GST INDIA Biz — Case Law

S.No	Name	Date of Order	Subject	Actions
161	K-9 Enterprises vs. State of Karnataka	02-04-2024	Legality of blocking of Electronic Credit Ledger (ECL) under Rule 86A of CGST Rules, 2017 without pre-decisional hearing and without independent application of mind.	View Download
BackgroundThe appellants — GST-registered businesses dealing in lead, lead scrap and allied goods — had availed Input Tax Credit (ITC) on purchases from GST-registered suppliers, which stood credited in their Electronic Credit Ledgers (ECL). The tax authorities, acting on a field visit report of the Assistant State Tax Officer, Vasco-da-Gama, Goa (an officer from another jurisdiction), which found certain suppliers to be non-existent or not conducting business from their registered place, issued orders dated 27.06.2023 blocking the ECL of the appellants by invoking Rule 86A of the CGST Rules, 2017. No pre-decisional hearing was granted to the appellants before blocking the ECL. The appellants challenged these orders before the Single Judge by way of writ petitions, which were disposed of rejecting the appellants' contentions. Aggrieved, the appellants filed the present intra-court writ appeals before the Division Bench. Court Observations (Verbatim / Near-Verbatim)On Pre-Decisional Hearing (Point No. 1):"Though Rule 86A does not expressly/specifically provide for adherence to principles of natural justice, the same would necessarily have to be read into Rule 86A and complied with while invoking the said provision.""When the ECL of the appellants was sought to be blocked and such credit cannot be utilised for upto 1 year, the said blocking would entail and result in serious civil consequences for the appellants warranting compliance with the principles of natural justice and providing an opportunity of hearing to the appellants.""Ordinarily, a post-decisional hearing is not a substitute for pre-decisional hearing and that pre-decisional hearing is important especially when the respondents-revenue passed the impugned orders which would entail and visit the appellants with serious civil consequences.""It was not physically possible for the appellants to immediately/forthwith encash/withdraw the ITC available in its ECL so as to warrant emergent/urgent blocking of the ECL without providing a pre-decisional hearing to the appellants.""Respondents-revenue committed a grave and serious error/illegality/infirmity in not providing/granting a pre-decisional hearing to the Appellant before passing the impugned order blocking its Electronic Credit Ledger under Rule 86A of the CGST Rules."On 'Reasons to Believe' and Independent Application of Mind (Point No. 2):"Rule 86A, which in effect is the power to block ECL is drastic in nature which creates a disability for the taxpayer to avail of the credit in ECL for discharge of his tax liability which he is otherwise entitled to avail and therefore, all the requirements of Rule 86A would have to be fully complied with before the power thereunder is exercised; when this Rule requires arriving at a subjective satisfaction which is evident from the use of words, 'must have reasons to believe', the satisfaction must be reached on the basis of some objective material available before the authority and cannot be made on the flights of ones fancies or whims or caprices.""The electronic credit ledgers have been blocked solely on the basis of communication from another officer [Field visit report by the Asst. State Tax Officer, Vasco-D-Gama, (Goa)]. There was no tangible material to form any belief that the ITC lying in the appellants' ECL was on account of any fake invoice; it had proceeded to take action solely on the basis of a direction issued by another authority.""The impugned orders have been passed based on the communication received from other officers, without any independent application of mind. This shows that exercise of power under Rule 86A was not because he was independently satisfied about the need for blocking the ECL but, was due to the fact that he felt compelled to obey the command of another officer.""The impugned order discloses that the same has been passed mechanically and is based on borrowed satisfaction and does not meet the test of formation of an opinion... the impugned orders are bald, vague, cryptic, laconic, unreasoned and non-speaking and deserve to be set aside.""It is quite possible that the transaction, when entered into in 2017 or 2018 could be genuine and when the officer visits in 2020 or 2021, the business could have been closed and therefore the mere closure of business in 2020 or 2021 cannot be a basis for denying credit availed earlier.""A bonafide purchaser cannot be denied ITC on account of a supplier's default and the recipient cannot be made to suffer denial of ITC for the wrong doings of the supplier." Final VerdictAll six writ appeals were allowed. The common order of the Single Judge dated 27.07.2023 and all the ECL blocking orders dated 27.06.2023 / 02.06.2023 were set aside and quashed. 👍
K-9 Enterprises vs. State of Karnataka 02-04-2024 Legality of blocking of Electronic Credit Ledger (ECL) under Rule 86A of CGST Rules, 2017 without pre-decisional hearing and without independent application of mind. BackgroundThe appellants — GST-registered businesses dealing in lead, lead scrap and allied goods — had availed Input Tax Credit (ITC) on purchases from GST-registered suppliers, which stood credited in their Electronic Credit Ledgers (ECL). The tax authorities, acting on a field visit report of the Assistant State Tax Officer, Vasco-da-Gama, Goa (an officer from another jurisdiction), which found certain suppliers to be non-existent or not conducting business from their registered place, issued orders dated 27.06.2023 blocking the ECL of the appellants by invoking Rule 86A of the CGST Rules, 2017. No pre-decisional hearing was granted to the appellants before blocking the ECL. The appellants challenged these orders before the Single Judge by way of writ petitions, which were disposed of rejecting the appellants' contentions. Aggrieved, the appellants filed the present intra-court writ appeals before the Division Bench. Court Observations (Verbatim / Near-Verbatim)On Pre-Decisional Hearing (Point No. 1):"Though Rule 86A does not expressly/specifically provide for adherence to principles of natural justice, the same would necessarily have to be read into Rule 86A and complied with while invoking the said provision.""When the ECL of the appellants was sought to be blocked and such credit cannot be utilised for upto 1 year, the said blocking would entail and result in serious civil consequences for the appellants warranting compliance with the principles of natural justice and providing an opportunity of hearing to the appellants.""Ordinarily, a post-decisional hearing is not a substitute for pre-decisional hearing and that pre-decisional hearing is important especially when the respondents-revenue passed the impugned orders which would entail and visit the appellants with serious civil consequences.""It was not physically possible for the appellants to immediately/forthwith encash/withdraw the ITC available in its ECL so as to warrant emergent/urgent blocking of the ECL without providing a pre-decisional hearing to the appellants.""Respondents-revenue committed a grave and serious error/illegality/infirmity in not providing/granting a pre-decisional hearing to the Appellant before passing the impugned order blocking its Electronic Credit Ledger under Rule 86A of the CGST Rules."On 'Reasons to Believe' and Independent Application of Mind (Point No. 2):"Rule 86A, which in effect is the power to block ECL is drastic in nature which creates a disability for the taxpayer to avail of the credit in ECL for discharge of his tax liability which he is otherwise entitled to avail and therefore, all the requirements of Rule 86A would have to be fully complied with before the power thereunder is exercised; when this Rule requires arriving at a subjective satisfaction which is evident from the use of words, 'must have reasons to believe', the satisfaction must be reached on the basis of some objective material available before the authority and cannot be made on the flights of ones fancies or whims or caprices.""The electronic credit ledgers have been blocked solely on the basis of communication from another officer [Field visit report by the Asst. State Tax Officer, Vasco-D-Gama, (Goa)]. There was no tangible material to form any belief that the ITC lying in the appellants' ECL was on account of any fake invoice; it had proceeded to take action solely on the basis of a direction issued by another authority.""The impugned orders have been passed based on the communication received from other officers, without any independent application of mind. This shows that exercise of power under Rule 86A was not because he was independently satisfied about the need for blocking the ECL but, was due to the fact that he felt compelled to obey the command of another officer.""The impugned order discloses that the same has been passed mechanically and is based on borrowed satisfaction and does not meet the test of formation of an opinion... the impugned orders are bald, vague, cryptic, laconic, unreasoned and non-speaking and deserve to be set aside.""It is quite possible that the transaction, when entered into in 2017 or 2018 could be genuine and when the officer visits in 2020 or 2021, the business could have been closed and therefore the mere closure of business in 2020 or 2021 cannot be a basis for denying credit availed earlier.""A bonafide purchaser cannot be denied ITC on account of a supplier's default and the recipient cannot be made to suffer denial of ITC for the wrong doings of the supplier." Final VerdictAll six writ appeals were allowed. The common order of the Single Judge dated 27.07.2023 and all the ECL blocking orders dated 27.06.2023 / 02.06.2023 were set aside and quashed. 👍 View Download
162	Shantanu Sanjay Hundekari vs. Union of India & Ors.	18-03-2024	Validity of show cause notice imposing penalty under Section 122(1A) and invoking Section 137 of the CGST Act against an employee of a company for alleged GST evasion by the company.	View Download
Court DecisionThe Court allowed the writ petition and quashed the show cause notice dated 19 September 2023 insofar as it was issued to the petitioner.The Court held:Section 122(1A) applies only to a taxable person:Section 122(1A) applies to a person who retains the benefit of transactions covered under clauses (i), (ii), (vii) or (ix) of Section 122(1), and at whose instance such transaction is conducted. Such person must necessarily be a “taxable person” as defined under Sections 2(107) and 2(94) of the CGST Act.The petitioner, being merely an employee and power of attorney holder of Maersk, was not a taxable or registered person and could not retain the benefit of the alleged transactions. Therefore, invocation of Section 122(1A) against him was wholly without jurisdiction.Jurisdictional ingredients not satisfied:The show cause notice did not disclose any material to establish that the petitioner retained the benefit of the alleged GST evasion or that the transactions were conducted at his instance. In absence of these basic elements, the notice was held to be illegal for want of jurisdiction and for non-application of mind.Section 137 could not be invoked in a demand notice under Section 74:Section 137 relates to offences by companies and falls under the chapter dealing with offences and penalties. The impugned notice was a demand cum show cause notice under Section 74, which pertains to determination of tax not paid or short paid. The Court held that such penal provisions could not be intermingled with demand proceedings, and such invocation against the petitioner was without jurisdiction.No vicarious liability under Sections 122 and 137:The Court held that no principle of vicarious liability could be read into Sections 122 or 137 so as to fasten liability on an employee for tax alleged to be evaded by the company.Disproportionate demand:The demand of ₹3731 crores from the petitioner, which was alleged to be the liability of Maersk, was held to be highly unconscionable and disproportionate.Accordingly, the show cause notice was quashed insofar as it applied to the petitioner. The connected writ petitions were also allowed on the same reasoning.
Shantanu Sanjay Hundekari vs. Union of India & Ors. 18-03-2024 Validity of show cause notice imposing penalty under Section 122(1A) and invoking Section 137 of the CGST Act against an employee of a company for alleged GST evasion by the company. Court DecisionThe Court allowed the writ petition and quashed the show cause notice dated 19 September 2023 insofar as it was issued to the petitioner.The Court held:Section 122(1A) applies only to a taxable person:Section 122(1A) applies to a person who retains the benefit of transactions covered under clauses (i), (ii), (vii) or (ix) of Section 122(1), and at whose instance such transaction is conducted. Such person must necessarily be a “taxable person” as defined under Sections 2(107) and 2(94) of the CGST Act.The petitioner, being merely an employee and power of attorney holder of Maersk, was not a taxable or registered person and could not retain the benefit of the alleged transactions. Therefore, invocation of Section 122(1A) against him was wholly without jurisdiction.Jurisdictional ingredients not satisfied:The show cause notice did not disclose any material to establish that the petitioner retained the benefit of the alleged GST evasion or that the transactions were conducted at his instance. In absence of these basic elements, the notice was held to be illegal for want of jurisdiction and for non-application of mind.Section 137 could not be invoked in a demand notice under Section 74:Section 137 relates to offences by companies and falls under the chapter dealing with offences and penalties. The impugned notice was a demand cum show cause notice under Section 74, which pertains to determination of tax not paid or short paid. The Court held that such penal provisions could not be intermingled with demand proceedings, and such invocation against the petitioner was without jurisdiction.No vicarious liability under Sections 122 and 137:The Court held that no principle of vicarious liability could be read into Sections 122 or 137 so as to fasten liability on an employee for tax alleged to be evaded by the company.Disproportionate demand:The demand of ₹3731 crores from the petitioner, which was alleged to be the liability of Maersk, was held to be highly unconscionable and disproportionate.Accordingly, the show cause notice was quashed insofar as it applied to the petitioner. The connected writ petitions were also allowed on the same reasoning. View Download
163	Prahitha Construction — GST on Transfer of Development Rights under JDA	09-02-2024	Whether transfer of Development Rights (TDR) by a landowner to a developer under a Joint Development Agreement (JDA) amounts to sale of land exempt under Entry 5 of Schedule III of the CGST Act, 2017, or constitutes a taxable supply of service under GST �	View Download
BackgroundPrahitha Construction Pvt. Ltd., a commercial real estate developer, entered into a JDA dated 28.12.2017 with two landowners — M/s. Jitvan Land Limited and M/s. Janina Marine Properties Pvt. Ltd. — for development of land admeasuring 8.30 acres and 1.82 acres at Hyderabad Knowledge City, Raidurg Village, Serilingampally Mandal, Ranga Reddy District, Telangana into an IT/ITES and commercial office project. Under the JDA, the landowners granted permissive possession to the developer, who agreed to construct three towers. The developer was to receive the Developer's Undivided Share (UDS) of land and the built-up area as consideration, but only after handing over the Landowner's Share upon project completion. The JDA expressly stated that permissive possession shall not be construed as delivery of possession in part performance under Section 53-A of the Transfer of Property Act, 1882. The petitioner challenged Notification No. 4/2018 as amended by Notification No. 23/2019-CT(Rate) dated 30.09.2019, which imposed GST on transfer of development rights under a JDA, seeking its declaration as ultra vires Articles 14, 246A and 265 of the Constitution and the CGST/TGST Act, 2017. Court Observations (Verbatim)"Reading of the aforesaid clause further gives a clear picture of the fact that mere execution of JDA by itself would not mean that the right, title and ownership of the property or a portion of that property stands transferred in the name of the petitioner/developer. There are certain conditions/milestones/stages which have to be crossed before which the petitioner would be entitled to have a certain element of right over the completed constructed area which has been agreed to be left at the disposal of the petitioner. But that does not mean that mere execution of the JDA would amount to transfer of right to the petitioner.""The transfer of development rights is hence a service under GST Law which the landowner is offering to the developer and that too for a consideration. Thus, the transfer of development rights is a service and not an outright sale of an immovable property.""From plain reading of the JDA that was entered into between the two parties, what is apparently visible is that, there was no outright sale of land being effectuated and the JDA per se cannot be considered merely as a medium adopted by the landowner selling his land and the JDA does not lead to sale of land by itself.""The transfer of ownership from the landowner goes directly to the purchaser of the constructed property and not in favour of the petitioner unless and until the land stands transferred in the name of the petitioner. The same cannot be brought within the ambit of sale. Transferring of the development rights does not result in transfer of ownership rights. That the sale of land/transfer of land or undivided share of land would get executed only after issuance of completion certificate of the project. This itself would give a clear indication that the services rendered by the petitioner in execution of JDA was supplied prior to the issuance of completion certificate and would thus be amenable to GST.""On conjoint reading of the clauses under JDA, clause d of the JDA along with clause 2.2, 2.3, 2.4, 6.1, 6.7 and 23.4...it will clearly indicate that there is no automatic transfer of ownership given to the petitioner at the time of execution of the JDA...In the absence of any cogent and substantial material to establish right, title and ownership being created in favour of the petitioner/developer, the transfer of development rights as it stands is amenable to GST and cannot be brought within the purview of Entry 5 of Schedule-III of the GST Act.""The Notification No. 4 of 2018 dated 25.01.2018 as amended by Notification No. 23/2019-Central Tax (Rate), dated 30.09.2019, on its plain reading would reveal that it is not with which there is a charge created on the transfer of development rights, but in fact only provide for the time when the tax need to be paid.""Taking into consideration the provisions of Article 246A of the Constitution of India and also considering the extraordinary powers which have been conferred upon the GST Council and upon whose recommendation the Government has issued the notification clarifying the aspect of transfer of development rights being attracted to GST/TGST, the challenge to the notification issued by the Government of India can be safely held to be devoid of merits." Final VerdictThe Writ Petition was dismissed. The Court held that transfer of development rights under a JDA is a taxable supply of service under GST and does not amount to sale of land under Entry 5 of Schedule III of the CGST Act. The impugned Notification No. 23/2019-CT(Rate) dated 30.09.2019 was upheld as valid.
Prahitha Construction — GST on Transfer of Development Rights under JDA 09-02-2024 Whether transfer of Development Rights (TDR) by a landowner to a developer under a Joint Development Agreement (JDA) amounts to sale of land exempt under Entry 5 of Schedule III of the CGST Act, 2017, or constitutes a taxable supply of service under GST � BackgroundPrahitha Construction Pvt. Ltd., a commercial real estate developer, entered into a JDA dated 28.12.2017 with two landowners — M/s. Jitvan Land Limited and M/s. Janina Marine Properties Pvt. Ltd. — for development of land admeasuring 8.30 acres and 1.82 acres at Hyderabad Knowledge City, Raidurg Village, Serilingampally Mandal, Ranga Reddy District, Telangana into an IT/ITES and commercial office project. Under the JDA, the landowners granted permissive possession to the developer, who agreed to construct three towers. The developer was to receive the Developer's Undivided Share (UDS) of land and the built-up area as consideration, but only after handing over the Landowner's Share upon project completion. The JDA expressly stated that permissive possession shall not be construed as delivery of possession in part performance under Section 53-A of the Transfer of Property Act, 1882. The petitioner challenged Notification No. 4/2018 as amended by Notification No. 23/2019-CT(Rate) dated 30.09.2019, which imposed GST on transfer of development rights under a JDA, seeking its declaration as ultra vires Articles 14, 246A and 265 of the Constitution and the CGST/TGST Act, 2017. Court Observations (Verbatim)"Reading of the aforesaid clause further gives a clear picture of the fact that mere execution of JDA by itself would not mean that the right, title and ownership of the property or a portion of that property stands transferred in the name of the petitioner/developer. There are certain conditions/milestones/stages which have to be crossed before which the petitioner would be entitled to have a certain element of right over the completed constructed area which has been agreed to be left at the disposal of the petitioner. But that does not mean that mere execution of the JDA would amount to transfer of right to the petitioner.""The transfer of development rights is hence a service under GST Law which the landowner is offering to the developer and that too for a consideration. Thus, the transfer of development rights is a service and not an outright sale of an immovable property.""From plain reading of the JDA that was entered into between the two parties, what is apparently visible is that, there was no outright sale of land being effectuated and the JDA per se cannot be considered merely as a medium adopted by the landowner selling his land and the JDA does not lead to sale of land by itself.""The transfer of ownership from the landowner goes directly to the purchaser of the constructed property and not in favour of the petitioner unless and until the land stands transferred in the name of the petitioner. The same cannot be brought within the ambit of sale. Transferring of the development rights does not result in transfer of ownership rights. That the sale of land/transfer of land or undivided share of land would get executed only after issuance of completion certificate of the project. This itself would give a clear indication that the services rendered by the petitioner in execution of JDA was supplied prior to the issuance of completion certificate and would thus be amenable to GST.""On conjoint reading of the clauses under JDA, clause d of the JDA along with clause 2.2, 2.3, 2.4, 6.1, 6.7 and 23.4...it will clearly indicate that there is no automatic transfer of ownership given to the petitioner at the time of execution of the JDA...In the absence of any cogent and substantial material to establish right, title and ownership being created in favour of the petitioner/developer, the transfer of development rights as it stands is amenable to GST and cannot be brought within the purview of Entry 5 of Schedule-III of the GST Act.""The Notification No. 4 of 2018 dated 25.01.2018 as amended by Notification No. 23/2019-Central Tax (Rate), dated 30.09.2019, on its plain reading would reveal that it is not with which there is a charge created on the transfer of development rights, but in fact only provide for the time when the tax need to be paid.""Taking into consideration the provisions of Article 246A of the Constitution of India and also considering the extraordinary powers which have been conferred upon the GST Council and upon whose recommendation the Government has issued the notification clarifying the aspect of transfer of development rights being attracted to GST/TGST, the challenge to the notification issued by the Government of India can be safely held to be devoid of merits." Final VerdictThe Writ Petition was dismissed. The Court held that transfer of development rights under a JDA is a taxable supply of service under GST and does not amount to sale of land under Entry 5 of Schedule III of the CGST Act. The impugned Notification No. 23/2019-CT(Rate) dated 30.09.2019 was upheld as valid. View Download
164	Shamhu Saran Agarwal and Company v. Additional Commissioner Grade-2 & Ors.	31-01-2024	Legality of detention and penalty under Section 129 GST on ground of undervaluation of goods	View Download
Facts :The petitioner challenged a penalty order dated 20.12.2020 and appellate order dated 17.09.2021 passed under GST law. The goods were detained during transit solely on the ground of alleged undervaluation. All documents including invoice and e-way bill were available and there was no discrepancy in description of goods. The detention and penalty were confirmed by the authorities on the same ground.Court Decision:The Court held that undervaluation is not a valid ground for detention of goods under Section 129. It observed that when documents are proper and there is no mismatch, detention cannot be justified merely on valuation issues. The Court held that in cases of undervaluation, proceedings must be initiated under Sections 73 or 74 and not by detention and penalty during transit. Accordingly, the impugned penalty and appellate orders were quashed and set aside, with direction to refund any deposited amount.Cases Referred:Hindustan Coca Cola Pvt. Ltd. v. Assistant State Tax OfficerN.V.K. Mohammed Sulthan Rawther caseJ.K. Synthetics Ltd. v. Commercial Taxes Officer
Shamhu Saran Agarwal and Company v. Additional Commissioner Grade-2 & Ors. 31-01-2024 Legality of detention and penalty under Section 129 GST on ground of undervaluation of goods Facts :The petitioner challenged a penalty order dated 20.12.2020 and appellate order dated 17.09.2021 passed under GST law. The goods were detained during transit solely on the ground of alleged undervaluation. All documents including invoice and e-way bill were available and there was no discrepancy in description of goods. The detention and penalty were confirmed by the authorities on the same ground.Court Decision:The Court held that undervaluation is not a valid ground for detention of goods under Section 129. It observed that when documents are proper and there is no mismatch, detention cannot be justified merely on valuation issues. The Court held that in cases of undervaluation, proceedings must be initiated under Sections 73 or 74 and not by detention and penalty during transit. Accordingly, the impugned penalty and appellate orders were quashed and set aside, with direction to refund any deposited amount.Cases Referred:Hindustan Coca Cola Pvt. Ltd. v. Assistant State Tax OfficerN.V.K. Mohammed Sulthan Rawther caseJ.K. Synthetics Ltd. v. Commercial Taxes Officer View Download
165	Shamhu Saran Agarwal and Company vs Additional Commissioner Grade-2 & Others	31-01-2024	Whether goods can be detained and penalty imposed under Section 129 GST Act on the ground of undervaluation.	View Download
Facts :The petitioner challenged penalty order dated 20.12.2020 and appellate order dated 17.09.2021 arising from detention of goods in transit. The goods were detained solely on the allegation of undervaluation despite accompanying invoice, e-way bill, and proper documents. The appellate authority affirmed the penalty on the same ground of undervaluation. The petitioner relied on departmental circular stating that goods should not be detained merely on valuation disputes.Court Decision:The Court held that undervaluation is not a valid ground for detention of goods under Section 129 of the Act. Where all documents are proper and there is no discrepancy, detention cannot be justified on valuation issues. Issues of undervaluation must be examined through proceedings under Sections 73 or 74 of the GST Act and not through detention proceedings. Penalty imposed under Section 129 on mere suspicion of undervaluation was held unsustainable and set aside. The impugned orders were quashed and consequential relief including refund was directed.Cases Referred:Hindustan Coca Cola Pvt. Ltd. vs Assistant State Tax OfficerN.V.K. Mohammed Sulthan Rawther’s caseJ.K. Synthetics Ltd. vs Commercial Taxes Officer
Shamhu Saran Agarwal and Company vs Additional Commissioner Grade-2 & Others 31-01-2024 Whether goods can be detained and penalty imposed under Section 129 GST Act on the ground of undervaluation. Facts :The petitioner challenged penalty order dated 20.12.2020 and appellate order dated 17.09.2021 arising from detention of goods in transit. The goods were detained solely on the allegation of undervaluation despite accompanying invoice, e-way bill, and proper documents. The appellate authority affirmed the penalty on the same ground of undervaluation. The petitioner relied on departmental circular stating that goods should not be detained merely on valuation disputes.Court Decision:The Court held that undervaluation is not a valid ground for detention of goods under Section 129 of the Act. Where all documents are proper and there is no discrepancy, detention cannot be justified on valuation issues. Issues of undervaluation must be examined through proceedings under Sections 73 or 74 of the GST Act and not through detention proceedings. Penalty imposed under Section 129 on mere suspicion of undervaluation was held unsustainable and set aside. The impugned orders were quashed and consequential relief including refund was directed.Cases Referred:Hindustan Coca Cola Pvt. Ltd. vs Assistant State Tax OfficerN.V.K. Mohammed Sulthan Rawther’s caseJ.K. Synthetics Ltd. vs Commercial Taxes Officer View Download
166	The State of Himachal Pradesh and Others v. Yogendera Mohan Sengupta and	11-01-2024	Binding nature of law declared by the Supreme Court under Article 141 of the Constitution of India on all Courts, Tribunals, and authorities functioning under a High Court's superintendence — and the requirement of judicial discipline to prevent	View Download
Background:Para 1–2, 3.1–3.14: The Himachal Pradesh Town & Country Planning Act, 1977 (TCP Act) governs planning for the Shimla Planning Area (SPA). Respondent No.1 filed OA No. 121 of 2014 before NGT seeking protection of "Green Belt"/forest areas from non-forest activity. NGT (16.11.2017 order — "first order of NGT") went beyond the prayers and issued sweeping construction restrictions across the entire SPA (e.g., capping construction at "2 storeys + attic" in core/green areas) and directed the State to finalize the development plan within 3 months incorporating its directions. The State's review was dismissed (16.7.2018), leading to Civil Appeal Nos. 5348-5349 of 2019.Para 2, 4–4.1: Subsequently the State published a draft development plan (8.2.2022). Respondent No.1 filed a fresh OA (No. 297 of 2022); NGT stayed the draft plan (interim order 12.5.2022). The State challenged this before the Himachal Pradesh High Court (CWP No. 5960 of 2022). Despite the pendency of that writ petition, NGT passed a final order (14.10.2022 — "second order of NGT") declaring the draft plan illegal for conflicting with its first order. The Supreme Court transferred CWP No. 5960 of 2022 to itself (order dated 14.11.2022), renumbered as Transferred Case (C) No. 2 of 2023.Facts :Para 12–19: The State argued: (a) NGT's jurisdiction under the NGT Act, 2010 is confined to Schedule I enactments, which do not include town & country planning; (b) finalizing a development plan is a quasi-legislative function, and NGT cannot direct how a legislative body exercises that power; (c) NGT could not have suo motu enlarged the scope of the original OA; (d) NGT could not proceed once the High Court was already seized of the same issue in CWP No. 5960 of 2022.Para 20–28: Respondents argued the first NGT order was based on a High-Powered Committee report addressing genuine ecological risks (landslides, cloudbursts, fragile Himalayan ecology), that NGT has overriding power under the NGT Act, and relied on Mantri Techzone Private Limited v. Forward Foundation, (2019) 18 SCC 494 : 2019 INSC 315, to argue NGT could vary buffer zones/planning norms.Para 30–61: The Court analyzed Sections 13–20 of the TCP Act (Chapter IV) — preparation of draft development plan (Sec. 18), publication and objections (Sec. 19), and State Government's sanction (Sec. 20) — holding these constitute a complete delegated-legislation scheme with in-built safeguards (public notice, objections, hearings at two stages).Court Observations :Para 45: "Chapter-IV of the TCP Act is a complete code, providing for preparation of draft development plan, publication of draft development plan with a publication of its notice, inviting objections and suggestions, giving reasonable opportunity to all persons affected of being heard, making modifications in the draft development plan as may be considered necessary by the Director and thereafter submitting it to the State Government."Para 51: "...it will be amply clear that the preparation of draft development plan under Section 18 of the TCP Act, finalization of the same under Section 19 of the TCP Act by the Director and grant of approval by the State under Section 20 of the TCP Act are all legislative functions."Para 61 (citing Cynamide India Ltd., (1987) 2 SCC 720 : 1987 INSC 100; Tulsipur Sugar Co. Ltd., (1980) 2 SCC 295 : 1980 INSC 38; Sundarjas Kanyalal Bhatija, (1989) 3 SCC 396 : 1989 INSC 202; Pune Municipal Corporation, (2004) 10 SCC 796 : 2004 INSC 348; Bangalore Development Authority, (2012) 3 SCC 442; Rajeev Suri, (2022) 11 SCC 1 : 2021 INSC 446): "...it is a settled position of law that the exercise of power for the preparation, finalization and approval of development plan is a power exercised by the delegatee for enacting a subordinate piece of legislation."Para 64 (citing V.K. Naswa v. Home Secretary, Union of India, (2012) 2 SCC 542 : 2012 INSC 10): "The courts cannot usurp the functions assigned to the executive under the Constitution and cannot even indirectly require the executive to exercise its law-making power in any manner." and "Neither the court can legislate, nor has it any competence to issue directions to the legislature to enact the law in a particular manner."Para 69: "...neither the High Courts while exercising powers under Article 226 of the Constitution nor this Court while exercising powers under Article 32 of the Constitution can direct the legislature or its delegate to enact a law or subordinate legislation in a particular manner. If the High Courts and this Court... cannot do so, the answer to the question as to whether a Tribunal constituted under a statute, having a limited jurisdiction, can do so or not, would be obviously 'No'."Para 70: "...the first order of NGT is liable to be set aside on the short ground that it has transgressed its limitations and attempted to encroach upon the field reserved for the delegate to enact a piece of delegated legislation."Para 76: On Mantri Techzone Private Limited (relied on by respondents) — "we are... of the considered view that the observations found in para 47 of the Mantri Techzone Private Limited (supra) could not be construed to be a precedent or a ratio decidendi," since the point was conceded by counsel there, not adjudicated.Para 108 (citing Priya Gupta and Another v. Additional Secretary, Ministry of Health and Family Welfare and Others, (2013) 11 SCC 404 : 2012 INSC 601):"It could thus be seen that this Court in unequivocal terms held that no Court or Tribunal and for that matter any other authority can ignore the law stated by this Court. It held that such obedience would also be conducive to their smooth working, otherwise there would be confusion in the administration of law and the respect for law would irretrievably suffer. It has been held that the law declared by the higher court in the State is binding on authorities and tribunals under its superintendence and they cannot ignore it. This Court expressed a caution that it had become necessary to reiterate that disrespect to the constitutional ethos and breach of discipline have a grave impact on the credibility of judicial institution and encourages chance litigation. This Court further held that predictability and certainty are important hallmarks of judicial jurisprudence developed in this country, as discipline is sine qua non for effective and efficient functioning of the judicial system."(This paragraph establishes that Supreme Court orders bind all courts/tribunals under Article 141; that a tribunal under a High Court's supervisory jurisdiction — such as the NGT vis-à-vis the Himachal Pradesh High Court — cannot ignore issues already before that High Court; and that disregarding this discipline undermines judicial credibility and encourages "chance litigation." It directly supports the Court's conclusion in Para 109 that the NGT breached judicial propriety by proceeding despite the High Court being seized of the same matter.)Para 109–112 (citing L. Chandra Kumar, (1997) 3 SCC 261 : 1997 INSC 288; Raghu Ramakrishna Raju Kanumuru, (2022) 8 SCC 156 : 2022 INSC 632): "...the continuation of the proceedings by the NGT during the pendency of the writ petitions before the High Court was not in conformity with the principles of judicial propriety." and "...the second order of NGT... is liable to be set aside... [also] on the ground of judicial propriety, the NGT ought not to have continued with the proceedings after the High Court was in seisin of the matter."Para 124: "...there are sufficient safeguards to balance the need for development while taking care of and addressing the environmental and ecological concerns... the development plan... cannot be stalled in entirety thereby putting the entire developmental activities to a standstill."Final Verdict (Para 126):Appeals and Transferred Case allowed; NGT's orders dated 16.11.2017, 16.7.2018, 12.5.2022 and 14.10.2022 quashed and set aside; State of Himachal Pradesh permitted to implement the development plan published on 20.6.2023, subject to the Court's observations. No order as to costs.👍 Thumbs Up — Decision in favour of the State of Himachal Pradesh (Appellant); NGT's orders restraining/directing the development plan were set aside as exceeding jurisdiction. Key Cases Referred :Himachal Pradesh Bus Stand Management and Development Authority v. Central Empowered Committee, (2021) 4 SCC 309 : 2021 INSC 18State of Madhya Pradesh v. Centre for Environment Protection Research and Development, (2020) 9 SCC 781 : 2020 INSC 516Director General (Road Development), NHAI v. Aam Aadmi Lokmanch, (2021) 11 SCC 566 : 2020 INSC 452Tamil Nadu Pollution Control Board v. Sterlite Industries (India) Ltd., (2019) 19 SCC 479 : 2019 INSC 220Techi Tagi Tara v. Rajendra Singh Bhandari, (2018) 11 SCC 734 : 2017 INSC 986State of Himachal Pradesh v. Satpal Saini, (2017) 11 SCC 42Ambesh Kumar (Dr.) v. Principal, L.L.R.M. Medical College, 1986 Supp SCC 543 : 1986 INSC 275Bishambhar Dayal Chandra Mohan v. State of Uttar Pradesh, (1982) 1 SCC 39 : 1981 INSC 189State of Andhra Pradesh v. Raghu Ramakrishna Raju Kanumuru, (2022) 8 SCC 156 : 2022 INSC 632T.N. Godavarman Thirumulkpad v. Union of India, (1997) 2 SCC 267 : 1997 INSC 226; later orders (2023 INSC 430)Punjab Termination of Agreement Act, 2004, In Re, (2017) 1 SCC 121 : 2016 INSC 1018State of Tamil Nadu v. State of Kerala, (2014) 12 SCC 696 : 2014 INSC 373Mantri Techzone Private Limited v. Forward Foundation, (2019) 18 SCC 494 : 2019 INSC 315Pragnesh Shah v. Dr. Arun Kumar Sharma, (2022) 11 SCC 493 : 2022 INSC 47Supreme Court Monitoring Committee v. Mussoorie Dehradun Development Authority, (1997) 11 SCC 605Resident's Welfare Association v. UT of Chandigarh, (2023) 8 SCC 643 : 2023 INSC 22Union of India v. Cynamide India Ltd., (1987) 2 SCC 720 : 1987 INSC 100Tulsipur Sugar Co. Ltd. v. Notified Area Committee, Tulsipur, (1980) 2 SCC 295 : 1980 INSC 38Sundarjas Kanyalal Bhatija v. Collector, Thane, (1989) 3 SCC 396 : 1989 INSC 202Pune Municipal Corporation v. Promoters and Builders Association, (2004) 10 SCC 796 : 2004 INSC 348Bangalore Development Authority v. Aircraft Employees' Cooperative Society Ltd., (2012) 3 SCC 442Rajeev Suri v. Delhi Development Authority, (2022) 11 SCC 1 : 2021 INSC 446V.K. Naswa v. Home Secretary, Union of India, (2012) 2 SCC 542 : 2012 INSC 10Manoj Narula v. Union of India, (2014) 9 SCC 1 : 2014 INSC 568Union of India v. Dhanwanti Devi, (1996) 6 SCC 44 : 1996 INSC 911L. Chandra Kumar v. Union of India, (1997) 3 SCC 261 : 1997 INSC 288Priya Gupta v. Additional Secretary, Ministry of Health, (2013) 11 SCC 404 : 2012 INSC 601Indian Council for Enviro-Legal Action v. Union of India, (1996) 5 SCC 281 : 1996 INSC 237Essar Oil Limited v. Halar Utkarsh Samiti, (2004) 2 SCC 392 : 2004 INSC 40N.D. Jayal v. Union of India, (2004) 9 SCC 362 : 2003 INSC 438State of Uttar Pradesh v. Uday Education and Welfare Trust, 2022 SCC OnLine SC 1469 : 2022 INSC 465
The State of Himachal Pradesh and Others v. Yogendera Mohan Sengupta and 11-01-2024 Binding nature of law declared by the Supreme Court under Article 141 of the Constitution of India on all Courts, Tribunals, and authorities functioning under a High Court's superintendence — and the requirement of judicial discipline to prevent Background:Para 1–2, 3.1–3.14: The Himachal Pradesh Town & Country Planning Act, 1977 (TCP Act) governs planning for the Shimla Planning Area (SPA). Respondent No.1 filed OA No. 121 of 2014 before NGT seeking protection of "Green Belt"/forest areas from non-forest activity. NGT (16.11.2017 order — "first order of NGT") went beyond the prayers and issued sweeping construction restrictions across the entire SPA (e.g., capping construction at "2 storeys + attic" in core/green areas) and directed the State to finalize the development plan within 3 months incorporating its directions. The State's review was dismissed (16.7.2018), leading to Civil Appeal Nos. 5348-5349 of 2019.Para 2, 4–4.1: Subsequently the State published a draft development plan (8.2.2022). Respondent No.1 filed a fresh OA (No. 297 of 2022); NGT stayed the draft plan (interim order 12.5.2022). The State challenged this before the Himachal Pradesh High Court (CWP No. 5960 of 2022). Despite the pendency of that writ petition, NGT passed a final order (14.10.2022 — "second order of NGT") declaring the draft plan illegal for conflicting with its first order. The Supreme Court transferred CWP No. 5960 of 2022 to itself (order dated 14.11.2022), renumbered as Transferred Case (C) No. 2 of 2023.Facts :Para 12–19: The State argued: (a) NGT's jurisdiction under the NGT Act, 2010 is confined to Schedule I enactments, which do not include town & country planning; (b) finalizing a development plan is a quasi-legislative function, and NGT cannot direct how a legislative body exercises that power; (c) NGT could not have suo motu enlarged the scope of the original OA; (d) NGT could not proceed once the High Court was already seized of the same issue in CWP No. 5960 of 2022.Para 20–28: Respondents argued the first NGT order was based on a High-Powered Committee report addressing genuine ecological risks (landslides, cloudbursts, fragile Himalayan ecology), that NGT has overriding power under the NGT Act, and relied on Mantri Techzone Private Limited v. Forward Foundation, (2019) 18 SCC 494 : 2019 INSC 315, to argue NGT could vary buffer zones/planning norms.Para 30–61: The Court analyzed Sections 13–20 of the TCP Act (Chapter IV) — preparation of draft development plan (Sec. 18), publication and objections (Sec. 19), and State Government's sanction (Sec. 20) — holding these constitute a complete delegated-legislation scheme with in-built safeguards (public notice, objections, hearings at two stages).Court Observations :Para 45: "Chapter-IV of the TCP Act is a complete code, providing for preparation of draft development plan, publication of draft development plan with a publication of its notice, inviting objections and suggestions, giving reasonable opportunity to all persons affected of being heard, making modifications in the draft development plan as may be considered necessary by the Director and thereafter submitting it to the State Government."Para 51: "...it will be amply clear that the preparation of draft development plan under Section 18 of the TCP Act, finalization of the same under Section 19 of the TCP Act by the Director and grant of approval by the State under Section 20 of the TCP Act are all legislative functions."Para 61 (citing Cynamide India Ltd., (1987) 2 SCC 720 : 1987 INSC 100; Tulsipur Sugar Co. Ltd., (1980) 2 SCC 295 : 1980 INSC 38; Sundarjas Kanyalal Bhatija, (1989) 3 SCC 396 : 1989 INSC 202; Pune Municipal Corporation, (2004) 10 SCC 796 : 2004 INSC 348; Bangalore Development Authority, (2012) 3 SCC 442; Rajeev Suri, (2022) 11 SCC 1 : 2021 INSC 446): "...it is a settled position of law that the exercise of power for the preparation, finalization and approval of development plan is a power exercised by the delegatee for enacting a subordinate piece of legislation."Para 64 (citing V.K. Naswa v. Home Secretary, Union of India, (2012) 2 SCC 542 : 2012 INSC 10): "The courts cannot usurp the functions assigned to the executive under the Constitution and cannot even indirectly require the executive to exercise its law-making power in any manner." and "Neither the court can legislate, nor has it any competence to issue directions to the legislature to enact the law in a particular manner."Para 69: "...neither the High Courts while exercising powers under Article 226 of the Constitution nor this Court while exercising powers under Article 32 of the Constitution can direct the legislature or its delegate to enact a law or subordinate legislation in a particular manner. If the High Courts and this Court... cannot do so, the answer to the question as to whether a Tribunal constituted under a statute, having a limited jurisdiction, can do so or not, would be obviously 'No'."Para 70: "...the first order of NGT is liable to be set aside on the short ground that it has transgressed its limitations and attempted to encroach upon the field reserved for the delegate to enact a piece of delegated legislation."Para 76: On Mantri Techzone Private Limited (relied on by respondents) — "we are... of the considered view that the observations found in para 47 of the Mantri Techzone Private Limited (supra) could not be construed to be a precedent or a ratio decidendi," since the point was conceded by counsel there, not adjudicated.Para 108 (citing Priya Gupta and Another v. Additional Secretary, Ministry of Health and Family Welfare and Others, (2013) 11 SCC 404 : 2012 INSC 601):"It could thus be seen that this Court in unequivocal terms held that no Court or Tribunal and for that matter any other authority can ignore the law stated by this Court. It held that such obedience would also be conducive to their smooth working, otherwise there would be confusion in the administration of law and the respect for law would irretrievably suffer. It has been held that the law declared by the higher court in the State is binding on authorities and tribunals under its superintendence and they cannot ignore it. This Court expressed a caution that it had become necessary to reiterate that disrespect to the constitutional ethos and breach of discipline have a grave impact on the credibility of judicial institution and encourages chance litigation. This Court further held that predictability and certainty are important hallmarks of judicial jurisprudence developed in this country, as discipline is sine qua non for effective and efficient functioning of the judicial system."(This paragraph establishes that Supreme Court orders bind all courts/tribunals under Article 141; that a tribunal under a High Court's supervisory jurisdiction — such as the NGT vis-à-vis the Himachal Pradesh High Court — cannot ignore issues already before that High Court; and that disregarding this discipline undermines judicial credibility and encourages "chance litigation." It directly supports the Court's conclusion in Para 109 that the NGT breached judicial propriety by proceeding despite the High Court being seized of the same matter.)Para 109–112 (citing L. Chandra Kumar, (1997) 3 SCC 261 : 1997 INSC 288; Raghu Ramakrishna Raju Kanumuru, (2022) 8 SCC 156 : 2022 INSC 632): "...the continuation of the proceedings by the NGT during the pendency of the writ petitions before the High Court was not in conformity with the principles of judicial propriety." and "...the second order of NGT... is liable to be set aside... [also] on the ground of judicial propriety, the NGT ought not to have continued with the proceedings after the High Court was in seisin of the matter."Para 124: "...there are sufficient safeguards to balance the need for development while taking care of and addressing the environmental and ecological concerns... the development plan... cannot be stalled in entirety thereby putting the entire developmental activities to a standstill."Final Verdict (Para 126):Appeals and Transferred Case allowed; NGT's orders dated 16.11.2017, 16.7.2018, 12.5.2022 and 14.10.2022 quashed and set aside; State of Himachal Pradesh permitted to implement the development plan published on 20.6.2023, subject to the Court's observations. No order as to costs.👍 Thumbs Up — Decision in favour of the State of Himachal Pradesh (Appellant); NGT's orders restraining/directing the development plan were set aside as exceeding jurisdiction. Key Cases Referred :Himachal Pradesh Bus Stand Management and Development Authority v. Central Empowered Committee, (2021) 4 SCC 309 : 2021 INSC 18State of Madhya Pradesh v. Centre for Environment Protection Research and Development, (2020) 9 SCC 781 : 2020 INSC 516Director General (Road Development), NHAI v. Aam Aadmi Lokmanch, (2021) 11 SCC 566 : 2020 INSC 452Tamil Nadu Pollution Control Board v. Sterlite Industries (India) Ltd., (2019) 19 SCC 479 : 2019 INSC 220Techi Tagi Tara v. Rajendra Singh Bhandari, (2018) 11 SCC 734 : 2017 INSC 986State of Himachal Pradesh v. Satpal Saini, (2017) 11 SCC 42Ambesh Kumar (Dr.) v. Principal, L.L.R.M. Medical College, 1986 Supp SCC 543 : 1986 INSC 275Bishambhar Dayal Chandra Mohan v. State of Uttar Pradesh, (1982) 1 SCC 39 : 1981 INSC 189State of Andhra Pradesh v. Raghu Ramakrishna Raju Kanumuru, (2022) 8 SCC 156 : 2022 INSC 632T.N. Godavarman Thirumulkpad v. Union of India, (1997) 2 SCC 267 : 1997 INSC 226; later orders (2023 INSC 430)Punjab Termination of Agreement Act, 2004, In Re, (2017) 1 SCC 121 : 2016 INSC 1018State of Tamil Nadu v. State of Kerala, (2014) 12 SCC 696 : 2014 INSC 373Mantri Techzone Private Limited v. Forward Foundation, (2019) 18 SCC 494 : 2019 INSC 315Pragnesh Shah v. Dr. Arun Kumar Sharma, (2022) 11 SCC 493 : 2022 INSC 47Supreme Court Monitoring Committee v. Mussoorie Dehradun Development Authority, (1997) 11 SCC 605Resident's Welfare Association v. UT of Chandigarh, (2023) 8 SCC 643 : 2023 INSC 22Union of India v. Cynamide India Ltd., (1987) 2 SCC 720 : 1987 INSC 100Tulsipur Sugar Co. Ltd. v. Notified Area Committee, Tulsipur, (1980) 2 SCC 295 : 1980 INSC 38Sundarjas Kanyalal Bhatija v. Collector, Thane, (1989) 3 SCC 396 : 1989 INSC 202Pune Municipal Corporation v. Promoters and Builders Association, (2004) 10 SCC 796 : 2004 INSC 348Bangalore Development Authority v. Aircraft Employees' Cooperative Society Ltd., (2012) 3 SCC 442Rajeev Suri v. Delhi Development Authority, (2022) 11 SCC 1 : 2021 INSC 446V.K. Naswa v. Home Secretary, Union of India, (2012) 2 SCC 542 : 2012 INSC 10Manoj Narula v. Union of India, (2014) 9 SCC 1 : 2014 INSC 568Union of India v. Dhanwanti Devi, (1996) 6 SCC 44 : 1996 INSC 911L. Chandra Kumar v. Union of India, (1997) 3 SCC 261 : 1997 INSC 288Priya Gupta v. Additional Secretary, Ministry of Health, (2013) 11 SCC 404 : 2012 INSC 601Indian Council for Enviro-Legal Action v. Union of India, (1996) 5 SCC 281 : 1996 INSC 237Essar Oil Limited v. Halar Utkarsh Samiti, (2004) 2 SCC 392 : 2004 INSC 40N.D. Jayal v. Union of India, (2004) 9 SCC 362 : 2003 INSC 438State of Uttar Pradesh v. Uday Education and Welfare Trust, 2022 SCC OnLine SC 1469 : 2022 INSC 465 View Download
167	Tejas Arecanut Traders vs. Joint Commissioner of Commercial Taxes & Another	20-12-2023	Whether the mandatory pre-deposit of 10% under Section 107(6)(b) of the CGST Act is to be computed on the entire demand (tax + interest + fine + fee + penalty) or exclusively on the disputed tax amount.	View Download
BACKGROUNDThe petitioner, a trader, was subjected to a confiscation order by the Enforcement Officer who determined the total demand at Rs.1,41,11,633/-, which included tax, fine, penalty and other components, with the tax component alone determined at Rs.6,71,983/-. When the petitioner filed an appeal before the Appellate Authority under Section 107(1) of the CGST Act, the Appellate Authority declined to admit the appeal on the ground that the petitioner had failed to comply with the pre-deposit requirement under Section 107(6) of the CGST Act — having calculated 10% pre-deposit on the entire demand of Rs.1,41,11,633/- (i.e., Rs.14,11,163/-). The petitioner, however, had already deposited 10% of the tax component alone amounting to Rs.67,200/-. FACTSThe petitioner challenged the entire demand confirmed in the confiscation order. The Appellate Authority, while examining the maintainability of the appeal, called upon the petitioner to deposit 10% of the total composite demand of Rs.1,41,11,633/- (inclusive of fine, penalty, fee and interest). The petitioner contended that the expression "tax in dispute" in Section 107(6)(b) of the CGST Act refers only to the tax component and does not include interest, penalty, fine and fee, and that he had already deposited 10% of the tax as determined by the Enforcement Officer. The Appellate Authority, rejecting this contention, refused to admit the appeal, leading to the present writ petition before the High Court. COURT OBSERVATIONS (Verbatim)"In the context of disputing the entire tax amount, the 10% pre-deposit requirement pertains exclusively to the remaining disputed tax amount as articulated in the statutory language. Consequently, there exists a statutory basis for asserting that 10% pre-deposit obligation is confined to the contested tax quantum excluding penalty, fee and interest. This interpretation aligns with the legal principle that penalties are consequential to the determination of the underlining tax liability.""The intentional exclusion of disputed interest, fine, fee, and penalty from sub-clause (b) of Section 107(6) of the CGST Act signifies a crucial legislative distinction. Analyzing this deliberate separation provides insights into the lawmaker's clear intent regarding the nature and scope of the pre-deposit obligation in appeals.""By isolating 'a sum equal to ten per cent of the remaining amount of tax in dispute' in sub-clause (b), the legislator conveys a focused pre-deposit requirement specifically related to the disputed tax amount. This implies that the legislative design prioritizes the financial commitment associated directly with the primary tax liability being contested.""The appellate authority therefore, was not justified in calling upon the petitioner to deposit 10% of not only tax liability, but, also fine which is imposed by the Enforcement Officer equivalent to the value of the goods. If the order passed by the appellate authority under challenge is accepted, then the condition under clause (b) giving an option to the aggrieved person who disputes the entire tax liability to deposit 10% of the remaining amount of tax in dispute would be defeated.""Therefore, the order under challenge is not sustainable. There is no need for the petitioner to deposit any percentage of disputed interest, fine, fee and penalty arising from the impugned order. In essence, the legislative intent as construed from Section 107(6)(b) of the CGST Act is that aggrieved party has to pre-deposit 10% of the tax liability and it does not extend to penalties, fees or interest when the petitioner has contested the entirety of the tax liability." FINAL VERDICTThe Writ Petition was allowed. The impugned order of the Appellate Authority calling for 10% pre-deposit on the total demand of Rs.1,41,11,633/- was set aside. Since the petitioner had already deposited 10% of the tax liability (Rs.67,200/-), the Appellate Authority was directed to admit the appeal and decide it on merits in accordance with law.👍 IN FAVOUR OF ASSESSEE CASES REFERRED BY THE COURT#Case NameCitation1Carbon Resources (P) Ltd. vs. State of Bihar & OthersCivil Writ Jurisdiction Case No. 24120 of 2023 (Patna High Court)2Durga Raj Vijay Kumar vs. State of U.P.(2022) 66 GSTL 321 (Allahabad High Court)3Commissioner of Income Tax vs. Hindustan Bulk Carriers2003 (3) SCC 57 (Supreme Court)4J.K. Synthetics Ltd. vs. CTO(2004) 4 SCC 276 (Supreme Court)5Prakash Nath Khanna vs. CIT(2004) 9 SCC 686 (Supreme Court)6B. Premanand vs. Mohan Koikal[2011] 4 SCC 266 (Supreme Court)
Tejas Arecanut Traders vs. Joint Commissioner of Commercial Taxes & Another 20-12-2023 Whether the mandatory pre-deposit of 10% under Section 107(6)(b) of the CGST Act is to be computed on the entire demand (tax + interest + fine + fee + penalty) or exclusively on the disputed tax amount. BACKGROUNDThe petitioner, a trader, was subjected to a confiscation order by the Enforcement Officer who determined the total demand at Rs.1,41,11,633/-, which included tax, fine, penalty and other components, with the tax component alone determined at Rs.6,71,983/-. When the petitioner filed an appeal before the Appellate Authority under Section 107(1) of the CGST Act, the Appellate Authority declined to admit the appeal on the ground that the petitioner had failed to comply with the pre-deposit requirement under Section 107(6) of the CGST Act — having calculated 10% pre-deposit on the entire demand of Rs.1,41,11,633/- (i.e., Rs.14,11,163/-). The petitioner, however, had already deposited 10% of the tax component alone amounting to Rs.67,200/-. FACTSThe petitioner challenged the entire demand confirmed in the confiscation order. The Appellate Authority, while examining the maintainability of the appeal, called upon the petitioner to deposit 10% of the total composite demand of Rs.1,41,11,633/- (inclusive of fine, penalty, fee and interest). The petitioner contended that the expression "tax in dispute" in Section 107(6)(b) of the CGST Act refers only to the tax component and does not include interest, penalty, fine and fee, and that he had already deposited 10% of the tax as determined by the Enforcement Officer. The Appellate Authority, rejecting this contention, refused to admit the appeal, leading to the present writ petition before the High Court. COURT OBSERVATIONS (Verbatim)"In the context of disputing the entire tax amount, the 10% pre-deposit requirement pertains exclusively to the remaining disputed tax amount as articulated in the statutory language. Consequently, there exists a statutory basis for asserting that 10% pre-deposit obligation is confined to the contested tax quantum excluding penalty, fee and interest. This interpretation aligns with the legal principle that penalties are consequential to the determination of the underlining tax liability.""The intentional exclusion of disputed interest, fine, fee, and penalty from sub-clause (b) of Section 107(6) of the CGST Act signifies a crucial legislative distinction. Analyzing this deliberate separation provides insights into the lawmaker's clear intent regarding the nature and scope of the pre-deposit obligation in appeals.""By isolating 'a sum equal to ten per cent of the remaining amount of tax in dispute' in sub-clause (b), the legislator conveys a focused pre-deposit requirement specifically related to the disputed tax amount. This implies that the legislative design prioritizes the financial commitment associated directly with the primary tax liability being contested.""The appellate authority therefore, was not justified in calling upon the petitioner to deposit 10% of not only tax liability, but, also fine which is imposed by the Enforcement Officer equivalent to the value of the goods. If the order passed by the appellate authority under challenge is accepted, then the condition under clause (b) giving an option to the aggrieved person who disputes the entire tax liability to deposit 10% of the remaining amount of tax in dispute would be defeated.""Therefore, the order under challenge is not sustainable. There is no need for the petitioner to deposit any percentage of disputed interest, fine, fee and penalty arising from the impugned order. In essence, the legislative intent as construed from Section 107(6)(b) of the CGST Act is that aggrieved party has to pre-deposit 10% of the tax liability and it does not extend to penalties, fees or interest when the petitioner has contested the entirety of the tax liability." FINAL VERDICTThe Writ Petition was allowed. The impugned order of the Appellate Authority calling for 10% pre-deposit on the total demand of Rs.1,41,11,633/- was set aside. Since the petitioner had already deposited 10% of the tax liability (Rs.67,200/-), the Appellate Authority was directed to admit the appeal and decide it on merits in accordance with law.👍 IN FAVOUR OF ASSESSEE CASES REFERRED BY THE COURT#Case NameCitation1Carbon Resources (P) Ltd. vs. State of Bihar & OthersCivil Writ Jurisdiction Case No. 24120 of 2023 (Patna High Court)2Durga Raj Vijay Kumar vs. State of U.P.(2022) 66 GSTL 321 (Allahabad High Court)3Commissioner of Income Tax vs. Hindustan Bulk Carriers2003 (3) SCC 57 (Supreme Court)4J.K. Synthetics Ltd. vs. CTO(2004) 4 SCC 276 (Supreme Court)5Prakash Nath Khanna vs. CIT(2004) 9 SCC 686 (Supreme Court)6B. Premanand vs. Mohan Koikal[2011] 4 SCC 266 (Supreme Court) View Download
168	Ram Kishor Arora v. Directorate of Enforcement	15-12-2023	Validity of Arrest under Section 19 read with Section 3 of the Prevention of Money Laundering Act, 2002 (PMLA) – Whether non-supply of the ECIR vitiates the arrest and whether the mandatory requirements of Section 19 were duly complied with by the Enfor	View Download
Facts of the Case:-* ED registered an ECIR against Ram Kishor Arora in connection with an alleged money laundering case arising out of a scheduled offence.* He was arrested by the ED under “Section 19 of the PMLA”.* He challenged his arrest before the Delhi High Court, arguing that: * the arrest was illegal; * he was not supplied with a copy of the ECIR; and * the mandatory requirements of Section 19 were not followed. * The Delhi High Court dismissed his petition, after which he approached the Supreme Court. Issues1. Whether supplying a copy of the ECIR to the accused is mandatory before arrest?2. Whether ED complied with Section 19 of the PMLA while arresting the appellant?3. Whether the arrest was illegal merely because the ECIR was not furnished? Observations of the Supreme CourtECIR is an internal document of the ED. It is not equivalent to an FIR, and there is no statutory requirement under the PMLA to supply a copy of the ECIR to the accused.* Under Section 19 PMLA, the authorised officer must have “reason to believe” that the person is guilty of an offence under Section 3; * record those reasons “in writing”and * inform the arrested person of the grounds of arrest.* The Court held that “communicating the grounds of arrest is mandatory”, but “supplying the ECIR is not mandatory”. Decision* The Supreme Court “dismissed the appeal”.* It upheld the validity of the arrest, holding that the requirements of Section 19 had been complied with.* The Court reaffirmed that: * ECIR is only an internal document of the ED. * Non-supply of the ECIR does not make the arrest illegal. * Compliance with Section 19 PMLA is the relevant legal requirement.
Ram Kishor Arora v. Directorate of Enforcement 15-12-2023 Validity of Arrest under Section 19 read with Section 3 of the Prevention of Money Laundering Act, 2002 (PMLA) – Whether non-supply of the ECIR vitiates the arrest and whether the mandatory requirements of Section 19 were duly complied with by the Enfor Facts of the Case:-* ED registered an ECIR against Ram Kishor Arora in connection with an alleged money laundering case arising out of a scheduled offence.* He was arrested by the ED under “Section 19 of the PMLA”.* He challenged his arrest before the Delhi High Court, arguing that: * the arrest was illegal; * he was not supplied with a copy of the ECIR; and * the mandatory requirements of Section 19 were not followed. * The Delhi High Court dismissed his petition, after which he approached the Supreme Court. Issues1. Whether supplying a copy of the ECIR to the accused is mandatory before arrest?2. Whether ED complied with Section 19 of the PMLA while arresting the appellant?3. Whether the arrest was illegal merely because the ECIR was not furnished? Observations of the Supreme CourtECIR is an internal document of the ED. It is not equivalent to an FIR, and there is no statutory requirement under the PMLA to supply a copy of the ECIR to the accused.* Under Section 19 PMLA, the authorised officer must have “reason to believe” that the person is guilty of an offence under Section 3; * record those reasons “in writing”and * inform the arrested person of the grounds of arrest.* The Court held that “communicating the grounds of arrest is mandatory”, but “supplying the ECIR is not mandatory”. Decision* The Supreme Court “dismissed the appeal”.* It upheld the validity of the arrest, holding that the requirements of Section 19 had been complied with.* The Court reaffirmed that: * ECIR is only an internal document of the ED. * Non-supply of the ECIR does not make the arrest illegal. * Compliance with Section 19 PMLA is the relevant legal requirement. View Download
169	Assistant Commissioner of State Tax, Ballygunge Charge & Ors. v. Suncraft Energy Private Limited & Ors.	14-12-2023	Challenge to High Court order relating to tax demand under GST; scope of interference under Article 136 of the Constitution (Provision involved: Article 136 of the Constitution of India)	View Download
Facts :The petitioners filed Special Leave Petitions challenging the judgment and order dated 02.08.2023 passed by the High Court at Calcutta. The dispute pertained to tax demand raised against the respondent. The matter was placed before the Supreme Court for admission, including an application for condonation of delay.Court Decision:The Supreme Court condoned the delay but declined to interfere with the impugned judgment of the High Court in exercise of its jurisdiction under Article 136. The Court noted the facts and circumstances of the case and the relatively low tax demand, and dismissed the Special Leave Petitions.
Assistant Commissioner of State Tax, Ballygunge Charge & Ors. v. Suncraft Energy Private Limited & Ors. 14-12-2023 Challenge to High Court order relating to tax demand under GST; scope of interference under Article 136 of the Constitution (Provision involved: Article 136 of the Constitution of India) Facts :The petitioners filed Special Leave Petitions challenging the judgment and order dated 02.08.2023 passed by the High Court at Calcutta. The dispute pertained to tax demand raised against the respondent. The matter was placed before the Supreme Court for admission, including an application for condonation of delay.Court Decision:The Supreme Court condoned the delay but declined to interfere with the impugned judgment of the High Court in exercise of its jurisdiction under Article 136. The Court noted the facts and circumstances of the case and the relatively low tax demand, and dismissed the Special Leave Petitions. View Download
170	Infac India Pvt. Ltd. v. Deputy Commissioner of GST & Central Excise	14-09-2023	Refund of wrongly adjusted interest on transitional credit under GST regime (Sections 49(5), 50(3), 140, 142(3) – Central Goods and Services Tax Act, 2017; Section 11B – Central Excise Act, 1944)	View Download
Facts :Petitioner wrongly transitioned balance from Personal Ledger Account as input tax credit under Section 140 of CGST Act.Refund was sanctioned, but ₹9,25,366 was adjusted towards interest on such utilization.Petitioner contended that sufficient Input Tax Credit was available and there was no loss to revenue.Dispute arose on legality of interest adjustment while granting refund.Court Decision:Petitioner ought to have claimed refund under Section 11B of Central Excise Act read with Section 142(3) of CGST Act.Wrong transition of credit was acknowledged, but tax liability was subsequently squared up using available Input Tax Credit.There was no loss to revenue, as sufficient credit existed.Directions:Deduction of ₹9,25,366 towards interest held unsustainable.Impugned order modified to that extent.Respondent directed to refund ₹9,25,366 to petitioner.Refund to be made within 8 weeks.
Infac India Pvt. Ltd. v. Deputy Commissioner of GST & Central Excise 14-09-2023 Refund of wrongly adjusted interest on transitional credit under GST regime (Sections 49(5), 50(3), 140, 142(3) – Central Goods and Services Tax Act, 2017; Section 11B – Central Excise Act, 1944) Facts :Petitioner wrongly transitioned balance from Personal Ledger Account as input tax credit under Section 140 of CGST Act.Refund was sanctioned, but ₹9,25,366 was adjusted towards interest on such utilization.Petitioner contended that sufficient Input Tax Credit was available and there was no loss to revenue.Dispute arose on legality of interest adjustment while granting refund.Court Decision:Petitioner ought to have claimed refund under Section 11B of Central Excise Act read with Section 142(3) of CGST Act.Wrong transition of credit was acknowledged, but tax liability was subsequently squared up using available Input Tax Credit.There was no loss to revenue, as sufficient credit existed.Directions:Deduction of ₹9,25,366 towards interest held unsustainable.Impugned order modified to that extent.Respondent directed to refund ₹9,25,366 to petitioner.Refund to be made within 8 weeks. View Download

Total: 205 case laws