Documents Burn, Tax Bill Survives

May 16, 2025 • Estimated Reading Time: 8 minutes

Welcome to another Friday, chief!

In today’s edition — Patna High Court rejects a travel agency’s fire excuse, ordering ₹25.25 lakh in service tax despite lost records, citing suppression of facts. Meanwhile, Assam CM Himanta Biswa Sarma rechristened GST from “Gabbar Singh Tax” to “God-Sent Tax,” claiming it helped buy Rafales and S-400s. From courtrooms to political battlefields, taxes are no longer just about revenue; they’re part of the national story now.

Fire Excuse Goes Up in Smoke

Vishwas Ved

Blaming a fire for losing documents might work at some places, but not in a court of law. 

A travel agency in Patna learnt this lesson recently when the Patna High Court said the company will have to pay ₹25.25 lakh service tax despite the fact the company’s business records had gone up in flames.

The case arose from a writ petition challenging a demand-cum-show cause notice issued about five years ago (October 2020) by CGST and Central Excise.

The notice covered service tax liabilities for the financial years 2015-16 and 2016-17 and demanded ₹25,25,313 in unpaid taxes, plus an equivalent penalty and applicable interest.

The petitioner argued that the tax could not be levied on gross receipts but only on commission earned from ticket sales. 

Unfortunately, without documentation to back this up, the court did not buy the argument.

Suppression of Facts

In the order on April 24, 2025, the court ruled that the travel agency’s failure to disclose transactions after surrendering its service-tax registration amounted to suppression of facts. 

The court stated: 

“The Taxing Authority was seeking cooperation and called for documents during the investigation, but the petitioner did not provide them. In such circumstances, concluding that this was a case of suppression cannot be faulted.”

Citing precedent on suppression and collusion, the bench ruled that both the show-cause notice and subsequent actions by the tax authorities were within their jurisdiction.

The bench also noted that the show-cause notice was issued during the pandemic and the petitioner was given three chances for a personal hearing after submitting their reply in February 2024.

With no deductions for flames or forgotten filings, the court advised the petitioner to pursue the statutory appellate route. The agency now has four weeks from the receipt of the order to file an appeal before the appropriate Appellate Authority. 

If such an appeal is filed, it will be assumed that the petitioner was following due legal process after the order was passed.

Why This Case Matters

The high court’s ruling might seem like just another legal story, but it carries some useful reminders for businesses: when it comes to tax matters, transparency and timely cooperation with authorities really do count.

This case sets a precedent in two ways:

The first is that suppression of facts is an invitation to trouble. The court backed the tax department’s use of the extended five-year limitation. 

That means if you “forget” to mention transactions or don’t file proper returns, the authorities can dig up your past and slap penalties long after.

Secondly, excuses won’t cut it. Claiming that you lost records due to a fire might win sympathy, but not a favourable court order, especially if you've also failed to cooperate during investigation.

In short, remember to double-check the numbers in your tax returns, chief.t.

A Political Airstrike

Who knew a conversation about tax could be cool until Assam Chief Minister Himanta Biswa Sarma strapped Goods and Services Tax (GST) into Rafale’s cockpit and went for a political airstrike of sorts.

In a rebuttal to Rahul Gandhi’s “Gabbar Singh Tax” jab, Sarma called GST to be a “God-Sent Tax.”

Yes, the same tax that makes you wince as if someone is bleeding you dry is apparently powering Rafales and S-400 missile systems.

Clearly, your chhole-bhature had defence potential.

Sarma wrote on X: “Rafale jets and S-400 systems don’t just appear; they are built on the strength of our taxpayers.”

What he meant was: Every time you ordered a biryani from Swiggy and paid GST on it, you helped blast the army in dealing with terrorists. 

Of course, this wasn’t Sarma’s attempt to put some makeup on a hated tax, it was a political attack aimed at Rahul Gandhi, who once said the BJP was turning Congress’s proposed “Genuine Simple Tax” into the dreaded “Gabbar Singh Tax.” 

Disagreeing with the Gabbar analogy, Sarma said GST isn’t a dacoit; it’s divine. In fact, “it funds national security, builds economic resilience, and holds the country together”.

The “God-Sent” connection emerged when Indian missiles hit nine terror camps under “Operation Sindoor.” 

So next time you look at GST with disdain while buying anything, remember it’s not just a tax. You may want to look at every swipe and scan as your contribution to the next Brahmos.

₹13.78 Lakh Crore

Over 30,000 cases were settled before their admission in the Insolvency and Bankruptcy Code (IBC) till December 2024, covering defaults worth ₹13.78 lakh crore. This proves that the provisions of the IBC have prompted debtors to take early action in distress situations, marking a positive shift in their behaviour.

—Justice Gavai takes oath as 52nd CJI. Justice BR Gavai took the oath as India's 52nd Chief Justice of India (CJI) on Wednesday, becoming the first Buddhist to lead the nation's judicial system. President Droupadi Murmu conducted the swearing-in ceremony for Justice Gavai, who has assumed the role following the retirement of Justice Sanjiv Khanna. Justice Gavai began his legal career in March 1985.

—Microsoft lays off 6,000. Microsoft has announced that it will lay off 3% of its global workforce, affecting thousands of employees across all levels, teams, and geographies, amounting to over 6,000 employees. The company, which employed 228,000 people as of June 2024, aims to reduce management layers and streamline operations. This represents Microsoft's largest staff cut since eliminating 10,000 roles in 2023. 

—CA held in ₹9-crore bank loan scam. A Chartered Accountant and a direct-selling agent (DSA) were arrested by Delhi Police for allegedly defrauding a private bank of Rs 9 crore by using forged financial documents to secure business loans. The accused, Rishi Chhabra (46), a DSA, and Himanshu Rastogi (33), a CA, were arrested on May 9. Both are currently out on bail. The third accused, Anshul Ahuja, a former credit manager at the private bank, was arrested earlier and is in judicial custody.

—RBI reviews e-wallets. RBI is scrutinising some digital wallets associated with electric-vehicle players after the collapse of the country’s largest all-EV taxi service left users unable to access money tied to their accounts. The review of payment tools is a result of troubles faced by the users of ride-hailing service BluSmart’s digital wallet. The events, triggered by fraud allegations against the company, highlighted the lack of safeguards for users who load money into closed-loop wallets to transact on apps.

—BSE hits ₹1 trillion market cap. BSE, Asia's largest and oldest stock exchange, joined an elite club of companies that have a market capitalisation of ₹1 trillion. The stock of the company hit the ₹1-trillion mark for the first time on May 14, 2025, after the stock price hit a new high of ₹7,422.50 on the National Stock Exchange.

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ICYMI | India Strikes Back, Trades Forward

Missed last week's update? India goes ahead with targeted military strikes in Pakistan and Pak-occupied Kashmir in response to the brutal Pahalgam attack on April 22, while securing a historic agreement with the UK. Operation Sindoor marks a tough military response, even as Moody’s warns of fiscal risks. Both strategies highlight the importance of balancing defence and growth. Meanwhile, Elon Musk turns West Lake Hills, Texas, into a security circus with his $6M mansion.

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