Tax Weekly Round-Up: June 23 - June 29, 2025

Kapil Dhyani

30 Jun 2025 8:30 PM IST

  • Tax Weekly Round-Up: June 23 - June 29, 2025

    HIGH COURTSBombay HCBenefit Of Cash Compensatory Scheme Cannot Be Denied On Castor Oil Exports Based On Subsequent Test Change: Bombay High CourtCase Title: Sanjay Kumar Agarwal v. Union of IndiaCase Number: WRIT PETITION NO.872 OF 1994The Bombay High Court stated that benefit of cash compensatory scheme benefit cannot be denied on castor oil exports based on subsequent test change.The...

    HIGH COURTS

    Bombay HC

    Benefit Of Cash Compensatory Scheme Cannot Be Denied On Castor Oil Exports Based On Subsequent Test Change: Bombay High Court

    Case Title: Sanjay Kumar Agarwal v. Union of India

    Case Number: WRIT PETITION NO.872 OF 1994

    The Bombay High Court stated that benefit of cash compensatory scheme benefit cannot be denied on castor oil exports based on subsequent test change.

    The Division Bench of Justices M.S. Sonak and Jitendra Jain has observed that contracts executed prior to the cutoff day would not be governed by the subsequent change in the scheme granting the benefit.

    Assessee Cannot Be Penalised U/S 271(1)(c) Of Income Tax Act For Merely Raising A Plausible Claim: Bombay High Court

    Case Title: M/s. Carona Limited v. Deputy Commissioner of Income Tax

    Case Number: INCOME TAX APPEAL NO. 512 OF 2003

    The Bombay High Court stated that the assessee cannot be penalised under Section 271(1) (c) of income tax act for merely raising a plausible claim.

    The Division Bench consists of Chief Justice Alok Aradhe and Justice Sandeep V. Marne opined that “the claim raised by the Assessee for claiming deduction in respect of the crystalised liability towards additional bonus was a plausible claim. Whether such claim is tenable in law or not is an altogether different issue. What is relevant to note is the position that the claim made by the Assessee can, by no stretch of imagination, be treated as malafide act of concealment of income so as to attract the provisions of Section 271(1)(c) of the I.T. Act.”

    Calcutta HC

    Eden Gardens Not A 'Public Street', Imposing Ad Tax Without Regulations Violates Rule Of Law: Calcutta High Court Quashes Demand Notice

    Case Title: THE CALCUTTA MUNICIPAL CORPORATION & ORS. VS THE CRICKET ASSOCIATION OF BENGAL & ORS.

    Case Number: APO/248/2016 WITH WPO/2662/1996 IA NO: GA/2/2021

    The Calcutta High Court bench of Justices Arijit Banerjee and Justice Kausik Chanda has held that without framing Regulations or without the budget estimate prescribing the rates at which advertisement tax may be levied by Kolkata Municipal Corporation (KMC), computation and imposition of such tax would be arbitrary. It would have no rational basis. It would then be open to KMC to quantify such tax as per its sweet will, which cannot be countenanced under the rule of law.

    Assessee Can Seek Refund Of Unutilised ITC In Personal Bank Account If Business Is Shut Down: Calcutta High Court

    Case title: Edelweiss Rural & Corporate Services Limited & Anr. v. The Deputy Commissioner of Revenue, Taltala Charge, WBGST & Ors.

    Case no.: WPA 3033 OF 2025

    Calcutta High Court recently directed the proper officer under the GST Act to consider ordering refund of the unutilised ITC of an Assessee to his personal bank account, as his business was closed and its GST registration stood cancelled.

    The Petitioner was aggrieved by a direction of the proper officer, though allowing the refund sanction to the tune of Rs. 68,66,238/- but, directing the amount to be paid to the bank account of the business— Edelweiss Rural & Corporate Services Limited.

    Delhi HC

    Valuation Of Company's Unquoted Equity Shares By 'Discounted Cash Flow' Method Permissible Under Income Tax Rules: Delhi High Court

    Case title: Principal Chief Commissioner Of Income Tax-1 v. A.H. Multisoft Pvt. Ltd.

    Case no.: ITA 9/2025

    The Delhi High Court recently rejected the appeal preferred by the Income Tax Department against an ITAT order allowing the valuation of a software company's unquoted equity shares by discounted cash flow [DCF] method.

    In doing so, a division bench of Justices Vibhu Bakhru and Tejas Karia held that DCF method “is one of the methods that can be adopted by the Assessee under Rule 11UA(2)(b) of the [Income Tax] Rules for determining the FMV of unquoted equity shares in a company in which public are not substantially interested.”

    Reassessment Notice Can't Be Based On 'General Information' From Investigation Wing Of Income Tax Dept: Delhi High Court

    Case title: Sanjay Kaul v. The Income Tax Officer Ward 24 (4), New Delhi & Ors.

    Case no.: W.P.(C) 11198/2019

    The Delhi High Court has made it clear that the Income Tax Department cannot issue reassessment notice to an assessee based on general information shared by its Investigation Wing, until the Assessing Officer forms definite 'reason to believe' escapement of income.

    A division bench of Justices Vibhu Bakhru and Tejas Karia observed, “It is clear from the information received from the Investigation Wing…that the same was general in nature and did not point towards the involvement of the Petitioner in the arrangement of providing accommodation entry by contriving bogus short term capital loss. From the aforementioned information, it cannot be concluded that all the transactions…were sham in nature.”

    Once AO Scrutinises Identity & Creditworthiness Of Shareholders, No Reassessment Action Without 'Additional Info' About Income Escapement: Delhi HC

    Case title: Pr. Commissioner Of Income Tax (Central)-2 v. M/S K.R. Pulp And Papers Ltd.

    Case no.: ITA No. 529/2023

    The Delhi High Court recently rejected Revenue's appeal against deletion of additions made to the income of an assessee-company alleged to have evaded tax, observing that the AO had already scrutinised the identity and creditworthiness of the shareholders and in the absence of any additional material coming to light, reassessment action could not have been initiated.

    A division bench of Justices Vibhu Bakhru and Tejas Karia observed, “During the original proceedings, the AO had issued a questionnaire…The Assessee had furnished the response to the said questionnaire and had submitted the share application money, share application form, proof of identity, copy of PAN and copy of ITR as well as the bank statements of the share applicants. Thus, the identity as well as the creditworthiness of the applicants was duly scrutinized…Therefore, the AO was required to have some additional information, beyond what had already been examined, in order to form reasons to believe that the Assessee's income had escaped assessment.”

    Taxpayers Must Be Vigilant About Communications On GST Portal, Department Can't Be Blamed: Delhi High Court

    Case title: Sandeep Garg v. Sales Tax Officer Class Ii Avato Ward 66 Zone 4 Delhi

    Case no.: W.P.(C) 5846/2025

    The Delhi High Court has made it clear that if an assessee fails to respond to a show cause notice duly communicated to it on the GST portal, the Department cannot be blamed for passing an order raising demand, without hearing the assessee.

    A division bench of Justices Prathiba M. Singh and Rajneesh Kumar Gupta observed, “Since the Petitioner has not been diligent in checking the portal, no reply to the Show Cause Notice has been filed by the Petitioner. Thus the department cannot be blamed.”

    S.75(5) Of CGST Act Contemplates A Maximum Of Three Adjournments, Cannot Be Construed As A Minimum Of Three Hearings: Delhi High Court

    Case title: SS Enterprises Vs Office of the Commissioner, Central Tax Delhi West & Anr.

    Case no.: W.P.(C) 5684/2025

    The Delhi High Court has held that the provision of maximum three adjournments that can be granted to a taxpayer during the course of adjudication proceedings, cannot be construed to mean that the taxpayer must be given a minimum of three hearings.

    A division bench of Justices Prathiba M. Singh and Rajneesh Kumar Gupta observed, “A perusal of Section 75(5) of the Central Goods and Service Tax Act, 2017 would show that the said provision merely contemplates that the maximum adjournments shall be given for three times but does not in effect mean that three hearings have to be given.”

    GST | Alleging Denial Of Hearing Insufficient If Assessee Itself Wasn't Diligent In Responding To SCN Or Attending Hearing: Delhi High Court

    Case title: Pret Study by Janak Fashions Private Limited Vs Assistant Commissioner, CGST

    Case no.: W.P.(C) 5878/2025

    The Delhi High Court has refused to interfere with a demand order passed by the GST Department without hearing the assessee, after noting that the assessee itself was not diligent in responding to the show cause notice or attending the personal hearing despite notice.

    A division bench of Justices Prathiba M. Singh and Rajneesh Kumar Gupta observed, “Considering the fact that (i) The Department has given the show cause notice and the personal hearing notices to the Petitioner; (ii) The Petitioner has not been diligent; the Department cannot be held to blame for not giving a proper hearing.”

    Gauhati HC

    Restoration Of Cancelled GST Registration Permissible If Taxpayer Clears Dues And Files Returns: Gauhati High Court

    Case Title: Shahima Khatun v. The State of Assam & Ors.

    Case Number: WP(C)/3300/2025

    The Gauhati High Court stated that the restoration of cancelled GST registration is permissible if the taxpayer clears dues and files returns.

    The Bench of Justice Sanjay Kumar Medhi observed that “proviso to sub-rule (4) of Rule 22 of the CGST Rules 2017 provides that if a person, who has been served with a show cause notice under Section 29(2)(c) of the CGST Act, 2017, is ready and willing to furnish all the pending returns and to make full payment of the tax itself along with applicable interest and late fee, the officer, duly empowered, can drop the proceedings and pass an order in the prescribed Form i.e. Form GST REG-20.”

    Himachal Pradesh HC

    Amount Deposited Under Protest Can't Be Treated As Admission Of Tax Liability: Himachal Pradesh High Court

    Case Name: Shyama Power India Ltd. v/s State of HP & others

    Case No.: CWP No.6990 of 2025

    The Himachal Pradesh High Court has held that when a taxpayer deposits an amount “under protest”, it does not amount to an admission of tax liability.

    A Division Bench of Justice Tarlok Singh Chauhan and Justice Sushil Kukreja observed as follows: “Once the petitioner had deposited the amount 'under protest', the same could not have been considered to be an admission of liability because the necessary corollary of deposit under protest is that the amount towards the alleged liability has been deposited without admitting the liability and inherent therein is his right to challenge the order.”

    Kerala HC

    Two Contradictory GST Orders On Same Allegations Not Sustainable: Kerala High Court

    Case Title: M/s Winter Wood Designers & Contractors India Pvt. Ltd. v. The State Tax Officer

    Case Number: WP(C) NO. 9086 OF 2025

    The Kerala High Court has stated that two contradictory GST orders on the same allegations are not sustainable, and the second order cannot exist if the first one already dropped the proceedings.

    The Bench of Justice Ziyad Rahman A.A. observed that the proceedings were dropped in the first order after accepting the explanation by the assessee, yet a second order was passed on the same allegations.

    'Decalcified Fish Scale' Import Covered Under Advance Authorisation Scheme; Customs Cannot Deny Benefit: Kerala High Court

    Case Title: Nitta Gelatin India Ltd. v. Commissioner of Customs

    Case Number: CUS. APPEAL NO.2 OF 2025

    The Kerala High Court stated that 'decalcified fish scale' import covered under advance authorization scheme; customs cannot deny benefit. The advance authorization scheme enables duty free import of inputs/raw materials required for manufacture of export goods.

    Justices A.K. Jayasankaran Nambiar and P.M. Manoj observed that during the period subsequent to the period covered by the show cause notice, the assessee has obtained advance authorization for importing the same product this time under the nomenclature 'decalcified fish scale' and no objection has been taken by the Revenue to such import.

    S.245C Income Tax Act Does Not Require Prior Cut-Off Date, Pending S.153A/153C Notice Sufficient For Settlement Application: Kerala HC

    Case Title: Union of India v. Aayana Charitable Trust

    Case Number: W.A.NO.2042 OF 2024

    The Kerala High Court stated that Section 245C of Income Tax Act does not require prior cut-off date; pending 153A/153C notice sufficient for settlement application.

    Justices A.K. Jayasankaran Nambiar and P.M. Manoj opined that “when Section 245C does not prescribe any prior cut-off date for an assessee to satisfy the requirements for filing an application before the Interim Board for Settlement, and the only statutory requirement is that the assessee should have a pending 'case' at the time of filing the application for settlement, then so long as the assessee had a 'live and un-adjudicated' notice under Sections 153A/153C as on the date of filing the application, the application had to be considered on merits by the Board.”

    Assessment Based On DVO's Valuation Cannot Be Revised U/S 263 Of Income Tax Act In Absence Of Concrete Material: Kerala High Court

    Case Title: The Principal Commissioner of Income Tax v. M/s Ayyappa Roller Flour Mills Ltd.

    Case Number: ITA NO. 9 OF 2024

    The Kerala High Court held that assessment based on DVO's (Department Valuation Officer) valuation cannot be revised under Section 263 of Income Tax Act in absence of concrete material.

    Justices A.K. Jayasankaran Nambiar and P.M. Manoj observed that “as on the date of invoking his power under Section 263 of the IT Act, the Commissioner could not have had a 'reason to believe' that the assessment was erroneous and prejudicial to the interest of the Revenue since the material to inform that 'reason to believe' did not exist on the date of issuance of the show cause notice. His exercise of power under S.263 was therefore clearly unjustified”.

    TRIBUNALS

    Packing/Re-Packing Of Parts Of Device Is Not Manufacture U/S 2(f)(iii) Of Central Excise Act; No Excise Duty: CESTAT

    Case Title: M/s Case New Holland Construction Equipment (India) Private Limited v. Commissioner of Central Excise, Customs & Service Tax

    Case Number: EXCISE APPEAL NO. 1455 OF 2012

    The New Delhi Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has stated that packing/re-packing of parts of vibrator compactor is not manufacture under Section 2(f)(iii) Of Central Excise Act and hence no excise duty is leviable.

    The Bench of Justice Dilip Gupta (President) and P.V. Subba Rao (Technical Member) was addressing the issue of whether the two constructions equipments namely Wheeled Tractor Loader Backhoe and Vibratory Compactor are “Automobiles”, because only then the activity of packing/repacking of parts of the WTLB and VC would amount to manufacture under section 2 (f) (iii) of the Central Excise Act.

    Proceedings Against Assessee Unsustainable Once Discharge Certificate Is Issued Under SVLDRS Scheme: CESTAT

    Case Title: Commissioner of Central Goods and Service Tax, Excise and Customs, Bhopal v. M/s. Akansha Sales Promoters

    Case Number: Excise Appeal No. 50135 of 2019

    The New Delhi Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has stated that proceedings against assessee unsustainable once discharge certificate is issued under SVLDRS [Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019] Scheme.

    The Bench of Ashok Jindal (Judicial Member) and P. Anjani Kumar (Technical Member) was addressing the issue that in case where the assessee opts for SVLDRS Scheme and obtained discharge certificate can the proceedings by way of appeal by the Revenue is sustainable or not.

    Statement Recorded U/S 108 Of Customs Act Is Not Valid Evidence U/S 138B Of Customs Act: CESTAT

    Case Title: Shanti Swaroop Sharma, Director v. The Principal Commissioner of Customs

    Case Number: Customs Appeal No. 50071 of 2024

    The New Delhi Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has stated that statement recorded under section 108 of the Customs Act not valid evidence under section 138B of the Customs Act.

    The Bench of Justice Dilip Gupta (President) and P.V. Subba Rao (Technical Member) was addressing the issue of whether the statement recorded under section 108 of the Customs Act could be considered as evidence under section 138B of the Customs Act.

    Service Tax Payable On Service Charges Collected From Client For Printing: CESTAT

    Case Title: M/s Chhattisgarh Samvad v. Principal Commissioner

    Case Number: SERVICE TAX APPEAL NO. 51826 OF 2017

    The New Delhi Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has stated that service tax payable on service charges collected from client for printing.

    The Bench of Dr. Rachna Gupta (Judicial Member) and P.V. Subba Rao (Technical Member) has observed that the assessee engaged someone else to do the job of printing after preparing content using its in-house expertise. The assessee was, by no stretch of imagination a job worker to a printer. The printer, in fact, was the assessee's sub-contractor. The assessee is liable to pay service tax on the service charges which it had collected from the client departments towards printing work but only within the normal period of limitation.

    Service Tax Not Leviable On License Fee Or Spectrum Charges Payable For Period Before 1st April 2016: CESTAT

    Case Title: Sistema Smart Technologies Limited v. Commissioner of Central Goods & Service Tax, Gurugram

    Case Number: Service Tax Appeal No. 60295 of 2023

    The Chandigarh Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has stated that service tax not leviable on license fee/spectrum charges payable for period prior to 01.04.2016.

    The Bench consists of S.S. Garg (Judicial Member) and P. Anjani Kumar (Technical Member) has stated that “as per the principle of ejusdem generis, the phrase “any other document issued by the Government demanding such payment” should only include documents of similar nature to an invoice, bill or challan. If we apply this principle, then the phrase “any other document issued by the Government demanding such payment” cannot be an agreement as considered by the department in the case because the same is not issued in the nature of an invoice, bill or challan.”

    Profit Earned In GTA Service Through Sub-Contractor Not Taxable As Business Auxiliary Service: CESTAT

    Case Title: M/s Balajee Structural India Ltd. v. Commissioner of Central Excise & Service Tax

    Case Number: SERVICE TAX APPEAL NO. 50124 OF 2018

    The New Delhi Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has stated that profit earned in GTA service (Goods Transport Agency Service) through sub-contractor not taxable as business auxiliary service.

    The Bench of Dr. Rachna Gupta (Judicial Member) and P.V. Subba Rao (Technical Member) has observed that “revenue's attempt to charge service tax on the profit calling it business auxiliary service cannot be accepted because the service which the assessee provided to Jhakodia Minerals was GTA service. Part of the consideration received cannot be treated as a separate service because there is no evidence of any other service being provided”.

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