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The Supreme Court upheld the High Courts' decisions, finding no substantial question of law regarding the recomputation of Section 80-IA deduction. The court also affirmed the disallowance of professional expenses based on retracted statements and declined to decide on the nature of carbon credit receipts, leaving it open for future proceedings.
The Supreme Court held that gains from foreign currency fluctuations in an EEFC account are not profits derived from the export of goods or merchandise. The deduction under Section 80HHC is strictly limited to profits directly arising from exports.
The Supreme Court, while acknowledging the appellant's failure to comply with the E-way bill validity period, decided to interfere with the High Court's order concerning the quantum of penalty. The Court upheld the tax amount of ₹54,00,000. However, considering the factual scenario – that the appellant owned the consignment, was using it for its contractual obligations in Uttar Pradesh and West Bengal, and no evidence indicated sale or use for another party – the penalty was reduced. The penalty was reduced to 50% of the initially imposed penalty, amounting to ₹27,00,000. The total amount payable by the appellant was thus fixed at ₹81,00,000 (₹54,00,000 tax + ₹27,00,000 penalty), subject to payments already made. Upon payment, the vehicle and consignment were to be released. The Court cautioned the appellant for future vigilance. This order was passed under Article 142 of the Constitution and is not to be treated as a precedent.
The Supreme Court held that the Review Petitioners had failed to make out any mistake or error apparent on the face of the record in the impugned judgment. The Court found that the submissions made by the learned counsels for the Review Petitioners that the impugned decision had failed to consider the waterfall mechanism under Section 53 and other provisions of the IBC were factually incorrect. The judgment explicitly noted that the Court had considered not only Section 53 of the IBC but also other provisions of the IBC and earlier decisions of the Supreme Court. The Court reiterated that the power of review is limited and that the grounds presented by the Review Petitioners did not meet the parameters for review. Consequently, the Supreme Court was not inclined to entertain the Review Petitions and did not propose to deal with other submissions on merits. All Review Petitions were dismissed.
The Supreme Court held that in the absence of fraud, collusion, or wilful misstatement or suppression of facts with intent to evade duty, the extended period of demand under Section 11A(4) of the Central Excise Act, 1944, could not be invoked. The Court noted that the assessee had declared their product as 'zarda scented tobacco' and that subsequent re-classification by the revenue was based on their own orders. The Court found that the assessee had not deliberately concealed information and that the excise authorities were aware of the product's nature. Citing precedents like CCE vs. Damnet Chemicals Private Ltd. and Anand Nishikawa Co. Ltd. v. CCE, the Court emphasized that wilful suppression requires a positive act and mere failure to declare is insufficient. The Court also referred to CCE vs. Tata Tech Ltd, stating that a demand against a classification cannot be made without undoing the classification in the registration certificate. Consequently, the Tribunal's findings were upheld, and the appeals challenging these findings were dismissed.
The Supreme Court held that a notification under Section 90(1) of the Income Tax Act, 1961, is a mandatory condition for courts, authorities, or tribunals to give effect to a DTAA or its protocol that alters existing provisions of law. The Court clarified that the fact a stipulation in a DTAA or Protocol with one nation requires the same treatment as a subsequent DTAA with another OECD member country does not automatically integrate such a term. Instead, the terms of the earlier DTAA require amendment through a separate notification under Section 90. The interpretation of the word 'is' in MFN clauses signifies present tense, meaning the relevant date for claiming benefit based on a third country's DTAA is when that country entered into a DTAA with India, not a later date when it became an OECD member. The Court found that India's treaty practice consistently requires notification for consequential amendments. Consequently, the reasoning and findings in the impugned orders were set aside, and the revenue's appeals were allowed. The Court expressly left undecided the interpretation of the India-Spain DTAA.
The Supreme Court held that the variable licence fee paid by the respondent-assessees to the Department of Telecommunications under the New Telecom Policy, 1999, is capital in nature and should be amortised in accordance with Section 35ABB of the Act. The Court found that the High Court of Delhi was incorrect in apportioning the expenditure as partly revenue and partly capital by dividing the licence fee into periods before and after July 31, 1999. The Court reasoned that the payment post-July 31, 1999, was a continuation of the payment pre-July 31, 1999, albeit in an altered format, and was traceable to the foundational licence agreement. The Court emphasized that the nomenclature and manner of payment are irrelevant, and the payment is intrinsic to the existence of the licence and the trade itself. Therefore, such a payment must be characterized as capital only. The composite right conveyed by the licence cannot be artificially bifurcated. The Court noted that even under the 1994 Policy, both fixed and variable components of the licence fee were accepted as requiring amortisation, and there was no basis to reclassify the variable fee under the 1999 Policy as revenue expenditure. The judgment of the Delhi High Court and other High Courts following it were set aside.
The Supreme Court held that IIT Patna and NIT Rourkela are covered within the definition of 'governmental authority' as per the exemption notification. The Court found no ambiguity in the definition and upheld the High Courts' decisions.
The Supreme Court held that "tinted glass sheets" are not "plain glass panes" and are therefore taxable as "goods or wares made of glass" under Notification No. 5784 dated 07.09.1981. The Court reasoned that the expression "all goods and wares made of glass" in the notification refers to all articles of glass except those specifically excluded. The exclusion of "plain glass panes" is to be construed strictly. The Court applied the principle that in taxing statutes, words and phrases are to be construed as understood in popular or commercial parlance, not technically. Citing cases like Ramavatar Budhaiprasad and Indo International Industries, the Court found that tinted glass, with its distinct manufacturing process and properties, is not understood as plain glass in common parlance. The Court rejected the appellant's reliance on dictionary meanings and Indian Standards, finding that the High Court had rightly distinguished them. The reassessment notices for the years 1992-93 to 1996-97 were also upheld. The appeals were dismissed.
The Supreme Court held that the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) was justified in setting aside the enhanced valuation and penalties. The department failed to provide sufficient evidence of contemporaneous imports at a higher price to reject the invoice price.
The Supreme Court held that for assessees whose documents are seized during a search on another party, the six-year period for filing returns commences from the date the Assessing Officer receives such documents, not from the date of the original search.
The Supreme Court held that the Settlement Commission rightly exercised its discretion in granting immunity from penalty and prosecution. The High Court should not have interfered with the Commission's order as the scope for judicial review of discretionary powers is narrow.
The Supreme Court held that the dividend income earned by the assessee is not taxable in India, as it is exempted under Omani Tax Laws, entitling the assessee to the benefits of the DTAA. The Court reasoned that the clarification letter dated 11.12.2000 from the Omani Ministry of Finance, interpreting Articles 8 and 8(bis) of the Omani Tax Laws, confirmed that dividends distributed by all companies, including tax-exempt ones, are exempt from income tax in the hands of recipients. This exemption was intended to promote economic development in Oman by attracting investments. Since the assessee invested by setting up a PE in Oman, which aided economic development, Article 8(bis) exempts the dividend tax. By virtue of Article 25 of the DTAA, the assessee is entitled to the same tax treatment in India as received in Oman. The Court also noted that the assessee's establishment in Oman had been treated as a PE from inception until 2011, and there was no reason to deviate from this treatment. The argument that the exemption letter lacked statutory force was rejected, as it was considered a valid clarification of existing provisions. Therefore, the appeals were dismissed.
The Supreme Court held that the assessee is entitled to claim tax credit for the dividend income as per the Double Taxation Avoidance Agreement (DTAA) between India and Oman. The exemption granted under Omani tax laws, supported by a clarificatory letter from the Omani Finance Ministry, is applicable.
The Supreme Court held that the appellant, Kerala State Co-operative Agricultural and Rural Development Bank Ltd. (KSCARDB), is not a co-operative bank within the meaning of Section 5(b) read with Section 56 of the Banking Regulation Act, 1949. The Court reasoned that while KSCARDB is an apex co-operative society under the State Act, 1984, it has not been declared a state co-operative bank under the NABARD Act, 1981. The definition of a 'co-operative bank' under Section 56 of the BR Act, 1949, when read with the NABARD Act, 1981, implies that only a state co-operative bank would be considered a banking company for the purposes of the BR Act. Since KSCARDB does not fall under this definition, it is not a co-operative bank hit by Section 80P(4). Therefore, it is entitled to the benefit of deduction under Section 80P of the Act as a co-operative credit society providing financial accommodation to its members. The appeals filed by the appellant are allowed, and the orders of the Kerala High Court and other authorities to the contrary are set aside.
The Supreme Court held that the customs duty, determined by adjudication orders in 2000, became 'due and payable' prior to twelve months before the 'relevant date' (December 1, 2003, the winding-up date). Consequently, these dues do not fall under the category of preferential payments under Section 530(1)(a) of the Companies Act, which is limited to debts 'due and payable' within the twelve months preceding the relevant date. The Court emphasized that Section 529A of the Companies Act, with its non-obstante clause, grants overriding preferential status to workmen's dues and secured creditors' dues, ranking them above government dues under Section 530. The provisions of the Customs Act do not override Section 529A. Therefore, prior secured creditors are entitled to enforce their charge. The impugned judgment of the High Court is set aside, and the Company Application filed by the Official Liquidator is allowed. The sale proceeds are to be paid to the Official Liquidator for distribution according to Sections 529A and 530 of the Companies Act.
The Supreme Court held that the customs authorities do not have the first right to sell the imported goods to recover customs duty when a company is in liquidation. The rights of secured creditors under Section 529A of the Companies Act, 1956, would take precedence.
The Supreme Court held that the judgment in "Bangalore Club vs. Commissioner of Income Tax" (2013) SCC 509 does not require reconsideration. The Court concluded that the principle of mutuality does not apply to interest income earned on fixed deposits made by the appellant Clubs in banks, irrespective of whether the banks are corporate members of the club or not. The Court reasoned that the order in "Cawnpore Club" was not a binding precedent under Article 141 of the Constitution as it did not declare any law and the appeals were disposed of without addressing the larger question of mutuality. The interest income earned on fixed deposits is to be treated as income from other sources under Section 2(24) of the Income Tax Act, 1961. The judgment in "Bangalore Club" was found not to be per incuriam, despite not noticing the "Cawnpore Club" order. The appeals were dismissed, upholding the taxability of the interest income.
The Supreme Court held that the first show cause notice was illegal due to an erroneous classification of service. For the other three notices, the CESTAT's findings were upheld, with a clarification regarding SEZ exemptions.
The Supreme Court held that the assessee had a bonafide belief that it was correctly discharging its duty liability, as its interpretation was based on a prior Tribunal ruling. Therefore, the extended period of limitation could not be invoked, and the demands were time-barred.
The Supreme Court held that maize starch is covered by Taxation Entry No. 61, which taxes 'starch of any kind', and not by Exemption Entry No. 8, which pertains to 'products of millets'. The Court reasoned that while maize itself is a millet product and exempt, maize starch is a processed product. The phrase 'starch of any kind' in Entry No. 61 is to be interpreted broadly to include all types of starch, including maize starch. The Court applied the principle that a specific provision (Taxation Entry No. 61) prevails over a general provision (Exemption Entry No. 8). Regarding the retrospective application of the clarification, the Court held that clarifications issued under Section 28-A of the Act, which aim to make the applicable rate of tax explicit, are inherently retrospective to resolve existing confusion. The Court found no merit in the appellant's contention that the Circular dated 8th October, 1998, was invalid or ran counter to the Act. The impugned judgment of the High Court was upheld, though for reasons different from those assigned by the High Court.
The Supreme Court held that the User Development Fee collected by airport operators is a statutory levy and not a taxable service. Therefore, service tax is not leviable on such collections.
The Supreme Court held that bitumen is not a 'valuable article' in the context of Section 69A of the Income Tax Act, 1961. Therefore, the assessee cannot be deemed to have undisclosed income from the ownership of bitumen under this section.
The Supreme Court, allowing the appeals, held that Section 69A of the Income Tax Act, 1961, is not applicable in this case. Firstly, regarding the 'owner' issue, the Court found that to apply Section 69A, the Assessing Officer must establish that the assessee is the owner of the valuable article. A bailee, such as a common carrier, is entrusted with possession but does not become the owner of the goods during the subsistence of the contract of carriage. The assessee, in this instance, was a carrier and not the owner of the bitumen. Secondly, concerning whether bitumen is a 'valuable article', the Court held that the phrase 'other valuable article' in Section 69A, when read in conjunction with 'money, bullion, jewellery', implies items of high value. Applying the principles of ejusdem generis and noscitur a sociis, bitumen, being a common article, does not fall within the category of 'valuable articles' that are typically used to hide income. The Court emphasized a strict interpretation of fiscal statutes and concluded that bitumen is not a valuable article in the context of Section 69A.
The Supreme Court held that the judgment in Mohd. Ekram Khan & Sons v. CTT, (2004) 6 SCC 183, is applicable when a manufacturer issues a credit note to a dealer for replacing a defective part under warranty, provided the dealer replaces the part from their own stock or from the open market. In such scenarios, the credit note constitutes valuable consideration for the transfer of property in the spare part from the dealer to the customer (and subsequently to the manufacturer), thus amounting to a sale exigible to sales tax. The value in the credit note is taxable. However, the judgment in Mohd. Ekram Khan does not apply if the dealer simply receives a spare part from the manufacturer to replace a defective one. In that case, the dealer might receive consideration for services rendered as an agent, which is not a sale. The Court found the overruling of judgments in Prem Motors and Geo Motors in Mohd. Ekram Khan to be proper. Consequently, dealers are liable to pay sales tax on credit notes issued under the described circumstances. The appeals filed by the dealers were dismissed, and those by the revenue were allowed.
The Supreme Court held that a legitimate expectation was created in favour of the appellants by the State government's assurance and the initial inclusion of 'blending of tea' in the definition of 'manufacture', which lured them to invest in setting up their small-scale industrial unit. This expectation was broken by the subsequent amendment in 2001, which removed 'blending of tea' from the definition, thereby making them ineligible for the tax holiday. The Court found that to justify such a shift in policy and snatch away a legitimate expectation, the public authority must demonstrate the reasons for the shift and consider the rights of affected persons, showing why the rescinding of rights is essential for advancing public interest. In this case, the government failed to provide appropriate justification for the amendment, nor did it discuss the considerations for the affected parties. A mere claim of a change in policy is insufficient; the government must precisely show the change and why it furthers public policy and good. Therefore, the Court concluded that the authority must be held accountable to the legitimate expectation created by it. The appellants were directed to be extended the benefits of the original amendment until the expiry of the promised period. The appeals were allowed.
The Supreme Court held that the prayers sought by the Revenue were in the form of a review and required detailed consideration. Therefore, the miscellaneous application for clarification was not entertained.
The Supreme Court found that the ITAT had not properly considered relevant factors like frequency and volume of trade to determine if the transaction was stock-in-trade or a capital asset. The High Court also erred in not considering these aspects.
The Tribunal held that the product rightly falls under the category of 'medicament' under Chapter 30. Amendments to tariff entries in 2012 did not justify re-examining the classification of the product, which had been consistently accepted as a medicament.
The Supreme Court held that the services rendered by the respondent were classifiable as 'works contract service' under the Finance Act, 1994, effective from 01.06.2007. The Court found the assessee's submission that they could pay service tax on the entire contract value and avail CENVAT credit on it to be without substance, as it would render Rule 2A and the composition scheme otiose. The Court clarified that for 'works contract service', an assessee is liable to pay service tax on the service element and sales tax on the goods element. The determination of the value of the service portion must be made as per Rule 2A, or the assessee can opt for the composition scheme. The assessee cannot claim CENVAT credit on the entire contract value; it can only be claimed on the service element after paying service tax on it. The impugned judgment of the CESTAT was quashed and set aside. The matter was remanded to the CESTAT for re-computation of demands in terms of Rule 2A and to decide the issue of limitation, with a direction to complete the exercise within three months. The demand for the period January 2007 to May 2007 was held unsustainable.
The Supreme Court held that the High Court's judgment was not sustainable. Exporters were duly notified of the changes due to the GST regime through a trade notice, which the High Court overlooked. The 'pre-import condition' was not a new concept, having been applied to specific articles prior to GST, and the DGFT retained the power to impose it on other goods. The Court found that the High Court erred by assuming only specified goods were subject to the condition and by not considering the HBP amendment. The definition of 'physical export' was clarified, and it was noted that not all categories of supply qualified as such. The introduction of GST was a significant overhaul, and it was not constitutionally mandated that concessions must continue in the same manner. The inconvenience to exporters in paying duties and claiming refunds was insufficient to override the legislative choice. The 'pre-import condition' and the requirement to pay duties were not arbitrary or unreasonable. The subsequent notification of 10.01.2019 could not be given retrospective effect. The Court set aside the High Court's judgment. However, for respondents who enjoyed interim orders, the Revenue was directed to permit them to claim refund or input credit, subject to documentary evidence and examination on a case-by-case basis, with a circular to be issued for convenience. The appeals were allowed subject to these terms.
The Supreme Court held that in cases of search, if incriminating material is found, the Assessing Officer can assess total income considering both the found material and other available information, even for completed assessments. However, if no incriminating material is unearthed, additions cannot be made to completed assessments based on other material.
The Supreme Court held that in the case of a search under Section 132 or requisition under Section 132A, the Assessing Officer (AO) assumes jurisdiction for block assessment under Section 153A. All pending assessments and reassessments shall stand abated. Crucially, if any incriminating material is found or unearthed, even in respect of unabated or completed assessments, the AO would have the jurisdiction to assess or reassess the total income, taking into account the incriminating material found during the search and other available material, including income declared in returns. However, if no incriminating material is unearthed during the search, the AO cannot assess or reassess income in respect of completed or unabated assessments by relying on other material. In such a scenario, for completed/unabated assessments, no addition can be made by the AO in the absence of any incriminating material found during the search. The Court agreed with the views of the Delhi High Court in Kabul Chawla and the Gujarat High Court in Saumya Construction. The Court also noted that completed/unabated assessments can be re-opened by the AO under Sections 147/148, subject to their conditions, and these powers are saved.
The Supreme Court held that a penalty or confiscation is a proceeding in rem and cannot be considered incidental to any business. Therefore, any loss incurred due to confiscation is not deductible. The decisions in Piara Singh and Dr. T.A. Quereshi were overruled.
The Supreme Court held that the High Court can examine whether the arm's length price was determined in accordance with the guidelines under the Act and Rules, and whether the Tribunal's findings were perverse. The absolute proposition that the Tribunal's determination is final was rejected.
The Supreme Court held that Section 271C is applicable only for failure to deduct tax at source, not for belated remittance of TDS. Penalties for belated remittance are covered under Section 201(1A) and prosecution under Section 276B.
The Supreme Court held that the High Court was correct in upsetting the ITAT's findings. The court agreed with the AO, CIT(A), and High Court that the assessees failed to prove their income was earned in Sikkim and that the Income Tax Act, 1961, was applicable from the relevant assessment years.
The Supreme Court held that the CESTAT's decision to exempt the imports from service tax based on their classification as goods was erroneous. The Court stated that the same activity can be taxed under different heads using the aspect theory, and the "design services" definition is broad enough to cover the imported designs.
The Supreme Court held that receipts from DEPB and Duty Drawback schemes are not profits derived from the industrial undertaking for the purpose of Section 80-IB deduction. These schemes are considered export incentives and not directly linked to the manufacturing or selling business.
The Supreme Court held that the amendment to Section 153C of the Income Tax Act, 1961, brought by the Finance Act, 2015, is applicable to searches conducted under Section 132 even before the amendment date.
The Supreme Court held that the assessment order was indeed erroneous and prejudicial to the interest of the Revenue. Applying the law laid down in Malabar Industrial Co. Ltd., the Court found that the twin conditions for exercising jurisdiction under Section 263(1) – namely, the order being erroneous and prejudicial to the Revenue – were satisfied. The Court observed that the scheme of the Act mandates the levy and collection of tax, and if an erroneous order leads to the Revenue losing tax lawfully payable, it is prejudicial. The Court distinguished situations where two plausible views are possible and the AO adopts one, stating that such orders are not revisable under Section 263 unless the view taken is unsustainable in law. In this case, the Court found the AO's acceptance of the payment as 'cost of improvement' to be erroneous, leading to a loss of revenue. Therefore, the Commissioner's exercise of jurisdiction under Section 263 was justified. The Supreme Court set aside the High Court's judgment and restored the order passed by the Commissioner.
The Supreme Court held that the payment to shareholders was not a 'cost of improvement' under Section 55(1)(b) and the Assessing Officer's order was erroneous and prejudicial to the interest of the revenue. Therefore, the Commissioner's revisionary powers under Section 263 were correctly exercised.
The Supreme Court held that the period of limitation for block assessment commences from the date of the last Panchnama drawn, not the date of the last authorization. This interpretation aligns with the purpose of Explanation 2 to Section 158BE.
The Supreme Court held that Section 35E and Section 11A operate in different fields and for different purposes. A separate notice under Section 11A is not necessary for recovery when an erroneous refund is set aside under Section 35E, provided the Section 35E proceedings were initiated within the prescribed time.
The Supreme Court held that the period of limitation for block assessment under Section 158BE of the Income Tax Act, 1961, commences from the date of the last Panchnama drawn. The Court reasoned that block assessment proceedings are initiated based on the entire material collected during the search(es) and on the basis of the respective Panchnamas drawn. Therefore, the date of the Panchnama last drawn is the relevant date and the starting point for the two-year limitation period. The Court agreed with the High Court's view and found that the submission of the assessees, if accepted, would frustrate the object and purpose of Explanation 2 to Section 158BE. The Court noted that there could be multiple searches and the material collected after the last Panchnama would be relevant. The appeals were dismissed, upholding the High Court's decision.
The Supreme Court held that the sale to institutional consumers like defense/paramilitary forces is not a retail sale and is exempt from the Legal Metrology (Packaged Commodities) Rules, 2011. Therefore, the transaction is ineligible for benefits under Section 4(A) of the Central Excise Act.
The Supreme Court held that the High Court did not commit any error in its decision. The Court reasoned that for a process to be considered 'manufacture' under the Act, it must result in the emergence of a new commercial commodity. Relying on its previous decisions, including Mahalaxmi Stores, Pio Food Packers, and Chowgule and Company, the Court reiterated that mere variation or finishing of goods does not amount to manufacture unless a new commercial commodity comes into existence. The expert evidence indicated that mixing base paint with colouring as an additive resulted in a paint of a different shade, but not a new commercial product. In common parlance, the resultant article was still 'paint' and not a different article. Therefore, the process did not amount to 'manufacture'. The appeals were dismissed.
The Supreme Court held that the excluded items, such as pumping units and pipes, are integral to the functioning of a Cutter Dredger and should not be treated as separate articles. The Court found the revenue's reliance on Note 2 of Section XVII to be insubstantial in this context.
The Supreme Court held that since all related appeals and proceedings were already decided against the appellants, there was no pending lis where the principles of Section 9-D could be applied. Therefore, the appeal was of academic interest.
The Supreme Court held that the High Court was not justified in dismissing the writ petition solely on the ground of alternative remedy. The Court clarified that while the availability of an alternative remedy is a rule of policy and discretion, it is not an absolute bar to the maintainability or entertainability of a writ petition. The Court emphasized that the High Court has discretion to entertain a writ petition, especially in cases involving a "wholly without jurisdiction" issue. The Supreme Court further held that the Revisional Authority lacked jurisdiction to reopen the proceedings. The Tribunal's order dated 21st November, 2001, which had attained finality, bound the Revisional Authority. The Revisional Authority's attempt to re-examine the classification of mosquito repellents, despite the Tribunal's decision, was considered an illegality and impropriety on the part of the Revisional Authority, not the Assessing Authority. Therefore, the impugned revisional orders were invalidated. The appeal was allowed, and the interim order was made absolute.