Electronic Credit Ledger Cannot Be Blocked Beyond One Year Under CGST Rules: Karnataka High Court

The Karnataka High Court on 25 February, held that the restriction imposed by blocking a taxpayer's electronic credit ledger under Rule 86A of the Central Goods and Services Tax Rules, 2017, cannot continue beyond one year, and any continuation of such blocking after the statutory period is illegal. Justice S. Sunil Dutt Yadav was hearing a writ petition filed by Jupiter Ventures challenging the action of the tax authorities in blocking its Electronic Credit Ledger on 21 November 2024. The...

Approval Of Insolvency Resolution Plan Not An Automatic Bar To Arbitration: Karnataka High Court

The Karnataka High Court on 26 February held that approval of a Corporate Insolvency Resolution Plan does not automatically bar disputes from being referred to arbitration. Where a valid arbitration agreement exists, any objections concerning the impact of the Resolution Plan on the claims must be adjudicated by the arbitral tribunal under Section 16, and cannot be considered at the appointment stage under Section 11 of the Arbitration and Conciliation Act, 1996. The Single Bench comprising...

Karnataka High Court Refuses New Arbitrator After Award, Says Fresh Appointment Would Reopen Proceedings

The Karnataka High Court has recently refused to appoint a substitute arbitrator under Section 11(6) of the Arbitration and Conciliation Act after an award had already been passed and the matter was remanded only for a limited purpose, holding that such reconstitution would effectively reopen concluded arbitral proceedings. Dismissing a plea filed by SSV Developers and its Managing Partner Vijaykumar Krishnasa Kabadi, Justice Lalitha Kanneganti held that once an award is passed and the case is...

Civil Courts Cannot Preempt SARFAESI Action, Karnataka High Court Sets Aside Injunction Against SBI

The Karnataka High Court has recently set aside an interim injunction that had restrained the State Bank of India from enforcing a corporate guarantee against Patel Engineering Limited. A Division Bench of Chief Justice Vibhu Bakhru and Justice C.M. Poonacha held that the Commercial Court in Bengaluru could not have injuncted SBI from proceeding under the SARFAESI Act or the Recovery of Debts and Bankruptcy Act. The bench noted that Section 34 of the SARFAESI Act bars courts from...

Right To Seek Arbitration Ends Once Written Statement Stage Is Closed: Karnataka High Court

The Karnataka High Court has reiterated that a defendant cannot seek reference to arbitration under Section 8 of the Arbitration and Conciliation Act, 1996 after its right to file a written statement in a commercial suit has been closed, dismissing an appeal filed by real estate developer Bhagyalakshmi Homes LLP. A Division Bench of Chief Justice Vibhu Bakhru and Justice C.M. Poonacha upheld the Commercial Court's order rejecting the developer's plea to refer the dispute to arbitration. “It is...

MSMEs Need Not Always Approach Facilitation Council; Arbitration Clause Enforceable: Karnataka High Court

The Karnataka High Court has recently held that enterprises are not required in every case to move the Facilitation Council under Chapter V of the Micro, Small and Medium Enterprises Development Act, 2006, which provides a mechanism for referring delayed payment disputes to the Council. Justice Suraj Govindaraj clarified that a contractual arbitration clause remains enforceable unless the statutory process under Section 18 is actually invoked. “It cannot be said, as an absolute proposition,...

Karnataka High Court Quashes Rs 85.51 Crore IGST Demand On Salaries Paid To Foreign Nationals By Huawei India

The Karnataka High Court has recently quashed a show cause notice issued to Huawei Technologies India Private Limited demanding Rs. 85.51 crore in Integrated Goods and Services Tax (IGST), along with interest and penalty, on salaries paid to foreign national employees. Justice S R Krishna Kumar held that this was not a case of secondment at all, but one where Huawei India had a direct employer-employee relationship with the foreign nationals working for it. The Court made it clear that once...

Karnataka High Court Invokes Writ Jurisdiction In RERA Matter To Enable Consideration Of Developer's Objections

The Karnataka High Court has recently held that the existence of an appellate remedy does not prevent it from exercising writ jurisdiction in a real estate dispute where due opportunity has not been afforded to one of the parties. The court set aside a Karnataka Real Estate Regulatory Authority order directing Embassy One Developers Pvt Ltd to pay over Rs. 4.24 crore as delay interest without considering its objections. Justice B. M. Shyam Prasad said, “An alternative remedy need not always...

Service Tax On Ocean Freight In CIF Imports Illegal: Karnataka High Court

The Karnataka High Court has held that service tax cannot be levied on ocean freight in imports made on a CIF (Cost, Insurance and Freight) basis, as such services fall outside the scope of the Finance Act, 1994.“The Act itself would be inapplicable to territories other than India and the Executive would not have the power to make rules for territories beyond India and where the events could be described to be extra territorial events i.e., service provided by a foreign exporter and a...

Tax Authority Cannot Deny Interest Waiver Through A Cryptic Order: Karnataka High Court

The Karnataka High Court recently held that a tax authority cannot deny a taxpayer's request for interest waiver through a cryptic order. It must pass a reasoned, speaking order after objectively examining whether the income could have been anticipated at the relevant time. A Bench of Justice K.S. Hemalekha, partly allowed a writ petition filed by Kanhaiyalal Dudheria (petitioner) and partially set aside an order of the Chief Commissioner of Income Tax, that allowed waiver of the second and...

No Appeal If Commercial Court Refuses To Return Plaint For Lack of Jurisdiction: Karnataka High Court

On 29 January, the Karnataka High Court dismissed an appeal filed by Trinetramilan Product Protection Solutions Pvt. Ltd., a packaging company, ruling that parties cannot immediately challenge a Commercial Court's decision to retain jurisdiction over a dispute. The Division Bench of Chief Justice Vibhu Bakhru and Justice C.M. Poonacha was hearing an appeal filed by Trinetramilan against a suit by Milan Packaging. It held that an appeal under Section 13(1A) of the Commercial Courts Act,...

Arbitration Can Resume Without Fresh Notice After Award Is Set Aside: Karnataka High Court

The Karnataka High Court has held that once an arbitral award is set aside, the disputes stand revived and can be referred back to arbitration without requiring the parties to issue a fresh notice under Section 21 of the Arbitration and Conciliation Act, 1996.Section 21 deals with the commencement of arbitral proceedings through notice to the opposing party. Justice Suraj Govindaraj held that this requirement is procedural and not jurisdictional and cannot be invoked to block arbitration after...