Top Stories Supreme Court & High Courts Weekly Round-up Supreme Court and High Courts Tax cases reported at Taxscan.in last week By Varsha Chandran – On December 4, 2024 12:19 pm – 11 mins read This weekly roundup analytically summarizes the key stories related to the Supreme Court and the High Court reported at Taxscan.in from 24th November 2024 to 29th November 2024. No Legal Action against GST Officers Acting in Good Faith: Supreme Court Expunged Gujarat HC’s Tentative Opinion THE STATE OF GUJARAT & ANR vs PARESH NATHALAL CHAUHAN CITATION: 2024 TAXSCAN (SC) 290 The Supreme Court expunged the tentative Opinion of the Gujarat High Court in its interim order on the good faith clause in Section 157 of the Goods and Services Tax ( GST ) Act may not be available to the officers of the State as their conduct. The bench pressed that such tentative opinions, if left unaddressed, could undermine the fairness and impartiality of subsequent adjudications, adversely impacting both the prosecution and the defence.

ITC in ECRL can be Utilised for making GST Appeal Pre-deposit u/s 107: Madras HC Clarifies in Ford India Ruling Ford India Private Limited vs The Office of the Joint Commissioner (ST) CITATION: 2024 TAXSCAN (HC) 2366 The Madras High Court, in the Ford India’s case, clarified that Input Tax Credit ( ITC ) credited in the Electronic Credit Ledger ( ECRL ) can be utilised for the mandatory pre-deposit for GST Appeal Filing under Section 107 of the Tamil Nadu Goods and Services Tax ( TNGST ) Act, 2017. The court observed that the statutory appeal form APL-01 includes a mechanism to pay the pre-deposit using the ECRL. Additionally, a circular dated 02.11.2023 issued by the CBIC prescribed a special procedure for filing appeals beyond the time limit under Section 107 of the TNGST Act. Factual Examination on ‘Addition’ of Unexplained Cash Credit under Income Tax Act Is Beyond Scope Of Appeal u/s  260A: Calcutta HC PRINCIPAL COMMISSIONER OF INCOME TAX-5 vs M/S. DELTA DEALERS PRIVATE LIMITED CITATION: 2024 TAXSCAN (HC) 2367 In a significant ruling, the Calcutta High Court has held that it cannot interfere  in factual examination of the material produced or not produced by an assessee-company to explain the share capital and premium received as  it is beyond the scope of the an appeal filed under Section 260A of the Income Tax Act, 1961.

A division bench of Chief Justice T.S. Sivagnanam and Justice Hiranmay Bhattacharyya ruled that examination of the factual position as sought for cannot be done in an appeal filed under Section 260A of the Income Tax Act and it is the duty of the Assessing Officer to have done such an exercise. Filing of Turnover in a tender process would not exempt from furnishing the Income Tax Return: Gauhati HC CHAYANIKA HANDLOOM PRODUCTS AND ANR vs THE STATE OF ASSAM AND 12 ORS CITATION: 2024 TAXSCAN (HC) 2368 The Gauhati High Court has held that filing of turnover in a tender process would not exempt from furnishing the income tax return ( ITR ). The court held that the words “Turnover” and “Income Tax Return” are different. A single bench of Justice Michael Zothankhuma held that Annual Turnover refers to the total revenue generated from the sale of goods or services during a financial year before deducting any expenses. It is a measure of business activity and operational performance. It is focused solely on the sales and revenue generated in the normal course of business. It does not factor in expenses, taxes, or other financial liabilities. Issuance of Scrutiny Notice Despite Knowing of Amalgamation: Calcutta HC Declines to Apply S. 292B of Income Tax Act PRINCIPAL COMMISSIONER OF INCOME TAX CENTRAL 2 KOLKATA vs GPT SONS PVT LTD CITATION: 2024 TAXSCAN (HC) 2369 In a significant case, the Calcutta High Court declined to apply Section 292B of the Income Tax Act, 1961 in the case where the scrutiny notice issued in an amalgamating company’s name, despite the Assessing Officer being aware about the company’s amalgamation. A division bench of Chief Justice T.S. Sivagnanam and Justice Hiranmay Bhattacharyya noted that the fact of amalgamation was well within the knowledge of the assessing officer. It thus dismissed the Department’s appeal which sought to contend that notice issued in the company’s previous name was a curable defect.

Depreciation as Granted with Rate per Income Tax Act Must Be Deducted to Determine Accumulated Profits: Telangana HC Babulal jain vs Income tax officer CITATION: 2024 TAXSCAN (HC) 2370 Telangana High Court in a recent case has held that for purposes of taxation,depreciation as granted with rates prescribed by Income-Tax Act, 1961 would have to be deducted for ascertaining the accumulated profits. A division bench of Chief Justice Alok Aradhe and Justice J. SreenivasRao allowed the appeal and  deleted the addition made by the Assessing Officer towards the Appellant’s income tax return for the relevant assessment year. Kerala HC Directs to treat Income from Sale of Immovable Properties owned by Assessee as ‘Capital Gains’ M/S KNOWELL REALTORS (INDIA) PVT. LTD vs ASSISTANT COMMISSIONER OF INCOME-TAX CITATION: 2024 TAXSCAN (HC) 2371 The Kerala High Court directed to treat income from sale of immovable properties owned by assessee as ‘Capital Gains’. It was viewed that the requirement of ensuring uniformity and consistency in tax assessments cannot be overlooked, especially while categorizing the nature of the activity carried on by an assessee to earn its income for the purposes of taxation. The bench noted that the assessee has been consistently seen as deriving income from letting out house property owned by it. It is on that basis that it has been assessed in all the assessment years prior to, and subsequent to, the assessment years under consideration in these appeals. VAT Assessment cannot be Re-opened if Time Limit Expired Pre-amendment of Timeline: Kerala HC Ruled in favour of Bhima Jewellery

THE ASSISTANT COMMISSIONER OF STATE TAX vs BHIMA JEWELLERY AND DIAMONDS P. LTD. CITATION: 2024 TAXSCAN (HC) 2372 In a ruling in favour of Bhima Jewellery, the Kerala High Court held that assessment cannot be re-opened  by the department if the limitation period expired before amendment extending timeline for reopening. It was viewed that in those cases where the erstwhile period of limitation of five years had already expired before the date of the amendment of Section 25(1) in 2017, the Revenue would not be permitted to re-open assessments that had been settled. The Division Bench of Justices A.K. Jayasankaran Nambiar and K.V. Jayakumar observed that in those cases where the erstwhile period of limitation of five years had already expired before the date of the amendment of Section 25(1) in 2017, the Revenue would not be permitted to re-open assessments that had been settled, through a fresh notice issued thereafter invoking the six-year period of limitation. Gauhati HC Directs to File Application u/s 249(4) of Income Tax as Tax Dues mentioned under ITR were Paid VIZOVOLIE NYEKHA vs UNION OF INDIA AND 4 ORS CITATION: 2024 TAXSCAN (HC) 2373 The Gauhati High Court directed the application under section 249(4) of Income Tax Act, 1961 as tax dues mentioned under income tax return ( ITR ) were paid. It was observed that as per section 249(4) where an appeal is filed before the Appellate Authority it shall not be entertained unless the assessee has paid the tax due on the income return by him wherein return is filed and where no returns are filed the assessee shall pay an amount equal to the amount of tax payable by him.

The court held that any application that may be filed by the petitioner will necessarily be required to be considered appropriately in terms of the provision to Section 249(4) of the Income Tax Act and pass appropriate orders. The contentions raised by the writ petitioner before the Court can also be raised before the Appellate Authority which is presently in seisin of the matter. The petitioner is granted liberty to file necessary applications before the Commissioner, Income Tax Appeal, raising all grounds to assail the Assessment Order dated 31.03.2022 before the Commissioner (Appeals). Kerala HC Refuses to Condone Delay as assessee’s Medical Condition is not Sufficient to Excuse Four-Year Delay in Filing Appeal under CGST Act BAIJU GEORGE vs COMMISSIONER OF GOODS AND SERVICE TAXES DEPARTMENT CITATION: 2024 TAXSCAN (HC) 2374 The Kerala High Court refused to condone delay as the assessee’s medical condition is not sufficient grounds to justify condoning a four-year delay in filing the appeal. It was viewed  that the contention of the assessee that he was sick and advised bed rest due to fatty liver disease has to be taken with a pinch of suspicion. A single bench of Justice Gopinath P. ruled that “the assessee has not made out any ground for grant of relief in the writ petition. Admittedly, the assessee filed appeals against the orders only in the month of February 2024 i.e., four years after the date on which the orders against which the appeal was sought to be filed had been issued.”

Co-Insurance Premiums and Reinsurance Commissions Not Taxable following Inclusion of Items 9 and 10 in Schedule III of CGST Act: Madras HC Royal Sundaram General Insurance Co. Limited vs Union of India CITATION: 2024 TAXSCAN (HC) 2375 In a recent ruling, the Madras High Court ( HC ) ruled that co-insurance premiums and reinsurance commissions are not taxable under the Goods and Services Tax ( GST ) following the inclusion of Items 9 and 10 in Schedule III of the Central Goods and Services Tax ( CGST ) Act, 2017. A single bench led by Justice Krishnan Ramasamy heard both sides and observed that the amounts deposited were not voluntary payments but made under its directions so they could not be treated as tax payments. The court explained that the deposits could only be utilized for tax payments following the final adjudication of the petitions. ITC Claims Permissible in GST Returns Filed On or Before 30th Nov 2021 for FYs 2017-18 to 2020-21: Madras HC rules in Light of Finance Act Ganapathi Pandi Industries vs The Assistant Commissioner CITATION: 2024 TAXSCAN (HC) 2376 In a recent ruling, the Madras High Court has ruled that the Input Tax Credit ( ITC ) claims are permissible in the Goods and Services Tax ( GST ) returns filed on or before 30th November 2021 for the Financial Years ( FYs ) 2017-18 to 2020-21.

The court ruled this in light of the Finance Act, 2024. The single bench stated that the amended Section 16(5) of the CGST Act explicitly permits taxpayers to claim ITC in returns filed within the new deadline. This amendment overrides the limitations imposed by the original Section 16(4). It was observed that the petitioners had filed their GSTR-1 returns on time but faced delays in submitting GSTR-3B due to extraordinary circumstances. Considering the retrospective amendment, the court ruled that denying ITC claims based on the earlier timeline was unsustainable. Charitable Institution’s Activities Prima Facie Not Classified as Supply or Business Under CGST Act: Delhi HC AROH FOUNDATION vs ADDITIONAL COMMISSIONER CITATION: 2024 TAXSCAN (HC) 2377 The Delhi High Court observed that the activities undertaken by charitable institutions were prima facie not classified as “supply” or “business” under the Central Goods and Services Tax ( CGST ) Act. The judges, Justice Yashwant Varma and Justice Dharmesh Sharma observed that the respondents (tax authorities) did not question the charitable status of AROH Foundation, which is properly registered under Section 12AA of the Income Tax Act. This registration confirms that the AROH Foundation is a charitable entity and should be eligible for tax exemptions. Relief to Revenue:

Delhi HC Affirms AO’s Reassessment u/s 147 on basis of Third-Party search Findings PR. COMMISSIONER OF INCOME TAX -7 vs NAVEEN KUMAR GUPTA CITATION: 2024 TAXSCAN (HC) 2378 The Delhi High Court recently remitted  matter back to the file of the Income Tax Appellate Tribunal (ITAT) observing that a jurisdictional Assessing Officer (AO) may initiate reassessment proceedings of an Assessee under Section 147 of the Income Tax Act, 1961 on the basis of connected findings uncovered by another AO during search conducted on a third-party. The Division Bench of the Delhi High Court composed of Justice Vibhu Bakhru and Justice Swarana Kanta Sharma observed that when Search or Requisition of another person under Section 132 or 132A points towards the conduct of an Assessee, and such information are handed over to the AO of the Assessee, the concerned AO may conduct assessment or reassessment of the income of the Assessee under Section 153C of the Income Tax Act, 1961 provided that the the jurisdictional conditions are met. GST Evasion by claiming Unauthorised ITC of Rs. 63.37 Crores through Fake Bills: Chhattisgarh HC Grants Bail Badal Gour S/o Tedo Gour vs Union Of India CITATION: 2024 TAXSCAN (HC) 2379 The Chhattisgarh High Court has granted bail to accused of passing unauthorised Input Tax Credit ( ITC ) worth Rs. 63.37 crores based on fake bills. It was found that the evidence in the matter of Ishan Gupta and no incriminating evidence has been recovered. It was observed that the conclusion of the trial is likely to take some time, hence, without commenting anything on merits of the case, Chief Justice , Shri Ramesh Sinha granted regular bail to the applicant. Orissa HC stays SCN issued u/s 74 of GST Act Consolidating Multiple Assessment years  Following Karnataka HC Ruling Dilip Kumar Swain vs Deputy Director CITATION: 2024 TAXSCAN (HC) 2380

The Orissa High Court has stayed the notice issued under Section 74 of the Goods and Services Tax ( GST ) which consolidated multiple assessment years following the single bench’s decision of the Karnataka High Court. The court stated that as the petitioner relied on the view taken by the Karnataka HC, the writ petition requires hearing and the department was directed to submit the counter by 17th December 2024. Punjab & Haryana HC sets aside Income Tax Notice Issued and Proceedings Initiated without Conducting Faceless Assessment u/s 144 B SHIKHAR GADH vs INCOME TAX OFFICER WARD-1 CITATION: 2024 TAXSCAN (HC) 2381 In a recent case, the High Court of Punjab & Haryana set aside Income Tax Notice issued and proceedings initiated without conducting faceless assessment under section 144 B of the Income Tax Act, 1961. The division bench of  Justice Sanjeev Prakash Sharma and Justice Sanjay Vashisth observed that the notices issued by the JAO under Section 148 of the Act, 1961 and the proceedings initiated thereafter without conducting the faceless assessment as envisaged under Section 144B of the Act, 1961, have been found to be contrary to the provisions of the Act, 1961. GST Department Cannot Escape from Issuance of Notice for Personal Hearing citing lack of Request:

Patna HC Remands Matter Barhonia Engicon Private Limited vs State of Bihar t CITATION: 2024 TAXSCAN (HC) 2382 The Patna High Court has recently ruled that the GST department cannot evade the requirement of issuing a notice for personal hearing, even if the party does not formally request one. The court upheld the extension of limitation periods under Section 168A, recognizing the unprecedented disruptions caused by the pandemic. However, it noted that extensions could not continue indefinitely. BREAKING: Relief to Lloyd; Kerala HC Sets Aside Order Denying ITC without Considering Newly Inserted Provision U/S 16 (5) of CGST Act LLOYD INSULATIONS INDIA LIMITED vs STATE TAX OFFICER CITATION: 2024 TAXSCAN (HC) 2383 In a landmark ruling in favour of Lloyd Insulations India Limited, the Kerala High Court set aside the order denying Input Tax Credit ( ITC ) without considering newly inserted provision under section 16 (5) of Central goods and Service Tax Act ( CGST ), 2017. The Court directed the competent authority to pass fresh orders, after taking note of the provisions contained in Section 16(5) of the CGST/SGST Acts within a period of three months .

The single bench of Justice Gopinath P observed that on account of notification of Sub-Section (5) of Section 16 of the CGST/SGST Acts, the petitioner will be entitled to input tax credit, which has been denied to the petitioner by order. Karnataka HC quashes Income Tax Notice u/s 148, Grants Chance to Submit Replies before Department VARAHA BUILDERS vs THE INCOME TAX OFFICER CITATION: 2024 TAXSCAN (HC) 2386 In a recent ruling, the Karnataka High Court quashed the Income Tax notice under Section 148 of the Income Tax Act, 1961 and granted the petitioner a chance to submit replies before the income tax department as the omission was due to bonafide reasons. The bench observed that the impugned order revealed that the petitioner did not submit a reply or documents in response to the Section 148A(b) notices. The bench, by considering the claim of the petitioner that the omission to file a reply was due to bona fide reasons and unavoidable circumstances, and that they are now prepared to submit the reply with documents if given another opportunity, set aside the impugned order dated 21.03.2023 under Section 148A(d) of the Income Tax Act, 1961, and related notices and orders. ITC and RCM Mismatch in GSTR-3B: Madras HC Grants Hearing Opportunity with 25% Disputed Tax Deposit Mr.Mohan Gokulraj vs The State Tax Officer CITATION: 2024 TAXSCAN (HC) 2387 The Madras High Court granted an opportunity for hearing to the assessee who received notices and the orders on discrepancy on the Input Tax Credit ( ITC ) and the Reverse Charge Mechanism ( RCM ) liability in the ( Goods and Services Tax Returns ) GSTR 3B Returns. Justice Mohammed Shaffiq set aside the impugned order dated 30.04.2024, instructing the petitioner to deposit 25% of the disputed tax within four weeks. Upon compliance, the order would act as a show-cause notice, allowing the petitioner to submit objections with supporting documents.

The respondent was directed to review the objections and issue a fresh order after granting a fair hearing. Madras HC rules 60% Tax Rate for Demonetization Deposits u/s 115BBE applies Prospectively from 01.04.2017, Orders 30% Tax Reassessment S.M.I.L.E Microfinance Limited vs The Assistant Commissioner of Income Tax CITATION: 2024 TAXSCAN (HC) 2388 In a recent ruling, the Madurai Bench of Madras High Court ruled that the increased 60% tax rate under Section 115BBE of the Income Tax Act applies prospectively from 01.04.2017 and ordered reassessment at the earlier 30% tax rate. The court observed that the use of the word “again” in the legislative intent indicated the focus was on preventing future misuse not penalizing past transactions. Recovery from Third Party u/s 79(1)(c) of GST Act: Madras HC allows Petition, Orders Dept to Consider Representation VVK Textiles vs Commercial Tax Officer CITATION: 2024 TAXSCAN (HC) 2389 In a recent judgment, the Madurai bench of Madras High Court allowed the petition seeking recovery from a third party under Section 79(1)(c ) of the Goods and Services Tax Act ( GST Act ). The court ordered the department to consider the representation. Justice K. Kumaresh Babu, addressing the limited scope of the prayer, directed the department to consider the petitioner’s representation regarding recovery from a third party.

The court further instructed the department to pass a reasoned order on merits and in accordance with the law, within four weeks, after granting the petitioner an opportunity for a hearing. Punjab & Haryana HC sets aside S.148 Notice for Non-Compliance with Faceless Assessment Process MOHAN JIT SINGH vs UNION OF INDIA AND OTHERS CITATION: 2024 TAXSCAN (HC) 2390 In the recent ruling, the High Court of Punjab and Haryana set aside a notice issued under Section 148 of the Income Tax Act, 1961, for non-compliance with the mandatory faceless assessment process under Section 144B of the Act. The division bench of Sanjeev Prakash Sharma ( Judge ) and Sanjay Vashisth ( Judge ) allowed the writ petition, set aside the notice and proceedings, and applied the principles from the previous judgments mutatis mutandis to the present case.