Tax Weekly Round-Up: February 23 - March 02, 2025
Kapil Dhyani
3 March 2025 11:07 AM IST
SUPREME COURTGST 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...
SUPREME COURT
Case 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.4240/2025
The 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 Court
Case Title: Radhika Agarwal v. Union of India and Ors.
Case no.: W.P.(Crl.) No. 336/2018 (and connected matters)
The Supreme Court on Thursday(February 27) delivered a significant ruling on the powers of arrest under the Goods and Services Tax Act and the Customs Act.
The Court held that the provisions of the Code of Criminal Procedure (now Bharatiya Nagarik Suraksha Sanhita) on the rights of accused persons are equally applicable to the arrests made both under the Customs Act and the GST Act.
Case Title: Radhika Agarwal v. Union of India and Ors.
Case no.: W.P.(Crl.) No. 336/2018 (and connected matters)
The Supreme Court on Thursday (February 27) observed that there was some merit in the allegation that tax officials coerce assesses to pay the Goods and Services Tax with the threat of arrest. This observation was made by the Court on the basis of data.
The Court said that if any person is feeling coerced to pay GST, they can approach the writ court for refund of the tax paid by them under coercion. The Court also said that the officers who indulge in such coercion must be dealt with departmentally.
Case Title: Radhika Agarwal v. Union of India and Ors.
Case no.: W.P.(Crl.) No. 336/2018 (and connected matters)
The Supreme Court has overruled its previous decisions which held that anticipatory bail applications were not maintainable with respect to offences under the Goods and Services Tax Act.
A three-judge bench comprising Chief Justice of India Sanjiv Khanna, Justice MM Sundresh and Justice Bela Trivedi overruled the two-judge bench judgments in State of Gujarat v. Choodamani Parmeshwaran Iyer and Another and Bharat Bhushan v. Director General of GST Intelligence, Nagpur Zonal Unit Through Its Investigating officer which held that a person summoned under the GST Act cannot file anticipatory bail application and that the only remedy was to file a writ petition under Article 226 of the Constitution.
Case Title: Radhika Agarwal v. Union of India and Ors.
Case no.: W.P.(Crl.) No. 336/2018 (and connected matters)
An arrest under the Goods and Services Act cannot be carried out merely on the basis of suspicion, the Supreme Court stated. Such an arrest cannot be carried out merely to investigate if a cognizable and non-bailable offence has been committed.
The Court held that the arrest must proceed on the belief supported by reasons relying on material that the conditions specified in sub-section (5) of Section 132 are satisfied. This means that there has to be a satisfaction that a cognizable and non-bailable offence has been committed.
Case Title: Radhika Agarwal v. Union of India and Ors.
Case no.: W.P.(Crl.) No. 336/2018 (and connected matters)
Dealing with a challenge to penal provisions of the Customs Act, the Supreme Court today observed that 'customs officers' are not 'police officers' and that they must satisfy a higher threshold of "reasons to believe" before arresting an accused.
A bench of CJI Sanjiv Khanna and Justices MM Sundresh, Bela M Trivedi made the observation while delivering verdict in a batch of 279 petitions challenging the penal provisions in the Customs Act, CGST/SGST Act, etc. as non-compatible with the CrPC and the Constitution.
Supreme Court Upholds Constitutionality Of GST Act Provisions On Arrest & Summons
Case Title: Radhika Agarwal v. Union of India and Ors.
Case no.: W.P.(Crl.) No. 336/2018 (and connected matters)
The Supreme Court has upheld the Constitutional validity of Sections 69 and 70 of the Goods and Services Tax Act, which provide for the power to arrest and the power to summon. The Constitutionality of these provisions were challenged on the ground that the Parliament lacked the legislative competence to enact them.
The petitioners argued that Article 246-A of the Constitution, while conferring legislative powers on Parliament and State Legislatures to levy and collect GST, does not explicitly authorize the violations thereof to be made criminal offences. Referring to Entry 93 of List I to the Seventh Schedule, it was submitted that the Parliament can enact criminal provisions only for the matters in List I. It was further argued that the power to summon, arrest and prosecute are not ancillary and incidental to the power of levying GST and therefore, are beyond the legislative competence of the Parliament under Article 246-A of the Constitution.
HIGH COURTS
Bombay HC
Case title: Oxford University Press v. DCIT, Int. Tax Circle 3 (2)(2) & Ors.
Case no.: WRIT PETITION NO.1894 OF 2022
The Bombay High Court has made it clear that merely because the tax rate which is applicable on an assessee changes in future assessment years (AYs), is not a ground to initiate reassessment action against it for previous AYs, unless the 'jurisdictional parameters' of Section 148 of the Income Tax Act, 1961 are fulfilled.
A division bench of Justices MS Sonak and Jitendra Jain thus quashed the reassessment order passed against Oxford University Press, merely because its tax status was changed from 'resident' to 'non-resident', making it subject to a 40% tax rate instead of 30%.
Case title: Vijay Shrinivasrao Kulkarni v. ITAT Pune Bench & Ors.
Case no.: WRIT PETITION NO. 17572 OF 2024
The Bombay High Court has disapproved of the Income Tax Appellate Tribunal dismissing the appeal against an ex-parte order passed against a former employee of Pfizer Healthcare without providing him an opportunity of hearing.
Stating that ITAT cannot “perpetuate” the ex-parte order, a division bench of Justices GS Kulkarni and Advait M. Sethna directed the Tribunal to hear the employee de novo, so far as his prayer for the grant of exemption under section 89 of the Income Tax Act, 1961 is concerned.
Calcutta HC
Case Title: Ashok Sharma v. The State of West Bengal & Ors.
Case Number: FMA 136 of 2025
The Calcutta High Court stated that customs department cannot seize the goods if the quantity or weight of the goods is found correct on physical verification.
The Division Bench of Chief Justice T.S Sivagnanam and Justice Hiranmay Bhattacharyya noted that the quantity or the weight of the goods, which were carried in the vehicle, has been found to be correct by the department on physical verification and there is no discrepancy.
Delhi HC
Case title: Mohamed Shamiuddeen v. Commissioner Of Customs & Ors.
Case no.: W.P.(C) 2030/2025
The Delhi High Court has reiterated that authorities making a traveller waive show cause notice before confiscation of goods, etc. under Section 124 of the Customs Act 1962, on a mere proforma, is not lawful.
A division bench of Justices Prathiba M. Singh and Dharmesh Sharma thus granted relief to a permanent resident of Hong Kong, whose Rolex wristwatch valued at ₹30,29,400/- was confiscated by the Customs Department at the airport.
Case title: SFDC Ireland Limited v. Commissioner Of Income Tax & Another
Case no.: W.P.(C) 12847/2024
The Delhi High Court has made it clear that before rejecting an assessee's application under Section 197 of the Income Tax Act 1961 for nil TDS or deduction of tax at a lower rate, the assessing officer must form a prima facie opinion regarding the assessee's taxability in India.
Section 197(1) of the Act enables an assessee to make an application for a certificate requiring the deduction of tax at a lower rate or no deduction at all if the Assessing Officer is satisfied that the total income of the recipient justifies such nil deduction or deduction at a lower rate.
Case title: Maruti Suzuki India Ltd v. Deputy Commissioner Of Income Tax
Case no.: W.P.(C) 9786/2016
The Delhi High Court has quashed the reassessment action initiated by the Income Tax Department against car manufacturer Maruti Suzuki India Ltd for alleged escapement of income in the Assessment Year 2009-10.
A division bench of Justices Yashwant Varma and Ravinder Dudeja observed that the company had made full and true disclosure of all facts in the course of the assessment and the Department did not have jurisdiction to reopen the assessment under Sections 147/148 of the Income Tax Act, 1961.
Case title: Ateesh Agarwal v. Union Of India And Ors
Case no.: W.P.(C) 2139/2025
The Delhi High Court has rejected the writ petition filed by a man, seeking an inquiry into the finances of his wife and her family who claimed to have paid him ₹2 crores dowry, in addition to spending crores of rupees on their wedding.
A division bench of Chief Justice Devendra Kumar Upadhyaya and Justice Tushar Rao Gedela observed that the complaint stemmed from a matrimonial feud and the man was unable to indicate the provision under which such a complaint was made to the Income Tax department.
CBDT Cannot Impose Limitations To Extinguish Rights Granted Under Income Tax Act: Delhi High Court
Case Title: Sun Pharmaceutical Industries Ltd. v. Income Tax Officer and Anr.
Case no.: W.P.(C) 8444/2018
Recently, the Delhi High Court held that Central Board of Direct Taxes (CBDT) cannot impose limitations to extinguish rights granted under Income Tax Act, 1961. The Court held that the wide powers granted to the CBDT are not for extinguishing a right that is conferred by the Act. Accordingly, the Court Circular No. 07/2007 dated 23 October 2007 issued by the CBDT to the be ultra vires the Income Tax Act.
Case title: The Commissioner Of Income Tax - International Taxation -2 v. Nokia Network OY
Case no.: ITA 785/2019
The Delhi High Court has held that a subsidiary or an entity which is substantially controlled by another entity in a contracting State does not by itself become a Permanent Establishment (PE) of that other entity.
Citing Article 5 of the India-Finland Double Taxation Treaty, a division bench of Justices Yashwant Varma and Ravinder Dudeja observed, “There is no general presumption in law that a subsidiary can never be acknowledged to be a PE. This since Article 5(8) itself merely states that the said factor alone shall not be determinative of the PE question. The covenant thus clearly obliges us to evaluate the facts based on the other provisions comprised in Article 5 of the DTAA.”
Case title: Daljeet Singh Gill v. Union Of India & Ors.
Case no.: W.P.(C) 4644/2021
The Delhi High Court recently granted relief to a trader whose application for availing the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 over service tax dues was declined by the GST Department “without providing any reason”.
A division bench of Justices Prathiba M. Singh and Dharmesh Sharma observed that in the absence of proof of service of notice upon the trader, prior to his making an application for dispute resolution, it cannot be presumed that any investigation was pending against him.
Case title: MR Makhinder Chopra Commissioner Of Customs New Delhi
Case no.: W.P.(C) 2049/2025
The Delhi High Court has held that the Baggage Rules 2016 which are framed under the Customs Act 1962 to ensure that every passenger entering India passes through a Customs check has limited application on foreign tourists coming to India.
While holding so, a division bench of Justices Prathiba M. Singh and Dharmesh Sharma ordered the release of a Russian national's gold chain, valued at about Rs. 7 lakhs, which was confiscated by the Customs Department when he arrived in India.
Case title: M/S Legacy Foods Pvt. Ltd. v. Deputy Commissioner Of Income Tax, & Anr.
Case no.: ITA 45/2023
The Delhi High Court has held that Section 80IC of the Income Tax Act, 1961, which contemplates tax incentives for enterprises operating in specific industries and locations in India, does not require such enterprises to enter into an agreement with the Government.
In doing so, a division bench of Justices Yashwant Varma and Harish Vaidyanathan Shankar distinguished the provision from Section 80IA, whereunder agreement with the Centre, State or local authority is a pre-condition for claiming deductions.
Case title: Monish Gajapati Raju Pusapati v. Assessment Unit Income Tax Department & Anr.
Case no.: W.P.(C) 2043/2025
The Delhi High Court has made it clear that Section 292B of the Income Tax Act, 1961 cannot be used to save an assessment order passed by overlooking errors apparent on face of the record. The provision provides that no notice or assessment or any proceedings can be deemed to be invalid merely for the reason of any mistake, defect or omission in such notice, assessment or other proceedings.
A division bench of Chief Justice Devender Kumar Upadhyay and Justice Tushar Rao Gedela said while the provision would save reassessment notice which inadvertently furnished to assessee information relating to some other individual instead of his own however, the subsequent reassessment order passed by overlooking such mistake cannot be condoned.
Case title: Pr. Commissioner Of Income Tax (Central)- 3 v. M/S Ridgeview Construction Pvt. Ltd
Case no.: ITA 618/2019
The Delhi High Court has held that even though Section 153C of the Income Tax Act, 1961 did not in its original form prescribe two-tier satisfaction of Assessing Officers of both the searched and non-searched entity for initiating reassessment, the same cannot be deemed absent.
“In our considered opinion, while and undoubtedly Section 153C as it stood at the relevant time did not contemplate a two tier recordal of satisfaction and the AO of the searched person was merely obliged to transmit the material belonging or pertaining to a third person gathered in the course of a search, proceedings under the said provision could not have been triggered mechanically absent the formation of opinion by the AO of the non-searched person that the material was likely to impact an assessment made,” a division bench of Justices Yashwant Varma and Harish Vaidyanathan Shankar observed.
Jharkhand HC
Case Title: M/s. Castrol India Limited v. The State of Jharkhand
Case Number: W.P.(T) No. 7098 of 2023
The Jharkhand High Court stated that retaining balance amount by department after the tax demand is reduced is violative of Article 14 & Article 265 of the constitution.
The Division Bench of Chief Justice M.S. Ramachandra Rao and Justice Deepak Roshan observed that the department cannot retain the amounts deposited by the assessee pursuant to condition imposed by the appellate authority for stay of the assessment order and contend that there is no necessity to refund the same.
Kerala HC
Case Title: M/s Ramanattu Motor Corp. v. State of Kerala
Case Number: WP(C) NO. 23872 OF 2024
The Kerala High Court has explained the difference between 'non-service of notice' and 'not noticing or lack of knowledge of service of notice'.
“Lack of knowledge of service of notice can amount to a violation of principles of natural justice only in certain limited circumstances. When lack of knowledge is attributable to the default of the sender of the notice, then 'not noticing or lack of knowledge of service of notice' can amount to a negation of the principles of natural justice,” observed Justice Bechu Kurian Thomas.
Madras HC
Case Title: Tvl. Chennais Pet v. The State Tax Officer
Case Number: W.P.(MD)No.3995 of 2025
The Madras High Court stated that appeal can't be dismissed due to procedural delay, when assessee has complied statutory requirements including pre-deposit.
“The appeal should not be dismissed merely due to a procedural delay, especially when the petitioner has made an effort to comply with the statutory requirements, including the pre-deposit of 10% of the tax liability and additional payments towards the disputed tax amount” stated the bench of Justice Vivek Kumar Singh.
Case Title: M/s.United Breweries Limited v. The Joint Commissioner of GST and Central Excise (Appeals II)
Case No: W.P.No.14080 of 2021
The Madras High Court has recently observed that the supply of holographic stickers or excise labels by the Prohibition and Excise Department which is to be affixed on manufactured and bottles alcoholic liquor is a supply of “goods” simplicitor and not a supply of “service”.
The court thus ruled that such supply of holographic stickers would not be taxable under the GST enactments. Justice C Saravanan noted that the holographic sticker was a label and therefore a good within the meaning of Section 2(52) of the CGST Act and the supply of label by the department had to be construed as a supply of “goods” and not a supply of “service”.
Telangana HC
Case Title: M/s Bigleap Technologies and Solutions Pvt. Ltd. and others v. The State of Telangana and others
Case Number: WRIT PETITION No. 21101 of 2024
The Telangana High Court stated that the show cause notices and the orders which are not pregnant with the signature of the Proper Officer cannot sustain judicial scrutiny.
The Division Bench of Acting Chief Justice Sujoy Paul and Justice Renuka Yara observed that “since Rule and prescribed Forms mandate requirement of signature of Proper Officer, its violation makes the notice/order vulnerable. Any contrary view taken by Court about DRC-07 having no signature without considering the above rule and prescribed Form must be held as per incuriam.”
TRIBUNALS
Case Title: M/s. Aglowmed Ltd. V. Commissioner Central Goods and Service Tax, Dehradun
Case Number: Excise Appeal No. 51902 of 2021
The New Delhi Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has stated that mere wrong availment of exemption notification does not mean that availment was done to evade payment of central excise duty.
The Bench of Dilip Gupta (President) and P. V. Subba Rao (Technical) has observed that, “Mere wrong availment of an Exemption Notification would not lead to a conclusion that it was with an intent to evade payment of central excise duty unless the department is able to not only allege but substantiate that the said suppression was deliberate with an intent to evade payment of central excise duty.”
Case Title: M/s Prestige Polymers Pvt. Ltd. V. The Commissioner of Customs
Case Number: Customs Appeal No. 51470 of 2019
The New Delhi Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has stated that if goods imported into an SEZ are not used for the authorised operations but are sold in Domestic Tariff Area, duty has to be paid.
The Bench of Dilip Gupta (President) and P. V. Subba Rao (Technical) has observed that, “if goods imported into an SEZ are not used for the authorised operations but are sold in Domestic Tariff Area, duty has to be paid. If duty is not paid or short paid and as a result a demand has to be raised, it must be done as per the Customs Act by the jurisdictional Customs Officers.”
Case Title: Svam Toyal Packaging Industries Pvt. Ltd. v. Principal Commissioner of Customs
Case Number: Customs Appeal No.50780 Of 2021
The New Delhi Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has stated that the Customs authorities cannot deny the benefit of Customs duty exemption under the notifications governing the Advance Licensing Scheme.
The Bench of Dr. Rachna Gupta (Judicial Member) and Hemambika R. Priya (Technical Member) was addressing the issue of whether the goods imported by the assessee under AAs are permitted for duty free import under Advance Authorization Scheme.
Obligation Under CENVAT Credit Rules, 2004, Cannot Be Transferred To Recipient Of Credit: CESTAT
Case Title: Hindustan Coca-Cola Beverages Pvt Ltd V. The Commissioner of CGST & Customs
Case Number: Excise Appeal No. 85225 of 2020
The Mumbai Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has stated that the obligation under rule 3(1) of CENVAT Credit Rules, 2004 cannot be transferred to the recipient of credit under rule 7 of CENVAT Credit Rules, 2004.
The Bench of C J Mathew (Technical) has observed that, “the mechanism provided in rule 7 of CENVAT Credit Rules, 2004, governing the distribution of such credit, deems the credit so distributed to be eligible credit for the purpose of utilization. A harmonious reading of rule 3 and 4 of CENVAT Credit Rules, 2004 and the conditions prescribed in rule 7 alone would determine the extent of validity of the credit so distributed within the scheme of CENVAT Credit Rules, 2004.”
Assessee Not Eligible To Avail CENVAT Credit On Invoices Not In Their Name: CESTAT
Case Title: M/s Leel Electricals Ltd. v. Commissioner of CGST & Central Excise
Case Number: EXCISE APPEAL NO. 50277 of 2019
The New Delhi Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has stated that the assessee is not eligible to avail the CENVAT Credit on the basis of the invoices which were not in their name.
The Bench of Binu Tamta (Judicial Member) and Hemambika R. Priya (Technical Member) has observed that “it is necessary that the document contains all particulars as mentioned therein to avail the credit. The name of the consignee or service receiver on the invoice is the basic requirement for availing the CENVAT Credit.”
Case Title: M/s. Assam Gas Company Limited V. Commissioner of Central Excise & Service Tax
Case Number: Service Tax Appeal No. 75603 of 2015
The Kolkata Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has stated that the reimbursements received by the assessee cannot be considered as 'consideration' towards any taxable service.
The Bench of Ashok Jindal (President) and K. Anpazhakan (Technical) has observed that, “the service rendered by the appellant is not for any other company but to themselves. Thus, there is no service provider and service receiver relationship exists in the transaction.”
Case Title: OYO Hotels vs Principal CIT
Case Number: ITA No.2611/Del/2024
The Delhi ITAT held that the transactions between holding and its wholly owned subsidiary entity towards issuance of shares are not covered within ambit of Sec 56(2)(viib) in absence of any benefit arising from such transactions.
Referring to the Coordinate Benchs, the Bench of Pradip Kumar Kedia (Accountant Member) and Yogesh Kumar US (Judicial Member) reiterated that Sec 56(2)(viib) would not apply in the present case where the transaction is between the assessee (subsidiary company) with its 100% holding company as issuance of share.