Tax Weekly Round-Up: April 14 - April 20, 2025
Kapil Dhyani
21 April 2025 7:05 PM IST
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...
SUPREME COURT
Case Title: NEHA ENTERPRISES VERSUS COMMISSIONER, COMMERCIAL TAX, LUCKNOW, UTTAR PRADESH
Case no.: CIVIL APPEAL NO. 6553 OF 2016
Emphasizing 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.
Case Title: The Correspondence RBANMS Educational Institution VERSUS B. Gunashekar & Another
Case no.: CIVIL APPEAL NO. 5200 OF 2025
In 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).
Case Title: STATE OF RAJASTHAN & ORS. versus COMBINED TRADERS
Case no.: CIVIL APPEAL NO. 1208 OF 2025
The 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.
Case : Principal Commissioner of Income Tax-1 Chandigarh vs V-Con Integrated Solutions Pvt Ltd
Case no.: SPECIAL LEAVE PETITION (CIVIL) Diary No. 13205/2025
The 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.
HIGH COURTS
Allahabad HC
Case Title: M/S Solvi Enterprises v. Additional Commissioner Grade 2 And Another
Case no.: WRIT TAX No. - 1287 of 2024
The Allahabad High Court has held that if the seller is a registered dealer at the time of transaction, no adverse inference can be drawn against the purchasing dealer based on the subsequent cancellation of seller's registration.
Justice Piyush Agrawal held “Once the seller was registered at the time of the transaction in question, no adverse inference can be drawn against the petitioner. Further, the record shows that the registration of the selling dealer was cancelled retrospectively i.e. w.e.f. 29.01.2020 and not from its inception which goes to show that the transaction between petitioner and seller was registered and having valid registration in his favour.”
Case Title: Amit Kumar Sethia (Deceased) v. State of U.P. and another
Case no.: WRIT TAX No. - 917 of 2025
The Allahabad High Court has held that Section 93 of the Goods and Services Tax Act, 2017 does not empower the authorities to make determination of tax against a dead person and recover the same his legal representatives.
The bench of Chief Justice Arun Bhansali and Justice Kshitij Shailendra held, “A perusal of the above provision would reveal that the same only deals with the liability to pay tax, interest or penalty in a case where the business is continued after the death, by the legal representative or where the business is discontinued, however, the provision does not deal with the fact as to whether the determination at all can take place against a deceased person and the said provision cannot and does not authorise the determination to be made against a dead person and recovery thereof from the legal representative.”
Case Title: Merino Industries Ltd. v. State of Uttar Pradesh and another
Case no.: WRIT TAX No. - 1406 of 2025
The Allahabad High Court has imposed a cost of Rs. 20,000 on Joint Commissioner SGST, Corporate Circle-1, Ghaziabad who had issued a show cause notice without specifying the date and time for personal hearing and had passed an order under Section 74 of the Goods and Services Tax Act, 2017 creating a demand of more than Rs. 5 crore ignoring the specific request for personal hearing made by the assesee.
The bench of Chief Justice Arun Bhansali and Justice Kshitij Shailendra held, “Innumerable cases have come before this Court where show cause notices have been issued and ex-parte assessments made after the cancellation of the GST registration of the firm, based on uploading of notices on the portal, without ensuring personal service of the notices.”
Chhattisgarh HC
Case Title: Chhattisgarh State Power Transmission Company Limited v. DCIT Circle-1(1), Raipur, C.G.
Case Number: TAXC No. 91 of 2024
In a recent ruling, the Chhattisgarh High Court held that penalty under Section 271(1)(c) of Income Tax Act not applicable if assessee voluntary discloses bona fide mistake. Section 271(1)(c) of the Income Tax Act, 1961 deals with penalties for concealment of income or furnishing inaccurate particulars of income.
The Division Bench of Justices Sanjay K. Agrawal and Deepak Kumar Tiwari noted that “it is a case where the assessee came up fairly before the Assessing Officer correcting the error crept in while submitting the return and revised return that too before initiation of the scrutiny assessment proceedings. Even it is not the case of the Revenue that the assessee has concealed the income.”
Jammu & Kashmir & Ladakh HC
The Jammu and Kashmir High Court held that the contractors were liable to pay GST at a rate prevalent on the last day for the submission of the tenders and not when the work was allocated as the same was clear from the Special Condition No.49 existing in the contract agreement.
A bench of Justices Sanjeev Kumar, Justice Puneet Gupta observed that the review petitioner being a contracting party was bound by the terms of the contract which provides that tax rates as prevailing on the last due date for receipt of tenders will be applicable and in the absence of any challenge to above provision at any point of time the arguments presented were unsustainable.
Jharkhand HC
Case Title: M/s. Bokna Raiyat Rojgar Committee vs The Union of India
Case no.: W.P.(T) No. 6208 of 2024
The Jharkhand High Court has held that an appeal filed beyond the statutory period of limitation, as prescribed under Section 107 of the Central Goods and Services Tax Act, 2017, is not maintainable and the delay cannot be condoned beyond the limits expressly stated in the statute.
The Division Bench comprising Chief Justice M. S. Ramachandra Rao and Justice Deepak Roshan held, “Even otherwise, since specific period has been enshrined in the statute itself, the same cannot be condoned. Thus, we are having no hesitation in holding that the petitioner Firm is not entitled for any relief on the ground of being lethargic in approach, inasmuch as, on the one hand, the petitioner did not file its return for a continuous period of six months and on the other hand, petitioner-Firm filed appeal before the appellate authority after a delay of almost 17 months which is admittedly beyond the period of three months for filing appeal as prescribed under Section 107 (1) of the CGST Act, 2017.”
Case Title: M/s. BLA Infrastructure Private Limited Versus State of Jharkhand
Case no.: W.P.(T) No. 6527 of 2024
The Jharkhand High Court has held in a recent judgement that rejecting a refund claim for a statutory pre-deposit which has been made under Section 107(6)(b) of the GST Act, on the ground that the claim was filed after the 2-year limitation under Section 54(1), is legally unsustainable.
The Division Bench comprising Chief Justice M.S. Ramachandra Rao and Justice Deepak Roshan stated, “There is no dispute to the effect that once refund is by way of statutory exercise, the same cannot be retained neither by the State, nor by the Centre, that too by taking aid of a provision which on the face of it is directory, inasmuch as, the language couched in Section 54 is 'may make an application before the expiry of 2 years from the relevant date.'”
Kerala HC
Case : St. Antony Trading and Transport Pvt Ltd vs Joint Commissioner (Appeals)
Case no.: WP(C) NO. 14743 OF 2025
The Kerala High Court has held that an appellate authority under the Central Goods and Services Tax Act (CGST Act 2017) must consider the merits of an appeal even if there is no appearance on behalf of the appellant. The Court stated that the order must be passed on merits and that the dismissal cannot be merely for default.
Justice Bechu Kurian Thomas was considering a writ petition filed by an assessee challenging an order passed by the Joint Commissioner (Appeals) dismissing an appeal without any determination solely on the ground of non-appearance despite three adjournments.
Case Title: Anvar Ali Poolakkodan v. The Income Tax Officer
Case Number: I.T.A.NO.32 OF 2023
In a recent judgment, the Kerala High Court stated that the amounts received by an assessee as compensation or enhanced compensation for compulsory acquisition of his landed property would be treated as income under the head of 'Capital Gains' for the purposes of the I.T. Act.
The Division Bench of Justices A.K. Jayasankaran Nambiar and Easwaran S. stated that “Interest amounts received by an assessee in respect of delayed payment of compensation under the LAA will be treated as accruals to the principal compensation amount and be classified as “Capital Gains' for the purposes of the I.T. Act. Consequently, the interest amounts will also get the benefit of Section 10 (37) of the I.T. Act if the land compulsorily acquired is agricultural land. Further, since the interest amounts so received are not in the nature of interest as defined under Section 2 (28A), the provisions of Section 56 of the I.T. Act will not be attracted in such cases.”
Case Title: The Gateway Hotels v. Kochi Municipal Corporation
Case Number: WP(C) NO. 16984 OF 2020
The Kerala High Court stated that building owners liable to pay revised property tax for past three years, after adjusting previously paid amounts.
The Bench of Justice Bechu Kurian Thomas was addressing the issue of whether, despite the creation of charge on the property enabling the Municipality to recover the arrears of tax as arrears of public revenue, the limitation period would stand extended beyond three years.
Patna HC
Case Title: M/s JMD Alloys Ltd. v. Union of India & Ors.
Case no.: Civil Writ Jurisdiction Case No.15940 of 2023
The Patna High Court, while upholding the recovery of ₹8,62,566 as ineligible CENVAT credit, held that transitional credit under the GST regime cannot be availed for capital goods received after 1st July 2017.
The Division Bench of the High Court comprising Justices Rajeev Ranjan Prasad and Ramesh Chand Malviya held, “The distinction in the matter of giving benefit of CENVAT credit on capital goods during the transitional period may be found in Section 140 of the CGST Act. While this provision enables an assessee to carry forward and take credit of unutilized CENVAT credit paid on inputs as well as on capital goods, in the manner as may be prescribed and subject to the conditions contained in the provisions, sub-section (5) of Section 140 makes a distinction between the capital goods and inputs. This provides that a registered person would be entitled to take credit of eligible duties and taxes in respect of inputs or input services received on or after the appointed date but the duty on tax in respect of which has been paid by the supplier under the existing law…”
TRIBUNALS
Customs Officer Is A Stranger To Contract Of Sale, Cannot Re-Determine FOB Value: CESTAT
Case Title: M/s Kritika Enterprises Versus Commissioner of Customs (Appeals)
Case Number: Customs Appeal No. 51722 OF 2022
The New Delhi Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has stated that no stranger to the contract of sale, including the Customs officer, has any right to re-determine the FOB or transactional value of goods.
The Free on Board or (FOB )is one of the INCOTERMS – which are the terms used in international commerce. The INCOTERMS make the costs, risks and liabilities of the buyer and seller explicit. If the goods are exported on FOB basis, the seller is responsible until the goods are put on Board the vessel or aircraft. All costs and risks up to loading the goods on to the ship or aircraft are on the seller‟s account. The seller is free once the goods are put on board. The costs and risks associated with transportation to the destination, etc., are all on account of the buyer.
Case Title: Principal Commissioner of CGST & Central Excise- Delhi-IV
Case Number: SERVICE TAX APPEAL NO. 51901 OF 2019
The New Delhi Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has stated that no service tax on buying or selling of space in print media and receiving incentives on meeting targets.
The Bench of Binu Tamta (Judicial Member) and P.V. Subba Rao (Technical Member) has observed that the assessee cannot have an obligation to the media houses. All that is paid by the media houses is, if the assessee achieves particular target while carrying out its business for its clients, the media house gives some incentives.
Case Title: M/s Sony India Pvt. Ltd. v. Commissioner of Customs Appeal
Case Number: CUSTOMS APPEAL NO. 51699 OF 2018
The New Delhi Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has stated that 'digital still image video cameras' imported by assessee is entitled to basic customs duty exemption.
The Bench of Justice Dilip Gupta (Judicial Member) and P.V. Subba Rao (Technical Member) observed that what was to be examined was whether the demand confirmed for the normal period of limitation contemplated under section 28(1) of the Customs Act for the reason that 'digital still image video cameras' imported by the assessee would not be entitled to basic customs duty exemption under the notification dated 01.03.2005, as amended by the notification dated 17.03.2012 was justified or not.