Tax Weekly Round-Up: May 12 - May 18, 2025

SUPREME COURTSupreme Court Upholds Constitutional Validity Of S.5A, Kerala General Sales Tax Act and S.7A, Tamil Nadu General Sales Tax ActCase Title: C.T. KOCHOUSEPH VERSUS STATE OF KERALA AND ANOTHER ETC., CIVIL APPEAL NOS. 941 – 945 OF 2004 (and connected cases)Citation : 2025 LiveLaw (SC) 554The Supreme Court recently upheld the constitutional validity of Section 5A of the Kerala General Sales Tax Act, 1963 and Section 7A of the Tamil Nadu General Sales Tax Act, 1959. "The challenge to the constitutional validity must be rejected on the basis of the ratio elucidated by this Court in Kandaswami (supra), Hotel Balaji (supra) and Devi Dass (supra)...Hotel Balaji (supra) specifically upholds the constitutionality of the impugned provisions, disagreeing with the opinion/ratio expressed in Goodyear (supra)", said a bench of CJI Sanjiv Khanna and Justices Sanjay Kumar, R Mahadevan.HIGH COURTSCalcutta HCWhen Assessee-Company Can Prove Genuineness Of Transaction, Delhi HC's 'NR Portfolio' Judgment Not Applicable: Calcutta HCCase title: The Principal Commissioner Of Income Tax Central 1, Kolkata v. Wise Investment Private LimitedCase no.: ITAT/238/2024The Calcutta High Court has made it clear that the Delhi High Court decisions in NR Portfolio and Navodaya Castles will hold no value where an assessee-company establishes the identity of its shares subscribers, creditworthiness of the share subscribers and genuineness of the transactions. In CIT v. NR Portfolio Private Limited (2014) and in CITA v. Navodaya Castles Private Limited (2014), the Delhi High Court had held that mere production of incorporation details, PAN Nos. or the fact that third persons or company had filed income tax details in case of a private limited company may not be sufficient when surrounding and attending facts predicate a cover up. These facts indicate and reflect proper paperwork or documentation but genuineness, creditworthiness, identity are deeper and obtrusive.Excise Duty Under Sugar Cess Act Can Be Claimed As CENVAT Credit: Calcutta High CourtCase Title: Commissioner of CGST & Central Excise, Kolkata South, GST Bhawan v. M/s Diamond Beverages Pvt. Ltd.Case Number: CEXA/9/2020The Calcutta High Court stated that excise duty under sugar tax act can be claimed as CENVAT credit.The Bench consists of Chief Justice T.S. Sivagnanam and Justice Chaitali Chatterjee (Das) was addressing the issue of whether payment of duty under Sugar Cess Act, 1982 can be claimed as Cenvat Credit when the Cenvat Credit Rules does not provide payment of cess under the Sugar Cess Act, 1982 as not being eligible under Rule 3 of the said Rules.Delhi HCGST | Delhi HC Rebukes Trend Of Persons Who Wrongfully Avail ITC By Invoking Writ Jurisdiction; Imposes ₹1 Lakh CostCase title: M/S Mahesh Fabrinox Pvt. Ltd v. Union of IndiaCase no.: W.P.(C) 6006/2025The Delhi High Court has criticized the “pattern” of persons, who either availed fraudulent Input Tax Credit or enabled the availment of fraudulent ITC, invoking Court's writ jurisdiction to challenge orders imposing penalty under Section 74 of the Central Goods and Services Act 2017, on technical grounds. A division bench of Justices Prathiba M. Singh and Rajneesh Kumar Gupta further observed, “This Court also takes note, with some consternation, that such large scale fraudulent availment of ITC without actual passing of goods or services may, if left unchecked, can lead to severe damage to the GST framework itself, which is meant to encourage legally entitled persons and businesses to avail of ITC and other similar facilities such as drawbacks etc.”Rampant Misuse Of S.16 GST Act For Wrongful Availment Of ITC Will Create 'Enormous Dent' In GST Regime: Delhi High CourtCase title: Mukesh Kumar Garg v. UoICase no.: W.P.(C) 5737/2025The Delhi High Court has once again flagged concerns over rampant misuse of Section 16 of the Central Goods and Services Tax Act 2017 by traders, for wrongful availment of Input Tax Credit.A division bench of Justices Prathiba M. Singh and Rajneesh Kumar Gupta observed that while the provision is meant to enable ease of doing business, it has been coming across many cases where this facility under Section 16 of the CGST Act has been misused by various individuals, firms, entities and companies to avail of ITC even when the output tax is not deposited or when the entities or individuals who had to deposit the output tax are themselves found to be not existent.Gujarat HCWhether Compensation Cess Is Leviable On Goods Supplied To Merchant Exporter: Gujarat High Court Asks GST Council To DecideCase Title: M/s Sopariwala Export Pvt. Ltd. v. Joint Commissioner, CGST and Central Excise & Ors.Case Number: R/SPECIAL CIVIL APPLICATION NO. 6701 of 2023The Gujarat High Court has referred a matter to the GST Council to decide on whether the compensation cess is leviable on goods supplied to merchant exporter.The Division Bench of Justices Bhargav D. Karia and D.N. Ray observed that “…no notification is...

Tax Weekly Round-Up: May 12 - May 18, 2025

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