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    Case LawsIncome Tax
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    Case LawsIncome Tax
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    Royalty vs fees for included services: classification of cross border lead generation payments determines TDS obligation under tax treaty.
    Categorisation of cross border payments as royalty or fees for included services under the India US DTAA determines withholding under Section 195. Royalties cover payments for use of intellectual property; fees for included services require that technical knowledge, skill, or know how be made available. Services limited to lead generation, databases, or market facilitation without transfer of proprietary technical content do not qualify as either category and therefore fall outside the DTAA based TDS obligation.
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    Search-based assessment jurisdiction governs treatment of unexplained investments when records are absent, shifting the burden of proof to the assessee.
    Assessment based on search-derived incriminating material applies when jurisdiction under search-based assessment is not contested, and unexplained investments are taxed depending on whether amounts are recorded in books of account. The assessee bears the onus to explain investments; absence of records, non-filing of returns and non-cooperation justify adverse inferences. Procedural elements such as delay condonation, set-aside orders and cooperation in reassessment affect the assessment process, while interest for non-furnishing of returns is tied to the timing of the regular assessment.
    Case LawsIncome Tax
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    Scope of Section 80IA: expansion within the same undertaking does not automatically forfeit tax holiday eligibility.
    The court considered whether adding services and acquiring additional licenses by a telecommunications company created a new "undertaking" for tax holiday purposes. Finding that the company continued its original business using largely the same infrastructure and manpower, the court endorsed the Tribunal's conclusion that expansion within the same operational framework does not automatically constitute a separate undertaking and should not defeat eligibility for the tax holiday intended to encourage capital intensive projects.
    Case LawsIncome Tax
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    Limitation for tax penalties: emphasis on initiation of action preserves enforcement; reasonable cause evaluated by business realities.
    Applicability of the limitation period is determined by the initiation of action rather than the formal start of penalty proceedings, making the triggering of enforcement activity the operative moment for limitation. The reasonable cause doctrine is applied with attention to the appellant's bank like operations despite its cooperative structure, recognizing long standing practices and business realities as bearing on culpability for transaction handling contraventions.
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    Joint application maintainability under IBC: interconnected real estate defaults can meet allottee threshold despite limitation objections.
    Maintainability of a joint application under the Insolvency and Bankruptcy Code is supported where separate corporate participants in a real estate project have interconnected obligations, allowing joinder in a single filing. The creditor threshold for initiating insolvency by allottees can include claims affected by limitation when the default is a continuous breach, producing a continuing cause of action under the Limitation Act and thereby supporting counting such claims toward the allottee threshold.
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    The analysis focuses on the legal effect of digitally authenticated GST portal notices, the sufficiency of portal-based service for triggering taxpayer obligations, and the distinction between routine verification of returns and discretionary enforcement actions for suspected fraudulent defaults; it observes that verification is not an absolute prerequisite to initiate enforcement where officers reasonably suspect fraud, and that failure to engage with portal notices weakens natural justice claims.
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    Natural justice breach: non self contained, short notice show cause demands require reissuance with fair opportunity.
    A show cause notice initiating an adjudicatory demand must be self contained, supply sufficient material for response, and afford a reasonable opportunity to reply; an inadequate content and an unreasonably short response period (well below the preferred thirty days and below a minimum of fifteen days) violate audi alteram partem and procedural fairness. Defective notices warrant issuance of a fresh, legally valid notice rectifying the procedural defects, and may attract costs consequences against the issuing authority.
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    Destruction of obsolete imports: destruction with Customs permission can relieve full customs duty subject to procedural compliance.
    Whether imported raw materials and components rendered obsolete may be destroyed without paying customs duty where the unit obtains Customs permission and offers to pay duty on scrap value; reliance was placed on the Foreign Trade Policy, Circular No. 60/1999 Cus and an amendment to the governing Notification which exempts duty when goods are destroyed with Customs' permission, balanced against the Revenue's contention that non use within prescribed time attracts duty.
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    Money laundering offence: bail refused where admissible witness statements and accused failed to discharge burden showing non involvement.
    Bail was refused where admissible witness statements provided a prima facie basis to implicate the appellant in money laundering and the accused failed to show non involvement or low risk of reoffending. Money laundering was treated as an independent offence tied to dealings in proceeds, admissible statements supported inferences from financial transactions and concealment, parity was held non automatic, and discretionary release for trial delay does not guarantee bail in serious economic offences.
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    GST rectification: inadvertent filing errors may be amended when no revenue loss, encouraging taxpayer-friendly compliance.
    Rectification of GST return entries is permissible where errors are inadvertent and do not cause revenue loss. The court interprets CGST/MGST filing and correction provisions purposively, recognising practical difficulties faced by taxpayers and the central importance of accurate returns for downstream GST processes. Authorities are urged to permit amendments by online or manual means in cases of genuine mistake without fiscal prejudice, promoting a taxpayer friendly and pragmatic approach consistent with other high court decisions.
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    Bail considerations: Serious economic offence allegations constrain pretrial liberty when evidence tampering and investigative integrity risks exist.
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    The court analysed entitlement to refund of unutilized Input Tax Credit under an inverted duty structure and held that prior IGST refunds for zero-rated supplies do not automatically bar a Section 54 refund claim; absence of debit entries alone cannot justify rejection. The decision emphasises the requirement to submit comprehensive supporting documents distinguishing inputs affected by the inverted duty structure and directs reconsideration allowing additional evidence and a reasoned order consistent with statutory conditions and principles of natural justice.
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    Penalty under CGST law prompts appeal remedy and partial refund direction, preserving pre-deposit and taxpayer rights.
    The adjudicating officer withdrew the demand for inadmissible input tax credit and related interest and penalty, while separately imposing a penalty under Section 122(1)(vii) of the CGST Act adjusted against amounts paid by the petitioner. The court recognized the petitioner's appellate remedy and directed a partial refund subject to retention as pre-deposit, reflecting the procedural interplay between administrative adjudication and judicial review and safeguarding taxpayer rights during appeal.
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    Interplay of sales and bogus purchases: sales consistency limits rejection of purchases and favors gross profit alignment for taxation.
    For traders, rejection of purchases cannot proceed in isolation where declared sales exhibit regularity; cost of goods sold must be coherent with recorded sales. Tax adjustments should compare differential gross profit margins and align challenged purchases with genuine GP rates, allowing proportional taxation reconciliations rather than adding the entire value of disputed purchases as income.
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    Proportionality in tax assessments preserved: additions limited to profit element where sales are accepted, not entire purchase.
    Alleged accommodation entries may be restricted to taxation of the profit element where sales from those purchases are accepted; the tribunal limited an addition accordingly and the court upheld that proportionality. Separately, an enhanced gross profit addition was deleted because there was no concrete evidence to displace the assessee's declared book results; the court agreed that revenue must meet the evidentiary burden before altering declared figures.
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    Tax Deducted at Source protection: taxpayers not liable for employer's failure to deposit TDS; refunds should not be adjusted.
    The note explains that TDS credit protection bars holding an assessee liable for tax already deducted by an employer who failed to remit it; employers bear the deposit obligation as tax-collecting agents. Adjusting taxpayer refunds or using coercive measures to recover demands arising from employer non-deposit contravenes the protective principle and indirect recovery limits, and authorities should correct credit mismatches rather than treat deductees as liable.

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      Review of Customs duty Exemptions - Review of conditional exemption rates of BCD

      24 July, 2024

      Contents
      Notifications
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      Union Budget 2024-25 (Full) + FINANCE (No.2) Bill, 2024

      (i) The BCD exemption for the goods covered under following serial numbers of the notification are being extended upto 31st March, 2026 unless specified otherwise.

      S. No.

      S N of 50/17-Cus

      Brief Description

      1.

      17

      Specified Planting materials, namely, oilseeds, seeds of vegetables, tubers, etc.

      2.

      80A

      Algal oil for manufacturing of aquatic feed

      3.

      90

      Lactose for use in manufacture of homeopathic medicines

      4.

      104

      Specified goods used in processing of sea-food

      5.

      133

      Gold ores and concentrates

      6.

      139

      Bunker Fuels namely: (i). IFO 180 CST; (ii). IFO 380 CST; (iii). VLSFO (CTH 27)

      7.

      150

      Naphtha for manufacture of Fertilisers (scope of exemption is being reduced only to Naphtha)

      8.

      155

      Liquefied petroleum gases (LPG) received from unit in SEZ and returned by the DTA unit to the SEZ unit

      9.

      164

      Electrical energy supplied from SEZ unit to DTA

      10.

      165

      Electrical energy supplied from SEZ to DTA

      11.

      172

      Specified goods used in manufacture of silicon wafers or solar wafers, for manufacture of solar cell or module

      12.

      183

      Medical use fission Molybdenum-99 (Mo-99) for use in manufacture of radio pharmaceuticals

      13.

      184

      Pharmaceutical Reference Standard

      14.

      188

      Goods for manufacture of ELISA Kits

      15.

      191

      Maltol for manufacture of deferiprone

      16.

      204

      Anthraquinone or 2-Ethyl Anthraquinone for use in manufacture of Hydrogen peroxide

      17.

      237

      Specified material for manufacture of EVA (Ethylene Vinyl Acetate) sheets or backsheet, which are used in the manufacture of solar photovoltaic cells or modules (Scope of materials which can be imported is being increased)

      18.

      253

      Specified Goods for manufacture of Brushless Direct Current (BLDC) motors

      19.

      257

      Tags, labels, stickers, belts, buttons, hangers or printed bags, imported by bonafide exporters

      20.

      257A

      Specified goods used in manufacture of handicraft items for export when imported by bonafide exporter

      21.

      257B

      Specified goods used in manufacture of textile or leather garments for export when imported by bonafide exporter

      22.

      257C

      Specified goods used in manufacture of leather or synthetic footwear or other leather products for export when imported by bonafide exporter

      23.

      258

      Security fibre, threads, Paper based Taggant, M-feature for use in manufacture of security paper by Security Paper Mill, Hoshangabad and Bank Note Paper Mill India Pvt Ltd, Mysore.

      24.

      259

      Raw materials for manufacture of security fibre and security thread for supply to Security Paper Mill, Hoshangabad and Bank Note Paper Mill India Pvt. Ltd, Mysore for use in manufacture of security paper

      25.

      260

      Goods for the manufacture of specified orthopedic implants (902110)

      26.

      261

      Raw material for manufacture of Copper-T Contraceptive

      (i) Alatheon

      (ii) Copper Wire

      27.

      265

      Capacitor grades polypropylene granules for manufacture of Capacitor grade plastic

      28.

      269

      Super absorbent polymer for manufacture of adult diapers and specified goods

      29.

      271

      Polytetrametylene ether glycol, (PT MEG) for use in manufacture of spandex yarn

      30.

      276

      Ethylene- propylene- non-conjugated diene rubber (EPDM) for manufacture of insulated wire and cables

      31.

      279

      New or retreated Pneumatic tyres of rubber for use in servicing, repair of maintenance of aircrafts used for operating scheduled air transport service or scheduled air cargo service etc

      32.

      280

      New or retreated Pneumatic tyres of rubber for use in servicing, repair or maintenance of aircraft imported or procured by Aero Club of India/ for flying training purpose/ operating non-scheduled (passenger or charter) services/ AAI for flight calibration purpose

      33.

      290

      Wood pulp for manufacture of newsprint, paper or paperboard

      34.

      292

      Goods imported for manufacture of paper, paper boards, newsprint

      35.

      293A

      Newsprint and uncoated paper imported for printing of newsprint

      36.

      296A

      Lightweight coated paper imported by actual users for printing of magazines

      37.

      326

      Hydrophilic /Hydrophobic Non- Woven, imported for use in the manufacture of Adult Diapers

      38.

      329

      Pile fabrics for the manufacture of toys

      39.

      333

      Moulds, tools and dies, for the manufacture of parts of electronic components or electronic equipment

      40.

      334

      (i) Graphite Felt or Graphite pack for growing silicon ingots (ii) Thin Steel wire used in wire saw for slicing of silicon wafers

      41.

      345A

      Simply Sawn Diamonds

      42.

      364A

      Spent catalyst or ash containing precious metals

      43.

      368

      Ferrous Scrap

      44.

      374

      Magnesium Oxide (MgO) coated cold rolled steel coils for use in manufacture of cold rolled grain oriented (CRGO) steel

      45.

      375

      Specified items for manufacture of cold rolled grain-oriented steel (CRGO) steel

      46.

      378

      Metal parts for manufacture of electrical insulators falling under heading 8546

      47.

      379

      Pipes and tubes for use in manufacture of boilers

      48.

      380

      Forged steel rings for manufacture of special bearings for use in wind operated electricity generators

      49.

      381

      Flat copper wire for use in the manufacture of photo voltaic ribbon for manufacture of solar photovoltaic cell or modules

      50.

      392

      Dies for drawing metal, where imported after repairs from abroad

      51.

      403

      Parts and raw materials for offshore oil exploration

      52.

      404

      Specified items including capital goods and raw materials for off shore oil exploration

      53.

      415

      Parts for manufacture of catalytic convertors

      54.

      415A

      Platinum or Palladium for manufacture of Noble Metal Compounds & Noble Metal Solutions

      55.

      416

      Ceria zirconia compounds for use in the manufacture of washcoat for catalytic converters

      56.

      417

      Cerium compounds for use in the manufacture of washcoat for catalytic converters

      57.

      418

      Zeolite for use in the manufacture of washcoat for catalytic converters

      58.

      422

      Machinery, electrical equipment for use in semiconductor wafer and LCD

      59.

      423

      Machinery, electrical equipment for use in marking and packaging of semiconductor chips

      60.

      426

      Specified goods for the manufacture of semiconductor devices, memory card, IC, solar cell

      61.

      435

      Capital goods for printing industry

      62.

      442

      Bushings made of Platinum and Rhodium alloy when imported in exchange of worn out or damaged bushings exported out of India

      63.

      446

      Parts and components for manufacture of tunnel boring machines

      64.

      451

      Evacuated tubes with three layers of solar selective coating for use in manufacture of solar water heater

      65.

      462

      Ball screws for use in the manufacture of CNC Lathes

      66.

      463

      Linear Motion Guides for use in the manufacture of CNC Lathes

      67.

      464

      CNC Systems for use in the manufacture of CNC Lathes

      68.

      464A

      Goods for manufacture of plastic processing machineries

      69.

      467

      Parts and components of cash dispenser or automatic bank note dispenser

      70.

      468

      Parts for manufacture of Micro ATM, Fingerprint reader/scanner, Iris scanner, Miniaturised POS (Scope of exemption is being limited to import of raw materials only)

      71.

      471

      All parts for use in the manufacture of LED lights

      72.

      472

      All inputs for use in the manufacture of LED driver or MCPCB for LED lights

      73.

      476

      Television equipment, cameras etc for taking films, imported by a foreign film unit or television team

      74.

      477

      Filming equipment of foreign origin if imported into India after having been exported therefrom.

      75.

      480

      Goods imported for being tested in specified test centers

      76.

      489B

      Goods for manufacturing of Microphones

      77.

      504

      Parts and Components of Digital Still Image Video Cameras

      78.

      509

      Parts, components and accessories for manufacture of Digital Video Recorder

      79.

      510

       Parts, components and accessories for use in manufacture of reception apparatus for television

      80.

      511

      Parts, components and accessories for manufacture of CCTV Camera

      81.

      512

      Specified Parts, components and for use in manufacture of Lithium-ion battery and battery pack

      82.

      512A

      Inputs, parts or sub-parts for use in the manufacturing of Printed Circuit Board Assembly

      83.

      515A

      Open Cell for manufacture of TV Panel

      84.

      516

      The following goods for use in the manufacture of Liquid Crystal Display (LCD) /LED TV Panel

      85.

      517

      Magnetrons for manufacture of domestic microwave ovens

      86.

      519

      Raw materials or parts for use in manufacture of e-Readers

      87.

      523A

      Parts, sub-parts, inputs or raw material for use in manufacture of Lithium-ion cells

      88.

      527

      Lithium-ion cell use in manufacture of battery or battery pack

      89.

      527A

      Lithium-Ion Cell for use in manufacture of battery or battery pack of cellular mobile

      90.

      527B

      Lithium-Ion Cell manufacture of battery or battery pack of EV

      91.

      534

      Parts of gliders or simulators of aircrafts (excluding rubber tyres and tubes of gliders)

      92.

      535

      Raw materials for manufacture of aircraft and parts of aircraft

      93.

      535A

      Parts of aircraft for manufacture of aircraft or for manufacture of parts of aircraft by PSU under Min of Defence

      94.

      536

      Parts, testing equipment, tools and tool-kits for maintenance, repair, and overhauling of aircraft, components or parts of aircrafts

      95.

      537

      All goods of Heading 8802 (except 88026000-spacecraft)

      96.

      538

      Components or parts, including engines, of aircraft of heading 8802

      97.

      539

      (a) Satellites and payloads; (b) Ground equipment brought for testing of (a)

      98.

      539A

      Scientific and technical instruments etc for launch vehicles and satellites

      99.

      540

      Specified goods imported by scheduled air transporter

      100.

      542

      Specified goods imported by Aero Club, Flying Training Institutes

      101.

      543

      Specified goods imported by non-scheduled air transporter

      102.

      544

      Parts (other than rubber tubes), of aircraft of heading 8802

      103.

      546

      Parts (other than rubber tubes), of aircraft of heading 8802

      104.

      548

      Barges or pontoons imported along with ships

      105.

      551

      Cruise ships, Excursion ships

      106.

      553

      Fishing vessels, Tugs and Pusher crafts, light vessels excluding vessels and floating structure imported for break up

      107.

      555

      Vessels like warships, lifeboats excluding vessels and floating structure imported for break up

      108.

      567

      Stainless steel tube and wire, for manufacture of Coronary stents /artificial valve

      109.

      569

      Parts required for manufacture of Ostomy products

      110.

      570

      Medical and surgical instruments, apparatus and appliances including spare parts and accessories thereof

      111.

      575

      Specified Hospital Equipment for use in specified hospitals

      112.

      578A

      Raw materials, for the manufacture of Cochlear Implants

      113.

      580

      X-Ray Baggage Inspection Systems and parts thereof

      114.

      581

      Portable X-ray machine / system

      115.

      583

      Parts and cases of braille watches, for the manufacture of Braille watches

      116.

      591

      Parts of electronic toys

      117.

      593

      Parts of video games for the manufacture of video games

      Note: Description of entries is indicative. Notification may be referred to for complete description.

      (ii) The BCD exemption for the goods covered under following serial numbers of the notification no 50/2017-Customs is being extended upto 31st March 2029.

      S. No.

      S. No. of 50/2017Cus

      Brief Description

      1.

      212A

      Medicines/drugs/vaccines supplied free by United  Nations International Children's Emergency Fund (UNICEF), Red Cross etc

      2.

      213

      Drugs and materials

      3.

      428

      Specified goods imported by accredited press cameraman

      4.

      429

      Specified goods, imported by accredited journalist

      5.

      549

      Capital goods, raw materials and spares for repairs of ocean-going vessels

      6.

      550

      Spare parts and consumables for repairs of ocean going vessels registered in India.

      7.

      577

      Lifesaving medical equipment for personal use

      8.

      607

      Life Saving drugs like Keytruda etc

      9.

      607A

      Lifesaving drugs/medicines for personal use

      10.

      611

      Archaeological artefacts for exhibition in a museum

      11.

      612

      Specified raw material for sports goods

      Note: Description of entries is indicative. Notification may be referred to for complete description.


      Full Text:

      Union Budget 2024-25 (Full) + FINANCE (No.2) Bill, 2024

      Topics

      ActsIncome Tax