All High Courts
Finding that the taxpayer had paid the tax, though at a belated stage, citing financial difficulties, the Bombay High Court held that no inference can be drawn that the taxpayer has committed wilful default in paying the tax along with the ITR. Accordingly, the Court quashed the complaint as well as the prosecution.
A Single Judge Bench of Justice S.M. Modak observed that there is a difference between ‘failure’ and ‘evasion’, as the evasion should not only be simple, but it should be wilful evasion. Thus, Section 276-B of the Income Tax Act will be applicable when the tax deducted at source is not credited to the Government, which is one of the contingencies.
The Single Judge clarified that the ‘Failure to credit’ itself is sufficient, and it need not be wilful. Because a tax is deducted from the income of another person (who is liable), such a person is bound to credit it. That omission itself is an offence without the addition of wilfulness/intention.
Emphasising that issuance of consolidated notices for multiple years amounts to jurisdictional error and judicial overreach, the Bombay High Court quashes the show cause notices (SCN). The Court enlightens that the statutory scheme of the CGST Act, 2017, clearly mandates tax assessment & recovery based on distinct tax periods corresponding to financial years (FYS) or return periods, and there is no scope for clubbing or consolidating different FYs into a single SCN.
The Division Bench comprising Justice Bharati Dangre and Justice Ashish S Chavan observed that the CGST Act contemplates for furnishing of annual Returns for every financial year along with the audited final statement, and therefore involve a definite tax period, based on the filing of the Return, which can be either a monthly or annual Return and if the assessment is based on an annual Return, the tax period shall be the relevant financial year.
The Delhi High Court clarified that the redemption fine, as a consequence of non-payment of the excise duty, should be considered as part of the Excise Duty for purposes of the Sabka Vishwas (Legacy Disputes Resolution) (SVLDR) Scheme. Hence, once such a duty stands settled under the Scheme, the redemption fine will be waived too as part of the overall settlement.
While considering the key issue as to whether redemption fines, imposed for the release of confiscated goods under the Central Excise Act, 1944, fall under the categories of duty, interest, or penalty covered by the SVLDR Scheme, the Court clarified that the SVLDR Scheme applies to legacy disputes, including those involving SCNs, late fees, penalties, and arrears, and it outlines various percentages of tax dues that, if paid, would result in the issuance of a discharge certificate.
The Division Bench comprising Justice Prathiba M Singh and Justice Shail Jain addressed the scope of the SVLDR Scheme, specifically Section 123(b), which defines “tax dues” as the duty payable in a show cause notice issued before June 30, 2019. Since the matter was remanded by CESTAT and the show cause notice (SCN) was yet to be adjudicated, the demand raised therein was still pending, making the petitioners eligible for the Scheme.
4. Kerala HC: Rule 68B Time Bar Under Income Tax Act Inapplicable to Recovery Under RDDB Act
The Kerala High Court (Ernakulam Bench) clarified that Rule 68B of the Second Schedule to the Income Tax Act does not mandatorily apply to recovery proceedings under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (RDDB Act). The Court pointed out that since Section 29 of the RDDB Act adopts provisions of the Income Tax Rules only “as far as possible” and “with necessary modifications”, only procedural parts that aid recovery may apply, and not substantive restrictions that impede it.
Emphasising that the RDDB Act is a self-contained code enacted to secure speedy recovery of bank debts, the Court found that importing the time bar in Rule 68B would frustrate the statutory object. The Court added that even if there were procedural irregularities relating to timing, those do not render a sale, or consequent orders, void unless the adjudicating authority lacked inherent jurisdiction.
A Single Judge Bench of Justice Mohammed Nias C.P. examined Rule 68B and observed that its references to “financial year,” “finality under Section 245-I,” and “Chapter XX” are specific to the Income Tax regime, whereas the RDDB Act itself provides a complete framework for recovery under Sections 19(22) and 25 without prescribing any time limit.
The Bombay High Court (Aurangabad Bench) upheld the order passed by the State Information Commissioner, which had denied access to GST return details of six private firms sought under the Right to Information Act, 2005 (RTI Act), and clarified that the GST Act, 2017, being a special enactment, overrides the RTI Act, a general law.
The Court ruled that GST returns furnished under Section 158(1) cannot be disclosed by the authorities except as provided in sub-section (3). Essentially, the disclosure of GST returns is barred under Section 158(1) of the GST Act, which prohibits the dissemination of particulars contained in tax statements and returns, except as provided under sub-section (3).
A Single Judge Bench of Justice Arun R. Pednekar observed that when Section 158(1) of the GST Act expressly prohibits disclosure of GST data, the RTI Act cannot override such explicit statutory confidentiality. The Bench interpreted Sections 8 and 11 of the RTI Act and Section 158 of the GST Act to reiterate that while the RTI Act seeks to minimise information asymmetry between citizens and the State, the Parliament consciously incorporated exceptions under Section 8 to safeguard privacy, confidentiality, and fiduciary interests.
The Allahabad High Court (Lucknow Bench) ruled that in the event the TDS amount is not reflected in Form 26AS, the refund of said TDS must still be provided if the taxpayer sufficiently furnishes the Form 16A certificates. Asserting the responsibility of the AO to verify the amounts provided by the taxpayer (petitioner) through the proof of Form 16A, the Court concluded that the petitioner is entitled to receive a refund of the amounts once Form 16A was accepted by the Income Tax Authority.
The Division Bench comprising Justice Shekhar B. Saraf and Justice Prashant Kumar observed that a taxpayer should not be left at the mercy of an Assessing Officer who chooses to delay the payment of genuine refunds. Furthermore, as long as the taxpayer can provide documents proving that tax has been deducted at source, the same has to be accepted by the AO, who cannot insist that the amount match the figures in Form 26AS.
The Karnataka High Court (Bengaluru Bench) held that the Petitioner, a major contender in the Civil and Industrial Construction business, being similarly circumstanced, is entitled to the same relief that is granted by the co-ordinate bench of this court in WP.No.9721/2019, disposed on April 11, 2023, and WP.No.104908/2023, disposed on August 29, 2023.
The Court clarified that a supplementary agreement may be signed with the petitioner for the revised GST-Inclusive work value for the Balance Work completed or to be completed as determined above and in case the revised GST-inclusive work value for the Balance Work, completed or to be completed after 01.07.2017, is more than the original agreement work value, the Petitioners are to be paid /reimbursed, as the case may be, the differential tax amount by the concerned employer.
A Single Judge Bench of Justice M. Nagaprasanna observed that the tax component is an independent component, which the petitioners do not retain as a profit, and is a statutory payment to be made. Looking into the nature of such payment of GST, the respondents/employers are required to honour the same after determining the differential tax burden, especially for the Petitioners, where a “works contract” was entered during the KVAT regime and works are completed pre-GST.
The Delhi High Court has ruled that the Income Tax Settlement Commission (ITSC), being a creation of a statute, the taxpayers do have a statutory right to approach the same, seeking a concession. Though the orders of the ITSC may have the trappings of a concession, the same is exercised by the State through a statutory scheme, and whether or not the concession is granted, the taxpayers are, in fact, vested with a right to apply for the same to the ITSC.
The Court held so while referring to the Press Release dated September 07, 2021, and the subsequent order under Section 119(2)(b) of the Income Tax Act dated September 28, 2021, wherein it was clarified that the taxpayers, who were eligible to apply for settlement on or before January 31, 2021, but could not file the same due to the cessation of the ITSC, could file their applications till September 31, 2021 before the Interim Board.
The Division Bench comprising Justice V. Kameswar Rao and Justice Vinod Kumar observed that the power of the Parliament to enact Amendment Acts with retrospective application cannot be curtailed. However, the ITSC being a creature of statute, Section 245C of the Income Tax Act grants a vested right to the taxpayer to have their applications decided. The Bench, therefore, asserted that such rights of the taxpayer cannot be taken away in the absence of any express words or necessary implication in the Finance Act, 2021, to that effect.
The Calcutta High Court clarified that the petitioners, as auction purchasers, are liable to discharge outstanding property tax dues, including those that are accrued prior to the sale. The clarification came by referring to Section 232 of the Kolkata Municipal Corporation Act, 1980 (KMC), which states that property tax is a first charge on the property and thus constitutes a statutory encumbrance running with the land.
The Court emphasised that the sale was explicitly on an “as is where is, whatever there is and without recourse” basis, requiring bidders to undertake independent due diligence. Reference was made to the decisions in the case of K.C. Ninan v. Kerala State Electricity Board [(2023) 14 SCC 431] and Union of India v. Naskapara Jute Mills Co. Ltd. [(1994) 1 SCC 575]. Accordingly, the Court concluded that there was no illegality or arbitrariness in KMC’s letters withholding mutation until arrears are cleared.
A Single Judge Bench of Justice Gaurang Kanth explained that an “as is where is” sale transfers both assets and liabilities unless expressly excluded. The Single Judge also negated the applicability of the overriding clause of Section 238 of the Insolvency & Bankruptcy Code, 2016 (IBC), citing no conflict between the IBC and the KMC Act. Accordingly, KMC’s refusal to mutate the property until arrears were cleared was found lawful under Sections 183(5) and 232 of the KMC Act.
The Karnataka High Court (Bengaluru Bench) ruled that claims of the sales tax authorities would stand extinguished if they had not taken part in the resolution process and had not submitted their claims in the resolution plan. Accordingly, no demand can be made in respect of claims that have been extinguished.
The Court reiterated that once a moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 (IBC) is declared, the proceedings can happen only before the resolution professional. There is no jurisdiction to parallelly initiate proceedings and raise a demand.
A single Judge Bench of Justice M. Nagaprasanna further observed that after the declaration of moratorium, the Revenue Authority has no power to assess the quantum of duties and submit its claims. Reference was made to the decision in the case of ABG Shipyard Liquidator vs Central Board of Indirect Taxes and Customs [(2023) 1 SCC 472], where it was held that “once moratorium is imposed in terms of Sections 14 or 33(5) of the IBC as the case may be, the respondent authority only has a limited jurisdiction to assess/determine the quantum of customs duty and other levies”.
11. Bombay HC: Tax Demands above ₹50 Lakh invalid without CBIC-Mandated Pre-Consultation; SCN Quashed
The Bombay High Court quashed the Show Cause Notices (SCNs) for failure to follow the mandatory pre-consultation process required under Section 73 of the Finance Act, 1994, opining that failure to comply with such process would invalidate the SCNs. However, the Court preserved the Revenue Department’s right to issue fresh notices after due pre-consultation, with exclusion of limitation periods during the interim stay and consultation.
The Division Bench comprising Justice M.S. Sonak and Justice Advait M. Sethna observed that the requirement of a pre-consultative process cannot be dismissed as an empty formality, as the Central Board of Indirect Taxes and Customs (CBIC) Circulars make it mandatory for tax demands exceeding Rs. 50 lakhs and promote alternate dispute resolution, vital for ease of doing business.
The Bombay High Court clarified that when the contracts clearly stipulated that the purchasers would reimburse the freight charges to the dealer, then said charges could not have formed a part of the sales price. Accordingly, the Court held that no sales tax could be imposed on such freight charges by treating it as a part of the sales price.
The Division Bench comprising Justice M.S. Sonak and Justice Advait M. Sethna referred to the definition of ‘sales price’ under Section 2(29) of the Bombay Sales Tax Act, 1959, to observe that the contractual provisions clearly stipulate that the sale was to be completed ex-factory. Though the respondent may have agreed to transport the sold goods to the purchaser at the purchaser’s premises, the freight for such transportation was paid by the respondent in its capacity as an agent/bailee of the purchasers.
Other Courts (ITAT, CESTAT, AAR)
The Chandigarh Customs Excise and Service Tax Appellate Tribunal (CESTAT) clarified that the act of providing corporate guarantees for subsidiary units for the grant of a loan from a financial institution without any consideration is not chargeable to service tax.
The Division Bench, comprising S S Garg (Judicial Member) and P Anjani Kumar (Technical Member), reiterated that there is neither a service nor any consideration involved in cases where a corporate guarantee is provided by the associated enterprises to the banks for working capital-related loans required by the subsidiaries. The Bench asserted that no Service Tax under the category of banking and other financial services can be demanded on the Corporate Guarantee provided by Associated Enterprise.
The Tamil Nadu Authority for Advanced Ruling (AAR) clarified that no GST is leviable on the Minimum Guaranteed Off-take (MGO) charges imposed by Oil and Natural Gas Corporation (ONGC) on Gas Authority of India Limited (GAIL) for short-lifting Natural Gas from the contracted quantities, i.e, Adjusted Annual Contract quantity under the Gas Sales and Transportation Agreement.
The AAR held that the amount of MGO charges, which is paid as liquidated damages, is an amount paid only to compensate for injury, loss, or damage suffered by the applicant due to breach of contract and shall not be construed as the activity of refraining from or tolerating an act or doing anything.
The Ahmedabad ITAT clarified that when the cash deposits are sufficiently explained through the taxpayer’s own bank transactions and business activity, and the source of such deposits stands reconciled, then the addition made under Section 68 of the Income Tax Act is not sustainable at all.
The clarification came after drawing attention to the bank statement, Form 26AS, and the cash book produced by the appellant-taxpayer for the relevant assessment year, along with a detailed date-wise correlation between cash withdrawals and subsequent deposits.
The Division Bench comprising Dr. BRR Kumar (Vice President) and Siddhartha Nautiyal (Judicial Member) noted that the appellant had furnished a detailed explanation substantiating the source of cash deposits and clearly demonstrated that he was engaged in the construction business, and the contract receipts were directly credited to his savings bank account.
16. Delhi Court Discharges Accused in Offshore Tax Evasion Case Over Unverified Evidence
The Tis Hazari Court, Delhi, has dismissed a prosecution launched by the Income Tax Department alleging concealment of offshore assets and evasion of taxes through a British Virgin Islands-based entity. The case, filed under Sections 276C(1) and 277 of the Income Tax Act, 1961, along with Sections 181, 191, and 193 of the IPC, was based on information sourced from the International Consortium of Investigative Journalists (ICIJ) website and foreign authorities in the British Virgin Islands and Singapore.
The Mumbai ITAT came to the aid of a law firm (Naik Naik & Co.) and held that when tax has in fact been deducted at source from the taxpayer’s receipts, its TDS credit cannot be denied merely because the deductor has not deposited the tax or has not correctly reported it, and, therefore, the credit does not surface in Form 26AS.
The Division Bench comprising Amit Shukla (Judicial Member) and Girish Agrawal (Accountant Member) criticised the action of the CIT(A) in making Form 26AS the decisive touchstone and casting the burden upon the appellant of securing rectification by the deductors, and pointed out that when primary materials on record show that payments were received net of tax after deduction at source, then insisting on reflection in 26AS as a condition precedent for credit amounts to elevation of form over substance.