Sikkim High Court Quashes Zydus Healthcare Reassessments, Says Audit Objection Isn't New Evidence

The Sikkim High Court on 14 October quashed income tax reassessment proceedings against Zydus Healthcare Limited for three assessment years, holding that an audit objection expressing a contrary opinion on an issue examined during the original assessment cannot, by itself, justify reopening the assessment. Justice Bhaskar Raj Pradhan observed that the language used in Section 149(1)(b) of the Income Tax Act “clearly contemplates new evidence and not new opinion.” The Income Tax Department...

Sikkim High Court Sets Aside ₹37.93 Lakh Recovery Against Lupin Limited, Directs Fresh Review

On 23 September, the Sikkim High Court set aside a Rs. 37.93 lakh recovery against Lupin Limited under the Budgetary Support Scheme, directing the tax authorities to reconsider the matter after examining the company's explanation and supporting documents. Chief Justice A. Muhamed Mustaque found that the authorities had not properly considered Lupin's explanation on the ITC reflected in its GSTR-2A before concluding that it had received excess benefit under the scheme. The Bench observed: “If...

Judge Who Passed Earlier Interim Order Not Barred From Deciding Challenge To Arbitral Award: Sikkim High Court

The Sikkim High Court has held that a judge who earlier decided an application for interim protection in an arbitration dispute does not have to automatically recuse from hearing a subsequent challenge to the arbitral award arising from the same arbitration. Justice Bhaskar Raj Pradhan observed that automatic recusal would not be required unless the State of Sikkim could demonstrate a real and reasonable apprehension of bias. Allowing such a recusal, according to the court, would be akin to...

Courts Must Call For Arbitral Records Before Deciding Challenge To Arbitral Award: Sikkim High Court

The Sikkim High Court has reiterated that a court hearing a challenge to an arbitral award cannot decide the matter without first calling for the records of the arbitral tribunal. A Division Bench of Chief Justice A. Muhamed Mustaque and Justice Bhaskar Raj Pradhan observed: “The Court entertaining the application under Section 34 is required, imperatively, to look into the records of the Arbitral Tribunal to satisfy whether any grounds under Section 34 have been made out or not. Without...

Income Tax Act | Sikkim High Court Allows S.80P(2)(d) Deduction On Interest Earned From Co-operative Banks By Non-Bank Co-operative Society

The Sikkim High Court has held that a non-bank co-operative society is entitled to claim deduction under Section 80P(2)(d) of the Income Tax Act, 1961, on interest income earned from investments made with co-operative banks, and that Section 80P(4) does not bar such deduction. A Division Bench of Chief Justice Biswanath Somadder and Justice Meenakshi Madan Rai allowed the tax appeal filed by the Sikkim State Cooperative Supply and Marketing Federation Limited (SIMFED) and set aside the...

Delay Attributable To State: Sikkim High Court Affirms Arbitral Award Of ₹5.88 Crore; Rejects State's Challenge

The High Court of Sikkim dismissed an appeal under section 37 of the Arbitration and Conciliation Act, 1996 (Arbitration Act) filed by the State of Sikkim and its Power Department challenging an arbitral award that granted escalation and interest to contractor for work executed on a 66/11KV sub-station project at Mangan. A Division Bench comprising Chief Justice Biswanath Somadder and Justice Bhaskar Raj Pradhan upheld the order passed by the Commercial Court holding that neither patent...

Income Tax Act | Alternative Remedy No Bar When Reassessment Notice Lacks Jurisdiction U/S 148/149: Sikkim High Court

The Sikkim High Court stated that when the reassessment notice itself is illegal, issued without jurisdiction, or beyond the time limit prescribed under the Income Tax Act, the Court can directly examine the validity of the notice under Article 226, even though an appeal under the Act is otherwise available.A Single Bench of the Sikkim High Court, comprising Justice Meenakshi Madan Rai, held that the availability of an alternative statutory remedy does not bar the exercise of writ...

No Refund Of Unutilised ITC On Closure Of Business U/S 54 CGST Act, Must Be Reversed U/S 29(5): Sikkim High Court

The Sikkim High Court stated that no refund of unutilised ITC (Input Tax Credit) on closure of business under section 54 CGST Act (Central Goods and Services Tax), must be reversed under section 29(5). Section 54 of the CGST Act, 2017 deals with refund of tax, intertest, or any other amount paid under GST. The refund can be claimed in case of excess tax payment, zero-rated supplies, deemed exports, or unutilised ITC. Section 29(5) of the CGST Act, 2017 provides that when the...

Assessee Entitled To Refund Of Unutilized ITC Claimed On Closure Of Business: Sikkim High Court

The Sikkim High Court stated that the assessee is entitled to the refund of unutilized ITC claimed on the closure of business. The Bench of Justice Meenakshi Madan Rai was addressing the issue of whether the refund of ITC under Section 49(6) of the CGST Act is only limited to companies carved out under Section 54(3) of the CGST Act or does every registered company have a right to refund of ITC in case of discontinuance of business. In this case, the assessees/petitioners were...

S.29A Of Arbitration Act As Amended By 2019 Amendment Governs All Pending Arbitrations After Coming Into Force: Sikkim High Court

The Sikkim High Court bench of Justices Bhaskar Raj Pradhan and Biswanath Somadderhas held that section 29A, as amended by the 2019 Amendment, shall apply to all arbitration proceedings that were pending at the time the amendment came into force. Brief Facts: The present appeal has been filed under section 37 of the Arbitration and Conciliation Act, 1996 (Arbitration Act) against an order passed the Commercial Court at Gangtok that had set aside the arbitral award dated 23.02.2023 on...

Expansion Of Definition Of 'Sikkimese' In S.10(26AAA) Of Income Tax Act Doesn't Affect Rights Of Indigenous People: Sikkim High Court

The Sikkim High Court has upheld the constitutional validity of the definition 'Sikkimese' under the Income Tax Act, which was slightly expanded by way of an amendment in terms of the Finance Act, 2023.A division bench of Chief Justice Biswanath Somadder and Justice Meenakshi Madan Rai upheld the vires of Explanation (v) contained under clause (26AAA) of section 10 of the Income Tax Act, 1961.The initial definition excluded from the definition Indians who had settled in Sikkim prior to the...

Arbitration Agreement Remains Valid Even If Underlying Contract Is Terminated: Sikkim High Court

The Sikkim High Court bench of Chief Justice Biswanath Somadder and Justice Bhaskar Raj Pradhan affirmed that it is well settled that if the contract containing arbitration clause is rendered invalid or void, it does not affect the arbitration agreement. The arbitration agreement would continue to exist and the validity of which will be decided by the Arbitral Tribunal under section 16 of the Arbitration Act. Brief Facts The learned District Judge has, vide the impugned order dated ...