SUPREME COURT'Will Pull You Up' : Supreme Court Asks GST Department To Rectify Issues Over Fake Invoices, Asks How Genuine Purchasers Are LiableThe Supreme Court on Wednesday flagged a recurring problem in GST matters whereby genuine purchasers who paid Goods and Services Tax (GST) face issues because their suppliers raised fictitious bills to evade crediting the GST to the department.The...
SUPREME COURT
The Supreme Court on Wednesday flagged a recurring problem in GST matters whereby genuine purchasers who paid Goods and Services Tax (GST) face issues because their suppliers raised fictitious bills to evade crediting the GST to the department.
The Court orally wondered how could the purchaser be held liable for the incorrect GST registration of the suppliers when they have genuinely made purchases and paid the money, including the GST amount.
HIGH COURTS
Allahabad HC
Case Title: Ravish Rastogi v. Union Of India Thru. Secy. Ministry Of Finance New Delhi And 3 Others
Case no.: WRIT TAX No. - 359 of 2024
The Lucknow Bench of the Allahabad High Court has sought state response on the question of maintainability of proceedings under Section 148A(b) of the Income Tax Act initiated prior to 01.09.2024, if at all, would be saved after enforcement of the Finance (No.2) Act, 2024 w.e.f. 01.09.2024 especially in view of sub-Section- (4) of Section 152 of the Income Tax Act, 1961 which has been inserted by the said Finance (No.2) Act, 2024.
Andhra Pradesh HC
Case Title: Sterling And Wilson Private Limited v. The Joint Commissioner and Others
Case Number: WRIT PETITION NO: 20096/2020
The Andhra Pradesh High Court stated that the supply of solar generating power station is a composite supply and it would not amount to a works contract. Also, it is a moveable property and attracted 5% GST.
The Division Bench of Justices R Raghunandan Rao and Maheswara Rao Kuncheam observed that “a 'works contract' is also a composite supply. However, there could be a 'composite supply', which does not fall within the ambit of 'works contract'….. The distinction between 'works contract' and a 'composite supply' would be whether the end product handed over to the contractee, is moveable or immoveable property.”
Calcutta HC
Service Tax Liability Cannot Be Fastened On Implementation Of Govt Projects: Calcutta High Court
Case title: Commissioner Of Service Tax Kolkata Vs M/S Electrosteel Castings Limited
Case no.: CEXA/56/2024
The Calcutta High Court has held that construction of canals/ pipelines/ conduits to support irrigation, water supply or for sewerage disposal, when provided to the Government, cannot be exigible to service tax.
A division bench of Chief Justice TS Sivagnanam and Justice Hiranmay Bhattacharyya relied on two Circulars issued by the Central Board of Indirect Taxes and Customs to observe, “Even in case of works contract, if the nature of the activities is such that they are excluded from the purview of commercial or industrial construction services, or erection, commissioning or installation services, then they would generally remain excluded from this taxable service as well. These circulars are sufficient indication to hold that when the Government projects are being implemented, the service tax liability cannot be fastened.”
Chhattisgarh HC
Case title: Deepak Agrawal & Ors. v. Property Tax Assessment Officer & Ors.
Case no.: WPT No. 159 of 2024
The Chhattisgarh High Court has held that it cannot exercise writ jurisdiction against an order by the District Judge, which is the Appellate Authority under the Municipal Corporation Act 1956, upholding imposition of property tax.
In doing so, single judge Justice Narendra Kumar Vyas cited Section 149 of the Act which prescribes that the Appellate Authority is amenable to revisional jurisdiction of the High Court.
Delhi HC
Case title: Sonansh Creations Pvt. Ltd. v. Assistant Commissioner Of Income Tax And Anr.
Case no.: W.P.(C) No.17570/2022
The Delhi High Court has held that an Assessing Officer is required to be satisfied that accommodation entries as alleged in show cause notice under Section 148A(b) of the Income Tax Act 1961 exist, particularly where the assessee produces its accounts.
In doing so, a division bench of Acting Chief Justice Vibhu Bakhru and Justice Swarana Kanta Sharma heavily relied on its recent ruling in Sonansh Creations Pvt Ltd. v. Assistant Commissioner Of Income Tax And Anr. where it was held that to initiate reassessment proceedings under the Act, the AO must conduct an enquiry with respect to the information that suggests escapement of income, to ascertain its correctness.
Case title: Rohit Kumar v. Income Tax Officer Ward 54 (1), Delhi
Case no.: W.P.(C) 2830/2022
The Delhi High Court observed that absence of a formal notice under Section 148A of the Income Tax Act, 1961 was not fatal to reassessment proceedings initiated in the twilight zone when the inquiry provisions were introduced by the Finance Act, 2021.
A division bench of Justices Yashwant Varma and Dharmesh Sharma noted that the Department had provided an opportunity to the petitioner-assessee to question the assumption of jurisdiction under Section 148, which was the “underlying principle” of Section 148A.
Case title: Central Electricity Regulatory Commission v. The Additional Director Directorate General Of Gst Intelligence (Dggi) & Anr
Case no.: W.P.(C) 10680/2024 and connected matters
The Delhi High Court has made it clear that amounts received by the Electricity Regulatory Commissions under the heads of filing fee, tariff fee, license fee, annual registration fee and miscellaneous fee are not exigible to tax.
A division bench of Justices Yashwant Varma and Dharmesh Sharma thus allowed the petitions filed by the Central Electricity Regulatory Commission as well as the Delhi Electricity Regulatory Commission against the show cause notices issued to them by the GST Department. It observed, “We find ourselves unable to accept, affirm or even fathom the conclusion that regulation of tariff, inter-State transmission of electricity or the issuance of license would be liable to be construed as activities undertaken or functions discharged in the furtherance of business.
Case title: Rohit Kumar v. Income Tax Officer Ward 54 (1), Delhi
Case no.: W.P.(C) 2830/2022
The Delhi High Court has held that the benchmark of minimum Rs. 50 lakh income escapement prescribed under Section 149 of the Income Tax Act, 1961 must be met at the very initiation of reassessment proceedings.
A division bench of Justices Yashwant Varma and Dharmesh Sharma observed, “Additions ultimately made in the course of reassessment would not validate the initiation of proceedings if founded on income of INR 46,17,000/- having escaped assessment and thus evidently below the threshold of INR 50 lakhs.”
Case title: The Pr. Commissioner Of Income Tax - International Taxation -3 v. Samsung Electronics Co. Ltd.
Case no.: ITA 1029/2018
The Delhi High Court has held that Samsung India Electronics Pvt. Ltd (SIEL), a wholly owned subsidiary of South Korea-based Samsung Electronics Co. is not its 'Permanent Establishment' (PE) in India, hence not exigible to tax here.
A division bench of Justices Yashwant Varma and Harish Vaidyanathan Shankar agreed with ITAT's findings that the secondment of employees by Samsung Korea was merely with the objective of facilitating the activities of SIEL, not its own.
Case title: Qamar Jahan v. Union Of India, Represented By Secretary, Ministry Of Finance & Ors.
Case no.: W.P.(C) 198/2025
The Delhi High Court has urged the Central government as well as the Customs department to review the Baggage Rules, 2016 which regulate the amount of gold or gold jewellery that can be carried by a person travelling to India by air.
A division bench of Justices Prathiba M. Singh and Dharmesh Sharma observed, “While, there is no doubt that any illegal smuggling of gold deserves to be curbed, at the same time, bona-fidely and genuine tourists/travellers, including people from Indian Origin such as the OCI Cardholders, PIOs etc., could be travelling for social engagements in India or social events such as marriages etc., with gold, which could be of a much higher value than the permissible limits.
Case title: Divine Infracon Pvt Ltd v. Pr Commissioner Of Income Tax 3
Case no.: ITA 426/2024
The Delhi High Court recently said aside an order passed by the Income Tax Appellate Tribunal, deciding grounds that did not arise from the impugned order passed by the Commissioner of Income Tax (Appeals).
A division bench of Acting Chief Justice Vibhu Bakhru and Justice Tushar Rao Gedela observed, “The Assessee's challenge to the addition of ₹4,30,00,000/- under Section 68 of the Act had remained unaddressed by the learned CIT(A) but had been affirmed by the learned ITAT, without the same arising from the order passed by the learned CIT(A). The learned ITAT has clearly erred in entering into the said controversy without the learned CIT(A) rendering any finding on merits in regard to the petitioner's appeal.”
Case title: Pr. Commissioner Of Income Tax- 9 v. M/S Tata Power Delhi Distribution Ltd. (Formerly Known As M/S North Delhi Power Limited)
Case no.: ITA 687/2019
The Delhi High Court has held that Section 115JB of the Income Tax Act, 1961, as it stood prior to its amendment by virtue of Finance Act, 2012, would be inapplicable to an electricity generation company.
A division bench of Acting Chief Justice Vibhu Bakhru and Justice Swarana Kanta Sharma thus dismissed the Department's appeals against Tata Power Delhi Distribution Limited, a joint venture of Tata Power with the Delhi government for purposes of power generation and distribution of electricity in two districts of Delhi.
Case title: Rohit Kumar v. Income Tax Officer Ward 54 (1), Delhi
Case no.: W.P.(C) 2830/2022
The Delhi High Court has held that the Supreme Court's decision in Union of India and Ors. vs. Rajeev Bansal (2024) did not affirm the authority of a Joint Commissioner to grant approval under Section 151 of the Income Tax Act, 1961 for initiation of reassessment proceedings.
A division bench of Justices Yashwant Varma and Dharmesh Sharma observed that the Supreme Court in the Rajeev Bansal case “merely alluded to the time frames within which approval under Section 151 of the could be sought for and obtained.”
Case title: Pr. Commissioner Of Income Tax-7 v. Delhi Vedanta Ltd.
Case no.: ITA 88/2022
The Delhi High Court on Friday declined the Income Tax Department's appeal to treat as 'curable', the error committed in naming the relevant entity while issuing reassessment notices. A division bench of Justices Yashwant Varma and Dharmesh Sharma refused to grant the benefit which the Supreme Court had given to the Department in Sky Light Hospitality LLP v. Assistant commissioner of Income-tax (2018).
It observed, “It was the conduct of the assessee in Sky Light which had convinced the Supreme Court to observe that the mistake would not render the order of assessment invalid and that it could be saved under Section 292B of the. The facts of the present case are clearly not akin to what prevailed in Sky Light.”
Case title: Grid Solutions OY (Ltd) v. Assistant Commissioner Of Income Tax International Taxation & Anr.
Case no.: W.P.(C) 1196/2022
The Delhi High Court has held that whether an entity is a Permanent Establishment (PE) of a foreign company or not is a “fact-specific” issue which must be examined separately for different tax periods.
A division bench of Justices Yashwant Varma and Harish Vaidyanathan Shankar observed, “The position of a PE being a facts-specific issue and thus liable to be examined against the backdrop of what obtained in a particular tax period…”
Case title: Kamal Envirotech Pvt. Ltd. v. Commissioner Of Gst And Anr
Case no.: W.P.(C) 12142/2022
The Delhi High Court has held that Section 129 of the Central Goods & Services Tax Act, 2017 which pertains to detention, seizure and release of goods while in transit cannot be invoked for imposing penalties for minor breaches, like incomplete e-way bill.
A division bench of Justices Yashwant Varma and Harish Vaidyanathan Shankar further held that Section 129 cannot, merely by virtue of its non-obstante clause, be construed to have an overriding effect on Section 126 which interdicts tax officers from imposing any penalty for minor breaches of tax regulations or procedural requirements.
Case title: Commissioner Of Customs Air Chennai-Vii Commissionerate v. M/S. Ingram Micro India Pvt. Ltd.
Case no.: CUSAA 38/2023
Coming to the rescue of an IT distribution company, the Delhi High Court has held that the import of Wireless Access Points (WAPs), which operate on MIMO technology, are exempt from Customs duty.
In doing so, the division bench of Acting Chief Justice Vibhu Bakhru and Justice Swarana Kanta Sharma held that the word “and” used between 'MIMO and LTE Products', which are eligible for exemption under the relevant notification issued by the Centre, is disjunctive.
Gauhati HC
Case title: Shri Shambhu Prasad v. The State Of Assam And Ors
Case no.: WP(C)/6807/2024
The Gauhati HIgh Court has held that the Show Cause Notice issued to an assessee under Section 73 of the Central Goods and Services Tax Act, 2017, the Statement issued along with the SCN as well as an Order passed under Section 73(9) must mandatorily be signed by the Proper Officer.
Justice Soumitra Saikia observed, “As it is the statutory mandate that it is only the Proper Officer who has the authority to issue Show Cause Notice and the Statement and pass the order, the authentication in the Show Cause Notice, Statement as well as the Order by the Proper Officer is a must and failure to do so, makes the Show Cause Notice, Statement and Order ineffective and redundant.”
Gujarat HC
Case title: Infodesk India Pvt. Limited Versus The Union Of India & Ors
Case no.: R/SPECIAL CIVIL APPLICATION NO. 25609 of 2022
The Gujarat High Court has made it clear that where a subsidiary company provides goods or services to its parent company in its independent capacity, it cannot be said that such services fall under 'intermediary service' under Section 2(13) of the Integrated Goods and Service Tax Act, 2017.
The division bench of Justices Bhargav D. Karia and DN Ray observed, “it is apparent that the petitioner is required to assist the US entity in carrying on the business of providing information and consultancy in business of software development and for that purpose, the petitioner is required to set up consultations and meetings between globally based experts and globally based clients and to participate in any business of consultants, agents, sub-agents, liaison agents/liaison sub-agents for its parent company and foreign clients for such activities. The petitioner is also to provide advisory services for expansion of business, marketing, advertisement, publicity, personnel accounting to its parent company. Therefore, on conjoint reading of the scope of services to be provided by the petitioner, it cannot be said that the petitioner is only to work as an agent or a broker between parent company and its customers without supplying any goods or services on its own account.”
Himachal Pradesh HC
Case title: M/s Bhushan Power & Steel Ltd. v. Assistant Excise & Taxation Commissioner and another
Case no.: Civil Revision No. 267 of 2017
The Himachal Pradesh High Court has held that the penalty provision couched in Section 16(7) of the HP Value Added Tax Act, 2005 cannot be invoked until the statutory authority is satisfied regarding the applicability of Section 16(4) of the Act.
Section 16(4) requires a registered dealer to pay the full amount of tax due from him into a Government Treasury before it furnishes the return. Failure to do so attracts a penalty under Section 16(7).
Kerala HC
Case Title: Shish Jewels Private Limited v. The Intelligence Officer
Case Number: WP(C) NO. 40450 OF 2023
The Kerala High Court has held that interim release of goods can be ordered pending adjudication of notice under section 130 GST Act in lieu of fine.
The Bench of Justice Murali Purushothaman observed that “…the adjudication can be proceeded even if the goods are released pending adjudication. Even if confiscation is ordered, there is an option to the owner of the goods to pay fine in lieu of confiscation…”
GST Act | Notification Not Needed For Cross-Empowerment Of State Officials : Kerala High Court
Case : Pinnacle Vehicles and Services Pvt Ltd v. Joint Commissioner
Case no.: W.P(C).NO.25724 OF 2024
In a significant judgment having a wide impact on several pending cases, the Kerala High Court on Wednesday (January 15) ruled that separate notification is not necessary for the cross-empowerment of State officials under the Goods and Services Tax Act.
A division bench comprising Justice Dr AK Jayasankaran Nambiar and Justice S Easwaran delivered this significant judgment while answering a reference made to it by a single bench. It endorsed the prima facie view expressed by the single bench (Justice P Gopinath) that notification was not necessary for cross-empowerement.
Orissa HC
Case title: Binod Pattanayak v. Union of India
Case no.: CRLMC No.3284 of 2023
The Orissa High Court has refused to entertain a petition filed for quashing the offence under Sections 276(B) of the Income Tax Act, 1961, stating that the Petitioner-accused should have sought compounding of the offence.
Justice Sibo Sankar Mishra observed, “In the present regime, where the compounding of the offence is permissible, the jurisdiction of this Court under Section 482 Cr.P.C. may not be necessarily invoked by the petitioner. In that view of the matter, the petitioner may resort to the procedural remedy under Section 320 Cr.P.C. by relying upon the Circular dated 17.10.2024 and seek for compounding of the offences complained off against him by the Revenue.”
TRIBUNALS
Excise Duty Not Payable On 'Bagasse' Which Emerges As A Waste Product During Sugar Crushing: CESTAT
Case Title: M/s. Sakthi Sugars Ltd. v. Commissioner of GST and Central Excise
Case Number: Excise Appeal Nos. 40479 to 40482 of 2015
The Chennai Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has stated that excise duty is not payable on the Bagasse emerged as waste product during sugar crushing.
The Bench of Ajayan T.V. (Judicial Member) and Vasa Seshagiri Rao (Technical Member) has observed that Bagasse emerged only as a waste product during crushing of sugarcane during the manufacturing process and though marketable, duty could not be imposed on it as there was no manufacturing activity involved.
Case Title: Hyundai Motor India Ltd. v. Commissioner of Customs
Case Number: Customs Appeal No.40501 of 2024
The Chennai Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has stated that investigation report is not an appealable order and there is no statutory right for a hearing at the stage of preparation of investigation report.
The Bench of P. Dinesha (Judicial Member) and M. Ajit Kumar (Technical Member) has observed that “the assessee has also not demonstrated any real prejudice caused to them by the investigation report. Merely being disappointed or dissatisfied is not enough”.
Seized Gold Cannot Be Confiscated Just For Having An Invalid Letter Of Approval: CESTAT
Case Title: M/s Encee International NSEZ v. Commissioner of Customs, Noida
Case Number: Customs Appeal No.70692 of 2019
The Allahabad Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has stated that seized gold cannot be confiscated just for having an invalid letter of approval.
There was a difference in the opinion between the P.K. Choudhary (Judicial Member) and Sanjiv Srivastava (Technical Member) on the issues involved in the case. Therefore, the matter was place before third member ie. S.S. Garg (Judicial Member) for determination of the same.