Tax Law News and Expert Insights

Tax Law

Supreme Court Holds Rooh Afza Taxable as Fruit Drink, Says Marketing Labels Not Decisive

The Supreme Court held that Rooh Afza is classifiable as a fruit drink under the UPVAT Act and taxable at the concessional rate of 4%, rejecting the State’s decision to tax it at 12.5% under a residuary entry.

The dispute arose after tax authorities treated the product as a “non-fruit syrup/sharbat” based on its regulatory description.

The Court observed that marketing or licensing labels do not determine tax classification. It held that the product’s composition, essential character, and commercial identity must guide classification.

Allowing the appeal, the Court set aside the Allahabad HC judgments.

[M/s Hamdard (Wakf) Laboratories v. Commissioner, Commercial Tax, U.P.]

Read Judgment / 5 hours ago

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Kerala High Court: Bona Fide Error in Revised TRAN Forms Can’t Deny Transitional ITC

The Kerala High Court has held that a bona fide mistake in revised TRAN-1 and TRAN-2 forms cannot justify the denial of transitional Input Tax Credit when no tax evasion is alleged.

Justice Ziyad Rahman A. A. said courts should adopt a liberal approach under Article 226 in such matters.

The petitioner had disclosed only incremental credit while revising forms pursuant to directions of the Supreme Court of India. Authorities treated the revised forms as superseding the originals and denied the credit.

The Court quashed the assessment order and recovery notice, granting relief to the assessee.

[Pinnacle Motor Works Pvt. Ltd. v. Deputy Commissioner]

Read Judgment / a day ago

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Delhi High Court: Non-Declaration of Gold at Green Channel Not Automatically Smuggling

The Delhi High Court held that mere non-declaration of gold at the Green Channel does not automatically amount to smuggling, warranting absolute confiscation.

A Division Bench of Justices Nitin Wasudeo Sambre and Ajay Digpaul ruled that redemption upon payment of fine, penalty, and applicable duty can be appropriate where the lapse is not organised smuggling.

The Court dismissed Customs’ challenge to appellate orders allowing the release of 300 grams of gold under Section 125 of the Customs Act.

Upholding the exercise of discretion, the Court stressed proportionality and clarified that permitting redemption does not condone violation but calibrates consequences.

[The Commissioner Of Customs v. Ms. Shabnam Parveen]

Read Judgement / a day ago

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Supreme Court: Spectrum Usage Charges Payable from Date of 2G Licence Quashment

The Supreme Court directed a telecom operator to pay spectrum usage charges (SUC) from the date its 2G licence was quashed, not from the date of re-auction or grant of a fresh licence.

The Court observed that once a licence is declared invalid, the operator continues to use the spectrum and must compensate the exchequer accordingly.

It noted that allowing payment only from re-auction would unjustly benefit the operator at the cost of public revenue.

The Bench issued the direction while hearing an appeal arising from disputes over the consequences of quashing 2G licences issued in the controversial 2008 spectrum allocation exercise.

[UOI v. Sistema Shyam Teleservices Ltd.]

Read Judgment / 2 days ago

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Supreme Court Issues Notice on Challenge to CESTAT Ruling Against Altering FOB Value by Customs

The Supreme Court has issued notice on an appeal by the Commissioner of Customs (Appeals) challenging a decision of the Customs Excise and Service Tax Appellate Tribunal, New Delhi, which held that Customs officers cannot alter the Free on Board (FOB) value agreed between buyer and seller.

A Bench of Justices Pamidighantam Sri Narasimha and Alok Aradhe tagged the matter with a connected appeal.

The Tribunal had ruled in favour of Jayanthah Trading Company, observing that the Customs Act 1962 does not empower officers to modify transaction value, and export incentives linked to FOB cannot be recalculated on a re-determined figure.

The Revenue has challenged this view before the apex court.

Read order / 6 days ago

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ITAT Delhi: No Material to Reopen Mukul Rohatgi’s ₹133.46 Crore Assessment

The ITAT Delhi held that revisional powers under Section 263 cannot be exercised in the absence of material showing error and prejudice to Revenue, and set aside the revision against Senior Advocate Mukul Rohatgi.

The case concerned a revision order passed by the Principal Commissioner of Income Tax for Assessment Year 2020-21, where Rohatgi’s income was assessed at ₹133.46 crore.

The Tribunal found that the Assessing Officer had examined issues relating to mutual fund capital gains, annual letting value of properties in India and abroad.

It held that once a plausible view is taken after considering records, the assessment cannot be reopened merely because another view is possible. The revision was quashed.

[Mukul Rohatgi v. Principal Commissioner of Income Tax]

Read Order / 7 days ago

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Delhi High Court Quashes 15% TDS Order, Directs Nil Certificate for UK Firm

The Delhi High Court quashed an order under Section 197 of the Income Tax Act directing 15% tax deduction instead of issuing a nil TDS certificate to a UK-based company.

The Court held that the Income Tax Officer wrongly relied on an assessment order that had already been set aside by the ITAT.

It observed that once the Tribunal had ruled on identical facts that the distribution fees did not constitute royalty, the officer could not take a contrary view without fresh material.

Calling the approach revenue-driven and contrary to judicial discipline, the Court directed issuance of a nil TDS certificate within 15 days.

[Financial & Risk Organisation Ltd v. The Income Tax Officer Circle Int. Tax 1(3)(1) New Delhi]

Read Judgment / 9 days ago

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Delhi High Court: Duty Drawback Not Eligible for Section 80-IC Deduction

The Delhi High Court held that duty drawback receipts are not eligible for deduction under Section 80-IC of the Income Tax Act as they are not profits derived from an industrial undertaking.

The Court relied on Supreme Court precedents and rejected Narayan Industries’ claim on this issue.

However, it directed that excise and customs duties paid on raw materials must be set off from the duty drawback while recomputing income.

Observing that inconsistent treatment across assessment years is impermissible, the Court remanded the matter to the Assessing Officer for fresh computation in accordance with law.

[Narayan Industries v. ACIT Circle 60(1) New Delhi]

Read Judgment / 9 days ago

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Bombay High Court Protects Future Group's Sunil Biyani from Arrest in GST Scam

The Bombay High Court granted protection from arrest to Sunil Biyani, a non-executive director of Future Group, in a GST evasion case allegedly involving over ₹1,200 crore.

The matter concerns alleged fake invoices, wrongful input tax credit, and foreign remittances routed through certain companies where Biyani was previously a director. He resigned in July 2023 and has denied any wrongdoing, stating he is willing to cooperate with the investigation.

Justice NR Borkar noted that the Central GST authority had not issued an order under Section 69 of the CGST Act authorising his arrest.

In the absence of such authorisation, the Court held that arrest could not be effected at this stage.

[Sunil Biyani v. UOI & Ors.]

Read Details / 10 days ago

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Delhi High Court Directs Nil TDS for GoDaddy, Holds Domain Registration Fees Not Taxable Under India-US DTAA

The Delhi High Court has held that domain registration fees received by GoDaddy.com LLC are not taxable in India under the India-USA Double Taxation Avoidance Agreement (DTAA).

A Division Bench of Justices Dinesh Mehta and Vinod Kumar criticised the Income Tax Department for rejecting GoDaddy’s application for a nil withholding certificate under Section 197 of the Income Tax Act, despite binding precedent.

The Revenue had refused relief citing a proposed SLP before the Supreme Court.

Terming the reason unsustainable, the Court observed that authorities must act in accordance with law and treaty obligations, not revenue considerations, and directed issuance of a nil TDS certificate within 15 days.

[GoDaddy.com LLC v. Assistant/Deputy Commissioner Of Income Tax Circle 1(3)(1), International Taxation Delhi]

13 days ago

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Affiliation Fees Collected by Universities Liable to GST: Madras High Court

The Madras HC held that affiliation fees collected by universities from affiliated colleges attract GST and do not qualify for exemption under Notification No. 12/2017-CTR.

The Court said that although universities fall within the definition of “educational institutions,” the act of granting affiliation is a regulatory service provided to colleges.

It clarified that the exemption applies only to services directly relating to admission of students or conduct of examinations, not to all services rendered by universities.

The Court held that exemption notifications must be interpreted strictly and cannot be expanded beyond their clear terms.

[Bharathidasan University v. Joint Commissioner of GST]

Read order / 15 days ago

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No Vested Right to Redeem Confiscated Prohibited Goods Under Customs Act: Delhi High Court

The Delhi High Court held that redemption of confiscated goods under Section 125 of the Customs Act, 1962 is not an automatic or vested right, especially when the goods are prohibited for import.

The Court dismissed a writ petition challenging the absolute confiscation of areca nuts imported in violation of the Minimum Import Price condition.

It observed that Section 125 uses the term “may”, giving discretion to the adjudicating authority to allow or deny redemption.

The Court added that fiscal statutes must be strictly construed and writ jurisdiction cannot bypass statutory appellate remedies.

[Bhagwan Corporation v. Commissioner of Customs ICD Patparganj]

Read Judgment / 15 days ago

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Legal Services by Individual Advocate to Law Firm Exempt from Service Tax: Bombay High Court

The Bombay High Court has held that service tax is not leviable on legal services provided by an individual advocate to a law firm.

Quashing a ₹26.81 lakh demand against Mumbai lawyer Manisha Shroff, the Court relied on the 2012 mega exemption and reverse charge notifications under the Finance Act.

The Bench ruled that such services are expressly exempt and that even where taxable, liability lies on the client, not the advocate.

Recovery actions, including freezing of bank accounts, were set aside.

[Manisha Rajiv Shroff v. UOI & Ors.]

Read Details / 16 days ago

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Service Tax on Ocean Freight in CIF Imports is Illegal: Karnataka High Court

The Karnataka High Court has held that service tax cannot be levied on ocean freight for imports made on a CIF (Cost, Insurance and Freight) basis, as such transactions fall outside the scope of the Finance Act, 1994.

The Court ruled that transportation services under CIF contracts are rendered and consumed outside India, making them extraterritorial in nature.

It struck down Notifications No. 15/2017-ST and 16/2017-ST to the extent they sought to impose service tax on importers under the reverse charge mechanism.

Holding that an importer under a CIF contract is neither the service provider nor the recipient, the Court quashed the tax demand and allowed liberty to seek a refund, subject to unjust enrichment principles.

Read order / 17 days ago

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Madras High Court Dismisses Actor Vijay’s Plea Against ₹1.5 Crore Income Tax Penalty

The Madras High Court has dismissed a writ petition filed by actor and Tamilaga Vettri Kazhagam (TVK) founder Joseph Vijay, challenging a ₹1.5 crore income tax penalty imposed for alleged non-disclosure of income.

The penalty stemmed from income tax searches conducted in 2015, during which authorities claimed to have unearthed undisclosed income of around ₹16 crore, linked to Vijay’s remuneration for the film Puli.

Vijay argued that the penalty order was barred by limitation, but the Court accepted the Income Tax Department’s stand and upheld the validity of the proceedings.

[Chandrasekaran Joseph Vijay v. DCIT]

Read Details / 20 days ago

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