Tax Monthly Digest: February 2025

SUPREME COURTIncome Tax Act | Offence Committed Before Show-Cause Notice Compoundable As Covered By 'First Offence' In Compounding Guidelines: Supreme CourtCase title: VINUBHAI MOHANLAL DOBARIA Vs CHIEF COMMISSIONER OF INCOME TAXCase no.: SPECIAL LEAVE PETITION (C) NO. 20519 OF 2024The Supreme Court on January 7 set aside the Gujarat High Court's judgment dated March 21, 2017, through which the rejection to the compounding application of the Appellant for the assessment year 2013-2014, for having filed the belated income tax return, was upheld on the ground that only for the "first offence" compounding of offence is possible. Since the Appellant had filed delayed income tax for 2011-2012 and his compounding application was accepted, it now cannot be accepted. However, the Supreme Court observed that the "first offence" is the offence committed prior to the show cause notice, which was the case here for both years.'Every Statute Prima Facie Prospective Unless Stated Otherwise' : Supreme Court Says 2002 Amendment To CST Act Won't Affect Accrued RightsCase Name: THE STATE OF MAHARASHTRA & ORS. V. PRISM CEMENT LIMITED & ANR.Case no.: CIVIL APPEAL NO.13928 OF 2015The Supreme Court yesterday (on February 12) held that though after the amendment of Section 8(5) of the Central Sales Tax Act, the State Government's right to grant exemption from tax has ceased to exist, the amendment is prospective. Thus, it would not apply to the cases where an absolute exemption has already been granted. The amended Act nowhere stipulates that rights previously accrued stand nullified or all previous exemptions stand cancelled or revoked., the Bench of Justices P.S. Narasimha and Pankaj Mithal said.Income Tax Act | No Penalty Under S.271AAA If Undisclosed Income Is Admitted, Explained & Tax Paid Even With Delay : Supreme CourtCase Name: K KRISHNAMURTHY VERSUS THE DEPUTY COMMISSIONER OF INCOME TAX.Case no.: CIVIL APPEAL NO. 2411 OF 2025The Supreme Court, while determining a tax matter, observed that the undisclosed income, under Section 271AAA(1) of the Income Tax Act, surrendered by the assessee during the search, is not sufficient to levy the penalty.Charitable Trust's Registration For Income Tax Exemption To Be Decided Based On Proposed Activities & Not Actual Activities : Supreme CourtCase Title: COMMISSIONER OF INCOME TAX EXEMPTIONS VERSUS M/S INTERNATIONAL HEALTH CARE EDUCATION AND RESEARCH INSTITUTECase no.: SPECIAL LEAVE PETITION (CIVIL) Diary No. 19528/2018The Supreme Court reiterated that when a charitable trust registers under Section 12-AA of the Income Tax Act (“Act”) for income tax exemptions (under Sections 10 and 11), the tax authorities should check if the charity's proposed activities match its charitable goals, as stated in the Ananda Social case.The Court, however, clarified that mere registration under Section 12-AA would not entitle a charitable trust to claim exemption under Sections 10 and 11 respectively of the Act, 1961, and the authorities can decline the grant of exemption if the materials produced by the trust does not seem convincing for grant of exemption.Benefit Of Input Tax Credit Can't Be Reduced Without Statutory Sanction : Supreme CourtCase Title – State of Punjab & Ors. v. Trishala Alloys Pvt. Ltd.Case no. – Civil Appeal No. 2212 of 2024The Supreme Court recently held that Rule 21(8) of the Punjab Value Added Tax Rules, 2005, which was notified on January 25, 2014, could not be applied to transactions before April 1, 2014, as the enabling amendment to Section 13 of the parent statute, the Punjab Value Added Tax Act, 2005, was effective from that date.This means businesses that bought goods at a higher tax rate before this date are not subject to the limitation imposed by Rule 21(8) when claiming ITC, even if the tax rate was later lowered.GST Act | Can Time Limit To Adjudicate Show Cause Notice Be Extended By Notification Under S.168A? Supreme Court To ConsiderCase Name: M/S HCC-SEW-MEIL-AAG JV v. ASSISTANT COMMISSIONER OF STATE TAX & ORS. Case no.: Petition for Special Leave to Appeal (C) No.4240/2025The Supreme Court is to decide whether the time limit for adjudicating show cause notice and passing an order can be extended by the issuance of notifications under Section 168-A of the GST Act. This provision empowers the Government to issue notification for extending the time limit prescribed under the Act which cannot be complied with due to force majeure. “The issue that falls for the consideration of this Court is whether the time limit for adjudication of show cause notice and passing order under Section 73 of the GST Act and SGST Act (Telangana GST Act) for financial year 2019-2020 could have been extended by issuing the Notifications in question under Section 168-A of the GST Act.,” remarked the Bench of Justices J.B. Pardiwala and R. Mahadevan.BNSS/CrPC Provisions On Rights Of Arrested Persons Applicable To GST & Customs Acts : Supreme CourtCase Title: Radhika Agarwal v. Union of India and...

Tax Monthly Digest: February 2025

Kapil Dhyani