Direct TaxProceedings Initiated Against Income Tax Assessee After His Death Cannot Be Continued Against Legal Representative: Karnataka HCCase Title: The Income Tax Officer & ANR Preeti VCase No:WRIT APPEAL NO. 1407 OF 2024The Karnataka High Court has said proceedings initiated against an Income Tax Assessee by issuing notice after his demise cannot be continued against his/her...
Direct Tax
Case Title: The Income Tax Officer & ANR Preeti V
Case No:WRIT APPEAL NO. 1407 OF 2024
The Karnataka High Court has said proceedings initiated against an Income Tax Assessee by issuing notice after his demise cannot be continued against his/her legal representative.
A division bench of Justice Krishna S Dixit and Justice G Basavaraja said, “Had the proceedings been initiated against the Assessee during his lifetime, they could have continued against the legal representatives of the deceased Assessee.”
Case Title: Rajkumar Agarwal v. Income Tax Department.
Case No: CRIMINAL PETITION NO. 201214 OF 2023 (482(Cr.PC)/528(BNSS)) C/W CRIMINAL PETITION NO. 201213 OF 2023 CRIMINAL PETITION NO. 201215 OF 2023 CRIMINAL PETITION NO. 201216 OF 2023
The Karnataka High Court has refused to quash prosecution initiated by the Income Tax Department against an assessee who had willfully failed to submit his income tax returns in time for the Assessment Years 2012- 13 to 2015-16 and thereby committed the alleged offence.
A single judge, Justice S Vishwajith Shetty dismissed the petitions filed by Rajkumar Agarwal. It said, “Delay in filing of the income tax returns would not only result in payment of penalty, but it also results in prosecution as provided under Chapter 22 of the Act. Therefore, merely for the reason that petitioner has paid the penalty levied by the Competent Authority for the delay in filing of the returns, the same does not exonerate the petitioner from being prosecuted.”
Case Title: The PR. Commissioner of Income Tax
Case Number: INCOME TAX APPEAL NO. 425 OF 2023
The Karnataka High Court stated that fair market value of shares determined by statutory methods can't be rejected by the income tax department.
The Division Bench of Justices Krishna S Dixit and Ramachandra D. Huddar was addressing a case where the revenue has challenged the order passed by the Tribunal where the Tribunal held that the valuation report on DCF Method produced during assessment proceedings was a valid report justifying valuation of shares.
Case Title: M/S. KALPATHARU BREWERIES & DISTILLERIES PRIVATE LIMITED AND State of Karnataka & Others
Case No: WRIT PETITION NO.26031 OF 2017
The Karnataka High Court has held that the Gram Panchayat cannot levy or collect property taxes in respect of Industrial establishments located within areas notified by the Karnataka Industrial Areas Development Board (KIADB). Mere execution of a lease-cum-sale agreement or any administrative communication cannot vest power in the Gram Panchayat to levy tax in the absence of express delegation or statutory backing.
Justice Sachin Shankar Magadum held thus while allowing a batch of petitions and quashing the demand notices issued by the Sompura Gram Panchayat levying property tax on the industrial property of the petitioners located within the notified industrial area established and maintained by the respondent-Karnataka Industrial Areas Development Board (KIADB).
Karnataka High Court Directs CBDT To Extend Tax Audit Due Date To 31st October
The Karnataka High Court today directed the Central Board of Direct Taxes to extend the due date for filing Tax Audit Reports under Section 44AB of the Income Tax Act, 1961, by one month to 31st October, 2025.
The Court took into consideration the difficulties faced and directed the CBDT to extend the due date until the end of October.
Case Title: Sri Mukesh Gupta v. The Deputy Commissioner of Income Tax
Case Number: ITA NO 283 OF 2022
The Karnataka High Court has held that a loan raised by mortgaging property and advancing to a company does not constitute business expenditure, and the interest is not deductible against salary income.
The bench opined that unless expenditure is incurred in the course of the business or professional service, the assessee is not entitled to a deduction, merely due to it being incurred on the amount borrowed and advanced to the company.
Case Title: Mr. Yash v. Deputy Commissioner of Income Tax
Case Number: WRIT PETITION NO. 6530 OF 2021 (T-RES)
The Karnataka High Court has held that the search conducted at Actor Yash's residence makes him a 'searched person' under the Income Tax Act, as documents were seized from him, during the search and a panchanama was drawn. Hence, the order under Section 153C of the Act, which applies to persons other than the one originally searched, is without jurisdiction.
Justice S.R. Krishna Kumar opined that the actor was searched and in the light of the undisputed fact that his premises was searched and documents seized from him and a panchanama was drawn, the sole/unmistakable conclusion/inference that can be arrived at from the material on record is that the actor was a searched person and not a non-searched person / such other person as contemplated under Section 153C of the I.T. Act.
Indirect Tax
Case Title: M/s Vigneshwara Transport Company v. Additional Commissioner of Central Tax Bengaluru North-West Commissionerate
Case Number: WRIT PETITION NO.18305 OF 2023 (T-RES)
The Karnataka High Court held that when investigation is substantially completed by improper officer, show cause notice issued by proper officer u/s 74 of CGST Act is liable to be set aside.
The Bench of Justice M.I. Arun observed that “…substantial part of the investigation including search and seizure of the materials has been done by respondent no.2 who is not the proper Officer and under the circumstances, the said investigation, inspection, search and seizure in respect of the assessee herein has to be considered ab initio void…”
Case Title: The State Of Karnataka v. Tractor And Farm Equipment Limited
Case Number: STRP NO.26 OF 2023
The Karnataka High Court while laying down vital guidelines on Input Tax Credit stated that if the Assessee during the course of reassessment proceedings makes a claim for Input Tax Credit, the same cannot be disallowed only on the ground that the claim of the Assessee is disadvantageous to the State Exchequer.
The Division Bench of Justices Krishna S Dixit and G. Basavaraja observed that ordinarily, the claim for Input Tax Credit has to be made in the Return or Revised Return only. A claim otherwise is an exception and bona fide of the same has to be demonstrated.
Case Title: B G Parmeshwara AND Bangalore Development Authority & Others
Case No: WRIT PETITION No.51001 OF 2019 (BDA) C/W WRIT PETITION No.7028 OF 2022
The Karnataka High Court has reiterated that if the transaction of booking a residential house is entered into before the completion of construction and the consideration was paid (partly or fully) before issuance of completion certificate, the same would amount to supply of services requiring payment of the service tax (GST) by the purchaser.
Justice M G S Kamal recently dismissed a batch of petitions filed by B g Parmeshwara and others which had challenged the endorsement issued by Bangalore Development Authority (BDA) calling upon the petitioners to pay amount towards the service Tax (GST) under the provisions of the Central Goods and Services Tax Act, 2017, before registration of the apartment.
Case Title: M/s Yellalinga Electricals v. The Additional Commissioner of Commercial Taxes
Case Number: SALES TAX APPEAL NO. 1 OF 2024
The Karnataka High Court stated that inflating contract figures and complaining that tax authorities have premised their decision on such figures, amounts to defrauding state.
“Claiming higher contract amount by inflated figures and thereafter complaining that the Tax authorities have premised their decision on such figures, virtually amounts to defrauding the State, in two-ways. Such an assessee does not deserve any relief at the hands of this Court,” stated the Division Bench of Justices Krishna S Dixit and Ramachandra D. Huddar.
Value Of Land Under Works Contract Is Not Exigible To VAT: Karnataka High Court
Case Title: M/s Fortious Infradevelopers LLP V. The Additional Commissioner of Commercial Taxes
Case Number: SALES TAX APPEAL NO. 18 OF 2022
The Karnataka High Court stated that value of land under works contract is not exigible to VAT.
The Division Bench of Justices Krishna S Dixit and Ramachandra D. Huddar was addressing the issue of whether levying tax on receipt for land cost i.e., immovable property, which does not constitute consideration for works contract under Composition Scheme of KVAT is sustainable.
Case Title: B S Gupta AND The Commissioner & ANR
Case No: WRIT PETITION NO. 46688 OF 2017
The Karnataka High Court has set aside an advertisement tax demand notice issued by the Bruhat Bengaluru Mahanagara Palike (BBMP) to an educational institution for displaying non-commercial signage and boards on its own property.
Justice Sachin Shankar Magadum held thus while allowing the petition filed by BS Gupta, Secretary of Gupta Education Trust, who had challenged the legality/validity of the order issued by BBMP, under Section 134 of the Karnataka Municipal Corporation Act, 1976.
IGST Not Leviable On Secondment Of Employee From Overseas Group Companies: Karnataka High Court
Case Title: M/s Alstom Transport India Limited v. Commissioner of Commercial Taxes
Case Number: WRIT PETITION NO.1779 OF 2025 (T-RES)
The Karnataka High Court held that IGST is not leviable on secondment arrangement with overseas entities.
Justice Sachin Shankar Magadum was addressing the issue of whether a secondment constitutes a taxable supply of manpower services or a non-taxable employer-employee relationship exempt under Schedule III of the CGST Act.
Case Title: M/s Muni Naga Reddy HUF v. The Assistant Commissioner of Commercial Taxes
Case Number: WRIT PETITION NO. 12543 OF 2025 (T-RES)
The Karnataka High Court has directed the GST department to establish tracking system for notices sent to the taxpayers via email
Justice Suraj Govindaraj stated that it is required for the department to establish a system to ascertain delivery of e-mail notices, when the said e-mail was opened and when the email was read.
Export Incentives Can't Be Denied For Inadvertent Error In Shipping Bill: Karnataka High Court
Case Title: Louis Dreyfus Company India Pvt. Ltd. v. Union of India
Case Number: WRIT PETITION NO. 9005 OF 2025 (T-CUS)
The Karnataka High Court held that export incentives can't be denied for inadvertent error in shipping bill.
The bench opined that …there are situations where the assessee by inadvertence or even otherwise has uploaded certificate/forms or returns which contains some errors which would require correction. The said correction or amendment cannot be denied on the basis of the technological system which has been introduced by the Department to contend that the software does not allow for such amendment…
Case Title: TTK Prestige Limited AND Union of India & Others
Case No: WP 27926/2025
The Karnataka High Court on Monday refused to pass an ex-parte order staying the guideline dated September 9 issued by the Union of India mandating the declaration of revised retail sale price (MRP), on unsold stock manufactured/packed/imported, which would be effective from September 22, in addition to the existing retail sale price (MRP).
Justice B M Shyam Prasad refused the ex parte interim order on the petition filed by Kitchen and Home Products Company, TTK Prestige Limited. The company has approached the court seeking to quash the guideline.
Case Title: M/s BEE JAY Engineers v. Commercial Tax Officer
Case Number: WRIT PETITION NO. 106642 OF 2025 (T-RES)
The Karnataka High Court has held that an officer below the rank of Joint Commissioner cannot, by himself, inspect the premises of the assessee without authorisation under Section 67 of the Central Goods and Services Tax.
The bench further stated that there is no requirement to provide a copy of the authorisation and details of the order passed by the Joint Commissioner, but the delegate who inspects or confiscates any document or goods would be required to provide the details of the authorisation to the taxable person.
Case Title: M/s NCS Pearson INC. v. Union of India
Case Number: WRIT PETITION NO. 7635 OF 2024 (T-RES)
The Karnataka High Court has stated that a failure to mention the correct value in returns or apply the correct GST rate is not suppression under section 74 of the Central Goods and Services Tax (CGST).
Justice S.R. Krishna Kumar stated that "...though the revenue alleged in the impugned SCN that the assessee failed to mention the value of services correctly in the GSTR-5A returns and apply the correct GST rate on the consideration received, the mere omission to mention the value of services correctly in the returns and/or apply the correct GST rate would not be tantamount to wilful suppression…"
SARFAESI Charge Created Before GST Charge Takes Precedence Over It: Karnataka High Court
Case Title: The Canara Bank v. The State of Karnataka
Case Number: WRIT PETITION NO. 103730 OF 2025 (GM-RES)
The Karnataka High Court held that a SARFAESI charge created prior in time takes precedence over a GST Charge.
Justice Suraj Govindaraj stated that if there is a conflict between the GST Act and the SARFAESI Act (or the RDB Act), the priority of the charge must be determined based on the order in which the charges were created. If the charge under the GST Act was created prior to that under the SARFAESI Act, the GST Act will prevail, and vice versa.
Mens Rea Not Prerequisite For Imposing Penalty U/S 117 Of Customs Act: Karnataka High Court
Case Title: Principal Commissioner of Customs v. M/s Pigeon International
Case Number: CUSTOMS APPEAL No. 7 OF 2024
The Karnataka High Court held that mens rea is not a prerequisite for imposing a penalty under Section 117 of the Customs Act.
Justices S.G. Pandit and K.V. Aravind stated that a plain reading of Section 117 of the Act makes it clear that whenever any person contravenes any provision of the Act or fails to comply therewith, a penalty is attracted. Reading a requirement of mens rea into the provision would amount to rewriting the statute, which is impermissible. Since Section 117, in its plain language, does not indicate the necessity of mens rea. The contrary finding recorded by the CESTAT is incorrect and unsustainable.
Case Name: Gunnam Infra Projects Private Limited
Case No. : WP(C) No.611 of 2025
The Karnataka High Court holds that payments made by assessee through Form GST DRC-03 at the time of search or pursuant to an investigation cannot be treated as 'voluntary payments' when amount was not determined through any formal assessment or adjudication.
A Bench comprising of Justice M. Nagaprasanna, quashed deficiency memos issued by the Deputy Commissioner of Central Tax (Revenue) on two different dates rejecting refund sought by assessee. On this score, it was observed that “the petitioner is entitled for refund of the payments made in form DRC-03” as a deficiency memo cannot be issued when a refund application is complete in terms of Section 54 of the CGST Act, 2017 read with Rule 89 of the CGST Rules, 2017.
Case Title: M/s Merck Life Science Pvt. Ltd. v. Union of India
Case Number: WRIT PETITION NO. 27259 OF 2024 (T-RES)
The Karnataka High Court has held that the Centre cannot retain wrongly paid IGST (Integrated Goods and Services Tax) once the correct tax is paid to the State authorities.
Justice S.R. Krishna Kumar observed that since the assessee had wrongly paid IGST and later paid the correct tax to the State GST, the Central government must refund IGST to the assessee.
Case Title: Sri J Ramesh Chand v. Union of India
Case Number: WRIT PETITION NO. 9890 OF 2023 (T-RES)
The Karnataka High Court held that the assessee's payment of Rs. 10 crores could not be treated as a voluntary payment under Section 74(5) of the CGST Act (Central Goods and Services Tax Act), as the DRC-03 shows 'NIL' entries for both interest and penalty. The bench observed that the 'NIL' entries clearly indicated that the payment was made by the assessee under coercion and under the threat of arrest.
Justice S.R. Krishna Kumar stated that prior to the search and inspection conducted by the department, they did not issue any notice to the assessee nor were any proceedings to ascertain, adjudicate or determine the tax, interest and penalty payable by the assessee which indicates that there was no occasion for the assessee to pay the said sum voluntarily by way of self-ascertainment to the department, thereby indicating that the said amount was not paid voluntarily by the assessee.
GST | Non-Mentioning Vehicle Number In Part-B Of E-Way Bill Is Curable Defect: Karnataka High Court
Case Name: BVM TRANS Solutions Private Limited v. Commercial Tax Officer
Case no.: WRIT PETITION NO. 5465 OF 2025 (T-RES)
The Karnataka High Court in a matter concerning non-uploading of Part-B of E-way Bill, has set aside the revisional order and restored the order of Appellate Authority which allowed release of seized vehicle and imposed a General Penalty of Rs. 25000.
Justice S.R. Krishna Kumar directed to refund the entire amount imposed on the Petitioner as penalty excluding Rs. 25000 as also instructed to return the bank guarantee. The Karnataka High Court emphasized on how omission of vehicle number in Part-B of E-way Bill a 'curable effect' and procedural lapses as such would not invalidate the E-way Bill especially when the other documents viz., Invoice etc., tally at the time of interception, inspection and detention.
Case Title: Hindustan Construction Company Ltd. v. Union of India
Case Number: WRIT PETITION NO. 22377 OF 2022
The Karnataka High Court held that bona fide errors in GSTR-3B returns are rectifiable and cannot be a ground to initiate proceedings under Section 73 of the KGST /CGST (Central Goods and Services Tax) Act.
Justice S.R. Krishna Kumar directed the department to accept the revised returns, noting that the Supreme Court has also directed the CBIC to re-examine the provisions/timelines fixed for correcting the bona fide errors.
Case Title: M/s Toyota Kirloskar Motor Pvt. Ltd. v. Union of India
Case Number: WRIT PETITION NO.6126 OF 2024 (T-RES)
The Karnataka High Court held that for the purpose of determining the place of supply under Section 10(1)(a) of the IGST Act, the factor is the location where the movement of goods terminates for delivery to the recipient and not the place where the goods are handed over to the common carrier.
Justice S. R. Krishna Kumar stated that the assessee had not handed over the goods to the common carrier for the purpose of delivery to the ultimate destination; the liability to pay IGST under Section 10(1)(a) would arise only upon the movement of the goods terminating for delivery to the recipient at various places outside Karnataka. Undisputedly, the supply of goods is inter-State supply and not intra-State supply so as to attract CGST or KGST.
Case Title: M/s Pramur Homes and Shelters v. The Union of India
Case Number: WRIT PETITION NO. 33081 OF 2025 (T-RES)
The Karnataka High Court held that issuing a consolidated show cause notice for multiple financial years is illegal, arbitrary and contrary to the provisions of the CGST Act.
The bench opined that a composite notice for multiple financial years enables the Department to blur the statutory distinction between Section 73 (non-fraud, etc.,- 3 year limitation) and Section 74 (fraud etc., - 5 year limitation). If certain years fall under Section 73, but the entire block is treated under Section 74, the authority artificially extends limitation and bypasses mandatory statutory constraints and if such a course is permitted it clearly tantamounts to a colorable exercise of power which is impermissible in law.
Case Title: Uber India Systems Pvt. Ltd. v. Authority for Advance Ruling
Case Number: WP 25497/2024
The Karnataka High Court directed the CBIC to clarify whether passenger transportation services under Uber's subscription model attract GST under Section 9(5) of the CGST Act.
Justice S.R. Krishna Kumar also directed the CBIC to place the matter before the GST Council, if required, and file a status report.