Tax Monthly Digest: June 2025

HIGH COURTSAllahabad HCAllahabad High Court Rejects Patanjali's Plea Against ₹273.5 Crore GST PenaltyCase Title: M/s Patanjali Ayurved limited v. Union of India and OthersCase no.: WRIT-TAX NO. 1603 OF 2024The Allahabad High Court has directed continuation of proceedings under Section 122 of the Central Goods and Services Tax Act, 2017 against M/s Patanjali Ayurved limited's 3 plants even though proceedings under Section 74 of the Act have been dropped against them.The bench of Justice Shekhar B. Saraf and Justice Vipin Chandra Dixit held, “Under the present GST regime, persons who are not liable to pay tax under Sections 73/74 of the CGST Act may very well be liable for penalties as described in the twenty-one sub-sections of Section 122(1) and under sub-sections 122(2) and 122(3).”Bombay HCAmount Of Subsidy Received By Assessee From RBI Cannot Be Treated As 'Interest' Chargeable U/S 4 Of Income Tax Act: Bombay High CourtCase Title: Bank of India v. Deputy Commissioner of Income Tax, Special Range-15, MumbaiCase Number: INCOME TAX APPEAL NO.425 OF 2003The Bombay High Court held that the amount of subsidy received by the Assessee from RBI cannot be treated as 'interest' chargeable under Section 4 of Income Tax Act.The Division Bench of Chief Justice Alok Aradhe and Justice Sandeep V. Marne stated that “the amount of subsidy received by the Assessee is not relatable in loan or advance given by the assessee to the RBI and therefore, the amount of subsidy can neither be treated as commitment charges nor discount on promissory notes on bill of exchange drawn or made in India.”Cash Credit Account Cannot Be Treated As Property Of Account Holder Which Can Be Considered U/S 83 Of GST Act: Bombay High CourtCase Title: Skytech Rolling Mill Pvt. Ltd. v. Joint Commissioner of State Tax Nodal 1 Raigad DivisionCase Number: WRIT PETITION NO.1928 OF 2025The Bombay High Court stated that cash credit account cannot be treated as property of account holder which can be consider under Section 83 of GST Act.The Division Bench of Justices M.S. Sonak and Jitendra Jain observed that the phrase 'including bank account' following the phrase, “any property” would mean a non-cash-credit bank account. Therefore, a “cash credit account” would not be governed by Section 83 of the MGST Act.Treaty Provisions Don't Override Customs Law: Bombay High Court Upholds SCN Issued For Alleged Misuse Of Import ExemptionsCase Title: Purple Products Private Limited v. Union of IndiaCase Number: WRIT PETITION NO. 2831 OF 2018The Bombay High Court stated that treaty provisions don't override customs law and upheld the show cause notices issued for alleged misuse of import exemptions.The Bench consists of Justices M.S. Sonak and Jitendra Jain observed that based on a treaty provision that is not transformed or incorporated into the national law or statute, the provisions of the existing Customs Act cannot be undermined, or the powers and jurisdiction of the customs authorities questioned.Does Payment For Transponder Services Constitute 'Royalty' U/S 9(1)(vi) Of Income Tax Act? Bombay High Court Asks CIT To DecideCase Title: Viacom 18 Media Pvt. Ltd. v. Deputy Commissioner of Income TaxCase Number: INCOME TAX APPEAL NO.1378 OF 2018The Bombay High Court has asked the Commissioner of Income Tax to decide whether payment for transponder services constitutes 'royalty' under Section 9(1)(Vi) of Income Tax Act.The Division Bench of Justices M.S. Sonak and Jitendra Jain observed that “the authorities have held the payment to constitute 'royalty' under the domestic law as well as under the Treaty, but by holding the said payment is towards 'royalty' under the Treaty, the revenue has relied upon the definition of 'process' under the domestic law. Therefore, to say that the revenue has only held against the Assessee on the ground of domestic law and not the Treaty is not correct.”[Income Tax] Breach Of Article 265 Cannot Be Alleged Based On Inconclusive Opinion By Assessing Officer: Bombay High CourtCase Title: Fcbulka Advertising Pvt Ltd. v. Assistant Commissioner of Income Tax Circle 16(1)Case Number: WRIT PETITION NO.3442 OF 2022The Bombay High Court stated that a breach of Article 265 of the constitution cannot be alleged or sustained based upon a tentative or inconclusive opinion formed by assessing officer.The Division Bench consists of Justices M.S. Sonak and Jitendra Jain stated that “If the communication dated 29 November 2018 is an order, it being like a preliminary, prima facie, or interlocutory order and not a final order, the Petitioner cannot base their claim on this communication to allege breach of Article 265 of the Constitution. The communication dated 29 November 2018 is based on preliminary verification and is subject to processing, and therefore, it is in the nature of a preliminary/prima facie/interlocutory order.”AO Cannot Alter Net Profit In Profit & Loss Account Except Under Explanation To S.115J Of Income Tax Act: Bombay High CourtCase...

Tax Monthly Digest: June 2025

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