Tax Monthly Digest: October 2024

1. Kerala High Court Strikes Down Rule 96(10) of CGST Rules Retrospectively, Finds Them Ultra Vires To CGST Act The Kerala High Court struck down Rule 96(10) of the Central Goods and Service Tax Rules holding that it was ultra vires to the Section 16 of the Integrated Goods and Service Tax Act and was manifestly arbitrary. Justice P. Gopinath noted that Section 16 has not imposed any restriction in availing refund of taxes paid on input goods and input services or claiming refund of IGST after payment of IGST on the exports. The Court, therefore held that the restriction imposed under Rule 96(10) on claiming refund is ultravires to the Act. 2. Two Adjudication Orders Against One Show Cause Notice For The Same Period Is Not Permissible: Delhi High Court The Delhi High Court stated that two adjudication orders against one show cause notice for the same period is not permissible. The Division Bench of Justices Yashwant Varma and Ravinder Dudeja was dealing with a case where a show-cause notice had been issued to the assessee under Section 74 of the CGST Act, 2017. This notice was duly adjudicated by the department, resulting in an order. 3. Proceedings U/S 130 Of UPGST Act Not Applicable If Excess Stock Is Found At Time Of Survey: Allahabad High Court The Allahabad High Court has held that proceedings under Section 130 of the Uttar Pradesh Goods and Service Tax Act, 2017 cannot be initiated where stock is found excess at the time of survey. Section 130 of the UPGST Act provides for confiscation of goods and penalty in cases where supply, transport of goods has been made in contravention to the provisions of the Act with the intention to evade tax. It also includes penalty when an assesee does not account for the goods on which tax is to be paid. 4. Condonation Of Delay Application Should Focus On Sufficient Reason, Not Merits Of Claim U/S 119(2)(B) Of Income Tax Act: Kerala High Court The Kerala High Court stated that an application for condonation of delay should focus on whether there was sufficient reason to condone the delay under Section 119(2)(B) of the Income Tax Act, rather than on the merits of the assessee's claim. Section 119(2)(B) of the Income Tax Act, 1961 empowers CBDT to direct income tax authorities to allow any claim for exemption, deduction, refund and any other relief under the income tax act even after the expiry of the time limit to make such claim. 5. Outstanding Demand Under Maharashtra Settlement Can't Be Adjusted Against Refund Payable Under Maharashtra VAT Act: High Court The Bombay High Court held that authorities under MVAT Act while exercising powers under Maharashtra Settlement of Arrears of Taxes, Interest, Penalties or Late Fees Act, 2022, cannot invoke provisions of Section 50 of MVAT and that too in review proceedings under Settlement Act. The Division Bench of Justice M. S. Sonak and Justice Jitendra Jain observed that there is no provision under Settlement Act which provides for calculation of outstanding arrears of a particular year to be arrived at after adjustment of refund for another year more so in a case where there is no such adjustment of refund order on date of application or on date of settlement order u/s 13 of Settlement Act. 6. Temporary Suspension Of Business Activity On Account Of Ill Health Does Not Warrant Cancellation Of Taxpayer's GST Registration: Delhi HC Finding that proper officer passed the order cancelling taxpayer's GST registration with retrospective effect, the Delhi High Court clarified that such order does not indicate any reason for cancelling the GST registration much less from retrospective effect. The High Court found that the only allegation against the assessee was that it was non-existent, which was sufficiently addressed by the assessee in his reply by claiming that he had to go to Rajasthan due to ill health of his father. 7. Transfer Pricing | Entities Operating On Economic Upscale Can't Be Included As 'Comparables' Of Those Working On Cost-Plus Pricing: Delhi HC The Delhi High Court has reiterated that entities commanding high profit margins cannot be included as comparables of those working on cost-plus markup basis, to determine Arm's Length Price for international transactions. A Division bench of Justices Yashwant Varma and Ravinder Dudeja thus ordered the exclusion of TCS E-Serve International Ltd., TCS E-Serve and Infosys BPO Limited from the list of comparables of the Appellant- Cadence Designs. 8. Usage Of Chemicals As Raw Materials Doesn't Detract From Categorisation As Chemicals; Must Be Taxed At 8%: Andhra Pradesh High Court The Andhra Pradesh High Court stated that the use of chemicals as raw materials would not change their categorisation as chemicals. Therefore, they must be taxed at 8% only. The Division Bench of Justices R. Raghunandan Rao and Harinath N. was...

Tax Monthly Digest: October 2024

Pankaj Bajpai

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