Tax News & Updates

The Allahabad HC held that rejection of refund claims without excluding the Covid period was legally unsustainable. The impugned orders were quashed as the computation of limitation stood vitiated due to non-compliance with the SC directions. The matter was remanded for fresh consideration of refund applications after applying the mandated exclusion period and granting proper hearing.

The HC held that the appellate order suffered from clear non-application of mind, as it simply reiterated the findings of the adjudicating authority without any independent analysis. The Court observed that the appellate authority failed to consider the explanations and documentary evidence already available on record, thereby rendering the order unreasoned and legally unsustainable. Accordingly, the impugned appellate order was set aside, and the matter was remanded back to the appellate authority for fresh consideration on the merits after proper evaluation of all records and contentions.

The Court held that section 263 requires both error and prejudice, and since the AO made proper inquiries and adopted a plausible view, revision was unjustified. It was ruled that income from unlisted shares is to be treated as capital gains as per the CBDT Instruction, and the assessees conduct clearly reflected an investment, not trading. The ITATs order was upheld, the revision u/s 263 was quashed, and the Revenues appeal was dismissed in favour of the assessee.

The Bombay HC held that GSTAT possesses inherent and incidental powers to grant interim relief, including a stay of recovery during the pendency of an appeal. Such power flows from the wide appellate jurisdiction u/s 111 and 113 of the CGST Act, even though there is no express provision for stay. Since an effective alternative remedy existed before GSTAT, the assessee should approach the Tribunal for interim relief; the writ petition was therefore not entertained.

The Calcutta HC held that the relevant date for refund was 20-06-2021 (due date of return), and the application filed in June 2023 was within the two-year limit u/s 54(1). The Court ruled that an executive circular cannot retrospectively restrict a statutory right to claim a refund once it has accrued. The rejection orders were set aside, and the authority was directed to reconsider the refund claim on the merits without applying the circular.

The Court held that ISD is required to distribute ITC and not merely the tax shown in the invoice, and such credit arises only after the conditions u/s 16(2) are fulfilled. Rule 39(1)(a) must be interpreted to mean that the ITC available for distribution in a month refers to the ITC that has become eligible after fulfilling Section 16 conditions, not simply upon receipt of an invoice. Accordingly, allegations of delayed distribution must be examined in light of this interpretation, and the SCNs must be adjudicated considering that the distribution obligation arises only when ITC becomes legally available.

The HC held that the cancellation order contained no reasons and showed no application of mind, making it arbitrary and violative of Article 14 of the Constitution. Consequently, the cancellation order and the appellate order dismissing the appeal were quashed. The Court directed the assessee to file a reply to the SCN within three weeks, and the authority to pass a fresh order after providing an opportunity of hearing.

The Court held that Section 122(1A) can apply only when a person retains the benefit of the transaction, and the transaction is conducted at his instance, which was not established against the petitioners. Since the petitioners were employees and not taxable persons, a penalty u/s 122(1A) could not be imposed on them. As Section 122(1A) came into force from 1-1-2021, applying it to acts prior to that date violated Article 20(1) of the Constitution, and the penalty orders were quashed.

The assessee discharged its burden u/s 68 by proving identity, creditworthiness, and genuineness through strong documentary evidence. Non-appearance of directors cannot override verified records; suspicion cannot substitute evidence. No substantial question of law arose; the Tribunals order deleting Rs. 6.22 crore was upheld and Revenues appeal was dismissed.

Section 148A mandates the supply of information suggesting escapement of income, not copies of the entire material relied upon. Mention of transaction amounts and the nature of alleged bogus transactions was sufficient compliance at the 148A stage. No jurisdictional error was found; the reassessment notice and proceedings were upheld in favour of the Revenue.

Though portal upload is a valid mode of service u/s 169, in the absence of a response, the officer should have explored other statutory modes (preferably RPAD) to ensure effective service. Passing an ex parte order without a personal hearing amounted to a violation of principles of natural justice; both assessment and appeal rejection orders were unsustainable. The matter was remanded for fresh adjudication, subject to payment of 25% of the disputed tax, with direction to provide an effective personal hearing.

The Court held that since the law permitted cash purchases and did not mandate maintaining PAN or address details, the mere absence of such particulars could not establish the non-genuineness of creditors. Reassessment cannot be initiated merely on suspicion or solely on the basis of an audit objection without any cogent or objective material indicating escapement of income. As no valid jurisdictional foundation existed, the reassessment proceedings were quashed, and the writ petition was allowed in favour of the assessee.

The HC of Calcutta held that the appellate authority could not travel beyond the grounds mentioned in the SCN. If the appellate authority intended to confirm the demand on new grounds, it was mandatory to grant the petitioner a proper opportunity of hearing to rebut those grounds. Since no such opportunity was given, the appellate order was set aside, and the matter was remanded for fresh decision after affording due hearing.

The Court held that under the GST framework, each financial year constitutes a separate tax period, and the limitation u/s 73 and 74 runs independently for each year. A composite SCN covering multiple years distorts limitation, jurisdiction, and the taxpayers right to respond year-wise, and is therefore not permissible. The impugned show cause notice was quashed and set aside, with liberty granted to the department to issue fresh notices strictly in accordance with Section 74.

Reopening based solely on audit objections, when the AO had already examined the same material during scrutiny, amounts to an impermissible change of opinion. Since the assessee had fully and truly disclosed all material facts, the extended limitation was not available to the Revenue. The notice dated 31-03-2023 and consequential reassessment proceedings were held to be barred by limitation and quashed.

The Court held that a declaration u/s 139(9) declaring a return invalid is an order since it amounts to an authoritative direction. Such an order is revisable u/s 264, and the Commissioner erred in holding otherwise. The impugned order was quashed, and the revision application was restored for fresh consideration after granting proper hearing.

The SC held that u/s 54(5), 54(8)(e), and 57 of the CGST Act,the refund must be credited to the Consumer Welfare Fund if the incidence of tax has been passed on. Since Torrent Power Ltd. had admittedly passed on the tax burden to consumers, it was not entitled to receive the refund directly. The HCs procedure for refund through tariff adjustment was contrary to the statutory scheme; its judgment was set aside, and the company was directed to deposit Rs. 19.28 crore into the Consumer Welfare Fund.

Inspection of seized assets is only verificatory and not an invasive act like a search; therefore, there is no reason to believe or disclosure of information is required. Since the inspection was connected with pending section 263 proceedings, it was for purposes of the Act and valid under rule 112(13). Presence of assessee and sealed strong-room custody ensured no tampering; writ dismissed and department allowed to issue fresh inspection notice.

The Court held that section 70 does not prescribe any mandatory 7-day prior notice, and attendance for inquiry cannot be treated as detention. Since his presence was voluntary and there was no restriction on movement, illegal custody was not established. The compensation claim was rejected, and the writ petition was dismissed in favour of the revenue authorities.

The Court held that a minimum three-month gap between the issuance of notice and the passing of the order is mandatory. A shorter period violates principles of natural justice and statutory protections available to the taxpayer. Accordingly, the SCN and order were quashed, and the matter was remanded for fresh adjudication.