Tax Monthly Digest: April 2025

SUPREME COURTDealers Cannot Claim Input Tax Credit For Purchases Linked To Exempt Sales Under UPVAT Act : Supreme CourtCase Title: NEHA ENTERPRISES VERSUS COMMISSIONER, COMMERCIAL TAX, LUCKNOW, UTTAR PRADESHCase no.: CIVIL APPEAL NO. 6553 OF 2016Emphasizing that tax statutes must be strictly construed with statutory language taking precedence over policy intent, the Supreme Court, in a case concerning the Uttar Pradesh Value Added Tax Act, 2008 (“VAT Act”), held that a dealer is not entitled to claim Input Tax Credit (“ITC”) on the purchase of goods where the subsequent sale of those goods is exempt from tax. “Section 13(7) outlines the circumstances under which such a benefit cannot be allowed. Section 13(7) also sets out that no facility for input tax credit shall be allowed to a dealer with respect to the purchase of any goods where the sale of such goods by the dealer is exempt from tax under Section 7(c) of the Act.”, the Court observed.Courts & SROs Must Report To Income Tax Authorities If Suits/Deeds Mention Cash Transactions Above ₹2 Lakh: Supreme CourtCase Title: The Correspondence RBANMS Educational Institution VERSUS B. Gunashekar & AnotherCase no.: CIVIL APPEAL NO. 5200 OF 2025In a significant ruling aimed at combating black money and tax evasion, the Supreme Court today (April 16) directed courts and registration authorities to report cash transactions exceeding ₹2 lakhs to the Income Tax Department. The Court ruled that whenever any suit is filed claiming that a consideration of Rs. 2 Lacs or above is paid towards a transaction, then it becomes obligatory upon the Court to intimate the jurisdictional Income Tax Department for verification whether there's a violation of Section 269ST of the Income Tax Act, 1961 (IT Act).State Rules Can't Be Inconsistent With Central Rules Under CST Act : Supreme Court Rejects Rajasthan's AppealCase Title: STATE OF RAJASTHAN & ORS. versus COMBINED TRADERSCase no.: CIVIL APPEAL NO. 1208 OF 2025The Supreme Court upheld the Rajasthan High Court's decision striking down Rule 17(20) of the Central Sales Tax (Rajasthan) Rules, 1957 (Rajasthan CST Rules) as ultra vires the Central Sales Tax Act, 1956, noting that the State Government cannot exceed its delegated powers by authorizing cancellation of Form C, which the Central Rules do not permit. The bench comprising Justices Abhay S Oka and Ujjal Bhuyan dismissed the State of Rajasthan's appeal, which challenged the High Court's decision of declaring Rule 17(2) as ultra vires due to inconsistency between the Central and State Laws. The reason being that the Rajasthan CST Rules allowed the cancellation of Form C if obtained fraudulently, however, the Central Rules (Registration and Turnover Rules, 1957) prescribe Form C but do not provide for its cancellation.Income Tax Commissioners Must Not Routinely Remand Matters Just Because Assessing Officer Could Not Find Additions: Supreme CourtCase : Principal Commissioner of Income Tax-1 Chandigarh vs V-Con Integrated Solutions Pvt LtdCase no.: SPECIAL LEAVE PETITION (CIVIL) Diary No. 13205/2025The Supreme Court recently advised that the Commissioners of Income Tax should not randomly remand matters in exercise of their revisional powers under Section 263 of the Income Tax Act, 1961, merely by saying that the Assessing Officer was required to do more inquiries. The Court said that to remand matters on the ground of inadequate inquiry by the AO, the Commissioner must record “abject failure and lapse on the part of the Assessing Officer to establish both the error and prejudice caused to revenue” is necessary.Central Excise Tariff Act | Test Reports Justifying Reclassification Must Be Disclosed to Manufacturer : Supreme CourtCase Title: M/S OSWAL PETROCHEMICALS LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, MUMBAI – IICase no.: CIVIL APPEAL NOS. 129-130 OF 2011The Supreme Court ruled that when a test report forms the basis for reclassification of the petrochemical products, necessitating a higher duty, than the copy of such test reports ought to be furnished to the manufacturer-taxpayer. The bench of Justices Abhay S. Oka and Ujjal Bhuyan set aside the ₹2.15 crore central excise duty demand against M/s Oswal Petrochemicals Ltd., holding that the revenue authorities had violated principles of natural justice by failing to share key evidence—such as the test report used to justify the reclassification of the petrochemicals, which led to the higher duty.HIGH COURTSAllahabad HCNOIDA Authorities Deposited Party's Tax Under Wrong Head: Allahabad HC Directs Compensation To Assessee For Penalty Imposed U/S 73 Of GST ActCase Title: Surender Gupta vs. Appellate Authority State Gst / Additional Commissioner Grade-Ii And 2 OthersCase no.: WRIT TAX No. - 1892 of 2024Recently, the Allahabad High Court has directed the New Okhla Industrial Development Authority (NOIDA) to compensate the assesee Rs. Rs.19,22,778/- which was imposed on the assesee as tax and penalty in proceedings under Section 73...

Tax Monthly Digest: April 2025

Kapil Dhyani

Tags