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Monthly Digest Of Tax Cases: May 2022

Mariya Paliwala
1 Jun 2022 3:30 PM GMT
Monthly Digest Of Tax Cases: May 2022
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Indirect Taxes

Supreme Court

GST Council Recommendations Not Binding On Centre & States; Both Parliament & State Legislatures Can Legislate On GST : Supreme Court

Case Title : Union of India and Anr versus M/s Mohit Minerals Through Director

Citation : 2022 LiveLaw (SC) 500

In a significant verdict, the Supreme Court held that the recommendations of the GST council are not binding on the Union and the State Governments.

A bench led by Justice DY Chandrachud held that the Parliament intended that the recommendations of the GST Council will have persuasive value.

Importantly, the Court held that both the Parliament and the State Legislatures can equally legislate on matters of Goods and Service Tax.

Case Name: Union of India And Anr. v. M/s. Mohit Minerals Through Director

Citation: 2022 LiveLaw (SC) 500

Separate IGST On Indian Importers For Ocean Freight Against Concept Of "Composite Supply", Violates Section 8 CGST Act : Supreme Court

The Supreme Court has held when the Indian importer is liable to pay Integrated Goods and Services Tax (IGST) on the 'composite supply', which includes supply of goods and supply of services of transportation, insurance, etc. in a CIF contract, a separate levy on them for the 'supply of services' by the shipping line would be in violation of Section 8 of the CGST Act.

Indian Company Liable To Service Tax On Secondment Of Employees From Overseas Group Entities As Recipient Of Manpower Supply: Supreme Court

Case Name: C.C., C.E. & S.T. - Bangalore (Adjudication) Etc. v. M/s. Northern Operating Systems Pvt. Ltd.

Citation: 2022 LiveLaw (SC) 526

The Supreme Court has held that when the Overseas group companies providing skilled employees, on secondment basis, to its Indian counterparts amounts to supply of manpower services, the Indian company would be considered as service recipient. Therefore, the Indian company is liable to pay service tax on the salaries of the seconded employees reimbursed to the overseas company.

Delhi High Court

Bail Amount Can Be Paid By Cash Ledger, Debit Ledger Of ITC: Delhi High Court Refuses To Cancel Bail Of A Person Accused of Fraudulently Availing ITC

Case Title: Amit Gupta Vs Directorate General of GST Intelligence Headquarters

Citation: 2022 LiveLaw (Del) 426

The Delhi High Court bench of Justice Mukta Gupta has ruled that the bail amount can be paid by cash ledger and debit ledger of the Input Tax Credit (ITC).

Karnataka High Court

No Conflict Between Power To Levy GST And Power Of Municipal Corporation To Levy Advertisement Fee Or Advertisement Tax: Karnataka High Court

Case Title: Hubballi Dharwad Advertisers Association (R) Vs State of Karnataka

The Karnataka High Court bench of Justice Suraj Govindraj held that there is no conflict between the power to levy GST under the GST Act and the power of a municipal corporation to levy an advertisement fee or advertisement tax under Section 134 of the Karnataka Municipal Corporations Act.

18% GST Payable On 'Pattadar Pass Book Cum Title Deed' ; Karnataka High Court Upholds AAR Ruling

Case Title: M/s. Manipal Technologies Ltd. Versus State of Karnataka

The Karnataka High Court bench of Justice S. Sujatha and Justice Shivashankar Amarannavar, while upholding the ruling of the Authority of Advance Ruling (AAR), held that 18% GST is payable on 'pattadar pass book cum title deed'.

Madras High Court

No Excuse For Not Paying GST In Time From Its Electronic Cash Register: Madras High Court Upholds Interest Demand

Case Title: M/s.Srinivasa Stampings Versus The Superintendent of GST and Central Excise

Citation: 2022 LiveLaw (Mad) 202

The Madras High Court bench of Justice C. Saravanan held that the taxpayer is liable to pay interest if there is a belated payment of tax declared in the returns filed.

Form GST DRC-16 Merely Attaches Immovable Properties & Not Bank Account: Madras High Court Refuses To Quash Attachment Notice

Case Title: Tvl.G.Sankar Timber Depot Versus The State Tax Officer (Adjudication)

The Madras High Court bench of Justice C. Saravanan has held that form GST DRC-16 merely attaches immovable properties. There was no attachment to any bank accounts. The assessee appeared to be interested in dragging on the proceeding, though it appeared to be in arrears of huge amounts of tax.

Transition Of ITC cannot Be Denied Merely For Technical Difficulties: Madras High Court

Case Title: M/s.Vetrivel Explosives Pvt. Ltd. Versus Union of India

Citation: 2022 LiveLaw (Mad) 208

The Madras High Court held that in case the department is unable to permit the filing of TRAN-1 belatedly, they have to credit the corresponding amount in the electronic cash register provided that the credit remained unutilized on the cut-off date.

Madras High Court Upholds Validity Of Section 6 Of The Tamil Nadu Value Added Tax Act 2006

Case Title: M/s. LG Electronics India Pvt Ltd v. The State of Tamil Nadu and Another with connected cases.

Citation: 2022 LiveLaw (mad) 227

The Madras High Court recently upheld the validity of amendments made to Section 6 of The Tamil Nadu Value Added Tax Act, 2006. The court observed that in matters relating to tax, the interest of the State must be considered as against the interest of certain individuals.

Kerala High Court

Kerala High Court Directs GST Dept. To Facilitate Revision Of Form GST TRAN-1 By Making Necessary Arrangements On The Portal

Case Title: M/S G&C infra Innovations v. Union of india

Citation: 2022 LiveLaw (Ker) 209

The Kerala High Court bench of Justice Bechu Kurian Thomas has directed the GST department to facilitate the revising of Form GST TRAN-1 and filing of Form GST TRAN-2 by making necessary arrangements on the web portal.

KVAT Registration Once Cancelled Has To Be Published In Two Leading Daily Newspapers: Kerala High Court

Case Title: The State of Kerala Versus Raseena K.K.

Citation: 2022 LiveLaw (Ker) 215

The Kerala High Court ruled that once a Kerala Value Added Tax (KVAT) registration is cancelled, it must be published in at least two major daily newspapers, and the dealer must be notified in accordance with Form No.5 B.Then only will the cancellation of registration be effective.

Credit Notes Not Affecting Input Tax Can't Be Treated As Taxable Turnover: Kerala High Court

Case Title: Saji Thomas Vs Assistant Commissioner

The Kerala High Court bench of Justice S.V. Bhatti, Bechu Kurian Thomas, and Justice Basant Balaji has held that credit notes not affecting input tax already deposited cannot be treated as taxable turnover by the extended meaning of Section 2 subsection (iii) Explanation VII of the Kerala Value Added Tax Act.

Allahabad High Court

Allahabad High Court Stays GST Demand On Payment Of Royalty To Conduct Mining Activity

Case Title: M/s Jitendra Singh Versus Union of India

The Allahabad High Court bench of Justice Saumitra Dayal Singh has stayed the GST demand on payment of royalty to conduct mining activity.

Applicability of GST On Royalty On Mining: Allahabad High Court Directs Assessee To Reply To SCN

Case Title: M/s Ashish Pandey Versus UOI

The Allahabad High Court bench of Justice Devendra Kumar Upadhyaya and Justice Brij Raj Singh, while dealing with the issue of the applicability of GST on royalties on mining, has directed the assessee to reply to the show cause notice issued by the department.

Chandigarh High Court

SCN Issued By DRI Was Without Authority of Law: Chhattisgarh HC Stays Proceedings

Case Title: Vijay Baid Versus Union Of India

The Chhattisgarh High Court bench of Justice Parth Prateem Sahu has quashed the show cause notice which was issued by the DRI and stayed the proceedings.

Gujarat High Court

Reassessment Should Only Be Done By Officer Or His Successor And Not By Any Officer Of The Same Rank : Gujarat High Court

Case Title: Messrs Aztec Fluids And Machinery Pvt. Ltd. Versus UOI

The Gujarat High Court bench of Justice Sonia Gokani and Justice Rajendra M. Saraen, while invalidating the reassessment initiated by the DRI, held that the officer who did the assessment could only undertake reassessment.

GST Refund To Be Granted To The Entity Who Borne The Tax Burden: Gujarat High Court Allows GST Refund To Service Recipient

Case Title: Munjaal Manishbhai Bhatt Versus Union Of India

The Gujarat High Court bench of Justice J.B.Pardiwala and Justice Nisha M.Thakore has held that, as per Section 54 of the CGST Act, a claim of refund may be made directly by the recipient if he has borne the burden of tax.

Bonafide Mistake In Selection Of Wrong ODC Vehicle Type While Generating E-Way Bill: Gujarat High Court Quashes Detention Order

Case Title: Dhabriya Polywood Limited Vs Union of India

The Gujarat High Court has quashed the detention order as there was a bonafide mistake in the selection of the wrong ODC vehicle type while generating the e-way bill.

The division bench of Justice J.B. Pardiwala (as then was) and Justice Nisha M. Thakore observed that the goods were in transit with all the necessary documents, including the E-way bill generated from the GST portal. The goods were moved by a truck whose registration number was also correct. The only mistake in this case was the selection of the wrong ODC vehicle type while generating the e-Way Bill.

Chhattisgarh High Court

Wrongful Availment Of ITC:Chhattisgarh High Court Refuses Bail

Case Title: Paritosh Kumar Singh Versus State Of Chhattisgarh

Citation: 2022 LiveLaw (Chh) 36

The Chhattisgarh High Court bench headed by Chief Justice Arup Kumar Goswami and Justice Gautam Chourdiya has refused to grant bail to a person allegedly involved in availment of fraudulent Input Tax Credit (ITC).

Calcutta High Court

Genuine Transactions With Suppliers Whose GST Registration Cancelled: Calcutta High Court Allows GST ITC To Assessee

Case Title: Sanchita Kundu & Anr. Vs. The Assistant Commissioner of State Tax, Bureau of Investigation, South Bengal & Ors.

The Calcutta High Court bench of Justice Md. Nizamuddin has held that the Input Tax Credit (ITC) cannot be denied on genuine transactions with suppliers whose GST registration was cancelled after the transaction.

Madhya Pradesh High Court

Delay Of 18 Months In Filing Appeal Without Reasonable Justifications: Madhya Pradesh High Court Upholds Cancellation Of GST Registration

Case Title: M/s Rajdhani Security Force Pvt. Ltd Versus UOI

The Madhya Pradesh High Court bench of Justice Sheel Nagu and Justice Maninder S. Bhatti has upheld the cancellation of GST registration as there was a delay of 18 months in filing the appeal without reasonable justification.

Rajasthan High Court

Rajasthan High Court Refuses To Grant Priority of Government Dues Over Debts Due To Secured Creditors

Case Title: Asstt. Commercial Taxes Officer Versus M/s. Punusumi India Limited

The Rajasthan High Court bench of Justice Ashok Kumar Gaur has refused to grant the priority of the government dues over the debts due to secured creditors.

Meghalaya High Court

Applicability Of GST On Royalty Paid For Mining Limestone: Meghalaya High Court Stays GST Recovery

Case Title: M/s Hills Cement Company Limited vs. The Union of India & Ors

The Meghalaya High Court bench headed by Chief Justice Sanjib Banerjee and Justice W. Diengdoh has stayed the recovery of GST on royalty paid for mining limestone.

Gauhati High Court

Clarificatory Circular Operates Retrospectively And Does Not Bring Anything New: Gauhati High Court

Case Title: Sanjib Das versus Union of India and Ors.

The Gauhati High Court has reiterated that a circular issued by the Central Board of Indirect Taxes and Customs (CBIC) which only clarifies the CBIC's original instructions and does not bring anything new is clarificatory in nature and operates retrospectively.

The Single Bench of Justice Devashis Baruah held that the exceptions enumerated in the clarificatory circular issued by CBIC, that enumerated exceptions with respect to holding pre-show cause notice consultation, would operate retrospectively from the date of issuance of CBIC's original instructions relating to pre-show cause notice consultation.

Orissa High Court

ITC Transfer From One State To Another Is Not An Inward Supply: Orissa High Court

Case Title: M/s. JSW Steel Ltd. Versus Union of India

The Orissa High Court bench of Justice Jaswant Singh and Justice M.S. Raman has ruled that an input service distributor (ISD) can claim ITC only in the case of an inward supply, and an ITC transfer from one state to another is not an inward supply.

Jammu & Kashmir High Court

Education Cess Lawfully Refunded To The Assessee, Can't Recover Later Based On Change Of View Of The Supreme Court: J&K and Ladakh High Court

Case Title: Commissioner of CGST and Commissioner of Central Excise versus M/s Narbada Industries

The High Court of Jammu & Kashmir and Ladakh has ruled that the revenue department cannot seek the return of the amounts lawfully refunded to the assessee in consonance with an earlier decision of the Supreme Court, on the ground that the Supreme Court has changed its opinion on the said matter in a decision rendered subsequently.

The Bench, consisting of Chief Justice Pankaj Mithal and Justice Sanjay Dhar, held that a case cannot be reopened after the expiry of the limitation period merely on the ground that subsequently the view of the court on the said aspect has changed or that subsequently a different opinion has been expressed by the courts in another case.

AAAR

LNG Jetties Is Not In The Nature Of 'Plant And Machinery', ITC Not Eligible: Gujarat AAAR

Appellant's Name: M/s. Swan LNG Pvt. Ltd.

The Gujarat Appellate Authority of Advance Ruling (AAAR), comprised of Seema Arora and Milind Torawane, ruled that LNG jetties are not in the nature of "plant and machinery," but rather serve as the foundation for the installation of re-gasification equipment, apparatus, and machinery.The input tax credit on inputs, input services, and capital goods for the purpose of building these LNG jetties is not admissible.

AAR

Computer Software Supplied To Public Funded Research Institutions Attracts 5% GST: Karnataka AAR

Applicant's Name: Keysight Technologies India Pvt. Ltd.

The Karnataka Authority of Advance Ruling (AAR), consisting of members Dr. M.P.Ravi Prasad and T.Kiran Reddy, has ruled that 5% GST is payable on computer software supplied to public-funded research institutions.

No GST Leviable In The Hands Of Employer On Amount Representing Employees Portion of canteen charges: Gujarat AAR

Applicant' Name: M/s. Cadila Healthcare Limited

The Gujarat Authority of Advance Ruling (AAR) consisting of members Atul Mehta and Arun Richard ruled that no GST is leviable in the hands of the employer on an amount representing the employee portion of canteen charges.

Dismantling Of Existing Sleeper And Installation Of New Sleepers For Railways Attracts 12% GST: West Bengal AAR

Applicant's Name: Utkarsh India Limited

The West Bengal Authority of Advance (AAR), consisting of members Brajesh Kumar Singh and Joyjit Banik, has ruled that the dismantling of existing sleeper fixings and/or installation of H-Bean Steel sleepers amounts to the execution of original work and would attract 12% GST.

Transfer Of Business Unit Shall Be Treated As A Supply Of Services: West Bengal AAR

Applicant's Name: Cosmic Ferro Alloys Limited

The West Bengal Authority of Advance Ruling (AAR), consisting of members Brajesh Kumar Singh and Joyjit Banik, has ruled that the transfer of business units shall be treated as a supply of services.

Composite Supply Of Hospital Construction Works For Govt Entity Attracts 18% GST: Maharashtra AAR

Applicant's Name: KPC Projects Ltd.

The Maharashtra Authority of Advance Ruling (AAR), consisting of members Rajiv Magoo and T.R. Ramnani, has ruled that 18% GST is payable on the composite supply of hospital construction works for government entities.

Bus Body Building On Chassis Owned By GST Registered Customer Attracts 18% GST: Gujarat AAR

Applicant's Name: Vasant Fabricators Pvt. Ltd.

The Gujarat Authority of Advance Ruling (AAR) consisting of members Arun Richard and Atul Mehta ruled that 18% GST is payable on bus body building on chassis owned by GST registered customers and unregistered customers.

GST Not Leviable On Services By Security Manager Located Outside India For Subscription To Secured Notes : Gujarat AAR

Applicant's Name: M/s. Adani Green Energy Ltd

The Gujarat Authority of Advance Ruling (AAR), consisting of members Atul Mehta and Arun Richard, has ruled that GST is not leviable on services by security managers located outside India for subscription to secured notes placed in the USA.

Air Circulation Fans Supplied To Poultry House For Providing Ventilation To Livestock Attracts 18% GST: Gujarat AAR

Applicant's Name: M/s. Naimunnisha Nadeali Saiyed (legal name M/s. Star Enterprise)

The Gujarat Authority of Advance Ruling (AAR)consisting of Arun Richard and Atul Mehta has ruled that the 18% GST is payable on air circulation fans supplied to poultry houses for the purpose of providing ventilation to livestock.

Sale Of Second Hand 'Paintings' Attracts 12% GST: Maharashtra AAR

Applicant's Name: M/s. Saffron Art Private Limited

The Maharashtra Authority of Advance Ruling (AAR) consisting of Rajiv Magoo and T.R. Ramnani has ruled that the 12% GST is payable on the sale of second-hand paintings.

GST Payable On Fees Collected Towards Training In Respect Of Football, Basketball, Athletic, Cricket, swimming, Karate and Dance: AAR

Applicant's Name: Navi Mumbai Sports Association

The Maharashtra Authority of Advance Ruling (AAR) consisting of Rajib Magoo and T.R. Ramnani has ruled that GST is payable on fees collected towards training in respect of football, basketball, athletics, cricket, swimming, karate, and dance.

CESTAT

Foreign Origin Gold Bar With Unexplained Source Is Liable For Absolute Confiscation As It amounts To Importation Of Prohibited Goods: CESTAT

Case Title: The Commissioner of Customs Versus M.S. Alaudeen

The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) consisting of P.Dinesha (Judicial Member), while remanding the matter back, held that the gold bar with a foreign marking, the source of which is not explained, is liable for absolute confiscation since the same would amount to the importation of a prohibited good.

Liquidated Damages Does Not Attract Service Tax: CESTAT Hyderabad

Case Title: M/s. Krishnapatnam Port Company Limited versus Commissioner of Central Excise & Service Tax, Guntur

The Hyderabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has ruled that receipt of liquidated damages by the service provider for breach of conditions under an agreement to provide services would not attract Service Tax.

Compensation Paid By Employee To Employer For Resigning From Service Without Giving Requisite Notice Is Not A Taxable Service: CESTAT

Case Title: M/s. XL Health Corporation India Pvt. Ltd. Versus Commissioner of Central Tax, Bengaluru South Commissionerate

The Bangalore Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) consisting of S.K. Mohanty (Judicial Member) and P.Anjani Kumar (Technical Member) has held that any compensation paid by the employee to the employer for resigning from the service without giving the requisite notice, would not be termed as consideration for the contract of employment and would not fall within the preview of taxable service.

CESTAT Allows Refund Of CENVAT Credits On Service Tax Paid During GST Regime Under Reverse Charge Mechanism On Import Of Services

Case Title: M/s Brose India Automotive Systems Pvt. Ltd. Versus Commissioner of CGST

The Chennai Bench of ITAT has ruled that subscription money received in advance by the DTH operators is not taxable.

The Bench, consisting of members V. Durga Rao (Judicial Member) and Manoj Kumar Aggarwal (Accountant Member), held that the subscription money received by DTH operators is taxable only when the said amount is accrued to them, i.e., when the services are rendered by the DTH operators to the subscribers.

Compensation Received For Cancellation Of Coal Blocks Under Supreme Court Order, Not Liable To Pay Service Tax: Kolkata CESTAT

Case Title: M/s. Jindal Steel & Power Limited versus Principal Commissioner of CGST & CX, Ranchi Commissionerate

The Kolkata Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has ruled that compensation received under a statute for cancellation of coal blocks/mines vide an order of the Supreme Court, cannot be considered as a taxable service of tolerating a situation and is thus not exigible to Service Tax.

The Bench, consisting of members P.K. Choudhary (Judicial Member) and P.V. Subba Rao, (Technical Member), held that the question of tolerating something and receiving a compensation for such tolerance pre-supposes that the person had a choice to either tolerate or not tolerate, and that the person chose to tolerate. The CESTAT added that the appellant had not chosen to tolerate the cancellation since the cancellation was in pursuance of the order of the Supreme Court and not as a result of a contract to tolerate cancellation.

Galvanised Solar Structure Manufactured And Cleared For Initial Setting Up Of Solar Power Plants Exempted From Excise Duty: CESTAT

Case Title: M/s. KEC International Limited Versus Commissioner of Central Excise and Central Goods & Service Tax (Appeals)

The Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that galvanised solar structures manufactured and cleared for the initial setting up of solar power plants are exempted from excise duty.

No Service Tax Payable On Service Charges Collected By Rajasthan Cooperative Dairy Federation From Milk Unions: CESTAT Delhi

Case Title: M/s Rajasthan Co-operative Dairy Federation Limited versus Commissioner, Central Excise, Jaipur

The Delhi Bench of Custom, Excise & Service Tax Appellate Tribunal (CESTAT) has ruled that no service tax is payable on the service charges collected by the Rajasthan Cooperative Dairy Federation from the milk unions or district cooperative societies for the services rendered to them.

The Bench, consisting of Justice Dilip Gupta (President) and technical member P.V. Subba Rao, held that although the Rajasthan Cooperative Dairy Federation and the milk unions/district cooperative societies are registered under the Rajasthan Cooperative Societies Act, 2001 and are thus distinct legal entities, the nature of the relationship between them continues to be that of a club and its members. The CESTAT ruled that no service tax was payable on the services rendered by the Rajasthan Cooperative Dairy Federation to the milk unions.

Composition Scheme On Works Contract Cannot Be Denied On The Ground That Service Tax Was Discharged Earlier: CESTAT Bangalore

Case Title: M/s MFAR Construction Private Limited versus C.C.E & C.S.T.- Bangalore Service Tax- I

The Bangalore Bench of Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has reiterated that Composition Scheme for payment of Service Tax on Works Contract cannot be denied merely on the ground of discharge of Service Tax under a different head prior to 01.06.2007.

The Bench, consisting of members P Dinesha (Judicial Member) and P. Anjani Kumar (Technical Member), held that Works Contract Services are liable to Service Tax only from 01.06.2007. The CESTAT ruled that the appellant could not be put to jeopardy for the reason that it had been paying Service Tax before 01.06.2007 even though it was not legally required to pay.

Proceedings Can't Be Initiated When Excise Duty Was Paid Prior To Issuance Of Show Cause Notice:CESTAT

Case Title: M/s. Surya Alloy Industries Limited Versus Commissioner of CGST & CX

The Kolkata Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) consisting of P.K. Choudhary (Judicial Member) has held that the authorities had no jurisdiction to initiate proceedings as the assessee had paid the excise duty along with the interest prior to the issuance of the show cause notice.

Failure Of Customs Broker To Observe Due Diligence Leading To Facilitate Fake Importers: CESTAT Revokes Licence

Case Title: M/s. Sky Sea Services Versus Commissioner of Customs (General), Mumbai

The Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) affirmed the revocation of the customs broker's licence because the customs broker failed to conduct due diligence, allowing fake importers to operate.

The two-member bench of S.K. Mohanty (Judicial Member) and P. Anjani Kumar (Technical Member) observed that the institution of customs brokers was created to facilitate the import and export of trade and, at the same time, to take care of the interests of revenue. Thus, a great responsibility has been cast upon the customs brokers to exercise due diligence while conducting their business.

CESTAT Allows Cenvat Credit To The Member Of Industries Association Who Received Services And Borne Expenditure

Case Title: Gujarat Guardian Limited Versus C.C.E. & S.T.-Vadodara-ii

The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) consisting of Ramesh Nair (Judicial Member) has held that the member of an industry association who has received the services and borne the expenditure is entitled to the cenvat credit.

CESTAT Allows Cenvat Credit On Insurance Services

Case Title: Milestone Preservatives Pvt. Limited

The Ahmedabad Customs, Excise and Service Tax Appellate Tribunal (CESTAT) consisting of Ramesh Nair (Judicial Member) has allowed the Cenvat credit on insurance services.

No Service Tax Leviable On Toll Collection, Toll Collector Not A Commission Agent: CESTAT Mumbai

Case Title: Souvenir Developers India Pvt Ltd versus Commissioner of Central Excise, Customs & Service Tax– I

The Mumbai Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has ruled that any amount retained by a toll collector while undertaking toll-collection activity does not attract service tax since the said activity does not constitute a service rendered by a commission agent and thus it does not fall within the purview of a 'business auxiliary service' under the erstwhile Section 65(19) of the Finance Act, 1994.

Direct Tax

Supreme Court

Supreme Court Saves Over 90,000 Income Tax Reassessment Notices Issued After 2021 Amendment By Deeming Them As Notices Under Section 148A

Case Title: Union of India v. Ashish Agarwal

Citation : 2022 LiveLaw (SC) 444

The Supreme Court, on Wednesday, directed that reassessment notices under Section 148 of the unamended Income Tax Act which were issued beyond 01.04.2021 (the effective date of amendment of the said provision by the Finance Act, 2021) to be deemed to have been issued under Section 148A of the IT Act as substituted by the Finance Act, 2021 and be construed as show cause notices in terms of section 148A(b).

Equilibrium Between Power Of The Income Tax Dept. Of Reassessment And Rights Of The Assessee: Supreme Court

Case Title: Union of India v. Ashish Agarwal

Citation: 2022 LiveLaw (SC) 444

The Supreme Court, by invoking the extraordinary jurisdiction under Article 142 of the Constitution of India, saved over 90,000 Income Tax Reassessment notices issued after the 2021 Amendment by deeming them as notices under Section 148A of the Income Tax Act.

Delhi High Court

Non Filing Of Response Due To Technical Glitch In E-Filing Portal: Delhi High Court Quashes The Order And Directs Fresh Hearing

Case Title: Ankit Kaul Versus National Faceless Assessment Centre

Citation: 2022 LiveLaw (Del) 402

The Delhi High Court bench of Justice Manmohan and Justice Subramonium Prasad has held that the taxpayer could not file a response under the Faceless Scheme due to a technical glitch in the e-filing portal.

Delhi High Court Upholds Order Of Revenue Department Imposing Enhanced Compounding Charges On Subsequent Offences

Case Title: M/s Maspar Industries Private Limited & Ors. versus Chief Commissioner of Income Tax TDS & Anr.

Citation: 2022 LiveLaw (Del) 411

The Delhi High Court has upheld the order of the revenue department imposing enhanced compounding charges on subsequent applications for compounding of offences relating to late deposit of Tax Deducted at Source (TDS).

Sufficiency Of The Correctness Of Material Is Not To Be Considered While Issuing Reassessment Notice: Delhi High Court

Case Title: Kedar Nath Babbar Versus Assistant Commissioner of Income Tax

Citation: 2022 LiveLaw (Del) 434

The Delhi High Court held that the court was only required to see whether there was prima facie some material on the basis of which the department could reopen the assessment. The sufficiency of the correctness of the material cannot be considered while issuing the reassessment notice.

Time Of 8 Hours To File Reply To Show Cause Notice, Not Reasonable: Delhi High Court

Case Title: Rahul Biala Vs ITO

Citation: 2022 LiveLaw (Del) 455

The Delhi High Court bench of Justice Manmohan and Justice Dinesh Kumar Sharma has held that the time of eight hours to file a reply to the show cause notice was neither reasonable nor effective. The assessee could not have provided relevant information and documents to establish his case in such a short period of time.

AO & PCIT Failed To Consider Balance Of Convenience And Irreparable Injury While Deciding The Stay Application: Delhi High Court

Case Title: Seven Seas Hospitality Private Limited Versus PCIT

Citation: 2022 LiveLaw (Del) 467

The Delhi High Court bench of Justice Manmohan and Justice Dinesh Kumar Sharma has held that neither the Assessing Officer nor the Principal Commissioners of Income Tax (PCIT) have considered the three basic principles, i.e., the prima facie case, balance of convenience, and irreparable injury, while deciding the stay application.

Delhi High Court Directs Designated Committee To Manually Process Payments Of Assessee Under SVLDR Scheme

Case Title: SDB Infrastructure Pvt. Ltd. Versus Ministry of Finance

Citation: 2022 LiveLaw (Del) 468

The Delhi High Court bench of Justice Rajiv Shakdher and Justice Poonam A. Bamba has directed the designated committee to manually process payments of an assessee under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDRS).

Non Consideration Of Detailed Reply To Show Cause Notice Submitted After Stipulated Time, Delhi HighCourt Quashes Reassessment Order

Case Title: Divya Capital One Private Limited Vs. ACIT

Citation: 2022 LiveLaw (Del) 475

The Delhi High Court bench of Justice Manmohan and Justice Dinesh Kumar Sharma has quashed the reassessment order, alleging income of more than Rupees one lakh crore having escaped assessment on the grounds of violation of natural justice.

Initiation Of Reassessment Proceedings By Income Tax Officer Without Jurisdiction: Delhi High Court Quashes The Proceedings

Case Title: Indus Tower Ltd. Versus ITO

Citation: 2022 LiveLaw (Del) 477

The Delhi High Court bench of Justice Manmohan and Justice Dinesh Kumar Sharma held that since the petitioner jurisdictional Assessing Officer is headquartered in Delhi, the income tax officer from Jaipur had no authority to send a notice proposing the beginning of reassessment proceedings.

No Opportunity Of Personal Hearing Granted To Taxpayer: Delhi High Court Quashes Assessment Order

Case Title: Omkar Nath Versus National Faceless Assessment Centre

The Delhi High Court bench of Justice Rajiv Shakdher and Justice Talwant Singh has quashed the assessment order as an opportunity of personal hearing was not granted to the taxpayer.

Licensing Of Software Products By Microsoft Is Not Taxable In India As Royalty: Delhi High Court

Case Title: CIT Versus Microsoft Corporation

Citation: 2022 LiveLaw (Del) 483

The Delhi High Court bench of Justice Manmohan and Justice Sudhir Kumar Jain has ruled that licensing of software products by Microsoft in the Territory of India by Microsoft is not taxable in India as royalty.

Taxpayers Have Independent Statutory Right To File A Reply To Show Cause Notice And Draft Assessment Order: Delhi High Court

Case Title: Ketan Ribbons Pvt Ltd Vs National Faceless Assessment Centre Delhi

Citation: 2022 LiveLaw (Del) 498

The Delhi High Court bench of Justice Manmohan and Justice Manmeet Preetam Singh Arora, while directing the National Faceless Assessment Centre (NFAC) to pass the fresh assessment order, held that the taxpayers have an independent statutory right to file a reply to the show cause notice and draft assessment order.

Bombay High Court

Assessee Deprived Of Refund Due To Wrongful Withholding Of Amount By Income Tax Dept.: Bombay High Court Imposes 6% Interest

Case Title: Sanjeev Kumar Versus UOI

Citation: 2022 LiveLaw (Bom) 170

The Bombay High Court bench of Justice S.G. Mehare and Justice R.D. Dhanuka has allowed 6% interest to the assessee on wrongful withholding of the amount by the income tax department.

Bombay High Court Directs Assessee To Pay Rs.25,000 to Assessing Officer As The Stay Order Was Not Proactively Communicated

Case Title: Armstrong Pure Water Services Pvt. Ltd. Versus Union of India and others

The Bombay High Court bench of Justice N.R.Borkar and Justice K.R.Shriram held that the petitioner should have been proactive and promptly communicated the stay granted by the Court to the Assessing Officer so that he would have had enough time to make enquiries with his advocate and also check on the website about orders passed.

Credit Worthiness Of The Creditor And Genuineness Of Transaction Explained By The Assessee: Bombay High Court Quashes Re-assessment Notice

Case Title: Vapi Infrastructure and Industrial Township LLP Versus Income Tax Officer Ward

The Bombay High Court has quashed the reassessment notice. The assessee explained the credit worthiness of the creditor and the genuineness of the transaction.

The division bench of Justice K.R. Shriram and Justice N.R. Borkar observed that the re-opening proposed was purely based on a change of opinion. The assessing officer was also satisfied with the credit worthiness and details provided by third party lenders.

Assessment Can't Be Reopened On Mere Change Of Opinion Of AO: Bombay High Court

Case Title: Bhavani Gems Private Limited Versus Assistant Commissioner of Income Tax

The Bombay High Court, while quashing the reassessment notice, held that the assessment could not be reopened on a mere change of opinion of the Assessing Officer (AO).

The division bench of Justice K.R. Shriram and Justice N.R. Borkar observed that the reopening of assessment was merely on the basis of a change of opinion of the Assessing Officer from that held earlier during the course of assessment proceedings and this change of opinion does not constitute justification and/or reason to believe that income chargeable to tax has escaped assessment.

Loss On Trading In Derivatives Of Securities Not A Speculative Loss, Can Be Set Off Against Business Income: Bombay High Court

Case Title: Souvenir Developers (I) Pvt. Ltd. versus Union of India

The Bombay High Court has ruled that transactions in respect of trading in derivatives carried out in a recognized stock exchange are excluded from the definition of "speculation transaction" under the Income Tax Act, 1961.

The Bench, consisting of Justices R.D. Dhanuka and S.G. Mehare, held that an assessee is thus entitled to claim set off of the loss suffered by it in the said transactions in derivatives against its business income. The Court added that the explanatory notes on the provisions of the Finance Act, 2005, clearly indicate that an eligible transaction in respect of trading in derivatives of securities, carried out on a recognized stock exchange, shall not be deemed as a speculative transaction.

Madras High Court

Initiation Of Malicious Prosecution By Income Tax Dept. Abusing Power: Madras High Court

Case Title: Mrs. Noorjahan Versus The Deputy Commissioner of Income Tax

Citation: 2022 LiveLaw (Mad) 198

The Madras High Court bench of Justice G. Jayachandran has held that the suppression of material facts, the intentional suggestion of falsehood and the non-application of mind go to show that there was a malicious prosecution initiated by the Income Tax department by abusing its power. The petitioners need not be forced to undergo the ordeal of a trial, which has no legs to stand on.

Prosecution By Revenue Department Malicious And Patently Malafide, Madras High Court Quashes Complaint

Case Title: Mrs. Noorjahan versus Deputy Commissioner of Income Tax And M/s. AMK Solutions Private Ltd. & Ors. versus Deputy Commissioner of Income Tax

The Madras High Court has quashed the complaints filed by the income tax department against the assessee for wilfully attempting to evade payment of tax under Section 276 C (2) of Income Tax Act, 1961 on the ground of malicious prosecution, non-application of mind and abuse of power.

Allahabad High Court

Reassessment Order Not Valid If Notice By Assessing Authority Is Without Jurisdiction: Allahabad High Court

Case Title: Uphill Farms Private Limited Versus UOI

The Allahabad High Court bench of Justice Surya Prakash Kesarwani and Justice Jayant Banerji has ruled that once the notice under Section 148 of the Income Tax Act, 1961, issued by the assessing authority was declared without jurisdiction, the subsequent proceedings, including the re-assessment order, cannot be sustained.

High-Pitched, Unreasonable Reassessment Orders, Allahabad High Court Directs The Authorities To Take Action

Case Title: Harish Chandra Bhati Versus Principal Commissioner Of Income Tax Noida

Case Citation: 2022 LiveLaw (AB) 268

The Allahabad High Court has directed the centre and the tax department to take action against officials for issuing high-pitched and unreasonable reassessment orders.

The division bench of Justice Surya Prakash Kesarwani and Justice Jayant Banerji has observed that the centre should ensure to establish a monitoring cell at the level of government or CBDT within a month if it has not been established so far. The cell will ensure regular monitoring of the Local Committees, as well as follow-up actions and reviews by the Principal Chief Commissioners of Income Tax and Zonal Members, as well as an analysis of the quarterly reports.

Rajasthan High Court

Constitutionality Of First Proviso To Section 148 Of Income Tax Act, Rajasthan High Court Issues Notice To Govt.

Case Title: Maya Rathi Versus ITO

The Rajasthan High Court bench headed by Acting Chief Justice Manindra Mohan Shrivastava and Justice Sameer Jain has issued the notice to the government on a plea challenging the validity of the first proviso to section 148 of the Income Tax Act by granting arbitrary powers to the AO.

Gujarat High Court

Income Tax Not Applicable On Interest Awarded By The Motor Accident Claim Tribunal: Gujarat High Court

Case Title: Oriental Insurance Co. Ltd. Versus Chief Commissioner Of Income Tax (TDS)

The Gujarat High Court bench of Justice J.B. Pardiwala and Justice Nisha M. Thakore has held that the interest awarded by the Motor Accident Claim Tribunal (MACT) under section 171 of the Motor Vehicles Act 1988 is not taxable under the Income Tax Act, 1961.

Calcutta High Court

Reassessment Order Passed Without Issuance of Section 148 Notice Is Not Valid: Calcutta High Court

Case Title: Govardhan Commodities Pvt. Ltd. Vs. Assistant/Deputy Commissioner of Income Tax

Case Citation: 2022 LiveLaw (Cal) 176

The Calcutta High Court bench of Justice Md. Nizamuddin has ruled that the reassessment order passed without issuance of notice under Section 148 of the Income Tax Act is not valid.

Technical Issues In Income Tax Portal: Calcutta High Court Gives Fresh Opportunity To Assessee

Case Title: Bhadrish Jayantilal Sheth Versus Income Tax Officer

Case Citation: 2022 LiveLaw (Cal) 191

The Calcutta High Court bench of Justice Md. Nizamuddin has directed the assessing officer to do a new assessment proceedings as taxpayers could not furnish answers to the notice due to the technical glitches in the income tax portal.

Personal Hearing By Way Of Exchange Of Chat Messages Not An Effective Opportunity Of Personal Hearing: Calcutta High Court

Case Title: SREI Equipment Finance Limited versus Additional/Joint/Deputy/Assistant Commissioner of Income Tax and Ors

Case Citation: 2022 LiveLaw (Cal) 206

The Calcutta High Court has ruled that personal hearing conducted by way of exchange of chat messages cannot be said to be an effective opportunity of personal hearing to the assessee and that it does not satisfy the test of fairness or the principles of fair play.

Orissa High Court

Commission Paid To Persons Who Are Not Beneficial To Business Of Assessee Is Taxable : Orissa High Court

Case Title: M/s. Oripol Industries Ltd., Balasore v. Joint Commissioner of Income Tax, Balasore and Ors.

Citation: 2022 LiveLaw (Ori) 69

The Orissa High Court has dismissed a challenge against an order of the Income Tax Appellate Tribunal, Cuttack (ITAT) which disallowed commission expenses as claimed by the appellant. It held that the appellant was not able to prove the expertise of persons to help him in business to whom the said commission was paid.

A Division Bench of Chief Justice Dr. S. Muralidhar and Justice Radha Krishna Pattanaik observed, "Nevertheless, claiming that each of the seven persons to whom commission was paid actually had the expertise to help the Appellant procuring the IOF from different sources appears to be stretching things a bit too far."

Telangana High Court

CIT(A) Is A Quasi Judicial Authority, Not Bound By Administrative Circulars Issued By CBDT: Telangana High Court

Case Title: APR Jewellers Private Limited Versus The Commissioner of Income Tax

The Telangana High Court held that the CIT (A) is a quasi judicial authority and is not bound by the administrative circulars issued by the Central Board of Direct Taxes (CBDT).

The division bench of Justice Ujjal Bhuyan and Justice Surepalli Nanda has remanded the matter back to the CIT (A) for a fresh decision on the prayer for stay of the petitioner in accordance with law after complying with the principles of natural justice.

Meghalaya High Court

​​Income Tax Act | No Order Can Be Passed U/S 148A(d) Without Taking Into Consideration Reply Filed By Assessee To Notice U/S 148A(b):Meghalaya HC

Case Title: Jasmine Bonny Agitok Sangma v. Union of India & Ors.

Citation: 2022 LiveLaw (Meg) 16

A Division Bench comprising of Chief Justice Sanjib Banerjee and Justice W. Diengdoh of Meghalaya High Courthas held that no order can be passed under Section 148A(d) of the Income Tax Act, 1961, without taking into consideration reply filed by an assessee to the initial notice issued under Section 148A(b).

ITAT

Additions Cannot Be Made To Assessee's Income On Basis Of Document Declared By The CESTAT As 'Dumb Document': Ahmedabad ITAT

Case Title: Rajesh Sajjanraj Bafna versus D.C.I.T.

The Ahmedabad Bench of ITAT has ruled that additions cannot be made to assessee's taxable income under the Income Tax Act, 1961 on the basis of documents that are declared as 'dumb documents' by the CESTAT in the service tax proceedings before it.

Assessing Officer Cannot Apply Wrong Method In Absence Of Audited Financials Of AE: Delhi ITAT

Case Title: M/s Olympus Medical Systems India Pvt. Ltd. Versus DCIT

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) consisting of Yogesh Kumar (Judicial Member) and Dr. B.R.R. Kumar (Accountant Member) has held that the AO cannot give benefit to the assessee for non-cooperation in providing audited financials of associated enterprises (AE).

Capital Gain Exemption Can't Be Denied To Wife For Mere Presence of Husband's Name In Purchase Document: ITAT

Case Title: Y. Manjula Reddy Vs. ITO

The Banglore Bench of the Income Tax Appellate Tribunal (ITAT) headed by N.V. Vasudevan (Vice-President) and B.R. Baskaran (Accountant Member) has ruled that the capital gain exemption cannot be denied to the wife for the mere presence of the husband's name in the purchase document.

Subscription Money Received In Advance By DTH Operators Is Taxable Only When Services Are Provided To The Subscribers: Chennai ITAT

Case Title: ACIT versus M/s Sun Direct TV Pvt Ltd

The Chennai Bench of ITAT has ruled that subscription money received in advance by the DTH operators is not taxable. The Bench, consisting of members V. Durga Rao (Judicial Member) and Manoj Kumar Aggarwal (Accountant Member), held that the subscription money received by DTH operators is taxable only when the said amount is accrued to them, i.e., when the services are rendered by the DTH operators to the subscribers.

Consideration Paid For Purchase Of Advertisement Space Does Not Amount To 'Royalty' Under Income TaxAct: ITAT Chennai

Case Title: M/s. ESPN Digital Media (India) Pvt Ltd versus DCIT

The Chennai Bench of ITAT has ruled that consideration paid for purchase of advertisement space does not amount to 'royalty' under the Income Tax Act, 1961.

The Bench, consisting of members Mahavir Singh (Vice President) and Dr. M. L. Meena (Accountant Member), held that the Finance Act, 2016 recognizes providing advertising space as a 'specified service', which is subject to Equalisation Levy. The ITAT added that the contention that sale of advertising space was 'royalty' under the Income Tax Act would be contrary to the legislative intent, objects and purpose of the provisions of Equalisation Levy, as well as result in absurdity and double taxation.

No Further Verification Required If Cash Deposit Is Up To Rs 2.5 Lakhs During The Demonetization: ITAT Delhi

Case Title: Aniket Agarwal versus Income Tax Officer

The Delhi Bench of ITAT, consisting of judicial member Chandra Mohan Garg, has held that no further verification is required in the case of an individual earning income from salary, who has deposited an amount of up to Rs 2,50,000 during the demonetization period.

Husband Entitled Capital Gain Exemption For Asset Bought In The Name Of The Wife: ITAT

Case Title: Kaushlendra Singh Versus ITO

The Jaipur Bench of the Income Tax Appellate Tribunal (ITAT) consisting of Dr. S. Seethalashmi (Judicial Member) and Rathod Kamlesh Jayantbhai (Accountant Member) held that the husband was entitled to a capital gain exemption for assets bought in the name of the wife.

Delay In Filing Appeal Based On COVID-19 Reasons: ITAT Imposes Penalty Of Rs.25,000

Case Title: M/s. Kal Airways Private Limited Versus DCIT

The Chennai Bench of the Income Tax Appellate Tribunal (ITAT) headed by Mahavir Singh (Vice President) and Manoj Kumar Aggarwal (Accountant Member) has imposed a penalty of Rs. 25,000 on the assessee for the delay of 1217 days in filing the appeal due to COVID-19.

Failure Of Assessee To Reply To Income Tax Notice Due To COVID: ITAT Directs Fresh Adjudication

Case Title: M/s. Madanthyar Primary Agricultural Credit Co-operative Society Versus DCIT

The Bangalore bench of the Income Tax Appellate Tribunal (ITAT) held that the assessee could not respond to the notices in view of the pandemic situation, which has to be accepted as a reasonable cause.

The two-member bench headed by N.V. Vasudevan (Vice President) and Chandra Poojari (Accountant Member) set aside the orders of the CIT (A) and remanded the issue to the CIT (A) for a decision afresh after affording the assessee an opportunity to be heard.

Income Tax Penalty Can't Be Imposed For Committing Unintentional Error In Form-16: ITAT

Case Title: Anmole Singh Ghuman Versus ITO

The Pune bench of the Income Tax Appellate Tribunal (ITAT) consisting of S.S. Viswanethra Ravi (Judicial Member) and Inturi Rama Rao (Accountant Member) has ruled that the income tax penalty cannot be imposed for committing an unintentional error on Form-16.

Loss Arising Out Of Sale Of Government Securities Is A Trading Loss: ITAT

Case Title: Asst. Commissioner of Income Tax Versus The Eluru Cooperative Urban Bank Limited

The Visakhapatnam Bench of the Income Tax Appellate Tribunal (ITAT) held that the loss arising out of the sale of government securities is a trading loss.

The two-member bench of Duvvuru Rl Reddy (Judicial Member) and S. Balakrishnan (Accountant Member) observed that the treatment of securities of the AFS (available for sale) categories has to be seen in contradiction and contrast with securities of the HTM (held to maturity) categories, which are purchased and held for the purpose of investment only.

Onus To Prove Identity, Creditworthiness And Genuineness Of Transaction Lies On Assessee: Pune ITAT

Case Title: VEL Software Limited Versus DCIT

The Pune Bench of the Income Tax Appellate Tribunal (ITAT), consisting of Partha Artha Sarathi Chaudhury (Judicial Member) and Inturi Rama Rao (Accountant Member), has ruled that the onus to prove identity, creditworthiness, and genuineness of a transaction lies with the assessee.

Assessee Entitled To Additional Depreciation On The Power Plant And Installed Windmill: Delhi ITAT

Case Title: Nalwa Steel And Power Ltd Versus DCIT

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) consisting of Yogesh Kumar U.S. (Judicial Member) and B.R.R. Kumar (Accountant Member) has ruled that assessees are entitled to additional depreciation on the power plant and the installed windmill.

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