Tax News & Updates

The Delhi HC held that the right of appeal is a substantive right and the lis commenced with issuance of the SCN on 25.06.2025. Since the SCN preceded 01.10.2025, the unamended Section 107(6) governed the appeals; hence, the subsequent 10% penalty pre-deposit requirement did not apply. The Appellate Authority was directed to entertain the appeals without insisting on the 10% pre-deposit, subject to payment of any admitted amount u/s 107(6)(a).

The Court held that after cancellation of registration, the petitioner was not obligated to check the GST portal, and the notice should have been served through an alternative mode. Mere uploading of the SCN on the portal was held to be inadequate service, resulting in violation of natural justice. The demand order was quashed and set aside, with liberty to the Department to issue a fresh notice and proceed in accordance with law.

The Court held that reopening after four years was invalid because the assessee had fully and truly disclosed all material facts during the original assessment. The Court held that Section 2(22)(e) was not applicable since the assessee was not a registered shareholder of the payer company and the common shareholders interest was only 4.60%. The HC quashed the Section 148 notice, reassessment order and consequential demand notice.

The Gujarat HC held that failure to intimate the date, time and venue of personal hearing and failure to provide the required hearing opportunities violated Section 75 and principles of natural justice. The Court also held that the unreasoned and non-speaking order, which failed to consider the reply and documents, was legally unsustainable. The impugned order was quashed and set aside, and the matter was remanded to the jurisdictional officer for fresh adjudication after providing a proper opportunity of hearing.

The Court held that the refund could not be withheld merely because the Revenue had filed an appeal that remained unlisted, particularly when the refund had been sanctioned in 2022. Since the petitioner was an established cement manufacturing company and not a fly-by-night operator, the Court directed the Revenue to release the refund. The refund was ordered to be released within six weeks, subject to the petitioner furnishing an undertaking to redeposit the amount if the Revenues appeal ultimately succeeded.

The Court held that electronic filing of Form 3CLA within the due date for filing the return of income constituted compliance with Rule 6(7A)(c). The rejection of the Form 3CL applications as delayed was therefore unsustainable, and the impugned order was set aside. The prescribed authority was directed to decide the applications on the merits and determine the eligible expenditure for deduction u/s 35(2AB).

The HC held that satisfaction u/s 153C must be recorded at one of the permissible stages and, where recorded after completion of the searched persons assessment, it must be recorded immediately thereafter. The Court found that the substantial delay in recording satisfaction was contrary to the principles laid down in CIT v. Calcutta Knitwears and CBDT Circular No. 24/2015 and quashed the Section 153C notice. The SC dismissed the Revenues SLP, finding no good ground to interfere with the HCs order. Thus, the assessee succeeded.

The Tribunal deleted the addition, holding that the assessee had established the genuineness of the share transactions through supporting documentary evidence. The HC upheld the Tribunals order, finding no substantial question of law arising from the Tribunals decision. The SC dismissed the Revenues SLP, finding no good ground to interfere with the HCs order; hence, the relief to the assessee was sustained.

The Punjab & Haryana HC held that mere uploading of an SCN on the GST portal does not amount to valid service unless its receipt is acknowledged or the assessee files a reply. Where an SCN was only uploaded, and an ex parte order was passed, the proceedings were restored to the SCN stage, allowing the assessee an opportunity to reply and be heard. The Court held that portal-only service does not trigger the limitation period for appeal. The retrospective amendment did not change this position because the GST Rules did not specifically permit service of SCNs/orders merely by portal upload.

The Calcutta HC set aside the cancellation order, subject to the petitioner filing all pending returns and paying the applicable tax, interest, fine, penalty and late fees. The petitioner was directed to complete the compliance within six weeks from receipt of the server copy of the order, following which the GST registration would be restored. The authorities were directed to open the GST portal within two weeks to enable filing of returns and payment of dues; failure to comply within six weeks would result in dismissal of the writ petition.

The SC held that Section 16(2)(c) is constitutionally valid and there was no basis to read down the provision. It held that ITC is a statutory concession subject to conditions, and the GST framework specifically provides for re-availment of reversed ITC after the supplier discharges the tax liability. The Court affirmed the Gujarat HCs judgment and dismissed the SLPs, upholding the provision in favour of the Revenue.

Since ownership was not established, Ratul could not seek release as owner u/s 129(1)(a). Being perishable goods, he could nevertheless seek release under the alternate mechanism of Section 129(1)(b). The direction compelling him to participate in the auction was unsustainable; he was permitted to approach the authority for release of the goods.

The Court held that the seven-day timeline u/s 129(3) is mandatory and must be strictly followed. Intervening circumstances could not extend the statutory period, and the one-day delay could not be condoned. The penalty order dated 22 September 2025 was therefore quashed, without preventing action under other applicable provisions.

The HC held that proceedings initiated against a dissolved amalgamating company are void ab initio and without jurisdiction. Section 87 of the CGST Act does not permit the issuance of an SCN to a non-existent entity after amalgamation. The impugned demand order was set aside, while preserving the Departments liberty to proceed against the petitioner in accordance with law.

The HC held that exclusive portal upload of the SCN violated the mandatory service requirements u/s 169 and the principles of natural justice. The cancellation order and appellate order were set aside as the petitioner had been denied a fair opportunity of hearing. The department was permitted to commence fresh cancellation proceedings only after proper service of notice and compliance with statutory hearing requirements.

The HC held that a writ petition is maintainable where an assessment order is passed in violation of the principles of natural justice, notwithstanding the availability of an appellate remedy. It held that the assessee was denied a meaningful and effective opportunity of hearing, rendering the assessment order legally unsustainable. The assessment order, demand notice and penalty proceedings were quashed, and the matter was remanded for fresh assessment after granting a proper personal hearing.

The Karnataka HC held that the issue was already settled and that the recipient of the works contract service (the State) is liable to bear the differential GST arising solely because of the transition from VAT to GST. The Court allowed the writ petition and directed the State to determine the eligible differential GST and reimburse the amount within six weeks, after verification of records and calculations, restricting reimbursement only to the additional tax attributable to the introduction of GST.

The Penalty u/s 271(1)(c) is not sustainable where the addition is based only on estimation. The Court followed its earlier ruling in Colo Colour (P.) Ltd. holding that estimated additions cannot justify a concealment penalty. The Revenues appeal was dismissed as no substantial question of law arose.

The HC held that income surrendered during a survey, once treated as business income, qualifies for all regular business deductions. Partners remuneration u/s 40(b) is allowable on such business income. The assessees appeal was allowed, and the Tribunals denial of partners remuneration was set aside.

The HC upheld that a short deduction of TDS cannot result in a disallowance u/s 40(a)(ia). It approved a 0.5% corporate guarantee commission and upheld a deletion of the section 14A interest disallowance where sufficient own funds existed. The appeal was entertained only on the limited issue relating to Rule 8D(2)(iii); all other issues were rejected as not involving substantial questions of law.