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TaxCorp Daily Digest
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- ๐๏ธ GST Natural Justice Under Scrutiny: Multiple High Courts โ Patna, Delhi, Bombay, Punjab & Haryana โ quash ex-parte GST demand and refund rejection orders for denying assessees a meaningful opportunity of hearing, reinforcing that procedural compliance is non-negotiable in GST adjudication.
- ๐ Income Tax Reassessment Guardrails Strengthened: Gujarat and Chandigarh tribunals invalidate reassessment proceedings based on "change of opinion" and factually incorrect portal data, while Bombay HC stays a reassessment notice amid a constitutional challenge to Sections 148 and 148A.
- โ๏ธ Supreme Court Protects Property Rights & Curbs Excessive Bail Conditions: The apex court prohibits state interference in decades-old settled land titles and strikes down an onerous โน50 lakh bank guarantee bail condition in a GST fake invoice case.
- ๐ข IBC Threshold Discipline Upheld: NCLAT Delhi dismisses an insolvency petition where the debt attributable to the corporate debtor fell below the โน1 crore statutory threshold, reinforcing separate legal identity of related entities.
Category-wise Updates
๐งพ Income Tax
A charitable trust registered since 1973 sought condonation of a 42-day delay in accepting Form 10B on the e-filing portal, even though the auditor had uploaded the report within the prescribed due date. The CIT (Exemption) rejected the application citing the absence of a Section 12AA registration certificate โ a requirement entirely outside the scope of a condonation proceeding under Section 119(2)(b). The Gujarat High Court quashed the order, holding that the authority must confine its inquiry strictly to whether the delay deserves to be condoned.
โก Key Action: Charitable trusts facing Form 10B delays should file condonation applications under Section 119(2)(b) with clear, specific reasons for the delay. Ensure the CIT (Exemption) does not venture beyond the narrow condonation inquiry.
2. Agricultural Land in Revenue Records Not Taxable as Capital Asset: Madras High Court Clarifies
The Madras High Court reaffirmed that land consistently classified as agricultural in State revenue records, with evidence of actual agricultural activity, cannot be treated as a "capital asset" for capital gains tax purposes โ even if situated in an urbanising area or earmarked for commercial development. The Court disapproved of the Tribunal's reliance on guideline values and commercial potential assumptions over official Patta, Adangal records, and accepted agricultural income.
โก Key Action: Taxpayers selling land with established agricultural classification should preserve all revenue records (Patta, Adangal, crop details) and evidence of agricultural income to successfully contest capital gains demands.
The Gujarat High Court held that even under the new reassessment regime under Sections 148 and 148A, the prohibition against "change of opinion" remains firmly intact. Where an assessee fully disclosed all material facts during original scrutiny under Section 143(3) and the AO accepted those facts, the department cannot use automated risk-flagging systems to re-evaluate the exact same data as a basis for reopening.
โก Key Action: Maintain exhaustive records of all replies, annexures, and computation statements filed during original scrutiny. These form the first line of defence against arbitrary reassessment.
The ITAT Delhi remanded the matter in HPC Infotech Private Limited Vs ITO for fresh assessment, holding that additions made on mere suspicion โ without engaging with the documentary evidence presented by the assessee โ cannot survive appellate scrutiny. The Tribunal emphasised that both assessment and appellate orders must be "speaking orders" that specifically address why evidence is accepted or rejected.
โก Key Action: All foreign remittances for inventory or business purposes must be routed through authorised banking channels with full documentary trail. Prepare detailed written submissions with indexed evidence for AO review.
5. Kerala High Court sends delayed income tax appeal back to ITAT for fresh look
The Kerala High Court set aside the ITAT's refusal to condone a 542-day delay in filing an income tax appeal for AY 2015โ16, where the assessee claimed reliance on an external agency. While the ITAT's scepticism was understandable, the Court held that the assessee โ seeking to exercise a statutory right of appeal supported by binding Supreme Court precedents on Section 80P โ should not be permanently denied the remedy for a curable defect in the affidavit.
โก Key Action: When filing delay condonation applications before the ITAT, ensure affidavits are exhaustive, identify all external agencies relied upon, and cite specific Supreme Court precedents supporting the substantive claim.
The Andhra Pradesh High Court upheld an addition of โน1.82 crore representing a negative cash balance, rejecting the assessee's shifting explanations โ first attributing the cash to anonymous "others," then to a grandmother. The Court reiterated that the burden of proving the identity, genuineness, and creditworthiness of a cash credit rests entirely on the assessee.
โก Key Action: Monitor cash ledgers rigorously. Any cash gifts or credits must be supported by consistent, documentary evidence establishing donor identity and creditworthiness from the outset.
The Gujarat High Court affirmed the deletion of a โน5.04 crore bogus purchase addition in PCIT Vs Sunil Devkishan Panwar, holding that an AO cannot make additions solely on third-party investigation reports without independently verifying evidence, supplying material to the assessee, or offering an opportunity of cross-examination. Where the assessee maintains proper books, pays applicable taxes, and has been allowed ITC by other statutory authorities, the AO's unsubstantiated allegation fails.
โก Key Action: Maintain proper books of account, ensure all purchase transactions are supported by invoices, payment records, and GST filings. Challenge bogus purchase additions by demanding the AO supply all third-party material and afford cross-examination rights.
8. Invalid Email Service Vitiates Income Tax Assessment: Karnataka High Court Quashes Proceedings
The Karnataka High Court quashed assessment orders under Section 144 r/w Section 144B, penalty orders under Sections 270A and 272A(1)(d), and demand notices under Section 156 where statutory notices were sent to an incorrect email ID not belonging to the assessee. The Court allowed the Department to proceed afresh after ensuring proper service and opportunity of hearing.
โก Key Action: Immediately verify and update your registered email ID on the income tax portal. Incorrect email registration can inadvertently waive your right to notices and lead to ex-parte assessment orders.
The ITAT Chennai held that an institution will not lose Section 80G approval merely because it performs limited religious activities or incurs minor religious expenditure, provided: the predominant purpose is charitable/educational, the institution is not confined to a particular religious community, and religious expenditure stays within the 5% ceiling under Section 80G(5B). The Tribunal also cautioned authorities against relying on unverified Google or public-domain material without disclosure to the assessee.
โก Key Action: Charitable institutions with incidental religious activities should document the proportion of religious expenditure and ensure it remains within the 5% statutory ceiling. File Form 10AB accurately and seek correction of technical errors proactively.
10. Condonation Of Delay In Income Tax Appeals: Kerala High Court Halts Recovery Pending Decision
The Kerala High Court directed the appellate authority to dispose of delay condonation and stay petitions within two months after giving the assessee an opportunity of hearing, while halting recovery proceedings in the interim. The Court clarified that the stay petition relating to the delayed appeal would be considered only if the delay is first condoned.
โก Key Action: If recovery proceedings commence while delay condonation applications are pending, immediately approach the High Court for interim protection. File stay petitions alongside delay condonation applications.
11. ITAT Chennai Ruling: Remand on Section 54F Exemption, Protective Additions, and TDS Credit Mismatch
The ITAT Chennai held that appellate authorities cannot arbitrarily convert a protective assessment into a substantive one without conducting a thorough factual inquiry. Additionally, TDS credit cannot be denied merely due to a PAN mismatch when the underlying income has been offered to tax โ substantive justice prevails over technical defects.
โก Key Action: Taxpayers claiming Section 54F exemption must proactively maintain investment documentation and proof of fund flows. Reconcile TDS credits early and file rectification applications to address PAN mismatches.
The ITAT Delhi deleted additions under Sections 68 and 69C, holding that where lender entities are registered NBFCs assessed to tax with demonstrable financial capacity, allegations of shell companies or dummy directors cannot be sustained on presumption alone. The Tribunal also confirmed that the assessee bears no obligation to prove the "source of source" of funds from third-party lenders.
โก Key Action: When accepting unsecured loans, obtain and preserve KYC documents, financial statements, income tax acknowledgements, and board resolutions of lender NBFCs to meet the identity, genuineness, and creditworthiness standard under Section 68.
The ITAT Chennai deleted Section 69A additions where the assessee's investments and cash deposits were traceable to documented sale of a residential flat, with registered deeds and bank records. The Tribunal clarified that delayed cheque encashment alone does not render a genuine transaction unexplained.
โก Key Action: Ensure all property sale proceeds are routed through banking channels and reinvestments are evidenced by registered documents. Maintain cash flow statements linking sale proceeds to subsequent investments.
In G M Polyplast Ltd. Vs ACIT, the Bombay High Court stayed a reassessment notice dated 30 March 2025 while a constitutional challenge to clause (iv) of Explanation 2 to Section 148 and clause (c) of the proviso to Section 148A (applicable up to 31 August 2024) is adjudicated. The Court issued notice to the Attorney General of India, signalling the substantial legal questions involved.
โก Key Action: Assessees receiving Section 148 notices should immediately verify the date of issuance, statutory provisions cited, and whether they fall within the challenged window (up to 31 August 2024). Consider filing writ petitions if constitutional validity is in question.
15. ITAT Mumbai: No Interest Disallowance When TPO Accepts Arm's Length Rate on Foreign Currency Loan
The ITAT Mumbai held that where the TPO has accepted interest on a foreign currency loan to an overseas subsidiary as arm's length (benchmarked to LIBOR), the AO cannot mechanically disallow interest expenditure under Section 36(1)(iii) merely because the domestic borrowing rate is higher. The appropriate reference rate for cross-border lending is the market rate in the borrower's country and currency.
โก Key Action: In transfer pricing cases involving cross-border loans, ensure TP documentation clearly explains the LIBOR/SOFR-based benchmarking methodology. Once the TPO accepts arm's length pricing, maintain this position consistently across all related proceedings.
The Supreme Court dismissed the Revenue's SLP in PCIT 1 Vs Britannia Industries Limited, affirming that Section 263 revisionary power cannot be deployed without the PCIT independently identifying genuine errors prejudicial to Revenue. The PCIT's reliance solely on the AO's proposal without independent analysis is legally fatal. Note: The Supreme Court has expressly kept open the interpretation of Section 56(2)(x) for future consideration.
โก Key Action: When facing Section 263 revision proceedings, immediately assess whether the PCIT has exercised independent judgment or has merely acted on an AO's reference. Challenge revisions that lack a reasoned, independent order.
The Calcutta High Court reaffirmed that Section 263 revision requires independent examination โ not mere adoption of the AO's reference. On Section 56(2)(x), the Court held that a pre-01.04.2017 property acquisition agreement cannot be subjected to the provision. On Section 43B, reversal of provisions that were never allowed as deductions cannot be taxed again.
โก Key Action: Document the timeline of all property acquisition agreements meticulously. For Section 43B disputes, maintain records establishing whether provisions were ever claimed as deductions in prior years.
The ITAT Chandigarh upheld deletion of a โน8.44 crore Section 69A addition and declared the entire reassessment under Section 147 bad in law. The Insight Portal data that triggered reopening was factually wrong โ it attributed bank account credits of a different entity to the assessee. The Tribunal emphasised that Section 69A can only apply where credits are not recorded in books, and the AO failed to reject the books or produce adverse material.
โก Key Action: Immediately verify the accuracy of Insight Portal or AIS data when a Section 148 notice is received. If portal data is factually incorrect, raise this jurisdictional objection at the earliest stage under Section 148A(b) proceedings.
19. Service Tax on Tour Operators: CESTAT Kolkata Quashes BAS Demand for Lack of Proper SCN Basis
The CESTAT Kolkata invalidated a Business Auxiliary Service demand against a registered tour operator where the SCN failed to specify the relevant sub-clause of Section 65(19) and was not backed by evidence of a client-agent relationship. The Commissioner (Appeals) had also exceeded the SCN's scope by invoking the negative list โ a ground not forming part of the original notice.
โก Key Action: Tour operators and travel agencies facing legacy service tax demands should scrutinise show cause notices for missing sub-clause references and verify that the adjudicating authority has not gone beyond the SCN's stated grounds.
The ITAT Mumbai in SKF India Limited Vs ACIT confirmed that the limitation period for rectification under Section 254(2) begins from the date the order is actually communicated to the assessee โ not the date it is authored. The Tribunal also recalled its own order for ignoring a binding coordinate bench decision, reinforcing judicial discipline.
โก Key Action: Track the actual date of receipt of ITAT orders, not the order date, for computing the Section 254(2) limitation period. File rectification applications promptly citing any overlooked binding coordinate bench decisions.
The ITAT Mumbai deleted a Section 68 addition where the property buyer confirmed cash payment via a Section 133(6) response, and the AO and CIT(A) failed to examine or rebut this corroboration. The Tribunal also clarified that Section 68 applies specifically to unexplained credits in the books of account and cannot be mechanically applied to bank deposits when the underlying transaction is disclosed in the return.
โก Key Action: In property transactions involving cash components, proactively obtain written confirmations from buyers/sellers and submit these during assessment. Ensure all property transactions are disclosed in the return of income.
22. ITAT Delhi Nullifies Scrutiny Assessment for Breach of CBDT Manual Scrutiny Instruction
The ITAT Delhi held that strict adherence to CBDT Instruction No. 5/2017 is a condition precedent for valid manual scrutiny selection under Para 1(i) โ which requires recurring additions in earlier years exceeding specified monetary thresholds. Since no such prior additions existed, the scrutiny was without jurisdiction and the entire assessment, including Section 68 and 69C additions, was declared void ab initio. Section 292BB cannot cure this jurisdictional defect.
โก Key Action: When served with a manual scrutiny notice, immediately verify whether the selection criteria specified in the notice are actually satisfied based on your prior assessment history. Raise jurisdictional objections at the earliest stage.
The Kerala High Court declined writ jurisdiction where the core dispute involved the validity of retracted third-party statements requiring deep evidentiary examination. The Court also clarified that if the department issues summons for cross-examination on the assessee's request and the witness fails to appear, this does not constitute denial of natural justice by the department.
โก Key Action: Do not rush to file writ petitions when factual disputes dominate. Exhaust the statutory appellate hierarchy โ CIT(A) and ITAT โ where evidentiary examination is more appropriate.
The Calcutta High Court settled four important issues: (i) SEB tariff inclusive of electricity duty represents "market value" for captive power under Section 80-IA(8); (ii) Section 80-IA(9) cannot reduce Section 80HHC deductions when income streams are entirely independent; (iii) capital subsidies for specific purposes retain their capital character for MAT purposes; and (iv) independent income streams cannot be conflated for double-deduction prevention purposes.
โก Key Action: Industrial undertakings with captive power units and multiple deduction claims under Sections 80-IA and 80HHC should review this judgment carefully and document the independence of each income stream to resist Section 80-IA(9) reduction attempts.
The Madras High Court held that a 534-day delay in filing Form 10B for a charitable trust with modest income of โน8.64 lakh should not have been rejected without condonation, especially when the trust substantively qualified for exemptions under Sections 11 and 12. The Court emphasized that Circular No. 1/2015 mandates a pragmatic approach to procedural delays in the beneficial provisions framework.
โก Key Action: Charitable trusts that missed the Form 10B filing deadline should proactively file condonation applications under Section 119(2)(b) citing Circular No. 1/2015 and supporting High Court precedents. Do not wait for demands to be raised.
The ITAT Indore, through a consensus approach between the Authorised Representative and the Departmental Representative, reduced a Section 271(1)(b) penalty from โน20,000 to โน10,000 for AY 2012โ13 where the assessee had persistently failed to comply with Section 142(1) notices during reassessment proceedings.
โก Key Action: In penalty proceedings before the ITAT involving minor amounts, explore consensus-based resolution with the Departmental Representative as an efficient alternative to full-blown litigation.
๐งฎ GST
The Gujarat High Court dismissed a writ petition challenging a GST MOV-10 confiscation notice where the E-way Bill did not reflect a "Bill to Ship" structure and the petitioner was registered in a different State from the place of dispatch. The Court held that locus standi must be clearly established before approaching a writ court at the show cause notice stage, relying on the Supreme Court's ruling in State of Punjab v. Shiv Enterprises.
โก Key Action: Before filing writ petitions against GST confiscation notices, ensure E-way Bills correctly reflect your role in the transaction chain. If locus is doubtful, participate in the Section 130 adjudication process first.
2. Gujarat High Court confirms GST exemption for cotton seed oil cake and orders refund
The Gujarat High Court reaffirmed that cotton seed oil cake supplied as cattle feed is exempt from GST under Notification No. 02/2017-Central Tax (Rate), Entry No. 102/102A. The Court quashed the order-in-original, order-in-appeal, and DRC-07, and directed refund of CGST, SGST, and IGST paid via DRC-03 within 12 weeks from receipt of the order.
โก Key Action: Businesses dealing in cotton seed oil cake who have paid GST on cattle feed supplies should immediately file refund claims citing this ruling. If demands are pending, cite this coordinate bench decision in your reply.
The Patna High Court quashed an ex-parte Section 73(9) demand of โน26.66 lakh for the brick manufacturing sector where neither proper notice communication nor a personal hearing was provided. The Court cited the earlier Rounak Int Udyog precedent to send a firm message that GST adjudication must adhere to both substantive accuracy and procedural fairness.
โก Key Action: If you receive an ex-parte GST demand order without being afforded a personal hearing, immediately file a writ petition in the High Court supported by evidence of non-receipt of notice and denial of hearing opportunity.
The Madras High Court intervened where a GST appeal was dismissed as time-barred beyond the condonable limit, where the original assessment was ex-parte due to a GSTR-1/GSTR-3B mismatch. Noting bona fide conduct and the prior 10% deposit of disputed tax, the Court remanded for fresh consideration, subject to the assessee depositing an additional 10% of disputed tax.
โก Key Action: Even where the statutory condonable period has lapsed, approach the High Court under Article 226 if the original assessment was ex-parte and bona fide conduct is demonstrable. Ensure 10% of the disputed demand is deposited before the appeal.
The Punjab and Haryana High Court quashed a GST demand order dated December 30, 2025 where the Joint Commissioner failed to consider the assessee's detailed replies, disregarded relevant CBIC circulars, and basely relied on the term "sub-judice" to sustain demand. The Court held this to be a complete non-application of mind rendering the demand unsustainable.
โก Key Action: Always file detailed written replies to GST show cause notices citing relevant CBIC circulars and prior assessment consistencies. If the adjudicating authority fails to engage with these submissions, challenge the order as non-speaking under Articles 226/227.
6. Supreme Court Quashes Onerous Rs. 50 Lakh Bank Guarantee Bail Condition in GST Fake Invoice Dispute
The Supreme Court struck down an additional โน50 lakh bank guarantee condition in a GST fake invoice case (alleged โน64 crore wrongful ITC), where the accused had already furnished a โน1 crore personal bond and two sureties of โน1 crore each. Relying on Saravanan vs. State, the Court held that exorbitant bail conditions โ particularly when charges remain unframed since 2020 โ are legally unsustainable.
โก Key Action: Accused persons in GST economic offence cases facing disproportionate bail conditions should approach the Supreme Court directly when High Courts decline relief. Document the existing bail securities furnished and the period of pending trial.
In contrast to the Supreme Court ruling above, the Punjab and Haryana High Court dismissed a petition seeking to re-agitate a โน50 lakh bank guarantee bail condition already upheld by a coordinate bench in 2021, finding that the alleged "changed circumstances" (withdrawal of original surety) were not genuinely new grounds but a re-packaging of previously adjudicated arguments.
โก Key Action: Before filing fresh petitions challenging bail conditions, assess whether the grounds raised are genuinely new and not previously adjudicated. Recycled arguments under the guise of "changed circumstances" will be dismissed as a collateral challenge.
The Bombay High Court invalidated an ex-parte GST refund rejection that bypassed Rule 92(3) of the CGST Rules, 2017, reaffirming that statutory procedures for refund processing are mandatory. The Court also took a lenient view of delays in filing Section 107 appeals when the initial order was void ab initio and COVID-19 pandemic limitations were a contributing factor.
โก Key Action: Always cross-verify physical GST department orders against the GST portal. If a refund rejection order is not reflected on the portal or bypasses Rule 92(3) procedures, it is likely void ab initio โ approach the High Court promptly.
The CESTAT Delhi dismissed a โน30.31 lakh service tax refund claim by the Airports Authority of India where the claim was filed in August 2022 โ nearly three years after an internal audit in February 2019 identified the overpayment. The Tribunal held that this unexplained delay amounted to laches and that Section 11B of the Central Excise Act must be strictly complied with.
โก Key Action: File service tax/GST refund claims immediately upon identification of excess payment โ do not wait for internal audit cycles to complete. The Section 11B limitation clock begins from the date of payment, not the date of discovery.
10. IGST Demand on Re-Imported Goods Set Aside by Kerala High Court โ ITC Reversal Liability Clarified
The Kerala High Court held that in cases of re-importation of goods originally exported under LUT, the maximum IGST liability is limited to reversal of ITC actually availed in connection with the original export. If no ITC was availed, the assessee can obtain clearance by producing a certificate from the jurisdictional GST assessing officer โ not by paying full import-equivalent IGST.
โก Key Action: Exporters under LUT who re-import goods must obtain a clear ITC reversal certificate from their GST assessing officer before customs clearance. Ensure your clearing agent fully understands the legal position to avoid imprecise replies triggering excessive demands.
The Delhi High Court set aside a Section 73 GST demand of โน2.20 crore for FY 2019โ20 where the show cause notice uploaded on the GST portal did not appear in the outstanding tax liability section and no alert was received. While granting relief, the Court required the assessee to deposit the entire demand amount before the fresh hearing. The provisional bank attachment under Form GST DRC-22 was directed to be lifted immediately.
โก Key Action: Regularly monitor the GST portal for notices โ do not rely solely on email alerts or SMS notifications. If a demand order is passed without your knowledge, immediately approach the High Court while depositing 100% of the demand to secure bank attachment relief.
12. Uttarakhand HC Follows Binding Precedent in GST Registration Cancellation Dispute
The Uttarakhand High Court disposed of a writ petition challenging GST registration cancellation in terms of the Division Bench judgment in M/s Anshul Enterprises, signalling continued judicial support for enabling bona fide taxpayers to pursue revocation under Section 30 after clearing all pending dues.
โก Key Action: Taxpayers whose GST registrations have been cancelled and who wish to seek revocation under Section 30 should clear all outstanding tax, interest, and late fee liabilities first, then cite the binding Anshul Enterprises Division Bench precedent before the Uttarakhand authorities.
The Madras High Court overturned a CESTAT order, holding that where taxability of a transaction is not established in law, the department cannot retain amounts never lawfully due by hiding behind procedural barriers like limitation or failure to appeal. The Court recognised an assessee's suo motu adjustment in a subsequent return as a legitimate corrective measure rather than a contravention.
โก Key Action: Banks and financial institutions that paid service tax on forex profit margins under departmental instructions should review the legal basis of such payments and explore refund claims, ensuring adjustments in subsequent returns are properly documented.
๐ข Company Law & Corporate Matters
In The Secretary, Govt of Tamil Nadu vs S Raja and Others, the Supreme Court vacated a 2019 status quo order and protected innocent homebuyers in Thazhambur village from consequences of historical administrative negligence. The Court firmly held that a welfare state cannot retrospectively cancel decades-old land transactions to the detriment of citizens who invested in good faith, and directed authorities to immediately provide essential amenities to affected flat owners.
โก Key Action: Real estate developers and homebuyers facing legacy title disputes backed by decades of transactions should proactively invoke this Supreme Court precedent to resist state interference. Ensure essential amenity entitlements are documented and enforced.
The Supreme Court issued a show cause notice to the SP of Korba district for defiance of production orders, underlining that evidentiary standards in criminal cases โ proof beyond reasonable doubt โ cannot be diluted regardless of the nature of the offence. The case highlights consequences of prosecution failures in producing witnesses and securing forensic evidence.
โก Key Action: Legal departments handling serious criminal matters must ensure all prosecution witnesses are produced, forensic reports secured, and court production orders strictly complied with to avoid contempt proceedings.
3. Supreme Court Halts High Court Conviction and Leave-to-Appeal Order in CBI Murder Conspiracy Case
In Amit Jogi Vs CBI, the Supreme Court clarified that only the Central Government can maintain an appeal against acquittal in CBI-investigated cases under Section 378 CrPC, and the victim's appeal right under the proviso to Section 372 CrPC is prospective (confined to acquittals after 31.12.2009). The Court also condoned a 1373-day delay in the CBI's leave-to-appeal application in the interest of substantive justice.
โก Key Action: Corporates and individuals involved in CBI-investigated matters should note this jurisdictional clarity โ appeals against acquittal must be initiated by the Central Government, not State Governments, ensuring correct procedural compliance.
The Chhattisgarh High Court, following Supreme Court remand, condoned the massive 1373-day procedural delay in the CBI's leave-to-appeal application, emphasising that grave criminal allegations must be tested on substantive merits rather than dismissed on technicalities.
โก Key Action: In appellate proceedings involving CBI matters, delay condonation applications should comprehensively document the procedural journey and emphasise the gravity of the allegations to secure court sympathy for delay condonation.
The Allahabad High Court refused to quash decades-old criminal proceedings under Section 482 CrPC where factual disputes existed, directing the applicant to file a discharge application before the lower court while granting interim protection against arrest.
โก Key Action: Where criminal proceedings involve disputed facts, Section 482 petitions are unlikely to succeed. Focus instead on filing well-drafted discharge applications before the trial court supported by interim anticipatory bail protection.
6. Supreme Court Halts 35-Year-Old Prosecution: Unreasonable Delay as a Ground for Quashing Proceedings
In a landmark intervention, the Supreme Court stayed a 35-year-old trial under Sections 147, 323, 504 IPC and Section 120 Railway Act, recognising that extraordinary delay inherently prejudices the accused and can independently justify termination of criminal proceedings โ even when the High Court had declined to quash under Section 482 CrPC.
โก Key Action: Accused in long-pending criminal trials (particularly those exceeding 15โ20 years with co-accused deaths or acquittals) should approach the Supreme Court directly with a delay-based quashing petition supported by trial history records.
โ๏ธ Customs
The Telangana High Court granted bail in a customs seizure case involving 1000 grams of Ganja, confirming this constitutes an "intermediate quantity" under the NDPS Act โ not a commercial quantity โ which shifts the bail threshold. The Court balanced liberty with state interest by imposing stringent reporting conditions and financial securities.
โก Key Action: In NDPS-related customs interception cases, the statutory classification of quantity (small/intermediate/commercial) is critical for bail eligibility. Immediately obtain forensic quantification reports and challenge bail conditions based on actual quantity classification.
The CESTAT Mumbai ruled that Rule 2(a) of the General Rules for Interpretation of the Customs Tariff cannot be used to treat disparate imported parts as CKD/SKD units to invoke FTP prohibitions. The Tribunal emphasised that a one-to-one correlation of parts must be proved to sustain a CKD allegation โ which was impossible given highly uneven quantities โ and confirmed the statutory supremacy of Section 110A of the Customs Act 1962 over CBIC Circular No. 35/2017.
โก Key Action: Manufacturers importing components in varying quantities for subsequent assembly should maintain clear bill of materials and production records demonstrating that components do not constitute a CKD/SKD unit. Apply for provisional release under Section 110A where customs orders are challenged.
๐๏ธ Insolvency (IBC)
The NCLAT Delhi dismissed a Section 9 petition by Bhushan Power & Steel Limited where only โน13.09 lakh of the โน1.49 crore claimed debt was attributable to invoices in the corporate debtor's name. The Tribunal held that shared management or promoter identity between a sole proprietorship and a private limited company does not legally merge the two entities โ separate statutory registrations constitute conclusive evidence of independent legal identities.
โก Key Action: Operational creditors must ensure invoices and contracts clearly identify the correct legal entity (sole proprietorship vs. private limited company) before filing Section 9 petitions. The โน1 crore threshold must be met by debt attributable solely to the named corporate debtor.
In AVJ Heightss Apartment Owners Association Vs IIFL Finance Limited, the Supreme Court flagged serious concerns about a โน85 crore financial creditor claim where an arbitral award in parallel proceedings raised irregularities in loan disbursal, documentary execution, stamp purchases, backdating of key documents, and anomalous TDS entries potentially designed to circumvent RBI norms. The Court also expressed grave concern over inordinate CIRP delays.
โก Key Action: CoC members and resolution professionals should rigorously scrutinise financial creditor claims for documentary irregularities, particularly where parallel arbitral or civil proceedings have raised authenticity concerns. Inordinate CIRP delays must be proactively managed to avoid judicial censure.
Key Deadlines & Action Items
| # | Deadline / Action | Authority / Case Reference |
|---|---|---|
| 1 | GST Cotton Seed Oil Cake Refund โ 12 weeks from receipt of court order to process CGST/SGST/IGST refunds paid via DRC-03 | Gujarat HC โ N H Associates Vs Superintendent of Central GST |
| 2 | Kerala HC Income Tax Recovery Stay โ 2 months for appellate authority to dispose of delay condonation petition and stay applications after hearing | Kerala HC โ Manoj K V Vs ITO |
| 3 | Delhi HC GST Bank Attachment โ Immediate lifting of Form GST DRC-22 bank attachment upon assessee's full deposit of โน2.20 crore demand | Delhi HC โ Sun International Limited Vs Commissioner of DGST |
| 4 | Bombay HC GST Refund Remand โ Fresh adjudication after providing assessee full opportunity per Rule 92(3) CGST Rules | Bombay HC โ K Line India Pvt. Ltd. Vs Union of India |
| 5 | GST Registration Revocation โ Ongoing โ Clear all tax, interest, and late fees before applying for revocation under Section 30 CGST/UKGST Act | Uttarakhand HC โ Ayush Sharma Vs Commissioner SGST |
| 6 | Patna HC GST Demand Remand โ Fresh adjudication of โน26.66 lakh demand for April 2018 โ March 2019 with proper notice and personal hearing | Patna HC โ King Bricks Vs State of Bihar |
| 7 | Madras HC GST Appeal Remand โ Assessee to deposit additional 10% of disputed demand before fresh appellate consideration | Madras HC โ Muthu Vairam Export And Imports Vs Appellate Deputy Commissioner (CT) |
| 8 | Karnataka HC IT Assessment โ Immediate โ Assessee to file reply to Section 143(2) notice dated 29.06.2021 before fresh assessment proceedings commence | Karnataka HC โ Vyavasaya Seva Sahakari Sangh Pvt. Ltd. Vs Assessment Unit |
| 9 | Bombay HC Reassessment Stay โ Monitor โ Section 148 reassessment notice dated 30.03.2025 stayed; constitutional challenge proceedings to be tracked | Bombay HC โ G M Polyplast Ltd. Vs ACIT |
| 10 | CESTAT Mumbai Drone Components โ Implement provisional release conditions under Section 110A, Customs Act 1962 immediately | CESTAT Mumbai โ IZI Vs Commissioner of Customs |
Professional Takeaways
๐ก 1. Natural Justice is the Non-Negotiable Bedrock of GST Adjudication
Today's digest reveals a striking pattern: courts across the country โ from Patna to Delhi, Bombay to Madras โ are consistently quashing GST demand orders, refund rejections, and assessment orders on the singular ground of denial of natural justice. Whether the issue is notices not appearing on the portal, ex-parte orders, or non-application of mind, the judicial message is unambiguous: procedural compliance in GST adjudication is not optional, and any adverse order passed without a meaningful hearing will not survive judicial scrutiny. Tax professionals should advise clients to meticulously document all communications with GST authorities and proactively approach courts when hearings are denied โ rather than waiting for recovery or attachment actions.
๐ก 2. Reassessment Under Income Tax โ The "Change of Opinion" Shield Remains Potent
Despite legislative amendments to the reassessment framework under Sections 148 and 148A, multiple rulings today reaffirm that the fundamental prohibition against a "change of opinion" has not been diluted. The Gujarat High Court's ruling in Dignesh Patel and the ITAT Chandigarh's decision in Gulmohar Associates both demonstrate that automated risk-flagging through Insight Portal or AIS data does not automatically constitute "new tangible information" justifying reopening โ particularly when the data is factually incorrect or the issues were already examined in original scrutiny. Tax professionals must build proactive dossiers at the assessment stage: comprehensive replies with indexed annexures that clearly show all material facts were disclosed, forming a near-impenetrable defence against future reopening attempts.
๐ก 3. IBC and Criminal Law: The Threshold and Jurisdictional Discipline Must Come First
Two key rulings today โ the NCLAT Delhi's dismissal of a Section 9 IBC petition and the Supreme Court's clarification on Section 378 CrPC appeal rights in CBI matters โ highlight a common thread: courts will strictly enforce jurisdictional prerequisites before proceeding to merits. For insolvency practitioners, this means operational creditors must verify that the debt attributed to the correct legal entity crosses the โน1 crore threshold before filing. For litigators in CBI matters, the exclusive right of the Central Government to appeal acquittals must be confirmed before any appeal is filed. Getting the jurisdictional basics wrong wastes time, resources, and jeopardises otherwise meritorious claims.
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