Supreme Court Quarterly Digest 2026 - Tax Law

Tax Law - Supreme Court Quarterly Digest Jan - Mar, 2026Central Excise Act, 1944 – Section 11A(1) Proviso – Extended Period of Limitation – Suppression of Facts – Revenue Neutrality – The Revenue invoked the extended period of five years alleging suppression of actual use of Naphtha - held that "suppression" requires a deliberate act to escape payment of duty - Where the assessee is a Public Sector Undertaking receiving subsidies from the Central Government, any excise duty paid would be reimbursed as a subsidy, making the entire exercise "revenue neutral" - In cases of revenue neutrality where no benefit is derived by the assessee from evading duty, the extended period of limitation cannot be invoked. [Relied on Steel Authority of India v. Collector of Central Excise (1996) 5 SCC 484; State of Haryana v. Dalmia Dadri Cement Limited 1987 Supp SCC 679; Pushpam Pharmaceuticals Company v. Collector of Central Excise (1995) Supp 3 SCC 462; Nirlon Limited v. Chief Commissioner of Excise (2015) 14 SCC 798; Paras 38-45, 52-54, 56-58] Rashtriya Chemicals and Fertilizers Ltd. v. Commissioner of Central Excise and Service Tax, 2026 LiveLaw (SC) 295 : 2026 INSC 285Central Excise Act, 1944 – Section 5A – Exemption Notifications (No. 75/84-CE and No. 4/97-CE) – Naphtha used in the manufacture of Fertilizer – Interpretation of "Intended Use" – The Supreme Court held that when an exemption notification is conditioned on the "intended use" of a product, the benefit is attracted if the goods are used for the purpose and with the intention of manufacturing the specified product (fertilizer/ammonia) – Noted that the mere fact that a fraction of the procured Naphtha was used for generating electricity (steam), a portion of which was used in a chemical plant or supplied to the electricity board, does not disentitle the assessee from the exemption - Once eligibility for exemption is established, the notification must be construed liberally. Rashtriya Chemicals and Fertilizers Ltd. v. Commissioner of Central Excise and Service Tax, 2026 LiveLaw (SC) 295 : 2026 INSC 285Income Tax Act, 1961 – Double Taxation Avoidance Agreement (DTAA) – India-Mauritius Treaty – Tax Residency Certificate (TRC) – Held that the limited evidentiary role of a TRC in proceedings under Section 245R(2) - While a TRC establishes residency, it does not prevent the Revenue from examining whether an entity is a mere "conduit" or a "see-through entity" used as a device for tax avoidance – Held that the applications were rightly rejected by the AAR as being hit by the threshold jurisdictional bar under proviso (iii) to Section 245R(2) – Supreme Court concluded that capital gains arising from transfers effected after the cut-off date of 01.04.2017 are taxable in India under the Income Tax Act read with the DTAA – Appeals allowed. [Relied on Vodafone International Holdings BV v. Union of India (2012) 6 SCC 613; Balvir Singh v. State of Uttarakhand (2023) SC 5551; Union of India v. Azadi Bachao Andolan (2004) 10 SCC 1; LIC v. Escorts Ltd. (1986) 1 SCC 264; McDowell & Company Ltd v. Commercial Tax Officer (1985) 3 SCC 230; Paras 12-25; 40-50] Authority For Advance Rulings v. Tiger Global International II Holdings, 2026 LiveLaw (SC) 50 : 2026 INSC 60Income Tax Act, 1961 – Section 245R(2) Proviso (iii) – Advance Rulings – Chapter X-A (GAAR) – General Anti-Avoidance Rules - Rejection of application on the ground of being prima facie designed for the avoidance of tax – held that the use of the term "prima facie" in Section 245R(2) implies that the Authority for Advance Rulings (AAR) needs only an initial examination of documents to be satisfied that a transaction is for tax avoidance - The level of satisfaction for a prima facie conclusion is much lower than what is required for final proof – Held that that where evidence prima facie establishes that transactions do not qualify as lawful and are impermissible tax-avoidance arrangements, Chapter X-A becomes applicable. Authority For Advance Rulings v. Tiger Global International II Holdings, 2026 LiveLaw (SC) 50 : 2026 INSC 60Income Tax Act, 1961 – Section 260A – Jurisdiction of High Court – Substantial Question of Law – Whether the High Court can decide an issue (taxability under Section 28) not specifically framed as a substantial question of law – Held: Issues incidental or collateral to the main formulated question, on which parties have been heard and which go to the root of the matter, can be considered by the High Court - The absence of a formal formulation does not vitiate the judgment if no prejudice is caused and parties had the opportunity to address the dispute – Appeal dismissed. [Para 9] Jindal Equipment Leasing Consultancy Services Ltd. v. Commissioner of Income Tax Delhi – II, 2026 LiveLaw (SC) 37 : 2026 INSC 46Income Tax Act, 1961 – Section 28 and Section 47(vii) – Amalgamation – Substitution of Shares held as Stock-in-Trade – Whether the receipt of shares of an amalgamated company in lieu of shares of...

Supreme Court Quarterly Digest 2026 - Tax Law

LIVELAW NEWS NETWORK

This is a premium content
Available exclusively to
Our subscribers

INR 1099+GST

Tags

Supreme Court Quarterly Digest 2026 - Tax Law

LIVELAW NEWS NETWORK

This is a premium content Available exclusively to Our subscribers

INR 1099+GST

Tags

This is a premium content
Available exclusively to
Our subscribers