HC) 1744 The Madras High Court has held that the Principal Commissioner of Income Tax (PCIT) has no jurisdiction to revise the assessment under section 263 of the Income Tax Act when the assessment order attained finality by court order. A Singe bench of Justice C Saravanan observed that the High Court merely gave a fresh opportunity to the petitioner to explain the case afresh. The Assessing Officer has passed a consequential order by stating that the case does not attract a penalty since the additional income towards investment in jewellery was offered only to purchase peace with the Department. The Court dismissed the Writ Petition. Live Consignment from China Seized by Customs Authority: Madras HC directs to Verify Documents Submitted M/s.Jineshwar Enterprise vs .The Commissioner of Customs (Gr.2) New Customs House 2023 TAXSCAN (CESTAT) 1481 The Madras High Court directed the customs authority to verify documents to release the Live Consignment from China which was seized.
A single bench of Justice Krishnan Ramasamy held that “since the issue pertains to disposal of the representation dated 08.09.2023 for release of the subject goods/live consignment imported from China vide Bill of Entry No.6548176 dated 23.06.2023 and as the petitioner had already appeared before the concerned authorities and had provided all the details and even according to the respondents, the respondents are in the process of investigation, it would be appropriate to direct the respondents to dispose of the representation dated 08.09.2023 made by the petitioner, on merits and in accordance with law, within a period of thirty days from the date of receipt of a copy of this order.” 1.2 Kg Gold Seized Illegally From Sri Lankan Citizen: Madras HC Directs Customs Authority to Decide Matter Mohamed Fazaldeen vs The Chief Commissioner of Customs 2023 TAXSCAN (HC) 1745 The Madras High Court directed the Customs authority to decide the matter as the department had illegally seized 1.2 Kg of gold from Sri Lankan Citizen.
The petitioner contended that the respondent had illegally seized 1.2 kg of gold from the petitioner without following any procedures provided under the provisions of the Customs Act. Further, he contended that even though a representation was made by the petitioner, the respondent had neither considered the said representation nor returned the 1.2 Kg of gold to the petitioner. Considering the submissions, the single bench of Justice Krishnan Ramasamy directed the first respondent to look into the matter seriously take appropriate action following the law and dispose of the petitioner’s representation within two weeks. Delhi HC upholds Luxury Tax Levy on Gymkhana Club under Delhi Tax on Luxuries Act, 1996 DELHI GYMKHANA CLUB vs COMMISSIONER (LUXURY TAX), NEW DELHI & ORS 2023 TAXSCAN (HC) 1742 The Delhi High Court has upheld the luxury tax levy on Delhi Gymkhana Club under the Delhi Tax on Luxuries Act, 1996. Thus, finding no grounds to interfere with the Assessing Authority’s conclusion, the Delhi High Court held that the club was indeed liable to pay luxury tax. However, the court made a crucial observation, stating that this decision should not serve as a precedent for assessment periods following the promulgation of the 2012 Amendment Act.