Mistake Committed By Assessee Was Inadvertent & Technical; No Wrongful Availment Of ITC: Kerala High Court Quashes Demand Order

The Kerala High Court while quashing the demand order stated that there has been no wrong availment of credit, and that the only mistake committed by the assessee was an inadvertent and technical one, where he had omitted to mention the IGST figures separately in Form GSTR 3B. The Division Bench of Justices A.K. Jayasankaran Nambiar and K.V. Jayakumar observed that “……The mistake was also insignificant because it is not in dispute that there was no outward supply attracting IGST that...

GST | Delhi HC Orders Refund Of Service Tax Paid On Ocean Freight, Cites Gujarat HC Judgment Declaring It Unconstitutional

The Delhi High Court on Thursday ordered the GST Department to refund the service tax paid by certain importers on ocean freight (transportation of goods by vessel). In doing so, a division bench Justices Yashwant Varma and Dharmesh Sharma cited the Gujarat High Court's judgment in M/s Sal Steel Ltd. & Anr. vs. Union of India (2019) where it was declared that levy of service tax on ocean freight is unconstitutional. The Gujarat High Court had rendered the decision in connection...

DTAA | Foreign Company Providing Software To Its Agents In India Doesn't Mean It Has 'Permanent Establishment' In India: Delhi HC

The Delhi High Court has held that 'software' being an intangible property, cannot alone constitute 'Permanent Establishment' (PE) of a foreign entity in India. PE is defined under Article 5 of the Double Taxation Avoidance Agreement (DTAA) between India and the United States of America as- a fixed place of business through which businesses of an enterprise are wholly or partly carried on. A foreign entity's PE in India would exigible to tax. Some examples of fixed places are given...

[Taxation Law] Market Research, Promotional Activities, Training Or Deployment Of Software Are 'Auxiliary Functions' Under DTAA: Delhi HC

The Delhi High Court has reiterated that “activities such as market research, promotional activities, training or deployment of software would clearly not breach the threshold of auxiliary functions as are envisaged under the DTAA.” Double Taxation Avoidance Agreement (DTAA) was signed between India and the US to prevent International Double Taxation and encourage international trade. Determination of core or auxiliary activity is a relevant factor to ascertain whether a unit of a...

Person Arrested U/S 69 CGST Act Must Be Communicated Grounds Of Arrest 'In Writing': Delhi High Court

The Delhi High Court has held that grounds of arrest must be furnished to a person arrested under Section 69 of the Central Goods and Services Tax Act, 2017, 'in writing'.Justice Anish Dayal held that the Supreme Court's judgments in Pankaj Bansal and Arvind Kejriwal with respect to offence under PMLA and in Prabir Purkayastha with respect to offences under UAPA will also apply to offences under the CGST Act.“It is evident from the principles as enunciated by the Supreme Court that the...

There Cannot Be 'Disconnect' Between Reasons For Initiating Reassessment U/S 147 Of IT Act & Grounds On Which Final Order Is Passed: Delhi HC

The Delhi High Court has held that only 'original reasons' which formed the basis for initiating reassessment proceedings under Section 147 of the Income Tax Act can be taken into consideration by the Assessing Officer, for coming to the conclusion that income had escaped assessment. A division bench of Justice Yashwant Varma Hon'ble Mr. Justice Dharmesh Sharma observed that there cannot be a 'disconnect' between the reasons which had been originally recorded for initiation of ...

S.68 IT Act | Whether Assessee Discharged Burden To Substantiate Identity & Genuineness Of Share Application Money Is 'Question Of Fact', Not Law: Gauhati HC

The Gauhati High Court refused to entertain an appeal with respect to genuineness of credit received by an assessee from share application money, holding that the same would require it to venture into factual matrix of the case which is beyond its jurisdiction under Section 260A of the Income Tax Act, 1961. The appeal was preferred by the Revenue, following CIT(A) reversing the additions made by it on the strength of alleged share application money received by the Assessee. Its second...

Service Tax Not Prima Facie Leviable On Amounts Claimed As Performance Linked Incentives/Commission: Delhi High Court

The Delhi High Court has prima facie observed that service tax is not leviable on amounts claimed by an Assessee as commission or performance linked benefit. A division bench of Justices Yashwant Varma and Dharmesh Sharma cited the decision of a Larger Bench of the CESTAT in Kafila Hospitality & Travels Pvt. Ltd. vs. Commr. Of S.T., Delhi (2023). In that case, the Tribunal dealt with the issue of whether the incentives paid by airlines to travel agents for achieving targets was ...

Mobile Towers Are Not Immovable Property, They Are Eligible For Input Tax Credit: Delhi High Court Allows Airtel's Plea

The Delhi High Court has held that mobile/ telecommunication towers are movable properties, eligible for availing input tax credit under the Central Goods and Services Tax Act, 2017. A division bench of Justices Yashwant Varma and Girish Kathpalia further held that telecom towers fall outside the scope of Section 17(5) of the CGST Act which sets out various goods and services which are not liable to be taken into consideration for the purposes of availing input tax credit. Section...

Rule 8D Of IT Rules Can Be Invoked Only If Assessee's Computation Of Expenses Attributable To Earning Exempt Income Is Found Inadequate: Delhi HC

The Delhi High Court has held that recourse to Rule 8D of the Income Tax Rules, 1962 for computing disallowance under Section 14A of the Income Tax Act is available only if the Assessee's computation of expenses attributable to earning exempt income, is found to be inadequate. Rule 8D provides a mechanism to determine the expenditure in relation to exempt income. In the case at hand, Assessee had earned income by way of dividend amounting to ₹8,55,88,493/-, which was exempt under...

Delhi HC Deprecates Practice Of GST Authorities Issuing 'Template Orders', Says Rejection Of Reply To SCN Must Be On Merits

The Delhi High Court recently granted relief to a logistics company aggrieved by the decision of Assistant Commissioner, GST, rejecting its reply to a show cause notice by way of a 'template' order. A division bench of Justices Prathiba M. Singh and Amit Sharma observed that a SCN, which seeks to impose further liabilities (including penalties) upon assesses, has to be decided on merits. The Petitioner was issued a SCN alleging improper declaration of output tax. Though Petitioner...

Regulatory Measures Under GST Laws Necessary To Prevent Tax Evasion, Not Violative Of Fundamental Right To Trade: Calcutta High Court

The Calcutta High Court has held that regulatory measures under the Goods and Services Tax Act cannot be labeled as violative of an assessee's right to trade/ business under Article 19(1)(g) of the Constitution. Justice Rajarshi Bharadwaj reasoned that such regulatory measures are “necessary to ensure compliance and prevent tax evasion”. The observation comes in a petition filed by an iron and steel trader, contending that the mismatch in the description of its goods seized during...