Reopening Of Assessment Inspired From 'Review' & 'Change Of Opinion' By Subsequent AO Is Deprecated: Madras HCWhile setting aside the order disposing of assessee's objection for re-opening of assessment pursuant to the issue of notice u/s 148 of the Income tax Act, 1961 and the consequent reassessment order, the Madras High Court held that there is no scope for re-opening of the...
While setting aside the order disposing of assessee's objection for re-opening of assessment pursuant to the issue of notice u/s 148 of the Income tax Act, 1961 and the consequent reassessment order, the Madras High Court held that there is no scope for re-opening of the assessment, since the reasons cited for same was inspired from change of opinion of the Assessing officer.
A Single Judge Bench of Justice C. Saravanan observed that “there is no case made out for reopening the Assessment that was completed earlier. Reopening of the Assessment was inspired from a review and a change of opinion by the subsequent officer. Such practice has been deprecated and frowned upon by the Courts”
The Karnataka High Court has held that tax exemption cannot be denied to the government's helicopter pilot trainer merely for non-furnishing goods and service tax identification numbers (GSTIN) initially.
The bench of Justice B. M. Shyam Prasad has observed that the GSTIN of the recipient organization was not furnished initially, is able to be furnished later, and demonstrates that its services of imparting training to the helicopter pilots were totally sponsored and borne by the Central Government or the State Government.
The Delhi High Court has held that coconut oil sold by Amway as a hair oil cannot be classified as edible oil under the DVAT Act.
The bench of Justice Vibhu Bakhru and Justice Amit Mahajan, while ruling in favour of the department, observed that the coconut oil is sold by the appellant in small packs, is displayed in the category of hair care, the manner in which it is to be applied to hair, and the purpose for which it is purchased by the consumer leaves no manner of doubt that the coconut oil sold by the appellant is wrongly sought to be classified under Entry 25 of the Third Schedule of the DVAT Act.
The Delhi High Court has held that the Principal Commissioner Income Tax (PCIT) wrongly invoked jurisdiction under Section 263 of the Income Tax Act and fell in error by taking a U-turn in the fourth assessment year, thereby denying the benefit of Section 80IA of the Income Tax Act.
The bench of Justice Rajiv Shakdher and Justice Girish Kathpalia has observed that no material was brought on record by the PCIT to show that merely by migration from Internet Protocol-Virtual Private Network (IP-VPN) to National Long Distance-International Long Distance (NLD-ILD) license, a new and different “undertaking” of the assessee within the meaning of Section 80IA(4)(ii) came into existence.
The Allahabad High Court has held that a minor typographical error in the e-way bill without any other material establishing an intention to evade tax will not attract a penalty under Section 129 of the Goods and Service Tax Act, 2017.
Placing reliance on the decision of Allahabad High Court in M/s. Varun Beverages Limited v. State of U.P. and 2 others, the judgment of Supreme Court in Assistant Commissioner (ST) and others v. M/s. Satyam Shivam Papers Pvt. Ltd. And another, Justice Shekhar B. Saraf held that “Upon perusal of the judgments, the principle that emerges is that the presence of mens rea for evasion of tax is a sine qua non for imposition of penalty. A typographical error in the e-way bill without any further material to substantiate the intention to evade tax should not and cannot lead to the imposition of penalty.”
The Jharkhand High Court has ruled that registration of mining equipment, including drill masters and dumpers is mandatory under the Motor Vehicles Act. However, the Court has further said that the issue of whether a vehicle is taxable or not will depend upon the test as to whether the vehicle is proposed to be used for transporting goods from one place to another.
The Calcutta High Court has quashed the ex parte order imposing excise duty on the incineration of lean gas used in the generation of electricity.
The bench of Justice Md. Nizamuddin has remanded the matter back to the adjudicating authority concerned to pass a fresh adjudication order by allowing the petitioner to file an objection against the adjudication order by treating it as show cause notice and to take all the points raised in this writ petition.
The Gujarat High Court has allowed the deduction under Section 80IA(4) of the Income Tax Act to the assessee engaged in developing infrastructure projects like roads, canals, etc.
The bench of Justice Bhargav D. Karia and Justice Niral R. Mehta has observed that the assessee has entered into a development of infrastructure facility agreement and not a work contract.
The Delhi High Court has held that investment in shares by a company in its Indian subsidiary is a “capital account transaction” which does not give rise to any income. Therefore, the same cannot be treated as income for taxation.
Placing reliance on the earlier decision of Delhi High Court in Nestle SA v. Assistant Commissioner of Income Tax, the bench comprising of Acting Chief Justice Manmohan and Justice Mini Pushkarna held “It is settled law that investment in shares in an Indian subsidiary cannot be treated as 'income' as the same is in the nature of “capital account transaction” not giving rise to any income.”
The Allahabad High Court has held that the writ court should not interfere in notice issued under Section 73 of the UP Goods and Service Tax Act, 2017 unless there is inherent lack of jurisdiction or complete absence of relevant material is alleged and established.
The Delhi High Court has held that an input tax credit (ITC) refund cannot be rejected merely on the grounds of the non-supply of authenticated documents.
The bench of Justice Sanjeev Sachdeva and Justice Ravinder Dudeja has observed that the petitioner had uploaded documents; however, the system did not register the documents that were uploaded by the petitioner. The appellate authority records that the petitioner had not submitted any documents, which were submitted along with the reply.
The Rajasthan High Court has held that the department's action of denying the benefit of immunity on the ground that the penalty was initiated under Section 270A of the Income Tax Act for misreporting of income is not only erroneous but also arbitrary and bereft of any reason, as in the penalty notice, the respondents have failed to specify the limb, "under-reporting" or "misreporting" of income, under which the penalty proceedings had been initiated.
The bench of Justice Arun Bhansali and Justice Shubha Mehta has observed that the Deputy Commissioner violated the provisions of proviso to Section 270AA (4) by not providing any opportunity of hearing, the order passed was wholly laconic, it did not indicate as to under which part of Section 270A (9), the case of the petitioner was covered, and the revisional authority, without giving any cogent reasons, has in a wholly cursory manner indicated the case of the petitioner was within the ambit of Clauses (a) and (c) of Section 270A (9).
The Madras High Court has directed the verification of certificate of origin within 30 days and in case of failure of verification within time release the seized areca nut is subject to providing a bond for 100% of the value of goods but without insisting on a bank guarantee.
The bench of Justice Senthilkumar Ramamoorthy has observed that areca nuts have a limited shelf-life and the risk of contamination and deterioration of goods increases over time.
Employee Accepted Salary After TDS Deduction, Employer Responsible For Non-Deposit: Delhi High Court
The Delhi High Court has held that the employee accepted salary after TDS deduction and the employer is responsible for non-deposit of TDS.
The bench of Justice Rajiv Shakdher and Justice Girish Kathpalia has observed that the petitioner/employee, having accepted the salary after the deduction of income tax at source, had no further control over it in the sense that thereafter it was the duty of his employer, acting as a tax collecting agent of the revenue, to pay the deducted tax amount to the Central Government in accordance with law.
The Delhi High Court has quashed the order cancelling GST registration with retrospective effect, bereft of reasons.
The bench of Justice Sanjeev Sachdeva and Justice Ravinder Dudeja has observed that one of the consequences of cancelling a taxpayer's registration with retrospective effect is that the taxpayer's customers are denied the input tax credit availed in respect of the supplies made by the taxpayer during such a period.
On Thursday(January 4), the Supreme Court dismissed a Special Leave Petition filed by the State of Uttar Pradesh against the order of the Allahabad High Court quashing the demand of Rs. 235.52 Crores raised against Vivo Mobile India Private Limited raised by GST Authorities vide order under Section 74(9) of the Goods and Service Tax Act 2017.
In the peculiar facts of the case, the bench comprising of Justice B.V. Nagarathna and Justice Augustine George Masih refused to interfere with the order of the Allahabad High Court.
The Rajasthan High Court has held that once the deduction claim for education cess is withdrawn, the assessee is immune from the imposition of a penalty under Section 270A of the Income Tax Act.
The bench of Justice Vijay Bishnoi and Justice Munnuri Laxman has observed that neither in the assessment order nor in the subsequent show-cause notices, the Assessing Officer specify that the case of the petitioner-company is covered under which part of Section 270A(9). Even in the order, it is not specified which part of Section 270A(9) is attracted.
The Delhi High Court has directed the Customs Commissioner to release the remaining amount after realizing the redemption fine and penalty from the seized foreign currency.
The bench of Justice Sanjeev Sachdeva and Justice Ravinder Dudeja has observed that ordinarily, the adjudicating officer needs to give the owner of the goods the option to pay a fine in lieu of confiscation, and if such a fine is not paid within a period of 120 days, such an option will become void. But the goods seized in the present case are nothing else but foreign currency.
The Allahabad High Court has held that the seizure of a vehicle transporting goods affects the civil rights of the transporter as the truck is a capital asset of the transporter. The Court held that the transporter ought to be afforded an opportunity of hearing before passing any penalty order against him.
While observing that the vehicle carrying the goods could be released under proviso-1 of Section 129 (6) of the UP Goods and Service Tax Act, 2017 on payment of Rs. 1 Lakh, the bench comprising of Justice Saumitra Dayal Singh and Justice Manjive Shukla held “Truck being the valuable property and a capital asset of the transporter which is utilised to generate revenue/ income, we perceive valuable civil right of the petitioner having being adversely affected exparte.”
While observing that transaction pertaining to loan between two concerns wherein the liability of borrower stood reduced in the books of accounts to an extent of payment made to clear the liability of assessee appears to be in accordance with law, the Madras High Court ruled that penalty under Section 271E of Income tax Act, 1961 cannot be levied on repayment of loan in absence of cash transaction.
The High Court made it clear that the question of dealing with cash transaction does not arise and therefore penalty under Section 271E cannot be levied.
A Single Judge Bench of Justice Krishnan Ramasamy observed that “with regard to the grant of loan by the petitioner to M/s. Shakti Sugar Ltd. and repayment of the same made by M/s. Shakti Sugar Ltd. to the aforesaid three entities based on the instructions of the petitioner and as regards the discharge of liabilities, suitable entries have been made both in the books of account of the petitioner as well as M/s. Shakti Sugar Ltd. and in a similar way, the same was reflected in the audited books of account. When such being the case, initiation of proceedings against the petitioner appears to have been made under wrong assumption that there was cash transaction”.
Finding that assessee's income from sub-letting/sub-licensing the space in question, has always been accepted by Respondent / Income Tax Department as, income from business, the Calcutta High Court held that assessee's income from sub-licensing/sub-letting is chargeable to tax as business income and not as income from house property.
The Division Bench comprising of Justice Surya Prakash Kesarwani and Justice Rajarshi Bharadwaj observed that “Since the object of the assesse company and its activity is the business of renting/licencing/sub-licencing shops etc. and it derived income mainly from the aforesaid business activity, therefore, the income from contribution/sub-licencing derived by the assessee is business income and not income from house property”.
While setting aside the Rajasthan High Court orders, the Supreme Court restored the assessee's appeals by condoning the delay in filing the paper-book before High Court and observed that the assessee is entitled to have his appeals heard on merits.
The Division Bench comprising of Justice P.S. Narasimha and Justice Aravind Kumar, observed that “As Appeal No. 817 of 2008 stood dismissed for noncompliance, the High Court was of the opinion that inconsistent orders cannot be passed and proceeded to dismiss even Appeal No. 816 of 2008 without examining the matter on merits. We are of the opinion that the Appellant is entitled to have his appeals heard on merits”.
The Kerala High Court has quashed the penalty under the Kerala Value Added Tax (KVAT) Act and held that re-sellers of machines have not wilfully classified machines under the wrong head and have adopted the same classification as the seller.
The bench of Justice Dinesh Kumar Singh has observed that penalty proceedings have to be initiated when there is a willful or contumacious act on the part of the assessee to evade payment of the correct tax. The petitioners had reason to adopt the classification as 'Digital Multifunctional Devices', as they being re-sellers could not have classified the machines to a different classification.
The Bombay High Court has held that even assuming that there was a defect in the notice, it had caused no prejudice to the assessee, and the assessee “clearly understood” what the purport and import of the notice were under Section 274 read with Section 271 of the Income-tax Act, 1961. The principles of natural justice cannot be read in abstract form.
The bench of Justice G. S. Kulkarni and Justice Jitendra Jain has observed that the assessee at no earlier point in time had raised a plea that, on account of a defect in the notice, the assessee was put to any prejudice.
The Court observed that a violation will not result in nullifying the orders passed by statutory authorities. If the case of the assessee is that the assessee was prejudiced and principles of natural justice were violated on account of not being able to submit an effective reply, it would be a different matter.
The Delhi High Court has held that taxpayers are not provided an opportunity to object to the retrospective cancellation of GST registration.
The bench of Justice Sanjeev Sachdeva and Justice Ravinder Dudeja has restored the GST registration of the petitioner to its original number.
The Delhi High Court has held that transactions concerning mutual funds were in the nature of investment and not motivated by trade.
The bench of Justice Rajiv Shakdher and Justice Girish Kathpalia has observed that the intent has to be ascertained keeping in mind the magnitude and frequency of the transactions, the period for which shares are held, the purpose for which they are held, and how transactions are disclosed in the books of account. There is no presumption in law that the acquisition of shares by an assessee is necessarily for trade as opposed to investment.
Recently, the Supreme Court has held that definition of 'manufacture' under Section 2(e)(1) of the U.P. Trade Tax Act, 1948 does not include blending and packaging tea.
Distinguishing the judgment delivered by a three-judge bench of the Supreme Court in Chowgule & Co. Private Limited and Anr. vs. Union of India and Others, the bench comprising of Justice B.V. Nagarathna and Justice Ujjal Bhuyan held “However, in the instant case, mere mixing of different types of tea only for the purpose of marketing as tea and not a particular type of tea does not involve any process/manufacture within the meaning of the definition. Therefore, judgment and observations in Shiv Datt and Sons are squarely applicable to the present case.”
The Gujarat High Court has reiterated that the charge of the Secured Creditor will precede over the charge of an Unsecured Creditor. The above ruling came in a writ petition whereby the core issue raised was - 'Who will have the first charge over the property in question i.e. Secured Creditor or the State / Central Government (Crowns debt) on account of non-payment of dues of the Sales Tax department?'
The Supreme Court has held that the hiring of motor vehicles/cranes from a contractor is a service and would not attract Sales Tax or Value Added Tax (VAT) assuming the transaction to be sale of goods. The Court clarified that transfer of right to use the goods not only includes possession but also control over goods by the user. If the control over the goods remains with the contractor during the hire period, then it cannot be termed as sale of goods and only service tax can be levied.
The Allahabad High Court has held that once the registration of the assesee is cancelled, any notice for proceedings under the Central Goods and Service Tax Act, 2017 shall be served on the address of the assesee.
The Court observed that merely uploading notice on the web portal without any intimation to the assesee will vitiate any subsequent action as being bad in law.
Elaborating on the need for judicious application of the principle of audi alteram partem in legal and administrative proceedings, the bench comprising of Justice Shekhar B. Saraf held, “In the present case, when the petitioner had cancelled its registration in the year 2019, a proper notice was required to be issued to it under Section 74 of the Act at its address. However, the authorities simply uploaded the Section 74 show cause notice on the web portal inspite of knowing that the petitioner had already cancelled its registration prior to the date of issuance of the show cause notice. This action clearly prevented the petitioner from appearing in the hearing in the original proceeding under Section 74 of the Act that was accordingly passed ex parte.”
Industrial Units Can't Be Discriminated For Budgetary Support Based Turnover: Gauhati High Court
The Gauhati High Court recently held that the exclusion of industrial units who were eligible to avail benefits under the NEIIPP, on the classification that they did not pay Central Excise Duty either because their annual turnovers were below the threshold limit of 1.5 crores or that they had produced items which were already exempted, cannot be permitted to be a ground to deny the benefits of budgetary support scheme.
The single judge bench of Justice Soumitra Saikia observed: “Such classification cannot be held to be a reasonable classification as it fails to achieve the object for which the classification is made, namely providing financial support to those industries availing benefits under the NEIIPP. The said classification of the respondent authorities is therefore arbitrary and is hit by Article 14 of the Constitution of India and the same is, therefore, held to be bad in law.”
'No Reason To Interfere With The Levy Of Tax On The Sale Of 'Korai'': Patna High Court
In a recent ruling, the Patna High Court has upheld the imposition of tax on the sale of 'Korai,' a processed by-product used as cattle feed. The decision came in response to two appeals by M/s Raj Kumar Sao Kishori Lal Sao, a partnership engaged in the purchase, processing, and sale of food-grains, pulses, and related by-products.
The court's observation emphasized that there was no evidence to demonstrate that 'Korai' was sold as cattle feed. The processed nature of 'Korai' rendered it taxable as an unspecified residuary item at the rate of 8%, as it was not equivalent to Wheat Bran. The Appellate Authority had initially taxed it at 4%, a decision not challenged by the State.
In a recent ruling, the Patna High Court slapped a fine of Rs 5,000 on a Goods and Services Tax ( GST ) officer for forcible and illegal recovery of the full tax amount from a man waiting to avail the statutory remedy of appeal before GST tribunal which has not been made functional in Bihar.
The court has directed the department to reimburse the entire collected tax within 2 weeks. The ruling was issued by a division bench led by Chief Justice K Vinod Chandran and Justice Rajiv Roy, granting relief to the National Insurance Company's Patna regional office.
Payment To Third Party Instead Of Selling Dealer, ITC Not Allowable: Calcutta High Court
The Calcutta High Court has held that the writ petitioner is not entitled to the benefit of input tax credit as he has not paid the amount to the selling dealer but to a third party.
The bench of Chief Justice T.S. Sivagnanam and Justice Supratim Bhattacharya has observed that the writ petitioner is precluded from adding words to a statute to state that he will be entitled to the benefit of the input tax credit, though he has not paid the amount to the selling dealer to a third party based on certain instructions.
he Bombay High Court has held that the AO has no jurisdiction to assess or reassess any income, which was the subject matter of an appeal.
The bench of Justice K.R. Shriram and Justice Neela Gokhale has observed that since the grant of benefit under Section 11 of the Income Tax Act, 1961, was the subject matter of appeal and has been held in favour of the assessee, the matter cannot be reopened.
While deciding the question as to whether reopening of a concluded assessment under Section 147 of the Income Tax Act (“Act”) was legally sustainable or not, the Supreme Court recently held that for the purposes of tax assessment, an assessee's obligation is limited to making a "full and true" disclosure of all "material" or primary facts, and thereafter, the burden shifts on the assessing officer. If a return is defective, it is upto the officer that he intimate the assessee in order that defects may be cured. But if the officer fails to do so, the return cannot be called defective.
"Ascertaining the defects and intimating the same to the assessee for rectification, are within the realm of discretion of the assessing officer. It is for him to exercise the discretion. The burden is on the assessing officer. If he does not exercise the discretion, the return of income cannot be construed as a defective return," the Bench of Justices BV Nagarathna and Ujjal Bhuyan said.
The Madras High Court has quashed the assessment order and held that the defect was not cured due to the availability of records in the custody of the central GST authority.
The bench of Justice Senthilkumar Ramamoorthy has observed that a composite order of assessment was issued with regard to four defects, and the documents on record disclose that the non-availability of records, on account of such documents being in the custody of the Central GST authority, undoubtedly impacted the petitioner's ability to respond to two defects.
The Madras High Court has held that an IGST refund claim may be made before the expiry of two years from the relevant date. The relevant date is required to be computed from the date of export of the goods concerned by any mode.
The bench of Justice Senthilkumar Ramamoorthy has observed that since the refund claim pertains to exports made between July 2017 and November 2017 and the refund application was filed on January 9, 2019, it is clear that the refund application was made within two years from the relevant date.
Section 5 Of Limitation Act Does Not Apply To Section 107 Of CGST Act: Allahabad High Court
The Allahabad High Court has held that Section 5 of the Limitation Act, 1963 does not apply to appeals filed under Section 107 of the Central Goods and Services Tax Act, 2017.
“The Central Goods and Services Act is a special statute and a self-contained code by itself. Section 107 of the Act has an inbuilt mechanism and has impliedly excluded the application of the Limitation Act. It is trite law that Section 5 of the Limitation Act, 1963 will apply only if it is extended to the special statute. Section 107 of the Act specifically provides for the limitation and in the absence of any clause condoning the delay by showing sufficient cause after the prescribed period, there is complete exclusion of Section 5 of the Limitation Act,” held Justice Shekhar B. Saraf.
The Lucknow Bench of the Allahabad High Court held that before passing of any adverse order, such as imposing tax or penalty, opportunity of hearing is mandatory under Section 75(4) of the Uttar Pradesh Goods and Service Tax Act, 2017.
Section 75(4) of the UPGST Act provides that an opportunity of hearing must be granted if requested in writing or where any adverse action is contemplated against such person.
UPGST | Burden To Prove Intention To Evade Tax Lies Solely On Department: Allahabad High Court
On Wednesday, the Allahabad High Court held that the burden to prove intention to evade tax lies solely on the Department. The Court held penalties in tax laws should not be imposed solely on insignificant technical errors which do not have any financial consequences.
The Court held that penalties should only be imposed where there is concrete evidence to show that an assesee is deliberately trying to defraud the system and not in cases of unintentional mistakes.
The Jharkhand High Court has held that the determination of the value of the excisable goods for the purpose of assessment falls within the exclusive jurisdiction of the Supreme Court of India under Section 35L of the Central Excise Act, 1944.
The bench of Justice Rongon Mukhopadhyay and Justice Deepak Roshan has observed that the appeals are not maintainable, and the same would lie before the Apex Court under Section 35L, as the jurisdiction of the High Court in such matters is specifically excluded under Section 35G and it falls within the exclusive jurisdiction of the Apex Court under Section 35L.
The Karnataka High Court has quashed the prosecution under Section 276C(1) of the Income Tax Act for wilful tax evasion.
The bench of Justice M. Nagaprasanna has observed that the assessees filed revised returns, waiving their claim for short-term capital loss and long-term capital gains, and also paid taxes, the moment the search was conducted and the assessment proceedings commenced.
The Himachal Pradesh High Court has held that departments of the state, including excise and revenue, will not have priority over the secured creditors' debt.
The bench of Justice Tarlok Singh Chauhan and Justice Satyen Vaidya has observed that the dues of the secured creditor, i.e., the appellant bank, will have priority over the dues of the Central Excise Department, as even after the insertion of Section 11E in the Central Excise Act, 1944, w.e.f. April 8, 2011, and the provisions contained in the SARFAESI Act, 2002, will have an overriding effect on the provisions of the Central Excise Act.
The Allahabad High Court has held that if the invoice accompanying the goods contains all the details of the vehicle then not filing of Part-B of the e-way bill is a technical error without any intention to evade tax. The court quashed the penalty order under Section 129(3) of the UP Goods and Service Tax Act, 2017.
The Delhi High Court has held that fees received by assessees for sub-licensing sports broadcasting rights attributable to 'live feed' is not taxable as royalty.
The bench of Justice Yashwant Varma and Justice Girish Kathpalia has observed that once the Court came to the conclusion that a live telecast would not fall within the ambit of the expression “work”, it would be wholly erroneous to hold that the income derived by the assessee in respect of “live feed” would fall within clause (v) of Explanation 2 to Section 9(1)(vi) of the Income Tax Act, 1961.
The Calcutta High Court has held that the assessee had repeatedly sought adjournments, which would show that the assessee attempted to drag the matter along, knowing well that the assessment would be time-barred.
The bench of Chief Justice T.S. Sivagnanam and Justice Supratim Bhattacharya have observed that the provision of Section 148A of the Act has been scrupulously followed by the assessing officer, and there is no error in the decision-making process of the court to interfere.
The Bombay High Court has held that a change of opinion does not constitute justification and/or reasons to believe that income chargeable to tax has escaped assessment.
The bench of Justice K. R. Shriram and Justice Neela Gokhale has observed that once a query is raised during the assessment proceedings and the assessee has replied to it, it follows that the query raised was a subject of consideration of the Assessing Officer while completing the assessment. It is not necessary that an assessment order contain references and/or discussions to disclose its satisfaction with respect to the query raised. The only requirement is that the assessing officer ought to have considered the objection now raised in the grounds for issuing notice under Section 148 of the Act during the original assessment proceedings.
The Allahabad High Court has held that mere technical errors under tax laws without any financial implications should not be grounds for imposition of penalties.
While dealing with the case of goods not accompanying e-way bill, Justice Shekhar B. Saraf held, “Mere technical errors, without having any potential financial implications, should not be the grounds for imposition of penalties. The underlying philosophy is to maintain a fair and just tax system, where penalties are proportionate to the gravity of the offense. In the realm of taxation, imposition of penalty serves as a critical measure to ensure compliance with tax laws and regulations.”
The Allahabad High Court has held that authorities cannot travel beyond the show cause notice to impose penalty on the assesee.
The bench comprising Justice Shekhar B. Saraf held, “At its core, a show cause notice represents the initial step in an administrative or legal process, wherein an individual or entity is formally apprised of allegations or discrepancies attributed to them. This notice serves as a mechanism to afford the recipient an opportunity to present their side of the story, provide clarifications, or rectify any perceived errors before any punitive action is taken.”
The Calcutta High Court has upheld the quashing of an order passed by the CIT speculating on the possibility of understatement in closing stock without a specific finding.
The bench of Chief Justice T.S. Sivagnanam and Justice Hiranmay Bhattacharyy has observed that the assessing officer has conducted a due inquiry and thereafter completed his scrutiny assessment. The tribunal also noted that the CIT, in his order under Section 263, has only observed that there is a possibility of understatement in the closing stock without a specific finding on the said aspect. Thus, the case on hand is not one such case where no inquiry was conducted by the assessing officer.
Goa Cess Act Is Not Subsumed By GST Laws: Bombay High Court
The Bombay High Court at Goa has held that the Goa Cess Act is not subsumed by the GST laws.
“The Goa Cess Act is intra vires Articles 14, 301, and 303 read with Article 304 of the Constitution of India. Also, it is legal and valid, being in no manner subsumed by the GST laws,” the bench of Justice G. S. Kulkarni and Justice Bharat P. Deshpande observed.
The Madras High Court, while remanding the matter, held that the refund claim has to be examined and determined based on documents pertaining to the availing of ITC as well as the export of products on a zero-rated basis.
The bench of Justice Senthilkumar Ramamoorthy has observed that the petitioner/assessee has made the refund claims on time and cannot be faulted for the delayed processing of claims by the department.
The Delhi High Court has held that as a customs broker, the petitioner cannot be held liable because exporters were not traceable after the issuance of 'Let Export Orders' and the export of the goods out of the country.
The bench of Justice Yashwant Varma and Justice Ravinder Dudeja has observed that once the Importer Exporter Code (IEC) particulars as mentioned are verified from the system as maintained by the Customs, there is no requirement statutorily placed upon the Custom House Agent (CHA) to undertake an independent exercise in order to verify the details as furnished by the exporter.
Electricity Qualifies As Input For Grant Of CENVAT Credit: Madras High Court
The Madras High Court has held that electricity qualifies as an input for the grant of CENVAT credit under the CENVAT Credit Rules, 2002 (CCR).
The Bench of Justice Anita Sumanth and Justice R. Vijayakumar have observed that the captive power plant has been set up at substantial cost by the appellant at one of the company locations. The electricity generated has been used as 'input' only within the appellant group of companies, though at different locations. The consumption is in pari materia with the power generation, and there is no inflated claim.
Sales Tax Subsidy/Incentive Is Capital Receipt: Delhi High Court
The Delhi High Court has held that the sales tax subsidy or incentive received by the assessee under the Dispersal of Industries Package of Incentives, 1993, was a capital receipt.
The bench of Justice Rajiv Shakdher and Justice Girish Kathpalia has observed that the common thread running through various incentives provided under the scheme was the setting up of a new unit or large-scale investment in fixed capital. The fact that the eligibility certificate was to be issued by the agency implementing the scheme after the commencement of commercial production by the eligible unit appears to have been incorporated in the 1993 Scheme to ensure that the object and purpose of the 1993 Scheme, which was to industrialize underdeveloped and developing areas, were fulfilled.
The Calcutta High Court has held that when the goods are still in use, the question of passing the burden of customs duty does not arise, and the question of unjust enrichment will not be applicable.
The bench of Chief Justice T.S. Sivagnanam and Justice Hiranmay Bhattacharyya has observed that the appellate authority took note of the certificate issued by the Chartered Accountant in which the Chartered Accountant again certified that all the goods brought under the cover of the three bills of entries are still in use by the Dredging Corporation of India. The Director (Operations and Technical) of the assessee certified that the vessel is in operation and has not been sold.
While holding that the draft assessment order suffers from non-application of mind, the Madras High Court sets aside the proceedings initiated in violation of procedure prescribed as per Section 144B(1)(vii) read with (xiv) and (xvi)(b) of the Income tax Act, 1961.
A Single Judge Bench of Justice Mohammed Shaffiq observed that “a duty is cast on the assessing authority in terms of Section 144B(1)(xiv) of the Act to take into account all relevant material and thereafter frame the draft assessment order. The respondent has erred in not complying with the above mandatory requirement inasmuch as the draft assessment order has been made without even examining / taking into account the objections / response of the petitioner made vide letter dated 22.09.2021. Thus, the draft assessment order suffers from non-application of mind to matters that are relevant and on record, thus stands vitiated”.
Discount Linked To Subsidy Alone Can Form Part Of “Transaction Value”: Madras High Court
The Madras High Court has held that a discount linked to the subsidy alone can form part of the “transaction value.”.
The bench of Justice C. Saravanan has observed that a discount by itself will not qualify as a subsidy. However, a discount offered by a distributor, a supplier, or the manufacturer to the buyer or recipient simplicitor cannot form part of the “transaction value” unless such a discount is offered on account of the subsidy for supplies by a third party.
Customs Act | Claimant Entitled To Interest On Delayed Return Of The 'Duty Drawback' : Supreme Court
The Supreme Court on Monday (February 5) observed that if there is a delay in refund of the 'duty drawback' to the claimant under the Customs Act, 1962, then the claimant would be entitled to interest in addition to the amount of drawback at the rate of interest which was fixed by the Central Government at the relevant point of time.
It was contended on behalf of the Directorate General of Foreign Trade (DGFT) that there was no provision for payment of interest on delayed refund of duty drawback.
Rejecting such contention, the Bench of Justices Abhay S. Oka and Ujjal Bhuyan while affirming the findings of the High Court, observed that the claimant would be entitled to receive the interest on the belated refund of the 'duty drawback' by the Director General of Foreign Trade (“DGFT”) under the Customs Act.
The Bombay High Court has held that HSBC Bank carrying on bona fide banking business in Mauritius is exempt from tax in India.
The bench of Justice K. R. Shriram and Justice Neela Gokhale has observed that interest arising in a contracting state (India) shall be exempt from tax in that state (in India) provided the income is derived and beneficially owned by any bank carrying on a bona fide banking business that is a resident of the other contracting state (Mauritius).
The Madras High Court has held that when a registered dealer claims any benefit under Section 19 of the TNVAT Act 2006, he has to strictly adhere to the conditions laid down in the said section.
The bench of Justice D. Krishnakumar and Justice R. Vijayakumar has observed that the petitioner has not produced the original tax invoice from a registered dealer, and therefore, he cannot complain that the authorities are attempting to reverse the input tax credit in his favor. In fact, the petitioner has affected the purchase five months after the cancellation of the registration of the selling dealer. Since the registration of the selling dealer had already been cancelled in April 2008, he would not have paid the tax. Therefore, the allegation of the petitioner that the notice issued by the respondent department for reversing the input tax credit would amount to double taxation is not legally sustainable.
The Bombay High Court has held that excise duty paid and included in the closing stock has to be claimed separately as a deduction; otherwise, the appellant would not be claiming the entire excise duty paid in the year of its payment.
The bench of Justice K. R. Shriram and Justice Neela Gokhale has observed that Section 43B, which came to be introduced from Assessment Year 1984–1985 onwards, provides that the excise duty would be deductible only on a payment basis in the year in which it is actually paid.
Pointing that the information which was furnished to the assessee though contained information pertaining to the three assessment years, the information called for in the notice dated Mar 31, 2023 pertained only to the assessment year 2016-17, the Calcutta High Court upheld the reassessment proceedings despite the fact that Section 148A(b) notice issued for AY 2016-17 was accompanied with annexure containing information for multiple AYs.
The Division Bench comprising Chief Justice T.S. Sivagnanam and Justice Supratim Bhattacharya observed that “The stipulation under Clause (d) has been complied with by the assessing officer who has taken a decision, on the basis of the material available on record including the reply/replies given by the assessee and found that the case of the assessee for the assessment year under question namely 2016-2017 is a fit case to issue notice under Section 148 of the Act and prior approval of the specified authority has also been obtained. Thus, the provision of the Section 148A of the Act has been scrupulously followed by the assessing officer and there is no error in the decision-making process of this court to interfere”
The Bombay High Court has held that the assessing officer cannot take recourse to reopen the assessment to remedy the error resulting from his oversight in the assessment proceeding.
The bench of Justice K. R. Shriram and Kamal Khata have observed that the assessment cannot be reopened by reason of the omission or failure on the part of the assessee to disclose fully and truly all material facts, as the Income Tax Officer had material facts before him when he made the original assessment.
The Jharkhand High Court has upheld the income tax addition as the assessees have failed to prove the identity, creditworthiness, or genuineness of the creditors, who have given cash loans.
The bench of Justice Rongon Mukhopadhyay and Justice Deepak Roshan has observed that usually the matter would have been remitted to the AO for mentioning the correct provision and proceeding in accordance with law, but in the instant matter, the source of income in the case of both the assessees has not been proved, inasmuch as both the assessees have failed to prove the identity, creditworthiness, or genuineness of the creditors, who have given cash loans as claimed by them, thus we are of the view that remitting the cases to the AO will be a futile exercise.
The Jharkhand High Court has held that the show cause notice should give the noticeee a reasonable opportunity to make objections against proposed charges indicated in the notice, and the person proceeded against must be told the charges against him so that he can make his defense and prove his innocence.
The bench of Justice Rongon Mukhopadhyay and Justice Deepak Roshan has observed that in the entire course of the proceeding, at no stage is the petitioner made aware of the provisions of law that have been contravened and/or under which the additions are sought to be made, which is in gross violation of the principles of natural justice, and the procedure adopted by the Department is not fair or proper.
The Telangana High Court has held that Goods and Service Tax (GST) is payable on the transfer of land development rights under a joint development agreement (JDA).
The bench of Justice P. Sam Koshy and Justice Laxmi Narayana Alishetty has dismissed the writ petition filed by the real estate developer assailing the imposition of GST on the transfer of land development rights (TDR) on JDA for residential projects.
The Bombay High Court has held that the service provided by an individual advocate, a partnership firm of advocates, by way of legal services is exempt from levy of service tax.
The bench of Justice G. S. Kulkarni and Justice Kishore C. Sant has observed that the taxable service in respect of services provided or to be provided by the individual advocate for a firm of advocates has been set out to be 'Nil'. The Notification No. 25/2012, dated June 20, 2012, also clearly provides that the service provided by an individual advocate, a partnership firm of advocates, by way of legal services, is exempt from the levy of service tax.
The Calcutta High Court has held that if the provisions of the old regime of Section 148 of the Income Tax Act, including Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA), are read into or applied to the new regime applicable from 01.04.2021, it would also necessarily mean that a provision repealed by the Parliament without any savings and exception clause is applied by the department even after its life has come to an end, which is clearly not permissible in law.
The bench of Justice Md. Nizamuddin has relied on the decision of the Supreme Court in the case of Union of India vs. Ashis Aggarwal, in which the judgment of the Calcutta High Court was modified or substituted by directing that the notice under the old Section 148 of the Income Tax Act shall be deemed to have been issued under the new Section 148A(b), and all defenses that may be available to the assessee, including those under Section 149 of the Income Tax Act, and all rights and contentions that may be available to the assessee and department under the Finance Act, 2021, shall continue to be available.
The Allahabad High Court has held that the principle of res-judicata does not apply from one assessment year to another. However, the Court held that the Department cannot be allowed to change its stance for the same assesee for different assessment years, unless there is a marked change from one year to another.
Relying on the decision of the Supreme Court in Bharat Sanchar Nigam Ltd. v. Union of India, Justice Shekhar B. Saraf held that “One may of course keep in mind that in taxation matters, the principles of res-judicata do not apply squarely for one assessment year to the other. However, keeping in mind the doctrine of finality, unless there is a marked change from one assessment year to the other, the department cannot be allowed to take a different stand.“
The Supreme Court has refused to interfere with a 2017 Delhi High Court judgment which issued a set of guidelines to the Income Tax Department regarding the reopening of assessments.
A bench comprising Justice PS Narasimha and Justice Aravind Kumar dismissed a Special Leave Petition filed by the Income Tax Department in 2018 against the 2017 High Court verdict.
The Delhi High Court bench of Justice S. Muralidhar and Justice Prathiba M. Singh issued the guidelines to ensure that the Department did not repeat mistakes while reopening the assessment.
The Allahabad High Court has held that requirement of self-certified copy of order is not applicable to the appeals filed electronically under Section 107 of the Central Goods and Service Tax Act, 2017 read with Rule 108 of the Central Goods and Services Tax Rules, 2017.
Section 107 of the Central Goods and Services Tax Act, 2017 provides for remedy of appeal to any person aggrieved by any order passed under the Act. Rule 108 of the Central Goods and Services Tax Rules, 2017 provides that the appeal under Section 107 must be filed in FORM GST APL-01, along with the relevant documents, either electronically or otherwise as may be notified by the Commissioner.
Recently, while quashing penalty order passed under Section 129 of the Goods and Service Tax Act, 2017 against M/s Hawkins Cookers Limited, the Allahabad High Court cited the Arthashastra by Chanakya. “Governments should collect taxes like a honeybee collects honey from a flower without disturbing its petals.”
The Court held that in absence of any other discrepancy, incorrect address entered in four out of eight e-way bills is of the principal place of business of the petitioner, the same does not give rise to the presumption of intention to evade tax.
Justice Shekhar B. Saraf held that “mere technical error committed by the petitioner cannot result in imposition of such harsh penalty upon the petitioner.”
The Bombay High Court has held that the petitioner ought not to have been meted out such discriminatory treatment as denying clearance. The harsh and unreasonable conditions cannot be imposed, and more so when there is not an iota of material on the part of the department, as placed before the Court, indicating as to why a different yardstick would be required to be applied to the present consignments when earlier seven consignments were released at 16% to 28% bank guarantee.
The bench of Justice G. S. Kulkarni and Justice Firdosh P. Pooniwalla has directed the department to grant provisional release of the goods to the petitioners by accepting the bank guarantee from the petitioner of Rs. 3,49,000 in respect of the first bill of entry and the bank guarantee of Rs. 2,00,000 in respect of the second bill of entry. The necessary action in that regard must be taken within 10 days. In addition to the bank guarantees, the petitioner shall furnish a bond as per the conditions as incorporated in the letter of the Assistant Commissioner of Custom dated November 15, 2023, for the full value of the goods, which is Rs. 37,34416.
The Delhi High Court has held that the period spent in the disposal of the appeal before the CESTAT, i.e., between the filing and the final order being passed, shall not be counted towards the period stipulated under Section 28 (9) of the Customs Act.
The bench of Justice Sanjeev Sachdeva and Justice Ravinder Dudeja has observed that the Tribunal has already heard the appeal of the petitioner and the order is reserved.
The Bombay High Court has held that the reopening of the assessment was purely on the basis of a change of opinion of the AO from that held earlier during the course of assessment proceedings. The change of opinion does not constitute justification for assuming that income chargeable to tax has escaped assessment.
The bench of Justice K. R. Shriram and Justice Dr. Neela Gokhale has observed that the AO in the assessment order has noted that the issue of investment in immovable property and capital gain/income on sale of property was considered under limited scrutiny assessment, and in view of the material on record, no addition on the issue is made. The information relied upon while issuing notice under Section 148A(b) relates to the flat, and an entirely contradictory view is taken in the order that the asset sold was a short-term capital asset and the gain arising on the transfer of the said flat is a short-term capital gain.
The Bombay High Court has held that if an assessee for commercial expediency and in the normal course of its business activities takes loan to invest in shares of its subsidiary, the interest paid on these advances utilised is allowable expenditure under Section 36(1)(iii) of the Income Tax Act.
The bench of Justice K. R. Shriram and Justice Neela Gokhale has observed that assessee had an aggregate shareholding of 64% in the subsidiary and, therefore, it cannot be contended that share application money made is not for business purpose.
Yoga And Meditation Charges Are Subjected To Tax Under Kerala Tax On Luxuries Act: Kerala High Court
The Kerala High Court has held that yoga and meditation charges are subjected to tax under the Kerala Tax on Luxuries Act.
The bench of Justice A. K. Jayasankaran Nambiar and Justice Kauser Edappagath has upheld the tribunal's ruling in which the tribunal differentiated between the incomes, allowing certain deductions for the cost of medicines and professional charges related to ayurvedic treatments while including yoga and meditation charges and miscellaneous income in the taxable turnover. The Tribunal's ruling was primarily based on the definitions and exclusions specified under Section 4(2)(e) of the Kerala Tax on Luxuries Act.
Mariya Paliwala 20 Feb 2024 1:45 PM Listen to this Article The Delhi High Court has held that the assessee, Mitsubishi Corporation, is not liable to deduct TDS under Section 195(1) of the Income Tax Act where the sum paid was not chargeable to tax in India.
The bench of Justice Rajiv Shakdher has observed that the assessee could have taken recourse to the DTAAs qua the reformulated question since the provisions contained therein were more beneficial. Therefore, the business connection test had no relevance once it was established that MC Metal (Thailand) and Metal One (Singapore) did not have a PE in India.
'Enemy Property' Not Exempt From Municipal Taxes As It Is Not Vested With Union Govt : Supreme Court
The Supreme Court held that the 'enemy property' vested in the possession of the Union Government-appointed 'custodian', as per the Enemy Property Act, 1968, cannot be considered a property of the Union Government to claim the exemption from the municipal taxes under Article 285 (1) of the Constitution of India.
“Union of India cannot assume ownership of the enemy properties once the said property is vested in the Custodian. This is because, there is no transfer of ownership from the owner of the enemy property to the Custodian and consequently, there is no ownership rights transferred to the Union of India. Therefore, the enemy properties which vest in the Custodian are not Union properties.”, observed Supreme Court Bench Comprising Justices B.V. Nagarathna and Ujjal Bhuyan.
The bench stated that the 'enemy property' is not entitled to claim the exemption availalbe for the properties of the Union Government from State taxes as per Article 285.
“As the enemy properties are not Union properties, clause (1) of Article 285 does not apply to enemy properties. Clause (2) of Article 285 is an exception to clause (1) and would apply only if the enemy properties are Union properties and not otherwise.”, the Judgment authored by Nagarathna J. noted while allowing the municipal corporation to levy taxes on the enemy property.
The Allahabad High Court has rejected the application of Section 5 of the Limitation Act in appeals filed under Section 107 of the Uttar Pradesh Goods and Service Tax Act, 2017.
The Court held that Tax laws are complete comprehensive codes which have strict procedural requirements to ensure revenue certainty and fiscal stability. Section 107 of the UPGST Act provides a period of three months from the date of order to file an appeal challenging the same. Section 107(4) empowers the appellate authority to exercise discretion in condoning delay of up to one month in filing the appeal. Section 5 of the Limitation Act is a general provision which enables Courts to condone delay if sufficient cause is shown.
The Court held that Section 107 prescribes a time frame for filing of appeal to ensure timely adjudication and to promote “the efficient administration of GST regime” whereas Section 5 of the Limitation Act provides for condonation of delay in exceptional circumstances where sufficient cause is shown.
The Delhi High Court has held that TDS prosecution can't be initiated against any office holder in a corporation without establishing an administrative connection.
The bench of Justice Yashwant Varma and Justice Purushaindra Kumar has observed that merely because a person holds an office in a corporate entity, it would not be sufficient to place him as a principal officer until and unless he is established to be connected with the management or administration of the company. The bench stated that the department assumed that any person who has been served a notice embodying an intent to treat that person as a principal officer would be sufficient for the purposes of Section 2(35) of the Income Tax Act. As per Section 2(35), the secretary, treasurer, manager, or agent thereof would be liable to be treated as the principal officer; however, he should be “connected with the management or administration of the company.”.
The Delhi High Court has held that a mere deduction of TDS by a donor on grants would not disentitle the assessee-NGO from exemption under Section 11 of the Income Tax Act.
The bench of Justice Yashwant Varma and Justice Purushaindra Kumar Kaurav, while allowing the petition, set aside the assessment order and held that the receipt of Rs. 5.90 crore shall not be treated as income and allowed the claim of the assessee under Sections 11 and 12 of the Income Tax Act.
The Delhi High Court has held that subscription to legal databases cannot be construed as a transfer of copyright.
The bench of Justice Yashwant Varma and Justice Purushaindra Kumar Kaurav has observed that the subscription fees of the legal database LexisNex piad by an Indian subscriber neither comprise a transfer of copyright nor do they include a transfer of a right to apply technology and other related aspects, which are spoken of in Article 12(4)(b) of the DTAA.
The Lucknow bench of Allahabad High Court has quashed the order by the GST and Central Excise Superintendent for lack of jurisdiction.
The bench of Justice Alok Mathur has observed that according to the circular dated February 9, 2018 issued by the Government of India, Ministry of Finance, and Department of Revenue, the power of the Superintendent, Central Goods and Service Tax, and Central Excise is limited to the matter not exceeding Rs. 10,00,000, and in the present case, the amount involved is more than Rs. 16,00,000, and consequently, the order passed by it is without jurisdiction.
The Allahabad High Court has held that absence of tax invoices and/or e-way bill at the time of interception and their subsequent production does not absolve the assesee from the liability of penalty under the Goods and Service Tax Act.
“Production of these documents subsequent to the interception cannot absolve the petitioner from the liability of penalty as the very purpose of imposing penalty is to act as a deterrent to persons who intend to avoid paying taxes owed to the Government,” held Justice Shekhar B. Saraf.
The Bombay High Court has held that the respondent (assessee) ought to have deducted tax under Section 194I of the Income Tax Act, 1961, from the storage charges paid by the assessee.
The bench of Justice K. R. Shriram and Justice Sharmila U. Deshmukh has observed that the storage tanks in question do not qualify either as land or as buildings within the meaning of Section 194I. In terms of Section 194I, there has to be a lease, sub-lease, tenancy, or any other agreement involving land or any building, excluding factory buildings.
The Kerala High Court has held that Section 39 of the Kerala Value Added Tax Act, 2003, empowers the taxing authorities to recover the tax dues from the directors of the private company if the company fails to make payment of the tax. The bench of Justice Dinesh Kumar Singh has observed that when the taxing authorities could not recover the dues from the company, they issued notice for recovery of the said tax dues against the petitioners, who are the directors.
The Patna High Court has held that differentiation between government employees and other employees for leave encashment exemption is neither discriminatory nor violative of Article 14 of the Constitution of India.
The bench of Chief Justice K. Vinod Chandran and Justice Rajiv Roy has observed that the legislature must have the freedom to select and classify persons, properties, and income that it would tax and/or not tax. Thus, the differentiation made by the state between the employees of the central and state governments on the one hand and the other employees on the other in Section 10 (10 AA) of the Income Tax Act, 1961, is neither discriminatory nor violative of Article 14 of the Constitution of India.
'Cash' Excluded From Definition Of 'Goods', Can't Be Seized: Delhi High Court
The Delhi High Court has directed the respondent department to forfeit or remit the cash seized from the premises of the petitioner to the petitioner along with interest.
The bench of Justice Sanjeev Sachdeva and Justice Ravinder Dudeja has observed that 'cash' is clearly excluded from the definition of the term 'goods' and would fall within the definition of'money' as defined in Section 2 (75) of the GST Act.
The bench stated that since cash is not a good, it could not have been seized under the provisions of the Act, as seizure is limited to the goods liable for confiscation.
The Gujarat High Court while partly allowing a special civil application has emphasized the importance of lender banks affording borrowers the opportunity to review audit reports and present their case before categorizing an account as fraudulent.
The court stressed the need for lenders to provide a copy of audit reports and allow a reasonable window for borrowers to submit representations. Furthermore, the court mandated that lenders must issue a reasoned order addressing any objections raised by the borrower.
The Madras High Court has held that Section 116A of the Tamil Nadu Urban Local Bodies Act, 1998, mandates that 15 days' time should be provided to the property tax assessee to respond to the notice before action is taken.
The bench of Justice Senthilkumar Ramamoorthy has directed the respondent department to de-seal the restaurant.
TDS Not Liable To Be Deducted On Business Support Services As Not Taxable As FTS: Bombay High Court
The Bombay High Court has held that business support services are not taxable as a fee for technical services (FTS), and no TDS is liable to be deducted.
The bench of Justice K. R. Shriram and Justice Neela Gokhale has observed that even if it is fees for technical or consultancy services, it can be only where fees are paid in consideration for making available technical knowledge, experience, etc. Thus, the view of the AAR that the petitioner, Shell International Petroleum Company Limited (SIPCL), works closely with and advises the employees of the petitioner and hence makes available the services is not correct.
The Bombay High Court has held that actual carrying on of agricultural operations is not a necessary condition for deciding that the parcels of land were agricultural lands.
The bench of Justice K. R. Shriram and Justice Dr. Neela Gokhale has quashed the order and remanded the matter for passing the fresh assessment order. The AO will only examine whether the evidence brought on record to establish the claim that the lands sold are in the nature of agricultural land is authentic. If the AO has to reject the evidence filed by the petitioner, he shall bring contrary material on record. For that, the AO has to conduct an inquiry to ascertain the authenticity of the certificates filed by the petitioner.
The Jammu & Kashmir and Ladakh High Court has held that leasehold interest in the land is an asset of the company and is capable of valuation. As such, it is to be included in the value of the assets of M/s. Jyoti Private Limited so as to determine the fair market value of shares held by the assessee as well as other shareholders.
The bench of Justice Tashi Rabstan and Justice Puneet Gupta, while upholding the ITAT's order, observed that the fair market value is defined under Section 2(22B) of the Act as the price that such an asset would ordinarily fetch on sale in the open market. Therefore, for the purposes of computation of capital gain, the fair market value has to be determined, not the value of shares; the valuation of shares is to be made under Rule 1D of the Wealth Tax Rules.
The Allahabad High Court has held that when the GPS tracking system showed slow movement of the truck due to mechanical issues in the engine, penalty under Section 129 of the Goods and Service Tax Act, 2017 could not have been imposed for not extending time-period in e-way bill.
The Court held that not extending time period in such case was a technical breach. At the time of interception of Petitioner's goods, the e-way bill had been expired for four days. Counsel for petitioner argued that due to overheating of the engine of the truck, the driver was driving slowly and intermittently stopping. Reliance was placed on the GPS of the truck to show that it was travelling on the original route.
S.5 Limitation Act Applies To Rectification Of Orders U/S 31 Of UP VAT Act: Allahabad High Court
The Allahabad High Court has held that Section 5 of the Limitation Act will apply to rectification of orders passed by officer, authority, Tribunal or the High Court under Section 31 of the Uttar Pradesh Value Added Tax Act, 2008.
Section 31 of the Uttar Pradesh Value Added Tax Act, 2008 provides that any officer, authority, Tribunal or the High Court may rectify any mistake apparent on the face of record in any of its order either on its own motion or on an application made by parties, within a period of three years from the date of the order which is sought to be rectified.
The Jharkhand High Court has held that the issuance of pre-SCN consultation is mandated under proviso to Section 28(1)(a) of the Customs Act, 1962, before issuing the show cause notice.
The bench of Justice Rongon Mukhopadhyay and Justice Deepak Roshan has observed that the mandatory pre-SCN consultation, as mandated under proviso to Section 28(1)(a) of the Customs Act, 1962, read with the Pre-Notice Consultation Regulation, 2018, was not complied with while issuing the impugned SCNs; hence, the subsequent Order-in-Original and the 1st Appellate Order were bad in law, being void ab initio and a nullity in the eyes of law.
The Delhi High Court has held that any pick-and-choose method of rejecting certain entries from the books of account while accepting others without an appropriate justification is arbitrary and may lead to an incomplete, unreasonable, and erroneous computation of the income of an assessee.
The bench of Justice Yashwant Varma and Justice Purushaindra Kumar Kaurav has observed that the ITAT has made a categorical finding that despite the fact that the AO was provided with the requisite bills, vouchers, and addresses of the transacting parties, it did not make any effort to confirm the veracity of the alleged bogus or inflated bills.
Revisional Jurisdiction Can't Be Invoked For Inadequacy Of Enquiry By AO: Delhi High Court
The Delhi High Court has held that the inadequacy of the inquiry by the AO with respect to certain claims would not in itself be a reason to invoke the powers enshrined in Section 263 of the Income Tax Act.
The bench of Justice Yashwant Varma and Justice Purushaindra Kumar Kaurav has observed that the claims were duly examined during the original assessment proceedings themselves, and neither there was any error nor was the same prejudicial to the interests of the department.
The Calcutta High Court has held that Adani Wilmar is eligible for sanction of incentives under the West Bengal State Support for Industries Scheme, 2008, post GST.
The bench of Justice Sabyasachi Bhattacharyya has directed the respondent department to disburse the balance amount of the claim of Rs. 4070 lakhs under the West Bengal State Support for Industries Scheme, 2008, in favor of the petitioners at the earliest, preferably within two months from the date, subject to the petitioners complying with the other formalities as contemplated in the Scheme.
The Delhi High Court has held that the expression “yes” could not be considered to be a valid approval under Section 151 of the Income Tax Act.
The bench of Justice Yashwant Varma and Justice Purushaindra Kumar Kaurav has observed that the satisfaction arrived at by the prescribed authority under Section 151 of the Income Tax Act must be clearly discernible from the expression used at the time of affixing its signature while according approval for reassessment under Section 148.
The approval cannot be granted in a mechanical manner, as it acts as a linkage between the facts considered and the conclusion reached. Merely appending the phrase “yes” does not appropriately align with the mandate of Section 151, as it fails to set out any degree of satisfaction, much less an unassailable satisfaction.
The Allahabad High Court has held that for goods in transit, vehicle number in bilty (consignment note) cannot be changed upon change of vehicle due to breakdown.
The Court quashed the penalty order on grounds that vehicle number was updated in Part-B of the e-way bill. Petitioner's goods were intercepted, and penalty was imposed under Section 129(3) of the Uttar Pradesh Goods and Services Tax Act, 2017 on grounds that the bilty and invoice accompanying the goods had the earlier vehicle's number.
Service Tax Not Liable To Be Paid On Ocean Freight/Sea Transportation Services: Bombay High Court
The Bombay High Court has held that service tax is not liable to be paid on ocean freight or sea transportation services.
The bench of Justice G. S. Kulkarni and Justice Firdosh P. Pooniwalla has relied on the decision of the Gujarat High Court in the case of SAL Steel Ltd. vs. Union of India, in which it was held that no tax is leviable under the Integrated Goods and Services Tax Act, 2007, on the ocean freight for the services provided by a person located in a non-taxable territory by way of transportation of goods by a vessel from a place outside India up to the customs station of clearance in India, and the levy and collection of tax on such ocean freight under the impugned notifications is not permissible in law.
The Madras High Court has directed the Assessing Officer to allow transitional credit of purchase tax paid under Section 140 of the TNGST Act, 2017, if the petitioner had paid “purchase tax” under Section 12(1) of the TNVAT Act.
The bench of Justice C. Saravanan has observed that the petitioner deserves a chance to defend the case as the impugned assessment order was passed during the period when the country was in semi-lockdown mode. If the VAT-TDS had indeed remained unutilized for discharging tax liability under the TNVAT Act, 2006, there should be a fresh adjustment of the amount out of the VAT-TDS towards the tax liability of the petitioner, and thereafter, ITC, which would have remained unutilized, ought to have been allowed to be transitioned under Section 140 of the Act or refunded to the petitioner under Section 54 of the TNGST Act, 2017 read with the TNVAT Act, 2006.
The Madras High Court has held that it is mandatory for the income tax department to follow the Digital Evidence Investigation Manual issued by the Central Board of Direct Taxes (CBDT) while conducting searches and seizing electronic evidence.
The bench of Justice Krishnan Ramasamy has observed that the electronic data has been collected in.txt files in violation of the provisions of the Digital Evidence Investigation Manual. Though the procedures have not been followed while collecting the electronic data in.txt files, the data collected by the respondents can be relied upon only if the said data are supported by the corroborative evidence.
Finding that the period of one month expired on July 31, 2022, whereas the assessment order came to be issued on Mar 25, 2023, the Madras High Court Held the assessment order issued beyond time-limit specified in Sec.144C(13) as unsustainable.
A Single Judge Bench of Justice Senthilkumar Ramamoorthy observed that “the directions of the DRP were forwarded to the assessing officer, i.e. National Faceless Assessment Centre, Delhi by uploading the same on 17.06.2022. Although learned senior standing counsel contends that the jurisdictional assessing officer received the directions only on 17.03.2023, for purposes of sub-section (13) of Section 144C, the date of receipt should be reckoned as the date of receipt by the National Faceless Assessment Centre on 17.06.2022”.
The Bombay High Court has held that exgratia bonuses paid to employees over and above the eligible bonus under the Payment of Bonus Act are allowable as business expenditures.
The bench of Justice K. R. Shriram and Justice Dr. Neela Gokhale has observed that the ITAT was not right in law in holding that the liability for salary and wages arising out of the Justice Palekar Award is not allowable as expenditure in the present year but only in the year in which the agreement between the management and the employees is entered into.
Assessment Order Passed Beyond Time Limit Prescribed U/s 153 Merits To Be Quashed: Delhi High Court
Finding that no valid demand stood raised against the Petitioner / assessee prior to Sep 30, 2021, the Delhi High Court directed the Respondents / Revenue to re-compute the refund payable to the petitioner along with statutory interest which shall run up to the date of remittance in accordance with law. The High Court therefore quashes the assessment order passed beyond time limit prescribed u/s.153 of the Income tax Act.
The Division Bench comprising of Justice Yashwant Varma and Justice Purushaindra Kumar Kaurav observed that “period prescribed under Section 153(3) of the Act would thus have to necessarily be computed from the date when the order of the ITAT was received by the respondents. Even if the benefits of TOLA were extended to the respondents, undisputedly, the order of assessment was liable to be framed lastly by 30 September 2021. The respondents have thus abjectly failed to pass an order in terms of the mandatory provisions comprised in Section 153 of the Act”.
ITAT Must Recall Its Order U/s 254 To Correct Manifest Error Apparent On Record: Delhi High Court
While condoning the delay of 86 days by Revenue in filing the appeal, the Delhi High Court dismisses Revenue's appeal filed against the Tribunal's order in miscellaneous application filed by assessee to review its earlier order u/s. 254(2) of the Income tax Act.
The Division Bench comprising Justice Yashwant Varma and Justice Purushaindra Kumar Kaurav observed that “the ITAT had clearly rendered incompatible and inconsistent findings. In fact, we are constrained to observe that paras 12 and 21 were clearly contradictory. It was thus not only imperative but also expedient in the interest of justice for the ITAT to recall its order of 29 September 2020 and correct a manifest error apparent on the record”.
The Bombay High Court recently held that the interest paid on borrowed funds in respect of investment in shares of two companies was hit by Section 14A of the Act inasmuch as the dividend received on such shares did not form part of the total income
The Division Bench comprising Justice K.R. Shriram and Justice Dr. Neela Gokhale observed that “the fact remains that the dividend income from the two companies is not taxable and in that scenario the expenditure incurred on interest paid on funds borrowed in respect of investment in shares of two operating companies is hit by Section 14A of the Act inasmuch as the dividend received on such shares does not form part of the total income”.
The Bombay High Court in the Harshad Mehta Scam case, while upholding the ITAT's ruling, held that the Assessing Officer could not have assessed additions again since the CIT (A) had deleted the same in the first round of proceedings and the concerned matters have attained finality.
The bench of Justice K. R. Shriram and Justice Dr. Neela Gokhale has observed that various types of additions aggregating to the amount were made by the Assessing Officer in the original assessment proceedings, and in the appeal filed by the assessee, the CIT(A) deleted these additions. The Revenue did not prefer an appeal challenging the order of the CIT (A), and hence, the same has attained finality.
The Himachal Pradesh High Court has declared the levy of water cess by the state government on hydropower generation unconstitutional.
The bench of Justice Tarlok Singh Chauhan and Justice Satyen Vaidya has observed that even the Statement of Objects and Reasons as well as the preamble of the Himachal Pradesh Water Cess on Hydropower Generation Act, 2023, do not lend any guidance to the delegate. The preamble of the Act merely states that it is an act to levy water cess on hydropower generation in the State of Himachal Pradesh, and the Statement of Objects and Reasons merely states that the objective of the Act is revenue generation. Therefore, on account of having delegated power to fix rates of impugned levy to the Government of Himachal Pradesh without any legislative policy or guidance, the Act is unconstitutional.
The Calcutta High Court reiterated that the selection of the tested party is to further the object of the comparability analysis by making it less complex and requiring fewer adjustment.
The Division Bench comprising Justice T.S Sivagnanam and Justice Supratim Bhattacharya observed that “the tested party normally should be the least complex party to the controlled transaction and there is no bar for selection of tested party either local or foreign party and neither the Act nor the guidelines on transfer pricing provides so”.
The Delhi High Court allowed assessee's petition seeking refund of amounts which was deposited towards part payment of demand raised in pursuance of assessment order for AYs 2008-09 and 2009-10.
The Division Bench comprising Justice Yashwant Varma and Justice Purushaindra Kumar Kaurav observed that “Since the remit ordered by the ITAT, admittedly, was rendered prior to 1 June 2016, it was incumbent upon the AO to have framed a final order of assessment on or before 31 March 2017. Having failed to do so, there would exist no justification for the respondent to retain the amounts which had been deposited by the petitioner”.
The Delhi High Court has quashed the order denying Nil or lower TDS certificates and held that the services provided by the assessee, Irish Company, to its Indian counterpart were not technical services.
The bench of Justice Yashwant Varma and Justice Purushaindra Kumar Kaurav has observed that though the power to grant a TDS certificate was merely a preliminary examination of the issue of taxability and had no implication on the ultimate assessment that might be made, still due consideration should be accorded to the question of chargeability to tax while examining applications made under Section 197 of the Income Tax Act, 1961.
The Rajasthan High Court has held that the assessee is being run as a trust solely for educational purposes, thus seeking the exemption under Section 10(23C)(vi) of the Income Tax Act of 1961, and the generation of surplus from year to year cannot be a bar in seeking such an exemption under the provision of law.
The bench of Justice Pushpendra Singh Bhati and Justice Munnuri Laxman has observed that mere generation of surplus cannot be a basis for rejection of an application under Section 10(23C)(vi) on the ground that it amounts to an activity of the nature of profit-making. In fact, the third proviso to the said clause clearly provides that accumulation of income is permissible subject to the manner prescribed therein, provided such accumulation is to be applied “wholly and exclusively to the objects for which it is established.”
The Madras High Court has held that the Assessing Officer is not incompetent to invoke the jurisdiction under Section 154 of the Income Tax Act, 1961, if such officer had committed a glaring mistake of fact or law while passing the assessment order.
The bench of Justice C. Saravanan has observed that the meaning of the expression “error apparent on the face of record” is wider than the expression “mistake apparent from the record.”.
The Delhi High Court has held that the charges of clandestine removal and under valuation cannot be sustained merely on the basis of assumptions and presumptions. The absence of direct, credible evidence linking the respondents to the alleged offences necessitate the dismissal of the charges.
The bench of Justice Yashwant Varma and Justice Ravinder Dudeja has observed that the physical verification of the stocks and the absence of discrepancies in the recorded quantity of the raw material as well as the lack of evidence regarding the purchase of significant quantities of raw materials and cash undermine the presumption of unaccounted manufacture.
The bench found that the recovery of documents from the premises unrelated to the respondents and reliance of such documents to establish clandestine operations are found to be procedurally flawed and legally untenable by the CESTAT.
Recently, the Supreme Court held that under the Customs Act, the Importer's Bill of Entry of subsequent imported goods can be discarded if the subsequent imported goods are undervalued to the previously imported identical or similar goods.
Affirming the findings of the Central Customs, Excise & Service Tax Appellate Tribunal (“CESTAT”), the Bench comprising Justices Abhay S. Oka and Pankaj Mithal observed that the transaction value in the bills of entry of the subsequent goods can be discarded if it is found that the importer has earlier brought/imported an identical goods or similar goods at a higher price from the same seller/exporter.
The Madras High Court has held that a tax recovery officer cannot declare a sale made by the assessee in favour of a third party void if he finds that the property of the assessee was transferred by the assessee to a third party with an intention to defraud the revenue.
The bench of Justice C. Saravanan has observed that the Income Tax Department will have to file a suit in terms of Rule 11 (6) of the 2nd Schedule of the Income Tax Act, 1961, though under Rule 11 (6) of the 2nd Schedule of the Income Tax Act, 1961, the party against whom an order of attachment is made has to institute a suit in a civil court to establish the right which he claims over the property in dispute, and subject to the result of such suit (if any), the order of the Tax Recovery Officer shall be conclusive.
The Allahabad High court has held that the Department must take consistent stands in identical fact situations for different tax periods as consistency is paramount in tax regime.
While observing that the facts of the tax periods under dispute were exactly identical to previous tax periods, Justice Shekhar B. Saraf held “While the principle of res judicata does not apply to taxation matters, it is incumbent upon authorities to take a consistent approach when dealing with similar factual and legal circumstances. The principle of consistency states that when faced with analogous factual and legal circumstances, the treatment should remain uniform. Taxpayers have a legitimate expectation that similar factual and legal circumstances will be met with uniform treatment, and any deviations from this principle undermine the credibility and legitimacy of the actions taken by tax authorities.”
The Allahabad High Court has clarified that 'capital goods' as defined under Section 2 of the Central Goods and Service Tax Act, 2017 are for long term use whereas 'inputs' are meant for day-to-day business operations and are not capitalized in the books of accounts.
“Capital goods are intended for long-term use and are typically subject to capitalization. However, inputs, are goods used in the day-to-day operations of the business and are not subject to capitalization,” held Justice Shekhar B. Saraf.
The Bombay High Court has held that the assessee cannot be said to furnish inaccurate particulars of income merely for variance in allowable deductions.
The bench of Justice K. R. Shriram and Justice Neela Gokhale has observed that the ITAT was of the view and rightly so that the assessee had made a bona fide claim under Section 36(1)(viii), as such deductions claimed are linked to the business profit. Only because there was variance in the deductions allowable due to a change in the determination of business profit can it be said that the assessee has furnished inaccurate particulars of income or concealed inaccurate particulars of income.
The Karnataka High Court has held that if income tax returns are available the same should be considered as best a piece of evidence and if variations are found in the income tax returns, considered for different assessment years, it would be appropriate to consider the average income of three assessment years to arrive at the annual stable income of the claimant seeking compensation under the Motor Vehicles Act.
A division bench of H.T.Narendra Prasad and Justice K V Arvind made the observation while partly allowing the appeal filed by Jayashree questioning the order of the trial court and sought enhancement of compensation granted.
The Allahabad High Court has held that the provision requiring the assesee to provide his “registered email address” to the income tax authorities under Section 144B of the Income Tax Act, 1961 is residuary in nature.
The Court held that if the assessing authority is unable to obtain the registered email address from the income tax returns or from the designated portal of assesee or website of Ministry of Corporate Affairs, then it is upon the assesee to provide the email address to the authority.
The Madras High Court recently highlighted that provision of Section 278E of the Income tax Act brings in a statutory presumption regarding the existence of a culpable mental state.
Accordingly, the High Court refused to interfere in the criminal proceedings and relegated the petitioner/ taxpayer to the trial, while stating that the onus is upon the petitioner to prove the contrary and that can be done only at the time of the trial.
The Supreme Court has held that Section 71 of the Customs Act, 1962 would be inapplicable to cases where imported goods were stocked outside the notified public bonded warehouse with the permission of the concerned officer.
A portion of the Appellant's factory premises was notified as a public bonded warehouse. The Appellant, with the permission of Superintendent of Customs and Central Excise (“Superintendent”), partially stocked 264 cases of the imported goods outside the bonded warehouse but within the factory premises.
The Himachal Pradesh High Court has held that credit availed on outward transportation services is eligible when the freight charges are included in the taxable value.
The bench of Chief Justice M.S. Ramachandra Rao and Justice Jyotsna Rewal Dua observed that the Tribunal was not justified in holding that the place of removal for the GTA services provided under the sale contract is the manufacturer's premises and not the place where the goods are sold. The Tribunal was not justified in holding that the GTA services in the present case are being received beyond the place of removal and therefore not covered within the definition of input service under Rule 2(1) of the CENVAT Credit Rules, 2004.
The Bombay High Court has held that categorising the body massager as an adult sex toy was purely the officer's imagination.
The bench of Justice G. S. Kulkarni and Justice Kishore C. Sant has upheld the CESTAT's ruling, in which it was held that the view taken by the Commissioner was purely the Commissioner's imagination to categorise the item not as a body massager but as an adult sex toy. The sale of body massagers within the national boundaries was not subjected to any prohibition. In discarding the submission of the revenue to that effect, it was observed that the adjudicating authority had appeared to have found a cause to pause for ascertainment of his authority to determine goods as 'obscene' solely in international transactions, while no such restrictions were placed on domestic transactions for such categories of goods.
The Delhi High Court has held that the judgement of Abhisar Buildwell passed by the Supreme Court cannot be construed to be an authority to override the mandate of Section 245-I of the Income Tax Act.
The bench of Justice Yashwant Varma and Justice Purushaindra Kumar Kaurav has observed that in terms of the Supreme Court's judgment in the case of Abhisar Buildwell, the completed or unabated assessments can be re-opened by the AO in exercise of powers under Sections 147 and 148 of the Income Tax Act, subject to fulfillment of the conditions mentioned under the provisions.
The Madras High Court has recently ruled that Hostel services providing welling to girl students and working women will be exempt from the GST regime as they are residential dwelling units for the girl students and working women.
Justice Krishnan Ramasamy stressed the work “residential dwelling” referred to in Entry 12 of the Exemption Notification No. 12 of 2017 would include hostel facilities also. While noting that residential dwelling varies from person to person, the court added as far as hostellers were concerned, after their avocation, they stay, sleep, eat, wash etc in the hostel rooms alone thus making it their residential dwelling.
The Bombay High Court recently clarified that in a sale of a mortgaged asset, where the mortgage in favour of a secured creditor is registered prior in time with CERSAI, and the MVAT Authorities too have a charge, the proceeds of the enforcement of the mortgage would first go towards discharging the dues owed to the secured creditor. It is only the residue, if any, after discharging the dues of the mortgagee, that may flow to the MVAT Authorities, added the Court.
The High Court therefore held that once a secured creditor registers its security interest u/s 26-B of the SARFAESI Act notwithstanding any other law in force, the debts owed to the secured creditor shall be paid in priority over all other debts including taxes payable to the State Government.
A Division Bench of Justice Somasekhar Sundaresan and Justice B.P. Colabawalla observed that “The only effect of the interplay between Section 26-E of the SARFAESI Act and Section 37 of the MVAT Act would be that MVAT Authorities would not have priority in the recourse to the assets that are secured in favour of the secured creditor and registered in priority with CERSAI”.
The Bombay High Court has held that the action of the Maharashtra Government in levying stamp duty on delivery orders (DO) is within the legislative competence of the state.
The bench of Justice G.S. Patel and Justice Neela Gokhale has observed that the action of the State of Maharashtra in levying stamp duty on Delivery Orders (DO) as provided in Article 29 of Schedule I of the Maharashtra Stamp Act, 1958 (MSA) is well within the legislative competence of the State and does not intrude upon the legislative domain of the Parliament as reserved in Entries 41 and 83 of List I of Schedule VII of the Constitution of India and is not ultra vires Article 246(1), 286(1)(b) and 286(2) of the Constitution of India.