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    The Legal Contours of Input Tax Credit Eligibility: Procedural Aspects of GST and ITC
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    Case LawsGST
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    Input Tax Credit eligibility: procedural limits on reversing claims without supplier inquiry and GSTR-2A non-reflection not dispositive.
    Section 16(2) sets the statutory conditions for Input Tax Credit-tax invoice, receipt, tax payment, and return filing-and GSTR-2A serves only as a facilitator; non-reflection there does not automatically negate eligibility. Tax authorities must inquire into supplier conduct and observe procedural safeguards before reversing ITC or recovering tax from the recipient, with judicial precedents and CBIC clarifications shaping when exceptions may apply.
    Case LawsService Tax
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    Reverse charge mechanism: exporter not liable for foreign bank charges when Indian bank is the direct service recipient.
    The core issue is whether an exporter is liable under the Reverse Charge Mechanism for foreign bank charges deducted from export proceeds when those charges are imposed on and paid by an Indian intermediary bank. The Tribunal's analysis focuses on the definition of service recipient and territorial scope, concluding that the direct recipient-the Indian bank-is the party liable to discharge service tax while the exporter, as an indirect beneficiary without direct dealings with the foreign bank, is not subject to reverse charge.
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    The Court held that directorial liability requires specific averment that the director was in charge of and responsible for the conduct of the business at the time of the offence; mere titular position or awareness of cheque issuance is insufficient. It emphasized the necessity of serving the statutory notice prerequisite and rejected liberal construction to cure absent statutory averments, quashing proceedings against directors for non-compliance.
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    DIN requirement in tax administration: absence of mandatory DIN can invalidate assessment orders unless exceptional circumstances apply.
    Failure to quote the mandatory computer-generated Document Identification Number (DIN) in assessment orders, as required by the CBDT Circular from 1 October 2019, constitutes a procedural defect that can render the order invalid unless the revenue demonstrates that the issuance fell within the Circular's narrowly drawn exceptional circumstances; the Tribunal found such non-compliance in the order dated 15 October 2019 and the High Court affirmed, while the Supreme Court granted interim stay for further consideration.
    Case LawsIncome Tax
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    Capitation fee allegations challenge admissibility and attribution of seized evidence in charitable trust tax exemption inquiries.
    Alleged collection of capitation fees by a registered charitable trust threatens its exemption under Section 11; most evidence was seized from employees' residences, invoking the presumption under Section 132(4A) and raising attribution issues. Employee admissions later retracted, similar statement drafting, declarations under the Income Declaration Scheme 2016, and trustees' acknowledgments create contradictory evidentiary threads that complicate admissibility, credibility, and whether the seized funds can be treated as trust income.
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    Condonation of delay in tax compliance: liberal interpretation protects bona fide taxpayers from technical disqualification.
    The court analysed whether delay in filing Form 10 could be condoned, considering the petitioner's unawareness of post 2016 amendments, CBDT circulars and precedent, and applying principles that each case be judged on its facts; it stressed that failure to claim accumulation does not by itself show absence of intent to comply and urged a liberal approach to mitigate genuine hardship and prevent procedural technicalities from defeating substantive justice.
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    Scope of Section 263 is confined to instances where an assessment order is erroneous and prejudicial to revenue in a substantial way, not mere differences of opinion. Migration of licences from IP VPN to NLD ILD does not, by itself, create a new undertaking defeating entitlement to deduction under Section 80IA(4)(ii), particularly where identical deductions were previously allowed; administrative migration requires clear proof of substantive change before re characterising eligibility.
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    Delay condonation based on sufficient cause upheld where illness, relocation and pandemic disruption justified late filing and jurisdictional challenge.
    The tribunal applied a purposive construction of sufficient cause to condone substantial delay where cumulative factors-serious illness, change of residence and pandemic disruption-made filing untimely. It also found the assessment infirm for want of territorial and pecuniary jurisdiction because the taxpayer had established residence and filing history in a different territorial unit and administrative guidance allocated jurisdiction accordingly, underscoring that proper vesting of authority is a condition precedent to valid assessment.
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    Unexplained cash credits under Section 68 require taxpayers to prove investor identity and genuineness; authorities must rebut with evidence.
    Applicability of Section 68 requires the assessee to establish investor identity, creditworthiness and transaction genuineness-via PAN, tax returns, audited accounts and bank statements-and once this initial burden is satisfied, the burden shifts to the revenue to rebut with concrete evidence; mere suspicion or inability to trace an ultimate source does not alone justify additions if investments are reasonable relative to investors' net worth and effected through banking channels.
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    Retrospective cancellation of charitable trust registration invalidated due to lack of competent jurisdiction and procedural non compliance.
    The Tribunal invalidated the cancellation of a charitable trust's registration because the regional authority lacked competence to cancel under the statutory scheme and the transfer used to reassign the matter was improper; it further held that applying the newer cancellation provision retrospectively to deprive the trust of its recognized status was not legally tenable, emphasizing required notice, hearing and adherence to principled statutory interpretation.
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    Jurisdiction in multi locational offences governs venue determination; magistrate discretion and supervisory thresholds shape tax prosecution forums under criminal procedure.
    The judgment analyses Cr.P.C. place of offence principles in multi locational tax prosecutions, assessing whether procedural acts like recording statements under the Income Tax Act determine venue. It evaluates the magistrate's discretion in taking cognizance where alleged offences span jurisdictions and outlines the threshold for superior court supervisory intervention, emphasising that extraordinary petitions require demonstration of abuse of process or exceptional circumstances before altering magistrate venue determinations.
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    The tribunal held that excess unrecorded stock and cash found on survey were assessable as unexplained investment and unexplained money, and that the special higher-rate taxation provision applies to such income, taxing it at a higher fixed rate and disallowing any deduction; consequently the claimed partner's salary relating to the unexplained investment was disallowed.
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    Limitation under section 144C: assessment issued beyond statutory period, leaving transfer pricing adjustment unresolved on procedural grounds.
    The tribunal focused on the statutory time limit under Section 144C(13) for passing assessment orders after DRP directions, treated the order as barred by limitation and therefore did not adjudicate substantive transfer pricing challenges raised under Section 92CA. Consequently, technical disputes over comparability, exclusion/inclusion of comparables, and the profit level indicator computation were left unexamined.
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    Capitalization of interest: tribunal scrutinised whether interest and forex on capital projects form capital cost or permit revenue deduction.
    The tribunal analyzed four core taxation questions: whether interest and foreign exchange fluctuations written off from Capital Work in Progress are capital or revenue in nature and their nexus to business operations; whether write off of a DG set component should be treated within the block of assets for depreciation or as a revenue repair; the applicability of Section 36(1)(iii) to proportionate interest on interest free advances to related concerns and the presumption from mixed funds; and the evidentiary requirements to establish that inter corporate deposits were funded from own funds rather than borrowed monies for interest deduction purposes.
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    Doctrine of merger limits revisional jurisdiction under appeals, preventing collateral review of identical legal issues.
    The Doctrine of Merger operates to treat legal issues from an assessment as merged into appeal proceedings before the Commissioner of Income Tax (Appeals), thereby constraining subsequent revisional jurisdiction over those same issues; applied where initial assessment, reassessment notices and search-related assessment steps overlap, and supported by judicial precedent limiting collateral revision.
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    Interest on delayed tax refunds where delay is not attributable to the taxpayer under Section 244A.
    Entitlement to interest under Section 244A arises when refund payment is delayed for reasons not attributable to the assessee. The petitioner, a foreign company, faced delays caused by technical issues and incorrect guidance regarding banking details; the court treated the delay as the respondents' responsibility and applied Section 244A to award interest for the period of delay, directing payment according to the statutory rate.
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    Revision application under Section 264: remand for fresh merits review when alternative remedies were improperly relied upon.
    Whether a revision under Section 264 may be denied solely because alternative remedies existed and whether appeal provisions applied to DDT-related treaty claims; the court found that rejecting revision on the mere availability of other remedies was untenable and that the appealed provision was inapplicable, directing fresh merits consideration of treaty relief and related tax computation by the Principal Commissioner.
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    DTAA interpretation clarifies capital gains tax treatment for cross-border share sales under residency and grandfathering conditions.
    Taxation of capital gains from a Mauritius-based entity's sale of Indian company shares is analysed against the India-Mauritius Double Taxation Avoidance Agreement, focusing on DTAA allocation of taxing rights, timing of acquisition and transfer, and applicability of grandfathering provisions. The Tribunal assessed tax residency and treaty entitlement by examining corporate structure and commercial substance, applying the substance over form principle to determine whether treaty benefits were appropriate.
    Case LawsIncome Tax
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    Fiduciary funds not treated as taxable income when entity acts as facilitator; earmarked project funds excluded from income.
    The Tribunal examined whether earmarked receipts should be included in taxable income or treated on the balance sheet, focusing on jurisdictional validity of scrutiny notices, whether amounts were routed through the income and expenditure account or retained as earmarked funds, and whether receipts held in a fiduciary capacity for disaster relief were excluded from the entity's income because the entity acted only as facilitator without beneficial ownership.
    Case LawsIncome Tax
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    ESOP deduction in revised returns - tribunal permits claim within revision window, stressing valuation, timing and documentary consistency.
    Deductibility of ESOP-related costs in a revised return hinges on compliance with the statutory time limit for revision and on accounting and evidentiary consistency: correct year of recognition, reliable grant date valuation (e.g., Black Scholes), concordant employee records, and disclosure in audited accounts. The tribunal found the claim allowable within the revision window but emphasised documentary proof, valuation method and timing of liability as central to acceptability.

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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