Here's what happened: The Bombay High Court made a big decision involving Rochem Separation Systems and a few other companies. They were all arguing with the Union of India about some tax notices. The court sided with the companies, saying the tax department messed up by not following the rules.
The big question was whether the tax department needed to talk to the companies before sending them a notice asking why they shouldn't be taxed. According to a 2017 rule, if the tax demand is over 50 lakhs, there must be a discussion first. The tax department skipped this step, and the court wasn't happy about it.
“Talking with the company before sending a notice is mandatory for claims above fifty lakhs.”
The judges, M.S. Sonak and Advait M. Sethna, pointed out that the tax department didn't follow the required discussion process. They canceled the notices because of this mistake.
The decision relied on several earlier cases where courts had ruled that having a discussion first was necessary. The court mentioned cases like Amadeus India Pvt. Ltd. and others to support their decision.
Pre-Consultation Process: The tax department has to start a discussion process with the companies. They have four weeks to send out new notices.
New Notices: After the discussion, if needed, the tax department can issue new notices asking why the companies shouldn't be taxed.
Time Limits: The court made sure the time spent on this issue won't count against the tax department when it comes to deadlines.
This case is a reminder that rules are there for a reason. The court emphasized that having a discussion first helps avoid unnecessary arguments and encourages companies to follow the rules willingly.
In short, the court ruled in favor of the companies because the tax department skipped an important step. Now, they have to go back and do it correctly.
