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ITC Can’t Be Denied Without Hearing Buyer’s Bona Fides | HC

ITC denial due to supplier non-compliance

Case Details: MCLEOD Russel India Ltd. vs. Union of India - [2025] 181 taxmann.com 322 (Gauhati)

Judiciary and Counsel Details

  • Ashutosh Kumar, CJ. & Arun Dev Choudhury, J.
  • A. Kanodia, Adv. for the Petitioner.
  • S.C. Keyal, Standing Counsel & Ms R. Hussain, Adv. for the Respondent.

Facts of the Case

The petitioner, engaged in the tea business, challenged the validity of Section 16(2)(aa) of the CGST Act. It was contended that the denial of input tax credit (ITC) solely on account of non-reflection of supplier details in Form GSTR-2A/2B and supplier’s non-compliance under Section 37/38 was irrational. It was submitted that purchasers could not ensure supplier compliance in Form GSTR-1 filings. The Department of Revenue maintained that ITC entitlement was subject to statutory conditions designed to curb fraud. The matter was accordingly placed before the High Court.

High Court Held

The High Court held that Section 16(2)(aa) must be read down to prevent denial of ITC to bona fide recipients solely due to supplier non-compliance in GSTR-1 and non-reflection in GSTR-2A/2B. The Court interpreted that while ITC entitlement must be established, it must be linked exclusively to supplier compliance. The tax collected by the seller was ultimately borne by the buyer, not included in the sale price. While the buyer must establish entitlement to the credit, it is unfair to deny it solely because the supplier failed to comply. It concluded that authorities under CGST must allow the petitioner to substantiate the bona fide status before denying credit.

List of Cases Referred to

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Digital Personal Data Protection Act, 2023 – FAQs | Key Provisions

Digital Personal Data Protection Act

The Digital Personal Data Protection Act, 2023 is India’s data protection law that regulates the processing of digital personal data by individuals, companies, and government entities. It aims to protect the privacy rights of individuals (Data Principals) while permitting the lawful use of personal data for legitimate purposes, by prescribing obligations for data handlers (Data Fiduciaries), defining individual rights and duties, and providing for enforcement through penalties for non-compliance.
Check out Taxmann's FAQs on Digital Personal Data Protection Act 2023 which is authoritative and practical handbook to India's new privacy framework. Built on 150 meticulously crafted FAQs supported by statutory resumes, PIB clarifications, and Expert Committee insights, it offers a comprehensive, structured understanding of the DPDP Act and the DPDP Rules 2025. The book covers commencement timelines, fiduciary obligations, cross-border restrictions, penalties, appeals, and transitional provisions, as well as a dedicated chapter explaining the DPDP–RTI interplay. Updated till 23rd November 2025, it is an indispensable reference for legal, compliance, technology, governance, and regulatory professionals navigating India's evolving data protection regime.

FAQ 1. What is the new Digital Personal Data Protection Act, 2023 all about?

The Digital Personal Data Protection Act, 2023 (‘DPDP Act’) provides for the processing of digital personal data in a manner that recognises both the rights of the individuals to protect their personal data and the need to process such personal data for lawful purposes and for matters connected therewith or incidental thereto.

The Digital Personal Data Protection Act protects digital personal data [that is, the data by which a person (individual) may be identified] by providing for the following:

(a) The obligations of Data Fiduciaries (that is, persons, companies and government entities who process data) for data processing (that is, collection, storage or any other operation on personal data);

(b) The rights and duties of Data Principals (that is, the person to whom the data relates); and

(c) Financial penalties for breach of rights, duties and obligations.

The Digital Personal Data Protection Act also seeks to achieve the following:

(a) Introduce data protection law with minimum disruption while ensuring necessary change in the way Data Fiduciaries process data;

(b) Enhance the Ease of Living and the Ease of Doing Business; and

(c) Enable India’s digital economy and its innovation ecosystem.

Taxmann's FAQs on Digital Personal Data Protection Act 2023

FAQ 2. Whether DPDP Act apply to data in non-digital form?

The Digital Personal Data Protection Act applies to digital personal data i.e. personal data in digital form. Therefore, DPDP Act will not apply to data in non-digital form. However, in terms of clause (a) of section 3 of DPDP Act, DPDP Act shall apply to personal data in non-digital form which is digitised subsequently.

FAQ 3. When does the Digital Personal Data Protection Act come into force?

The DPDP Bill received the assent of the President of India on 11.08.2023. However, the DPDP Act does not provide for coming into force of the provisions with effect from the date of the President’s assent. As regards coming into force of the Act. Section 1(2) of the DPDP Act provides as under:

  • It shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint and
  • Different dates may be appointed for different provisions of this Act and
  • Any reference in any such provision to the commencement of this Act shall be construed as a reference to the coming into force of that provision.

In exercise of its powers under section 1(2), the  Central Government has, vide Notification G.S.R. 843 (E), dated 13.11.2025,  appointed the dates of coming into force of various provisions of the DPDP Act as per the Table below:

Provision of the DPDP Act Appointed Date for Coming
into Force of the Provision
Sub-section (2) of section 1, section 2, sections 18 to 26 sections 35, 38, 39, 40, 41, 42, 43, and sub-sections (1) and (3) of section 44 The date of publication of  Notification G.S.R. 843(E) in the Official Gazette (13.11.2025) [Clause (a) of the Notification]
Sub-section (9) of  section 6 and clause (d) of sub-section (1) of section 27 One year from the date of publication  of the Notification in the Official Gazette (13.11.2026) [Clause (b) of the Notification read with sections 3(66) and 9 of the General Clauses Act, 1897]
Sections 3 to 5, sub-sections (1) to (8) and (10) of section 6, sections 7 to 10, sections 11 to 17, section 27 except clause (d) of sub-section (1) of the said section, sections 28 to 34, 36, 37 and sub-section (2) of section 44 18 months from the date of publication  of the Notification in the Official Gazette (13.05.2027) [Clause (c) of the Notification read with sections 3(35) and 9 of the General Clauses Act, 1897]

 The date of coming into force is 13.11.2025 for the following provisions:

  • sub-section (2) of section 1,
  • section 2,
  • sections 18 to 26
  • sections 35, 38, 39, 40, 41, 42, 43, and
  • sub-sections (1) and (3) of section 44.

“Year” is to be reckoned according to the Calendar year as per British Calendar in terms of section 3(66) of the General Clauses Act, 1897. “Month”, according to section 3(35) of the General Clauses Act, 1897, means a month reckoned according to the British calendar.  In terms of section 9(1) of the General Clauses Act, 1897, the word “from” is used to exclude the first in a series of days or any other period of time. In view of the above provisions of the General Clauses Act, the following position emerges:

  • “One year from the date of publication”  of the Notification in the Official Gazette is to be reckoned from 13.11.2025 after excluding 13.11.2025. That is to say, one year is to be reckoned as calendar year 14.11.2025 to 13.11.2026. Therefore, 13.11.2026 is the date of coming into force for sub-section (9) of  section 6 and clause (d) of sub-section (1) of section 27.
  • 18 months from the date of publication of the Notification is 18 calendar months reckoned as 14.11.2026 to 13.05.2027. Therefore, 13.05.2027 is the date of coming into force for:
    1. sections 3 to 5,
    2. sub-sections (1) to (8) and (10) of section 6,
    3. sections 7 to 10,
    4. sections 11 to 17,
    5. section 27 except clause (d) of sub-section (1) of the said section,
    6. sections 28 to 34, 36, 37 and
    7. sub-section (2) of section 44

FAQ 4. Whether Rules have been notified to operationalise the DPDP Act?

Yes, the Digital Personal Data Protection Rules, 2025, have been notified on 14.11.2025.

FAQ 5. What is the conceptual basis of the DPDP Act?

The conceptual basis of the DPDP Act is the report of the Expert Committee set up under the Chairmanship of Justice BN Srikrishna titled

“A Free and Fair Digital Economy Protecting Privacy, Empowering Indians’.

FAQ 6. What are the principles on which the DPDP Act is based on?

The DPDP Act is based on the following seven principles:

(a) The principle of consented, lawful and transparent use of personal data;

(b) The principle of purpose limitation (use of personal data only for the purpose specified at the time of obtaining consent of the Data Principal);

(c) The principle of data minimisation (collection of only as much personal data as is necessary to serve the specified purpose);

(d) The principle of data accuracy (ensuring data is correct and updated);

(e) The principle of storage limitation (storing data only till it is needed for the specified purpose);

(f) The principle of reasonable security safeguards; and

(g) The principle of accountability (through adjudication of data breaches and breaches of the provisions of the DPDP Act and imposition of penalties for the breaches).

The DPDP Act is guided by seven core principles of consent and transparency, purpose limitation, data minimisation, accuracy, storage limitation, security safeguards, and accountability. [PIB Press Release, dated 14-11-2025]

The law rests on seven core principles. These include consent and transparency, purpose limitation, data minimisation, accuracy, storage limitation, security safeguards and accountability. These principles guide every stage of data processing. They also ensure that personal data is used only for lawful and specific purposes. [PIB Press Release, dated 17-11-2025]

FAQ 7. Where can one find elaboration of the above 7 principles which are the basis for the DPDP Act?

One can find elaboration of the above 7 principles in the report of the Expert Committee set up under the Chairmanship of Justice BN Srikrishna titled

“A Free and Fair Digital Economy Protecting Privacy, Empowering Indians”.

FAQ 8. What is the rationale for enacting the DPDP Act?

The report of the Committee of Experts notes the admission by Facebook that the data of 87 million users, including 5 lakh Indian users, was shared with Cambridge Analytica through a third-party application that extracted personal data of Facebook users who had downloaded the application as well as their friends. According to the Report notes that this admission by Facebook is demonstrative of several such harms users did not have effective control over data. Further, they had little knowledge that their activity on Facebook would be shared with third parties for targeted advertisements around the US elections. The incident, unfortunately is neither singular, nor exceptional. Data gathering practices are usually opaque, mired in complex privacy forms that are unintelligible, thus leading to practices that users have little control over. Inadequate information on data flows and consequent spam or worse still, more tangible harms, are an unfortunate reality. The Report notes that

“Currently, the law does little to protect individuals against such harms in India”.

To fill in the vacuum and protect individuals against such harms, a new law was necessary. Hence, the DPDP Act was enacted with the objective of “keeping citizens’ personal data protected while unlocking the digital economy.”

FAQ 9. What are the aims and objects of the DPDP Act?

In Justice K.S. Puttaswamy (Retd.) v. Union of India, the Hon’ble Supreme Court held that the right to privacy is a fundamental right under Article 21 of the Constitution of India. To make this right meaningful, it was necessary to put in place a data protection framework which, while protecting citizens from dangers to informational privacy originating from state and non-state actors, serves the common good. The data protection framework could not focus on right to privacy alone. There had to be a balancing of right to privacy with other considerations and values. In Puttaswamy (supra), the Supreme Court observed that

“Formulation of a regime for data protection is a complex exercise which needs to be undertaken by the State after a careful balancing of the requirements of privacy coupled with other values which the protection of data sub-serves together with the legitimate concerns of the State.”

Thus, the (‘DPDP Act’) aims to provide for the processing of digital personal data in a manner that recognises both the rights of the individuals to protect their personal data and the need to process such personal data for lawful purposes (needs of digital economy).

FAQ 10. Till the date DPDP Act comes into force on date notified by Central Government, are there no existing legal provisions protecting digital personal data of individuals from unauthorised use?

No. That is not the case. Till the date the DPDP Act comes into force, the existing legal provisions to protect digital personal data of individuals are contained in section 43A of the Information Technology Act, 2000 which provides for Compensation for failure to protect data.

Section 43A of the IT Act, 2000 provides that where a body corporate, possessing, dealing or handling any sensitive personal data or information in a computer resource which it owns, controls or operates, is negligent in implementing and maintaining reasonable security practices and procedures and thereby causes wrongful loss or wrongful gain to any person, such body corporate shall be liable to pay damages by way of compensation to the person so affected.

Explanation in section 43A defines the terms “body corporate”, “reasonable security practices and procedures” and “sensitive personal data or information” for the purposes of section 43A as under:

(i) “body corporate” means any company and includes a firm, sole proprietorship or other association of individuals engaged in commercial or professional activities;

(ii) “reasonable security practices and procedures” means security practices and procedures designed to protect such information from unauthorised access, damage, use, modification, disclosure or impairment, as may be specified in an agreement between the parties or as may be specified in any law for the time being in force and in the absence of such agreement or any law, such reasonable security practices and procedures, as may be prescribed by the Central Government in consultation with such professional bodies or associations as it may deem fit;

(iii) “sensitive personal data or information” means such personal information as may be prescribed by the Central Government in consultation with such professional bodies or associations as it may deem fit.

The Information Technology (Reasonable Security Practices and Procedures and Sensitive Personal Data or Information) Rules, 2011 (hereinafter referred to as the SPDI rules) were notified by Central Government to define “sensitive personal data or information” and specify “reasonable security practices and procedures”. The SPDI Rules were notified by the Central Government under powers conferred on it by sections 43A and 87(2)(ob) of the IT Act, 2000.

FAQ 11. Whether the existing protection to individuals under section 43A of IT Act and SPDI Rules will continue to be available once the DPDP Act comes into force?

In terms of section 44(2) of the DPDP Act, sections 43A and 87(2)(ob) of IT Act, 2000 and SPDI Rules shall stand repealed from the date notified by Central Government under section 1(2) of DPDP Act for coming into force of section 44(2) of DPDP Act. Sub-section (2) of section 44 has been notified to come into force with effect from 13.05.2027. Therefore, Sections 43A and 87(2)(ob) of IT Act and SPDI Rules shall stand omitted with effect from 13.05.2027.

FAQ 12. Whether the DPDP Act provides for compensation to affected individuals in case of personal data breach like section 43A of IT Act?

No. There are no provisions for compensation in DPDP Act along the lines of section 43A.

FAQ 13. What protections are available to individuals under existing provisions of section 43A of IT Act and SPDI Rules against unauthorised use/breach of privacy of their personal data?

Rule 2(1)(i) of the SPDI Rules defines “Personal Information” to mean “any information that relates to a natural person, which, either directly or indirectly, in combination with other information available or likely to be available with a body corporate, is capable of identifying such person.”

Rule 3 of the SPDI Rules defines the term “Sensitive personal data or information” to mean such personal information which consists of information relating to:

(i) password;

(ii) financial information such as Bank account or credit card or debit card or other payment instrument details ;

(iii) physical, physiological and mental health condition;

(iv) sexual orientation;

(v) medical records and history;

(vi) Biometric information;

(vii) any detail relating to the above clauses as provided to body corporate for providing service; and

(viii) any of the information received under above clauses by body corporate for processing, stored or processed under lawful contract or otherwise.

Proviso to Rule 3 clarifies that any information that is freely available or accessible in public domain or furnished under the Right to Information Act, 2005 or any other law for the time being in force shall not be regarded as sensitive personal data or information for the purposes of these rules.

Rule 4 of SPDI Rules provides for Body corporate to provide policy for privacy and disclosure of information as under:

(a) The body corporate or any person who on behalf of body corporate collects, receives, possess, stores, deals or handle information of provider of information, shall provide a privacy policy for handling of or dealing in personal information including sensitive personal data or information and ensure that the same are available for view by such providers of information who has provided such information under lawful contract.

(b) Such policy shall be published on website of body corporate or any person on its behalf and shall provide for:

(i) Clear and easily accessible statements of its practices and policies;

(ii) Type of personal or sensitive personal data or information collected under rule 3;

(iii) Purpose of collection and usage of such information;

(iv) Disclosure of information including sensitive personal data or information as provided in rule 6;

(v) Reasonable security practices and procedures as provided under rule 8.

Rule 5 of SPDI Rules provides for Collection of information as under:

(1) Body corporate or any person on its behalf shall obtain consent in writing through letter or Fax or email from the provider of the sensitive personal data or information regarding purpose of usage before collection of such information.

(2) Body corporate or any person on its behalf shall not collect sensitive personal data or information unless:

(a) the information is collected for a lawful purpose connected with a function or activity of the body corporate or any person on its behalf; and

(b) the collection of sensitive personal data or information is considered necessary for that purpose.

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Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025 Receives Presidential Assent

Sabka Bima Sabki Raksha Act 2025

Act No. 40 of 2025, Dated: 20.12.2025

1. Legislative Milestone

The Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025 received the President’s assent on December 20, 2025, marking a significant reform in India’s insurance regulatory framework. The Act represents a major step towards liberalisation, expansion of insurance coverage, and strengthening of the insurance ecosystem.

2. Statutes Amended

The Act amends the following key legislations governing the insurance sector in India:

  • Insurance Act, 1938
  • Life Insurance Corporation Act, 1956
  • Insurance Regulatory and Development Authority Act, 1999

By amending these foundational laws, the Act creates a unified and modernised legal framework to support the evolving needs of the insurance market.

3. Foreign Investment Liberalisation

3.1 Increase in FDI Limit

A central feature of the Act is the liberalisation of foreign investment norms in the insurance sector.

  • Foreign investment, including Foreign Direct Investment (FDI), is permitted up to 100%
  • The limit applies to the paid-up equity capital of Indian insurance companies
  • The enhanced cap is subject to prescribed conditions, safeguards, and regulatory oversight

This marks a departure from the earlier capped regime and places India among jurisdictions with fully open insurance markets, subject to regulatory controls.

4. Regulatory Safeguards

While allowing 100% foreign investment, the Act envisages that:

  • Conditions relating to ownership, control, governance, and management will be prescribed
  • Regulatory oversight will continue to ensure:
    1. Protection of policyholders’ interests
    2. Financial stability and solvency of insurers
    3. Compliance with prudential and conduct norms

This ensures that liberalisation does not dilute consumer protection or systemic stability.

5. Policy Objectives

The amendments seek to:

  • Attract long-term foreign capital into the insurance sector
  • Enhance insurance penetration and density
  • Improve competition, product innovation, and service quality
  • Strengthen the financial capacity and solvency of insurers
  • Support the vision of “Sabka Bima, Sabki Raksha” by expanding access to insurance across all sections of society

6. Implications for the Insurance Sector

6.1 For Insurers

  • Greater flexibility in capital structuring
  • Access to global expertise, technology, and best practices
  • Opportunities for consolidation, expansion, and innovation

6.2 For Investors

  • Entry into a large and under-penetrated insurance market
  • Full ownership possibilities, subject to regulatory conditions

6.3 For Policyholders

Potential benefits from:

  • Wider product offerings
  • Improved service standards
  • Stronger and better-capitalised insurers

7. Next Steps

The operational impact of the Act will unfold through:

  • Rules, regulations, and guidelines prescribing conditions for 100% foreign investment
  • Transitional provisions for existing insurers and shareholders
  • Regulatory clarifications on governance and control requirements

8. Key Takeaway

The Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025 ushers in a transformative phase for India’s insurance sector by permitting up to 100% foreign investment, modernising core insurance laws, and strengthening the foundation for wider coverage, deeper capital markets, and enhanced policyholder protection.

Click Here To Read The Full Update

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Govt. enacts the Viksit Bharat – Guarantee for Rozgar and Ajeevika Mission (Gramin) Act, 2025

Viksit Bharat Rozgar and Ajeevika Mission Act 2025

Act No. 36 of 2025, Dated: 21.12.2025

1. Legislative Context and Vision

The Viksit Bharat—Guarantee for Rozgar and Ajeevika Mission (Gramin) Act, 2025 has been enacted to realign India’s rural employment and livelihood framework with the long-term national vision of Viksit Bharat @2047. The Act represents a shift towards integrated, outcome-oriented, and decentralised rural development, while strengthening statutory employment guarantees.

2. Statutory Guarantee of Wage Employment

The Act provides a clear statutory guarantee of not less than 125 days of wage employment in every financial year to rural households:

  • Applicable to households whose adult members voluntarily seek unskilled manual work
  • Employment is demand-driven and rights-based
  • The guarantee is legally enforceable and backed by accountability mechanisms

2.1 Strengthened Legal Obligation

Section 5(1) places an explicit obligation on the Government to ensure delivery of the guaranteed employment. The Act does not dilute the right to demand work; instead, it expands the entitlement beyond earlier frameworks and reinforces its enforceability.

3. Planning Framework Viksit Gram Panchayat Plans (VGPPs)

All works under the Act must originate from Viksit Gram Panchayat Plans (VGPPs).

3.1 Key Features of VGPPs

  • Prepared at the Gram Panchayat level
  • Based on participatory planning processes
  • Approved by the Gram Sabha
  • Reflect local needs, priorities, and development gaps

This ensures that planning remains bottom-up and community-driven, preserving the constitutional role of Panchayati Raj Institutions.

4. Digital and Spatial Integration With National Platforms

VGPPs are:

  • Digitally and spatially integrated with national planning platforms, including PM Gati Shakti
  • Linked with infrastructure, logistics, and development datasets across Ministries

4.1 Whole-of-Government Convergence

This integration enables:

  • Cross-sectoral planning by different Ministries and Departments
  • Avoidance of duplication of works and wastage of public resources
  • Alignment of rural employment works with broader infrastructure and development goals

Importantly, decentralised decision-making is fully retained, even as national-level coordination is enhanced.

5. Outcome-Oriented and Saturation-Based Development

The integrated planning framework facilitates:

  • Saturation-based outcomes (complete coverage of identified needs)
  • Better sequencing and prioritisation of works
  • Faster and more efficient implementation
  • Improved quality and durability of assets created

This marks a transition from fragmented project execution to coherent, area-based rural development.

6. Implementation as a Centrally Sponsored Scheme

The Act is implemented as a Centrally Sponsored Scheme (CSS):

  • Operationalised through State Government notifications
  • States are responsible for execution in accordance with the Act and Rules
  • Flexibility is provided to States within the statutory framework

7. Funding Framework and Fiscal Discipline

Funding under the Act is provided through:

  • State-wise normative allocations
  • Allocations based on objective parameters prescribed in the Rules

7.1 Key Attributes

  • Predictability in fund flow
  • Improved fiscal discipline
  • Better planning at State and local levels
  • No dilution of statutory entitlements to:
    1. Wage employment
    2. Unemployment allowance where work is not provided

8. Accountability and Grievance Redressal

The Act strengthens:

  • Monitoring and reporting mechanisms
  • Accountability of implementing authorities
  • Grievance redressal systems accessible to rural households

The expansion to 125 guaranteed days, combined with enhanced oversight, reinforces the justiciable nature of the employment guarantee.

9. Policy Significance

The Act represents a major evolution in India’s rural employment architecture by:

  • Expanding guaranteed employment days
  • Integrating decentralised planning with national platforms
  • Promoting convergence across government programmes
  • Enhancing efficiency, transparency, and enforceability
  • Aligning rural livelihoods with the long-term vision of a developed India by 2047

10. Key Takeaway

The Viksit Bharat—Guarantee for Rozgar and Ajeevika Mission (Gramin) Act, 2025 strengthens rural employment as a legal right, expands guaranteed work to 125 days, embeds participatory planning through VGPPs, and leverages digital integration for efficient, outcome-driven rural development—without compromising decentralisation or statutory entitlements.

Click Here To Read The Full Update

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[Opinion] Is Supply Chain Management a mere Commercial Issue?

tax efficient supply chain management (TESCM)

Ameet Baid, Roshni Chaurasia & Chirag Rajput  [2025] 181 taxmann.com 582 (Article)

1. Introduction

In today’s highly competitive global marketplace, every enterprise strives to minimise costs and gain a strategic edge over competition. To achieve this, enterprises tend to focus more on operational factors of a supply chain such as transportation, inventory and logistics processes while overlooking the broader strategic aspects that can create long term values. For example, Apple assigning manufacturing of its iPhones to entities in other jurisdictions which can offer reduced costs and technical capabilities along with economies of scale. However, an important question arises; is operational optimisation alone sufficient to secure sustainable competitive advantage?

This is where a deeper, more holistic view of supply chain management becomes crucial. The synergy between operational strategies and tax is immensely vital and this is where Tax Efficient Supply Chain Management (TESCM) becomes significant. It focuses on the optimisation of taxes via allocating business activities/functions among different entities based in different countries. Having said that, at the same time it’s important to keep TESCM out of tax evasion.

This article explores how TESCM can be carved within the legal framework, following Organisation for Economic Co-operation and Development (OECD)/Base Erosion and Profit Shifting (BEPS) guidelines to ensure that profit allocations and tax payments are transparent and supported by economic substance.

2. Traditional Supply Chain Model

  • Traditional supply chain model focuses on function specific risks and rewards.
  • For instance, a manufacturing entity, A Co., produces goods and sell them to distributors, who distribute/sells these products to customers across various markets. The risks associated with the same are also highlighted below.
    image

3. Implications

Under the traditional supply chain model, each legal entity within the chain assumes risk associated with its respective functions, and the profits generated by them are taxed according to the rules of its respective jurisdiction. Since tax rates and regulations differ widely between jurisdictions, this often results in a substantial cumulative tax burden for the main/manufacturing company, and to mitigate this cumulative tax burden, TESCM framework becomes particularly relevant.

4. TESCM In Brief

  • TESCM considers tax as an integral part of the overall supply chain processes to optimise global effective rate of tax of an enterprise. The fundamental concept of TESCM is to establish a Principal Company (P Co.) in a low taxed jurisdiction and transfer appropriate amount of functions, assets and risk to such low taxed jurisdiction to justify the allocation of taxable profit and thus get benefit of lower tax rate of that respective jurisdiction.
  • P Co. should be allocated more management control and business risks to be entitled to entrepreneurial profits while other operating companies perform limited functions with limited risks, receiving a relatively low profit share. Hence, the structure and allocation of value-adding functions and commercial risks between P Co. and other operating companies are critical in designing a tax-optimal model.
  • By carefully designing supply chain frameworks, companies can save tax outflows. This enables enterprises to reduce their global tax liabilities. TESCM, thus plays a crucial role in improving an organisation’s competitive edge and maximising value creation across its global operations.
Click Here To Read The Full Article

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SARFAESI Action Invalid Where Loan Predates Act and No Security Interest Exists | SC

Security Interest

Case Details: North Eastern Development Finance Corporation Ltd. (NEDFI) vs. L. Doulo Builders and Suppliers Co. (P.) Ltd. - [2025] 181 taxmann.com 539 (SC)

Judiciary and Counsel Details

  • Dipankar Datta & Aravind Kumar, JJ.
  • Dr Manish Singhvi, Sr. Adv., Rituraj BiswasMayan PrasadMs Sujaya BardhanAayush GargSami Ahmed, Advs. & Chandan Kumar, AOR for the Appellant.
  • Kaushik Choudhury, AOR, Madhurjya ChoudhurySaksham GargJyotirmoy Chatterjee, Advs. for the Respondent.

Facts of the Case

In the instant case, the Respondent-company approached the appellant-corporation for financial assistance to set up a cold storage unit in Nagaland. The appellant agreed to offer financial assistance. To secure the said loan, a loan agreement was executed between the appellant and the respondent company.

Respondent defaulted in honouring its obligation under the loan agreement, resulting in the initiation of action by the appellant under the SARFAESI Act. The appellant took physical possession of the respondent’s assets. The Respondent invoked the writ jurisdiction of the High Court, praying for the quashing of the arbitrary and illegal action of the appellant in taking over possession.

The High Court allowed the writ petition and held that the appellant failed to establish that any security interest was created in its favour either by the respondent (borrower) or the guarantor and/or that the appellant was a ‘secured creditor’ within the meaning of section 2(1)(zd) of the Act.

It was noted that the SARFAESI Act does provide for transfer of property by auction sale or otherwise for realising secured assets, i.e., property on which a security interest is created. In the instant case, provisions of the SARFAESI Act were implemented in the State of Nagaland with effect from 10.12.2021, i.e., more than two decades after the respondent availed a loan from the appellant.

Thus, no security interest in respect of any property (secured asset) was created in favour of the appellant within the meaning of the SARFAESI Act and, therefore, the appellant was not a secured creditor.

Supreme Court Held

The Supreme Court held that Section 35 of the SARFAESI Act, though gives overriding effect to the provisions thereof notwithstanding anything to contrary contained in any other enactment for time being in force or any instrument having effect by virtue of any such law, same could not and did not override any provision of Constitution, to wit, Article 371A thereof in instant case which contains special provisions for State of Nagaland.

Therefore, the High Court’s impugned order was to be upheld, and the appeal against the impugned order was to be dismissed, leaving it open to the appellant to pursue/seek remedies against the respondent in accordance with the law.

List of Cases Reviewed

  • Gauhati High Court’s Order in M/s. L. Doulo Builders and Suppliers Co. Pvt. Ltd. v. North Eastern Development Finance Corporation Ltd. (NEDFI [W.P(C) No. 9241/2019 dated 6-3- 2020] (Para 37) affirmed

List of Cases Referred to

The post SARFAESI Action Invalid Where Loan Predates Act and No Security Interest Exists | SC appeared first on Taxmann Blog.

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Abuse of Dominance u/s 4 of the Competition Act – Case Laws

Abuse of Dominance u/s 4

Abuse of Dominance, governed by Section 4 of the Competition Act, 2002, plays a central role in safeguarding markets from the harmful exercise of market power. In contrast to collusive practices addressed under Section 3, this provision targets the unilateral actions of an enterprise that occupies a dominant position within a defined market. Importantly, Indian competition law does not consider dominance itself to be unlawful—only its abusive use invites regulatory scrutiny. The legislative focus is on ensuring that dominant firms do not use their market strength to exclude competitors, exploit consumers, or impede innovation and market access. The law thus seeks to strike a careful balance between allowing firms to grow and compete on the merits, while preventing distortive practices that undermine the competitive process.

Table of Contents

  1. Scheme of Section 4
  2. Enterprise and Group
  3. Relevant Market
Check out Taxmann's Competition Law which offers a clear, rigorous, and student-centric overview of India's competition framework, seamlessly connecting doctrinal foundations with contemporary market realities. It covers core antitrust themes—cartels, bid-rigging, vertical restraints, dominance, and merger control—while thoughtfully addressing emerging challenges posed by digital markets, platform economies, algorithmic pricing, and AI-driven collusion. The book integrates leading judgments of the CCI, NCLAT, and Supreme Court, along with the latest developments under the Competition (Amendment) Act 2023. Featuring structured explanations, case summaries, illustrations, and learning aids, it is ideally suited for law, business, and exam-focused students. Authored by Gautam Shahi and Dr Sudhanshu Kumar, it strikes an effective balance between conceptual clarity and practical insight into India's evolving competition regime.

1. Scheme of Section 4

Section 4 of the Competition Act, 2002, prohibits abuse of dominant position. Section 4 of the Competition Act does not prohibit market dominance or even monopoly itself but abuse thereof. Explanation (a) to section 4 of the Act defines ‘dominant position’ as a position of strength, enjoyed by an enterprise, in the relevant market, in India, which enables it to operate independently of competitive forces prevailing in the relevant market; or affects its competitors or consumers or the relevant market in its favour.1 Section 4 gives an exhaustive list of actions/activities which amount to abuse of dominant position.

A section 4 analysis has the following four sequential steps2:

  • Determine as to whether the entity whose conduct is alleged to be abusive is an enterprise or group as defined respectively in Section 2(h) and Explanation (b) to Section 5 of the Act.
  • Determine the ‘relevant market’ as defined under Section 2(r) of the Act with due regard to the factors listed in Section 19(6) and 19(7) of the Act.
  • Determine whether the enterprise/group enjoys a dominant position in the relevant market based on consideration of the factors listed in Section 19(4) of the Act.
  • Only if an enterprise or group is dominant, analyse its conduct to ascertain whether it has abused its dominant position through behaviour described in Section 4(2) of the Act.

Taxmann's Competition Law Abuse of Dominance

2. Enterprise and Group

Section 4(1) of the Competition Act prohibits an ‘enterprise’ or ‘group’ from abusing its dominant position. Hence, the first question is whether the alleged perpetrator of abusive conduct is an enterprise or a group of enterprise.

Section 2(h) gives a wide definition for the term ‘enterprise’. An enterprise includes individuals, firms or department of government engaged in any kind of commercial activity. However, it makes an exception for the activities of the government relatable to its sovereign functions

‘including all activities carried on by the departments of the Central Government dealing with atomic energy, currency, defence and space’.

Only primary, inescapable, inalienable and non-delegable functions of a government would qualify for exemption under sovereign functions.3 Thus, welfare or economic activities carried on by government departments or undertakings would be covered within the ambit of the definition.

To qualify as an enterprise, it is required that any person or department of the Government is, or has been, engaged in any activity, relating to the production, storage, supply, distribution, acquisition or control of articles or goods, or the provision of services, of any kind, or in investment, or in the business of acquiring, holding, underwriting or dealing with shares, debentures or other securities of any other body corporate, either directly or through one or more of its units or divisions or subsidiaries.4

2.1 Economic Nature of Activity

The thrust of the definition of the term ‘enterprise’ is on the economic nature of the activities discharged by the entities concerned. It is immaterial whether such economic activities were undertaken for profit making/commercial purpose or for philanthropic purpose. Thus, even non-commercial economic activities would be subject to the discipline of the Act as the Act does not distinguish economic activities based on commercial or non-commercial nature thereof. Like the European Courts,5 the CCI has adopted a functional approach6 to assess whether an entity is an enterprise under section 2(h) of the Competition Act. This means that the CCI will look at the various functions/activities that an entity is indulging in before deciding whether such entity is an enterprise. For instance, while analysing whether or not Indian Railways was an enterprise under section 2(h) of Competition Act, the CCI was of the view that various activities of the enterprise are to be considered individually and if some of the activities of the enterprise are in the nature of sovereign functions that does not mean that all other activities of the enterprise have to be considered non-economic.7

2.2 Approach of CCI

In a catena of cases the CCI has held that a department of government, as far as it carries out commercial ventures, is an enterprise in terms of section 2(h) of the Competition Act. In various cases it has held that New Okhla Development Authority,8 Haryana Urban Development Authority9 and Indian Railways10, Ghaziabad Development Authority11, Public Works Department12 are enterprises under section 2(h) of the Competition Act. Sports federations pursuing income generating economic activities would also come under the definition of ‘enterprise’.13 Even the Supreme Court of India has encouraged Government bodies to submit themselves to the jurisdiction of regulators like the CCI. In the case of Lucknow Development Authority v. M.K. Gupta,14 the Hon’ble Supreme Court while deciding the issue of jurisdiction of the National Commission, the State Commission and the District Forum under the Consumer Protection Act, 1986, stated as under:

“…When private undertakings are taken over by the Government or corporations are created to discharge what is otherwise State’s function, one of the inherent objective of such social welfare measures is to provide better, efficient and cheaper services to the people. Any attempt, therefore, to exclude services offered by statutory or official bodies to the common man would be against the provisions of the Act and the spirit behind it…”

“Under our Constitution sovereignty vests in the people. Every limb of the constitutional machinery is obliged to be people oriented. No functionary in exercise of statutory power can claim immunity, except to the extent protected by the statute itself. Public authorities acting in violation of constitutional or statutory provisions oppressively are accountable for their behaviour before authorities created under the statute like the commission or the courts entrusted with responsibility of maintaining the rule of law. Each hierarchy in the Act is empowered to entertain a complaint by the consumer for value of the goods or services and compensation.”

Notwithstanding the above, a distinction is to be made for statutory bodies acting in terms of their parent statutes and rules/regulations made thereunder. Section 2(w) of the Act defines the term Statutory Authority.

‘“statutory authority” means any authority, board, corporation, council, institute, university or any other body corporate, established by or under any Central, State or Provincial Act for the purposes of regulating production or supply of goods or provision of any services or markets therefor or any matter connected therewith or incidental thereto;’

In the Motion Pictures Case15 the CCI observed that Central Board of Film Certification (CBFC) is a statutory body formed under the Cinematograph Act, 1952 and functions as per the said Act and the Cinematograph (Certification) Rules, 1983. Based on the functions attributable to CBFC, the CCI held that CBFC is not engaged in the activities mentioned in section 2(h) of the Act. Hence, it is not an ‘enterprise’ within the meaning of section 2(h) and consequently, its conduct too cannot be examined within the meaning of section 4 of the Act. Similarly, in the IRDA Case16, CCI held that IRDA was not an ‘enterprise’ as it has been set-up under the Insurance Regulatory and Development Authority Act, 1999 to provide inter alia for the establishment of an Authority to protect the interests of holders of insurance policies, to regulate, promote and ensure orderly growth of the insurance industry and for matters connected therewith or incidental thereto. The Bureau of Indian Standards (BIS)17 established under BIS Act performing statutory functions has also not been held to be an enterprise under Section 2(h) of the Act.

The Delhi High Court interestingly has recently held that the Institute of Chartered Accountants of India (ICAI) falls under the definition of ‘enterprise’ because the functions performed by ICAI, in respect of providing education to its chartered accountants or to students, cannot be termed as ‘sovereign functions’. The High Court noted the ICAI cannot be considered the Government and, therefore, even if it carries on regulatory functions (regulation of a profession), it is not excluded from the wide definition of the term ‘enterprise’. Moreover, it was observed that the functions performed by ICAI, in respect of providing education to its chartered accountants or to students, cannot be termed as ‘sovereign functions’.18 This approach is different from previous occasions where the CCI in the matter of Bar Council of India19 or IRDA excluded regulatory functions from the ambit of Section 2(h). It is relevant to note here that although the Delhi High Court in the ICAI matter held ICAI to be covered under the definition of enterprise, it set aside the earlier decision of the CCI by holding that the exercise of powers and decisions taken by ICAI with respect to enrolment of chartered accountants and maintaining the standards of the profession; would not be a subject matter of review by the CCI. Observing that a decision in exercise of regulatory powers, is required to be taken by the regulator and its discretion to do so can only be fettered by the provisions of the statute, which clothes the regulator with such powers, the High Court held that the regulatory powers are not subject to review by the CCI.

The corresponding term for ‘enterprise’ in European Union is ‘undertaking’. In the FIFA Case,20 European Commission was assessing whether FIFA was an enterprise. It held that any entity, regardless of its legal form, which engages in economic activity, constitutes an undertaking. FIFA is a federation of sports associations and accordingly carries out sports activities, yet it also carries out activities of an economic nature. These include, among other things, the conclusion of advertising contracts and television broadcasting rights which account for around 65% of total World Cup revenue. Consequently, European Commission concluded that FIFA was an undertaking. In FENIN v. Commission,21 the question before the European Court of Justice (ECJ) was whether the provision of medical treatment is itself economic in nature and therefore makes the purchasing activity an economic activity subject to the competition rules. ECJ, approving the General Court’s order held that ‘there is no need to dissociate the activity of purchasing goods from subsequent use to which they are put in order to determine the nature of that purchasing activity, and that the nature of purchasing activity must be determined according to whether or not the subsequent use of the purchased goods amounts to an economic activity’. Similarly, in Compass-Datenbank GmbH v. Republik Osterreich,22 ECJ held that a State or a State entity may act as an undertaking, in relation to part of its activities, and be treated as an undertaking subject to competition provisions.

Group – Group has been defined in clause (b) of the Explanation to section 5 of the Act. The term ‘Group’ has been defined by the Act to mean two or more enterprises which, directly or indirectly, are in a position to:

  • exercise twenty-six per cent or more of the voting rights in the other enterprise; or
  • appoint more than fifty per cent of the members of the board of directors in the other enterprise; or
  • control the management or affairs of the other enterprise.

The Central Government vide Notification No. S.O. 673(E) dated March 4, 2016, had exempted a ‘Group’ exercising less than 50 % of voting rights in other enterprise from the provisions of section 5 of the Competition Act for a period of five years from the date of notification.

Further, the term ‘control’ has been defined in an inclusive manner in clause (a) of the Explanation to section 5 of the Competition Act. It “includes controlling the affairs or management by:

(i) one or more enterprises, either jointly or singly, over another enterprise or group;

(ii) one or more groups, either jointly or singly, over another group or enterprise.

Control can be both positive and negative. It can be singular or joint. Control may arise in case a person or enterprise enjoys certain affirmative rights in other company including, inter alia, the rights pertaining to approving the business plan or annual budget, commencement of any new business activity and appointing or dismissing any director, Company Secretary and the Chief Executive Officer, etc.23 It implies control over the strategic commercial operations of the enterprise by two or more persons. In such a case, each of the persons in joint control would have the right to veto/block the strategic commercial decision(s) of the enterprise which could result in a deadlock situation. Joint control over an enterprise may arise because of shareholding or through contractual arrangements between the shareholders. The assessment of joint control over an enterprise would depend on the facts and circumstances of each case with due consideration of relevant factors such as the statutory and contractual rights of the shareholders.24

3. Relevant Market

For the application of Section 4, the enterprise must enjoy ‘dominant position’ in a ‘relevant market’. Dominance is the notion of “power over the market” which is the key to analysing the competitive issues arising out of the conduct of an enterprise.25 For the purposes of investigating the possible dominant position of an enterprise on a given product market, the possibilities of competition must be judged in the context of the relevant product market comprising of substitutable products or services.26 A relevant market definition is an economic tool recognised by the Act and used by the CCI for identifying the dominant enterprise. Market definition is a tool to identify and define the boundaries of competition between enterprises. It serves to establish the framework within which competition policy is applied by the Commission. The main purpose of market definition is to identify in a systematic way the competitive constraints that the enterprises involved face. The objective of defining a market in both its product and geographic dimension is to identify those actual competitors of the enterprises involved that can constrain those enterprises behaviour and of preventing them from behaving independently of effective competitive pressure. Therefore, the purpose of defining the “relevant market” is to assess with identifying in a systematic way the competitive constraints that enterprises face when operating in a market. This is the case for determining if enterprises are competitors or potential competitors and when assessing the anti-competitive effects of conduct in a market.27

The determination of the relevant market is not an end by itself, but is a means to analyse the position of strength, enjoyed by an enterprise in such a market, as per the provisions of explanation (a) to section 4(2) of the Act, to determine if such an enterprise is in a dominant position in such a relevant market.28 The contours of relevant market guide the CCI, both in terms of product/service and geographic reach, as to what competitive constraints are faced by such market player.29 Hence, it is important to define the relevant market before analysing the dominant position of an entity.30 In fact, an inquiry by the CCI in to any violation will be incomplete unless the CCI defines the relevant market.31 However, when the dominance of an enterprise remains unchanged in a market even with an alternative market definition, technicality of the product market need not be dwelled further.32

As has been noted by the Apex Court in Coordination Committee of Artistes and Technicians of West Bengal Film and Television and Ors.,33 “the relevant product and geographic market for a particular product may vary depending on the nature of the buyers and suppliers concerned by the conduct under examination and their position in the supply chain. The process of defining the relevant market starts by looking into a relatively narrow potential product market definition. The potential product market is then expanded to include those substituted products to which buyers would turn in the face of a price increase above the competitive price. Likewise, the relevant geographic market can be defined using the same general process as that used to define the relevant product market.

Relevant market means the market which may be determined by the CCI with reference to the relevant product market or the relevant geographic market or with reference to both the markets.34 Section 2(r) of the Competition Act defines the relevant market with reference to the relevant product market and relevant geographic market.

3.1 Relevant Product Market

Section 2(t) defines the relevant product market as comprising

“all those products or services which are regarded as interchangeable or substitutable by the consumer, by reason of characteristics of the products or services, their prices and intended use”.

The relevant product market delineation classifies all those products/services which act as competitive constraints on each other to keep the conduct of market players under check.35 The concept of relevant market implies that there could be an effective competition between the products which form part of it and this presupposes that there is a sufficient degree of inter changeability between all the products forming part of the same market insofar as specific use of such product is concerned.36

Relevant product market is the market in which substitutable products are sold. It can be seen from the definition of the relevant product market that it is defined primarily based on demand side substitutability i.e. whether consumers consider different products to be substitutable. For example, in case enough purchasers of product A regard product B as an alternative to product A and would switch from product A to product B in response to a small change in relative prices, then product A and product B are part of the same relevant market. In Matrimony.com Limited v. Google LLC and Ors.,37 the CCI held that online general web search services are not interchangeable or substitutable with online specialised search services. While general purpose search engines allow internet users to search information on a wide range of topics, specialised search services permit online searches for information limited to topics or areas such as news, shopping, travel, entertainment, etc. Further, in response to a search query, general purpose web searches show information from across the web while specialised search results yield information from a limited source, i.e., either its own contents or from the contents of certain specified websites. Additionally, pricing and registration requirements stipulated by general purpose online searches and specialised searches are also different.

In United Brands v. Commission,38 the ECJ was considering whether bananas for a separate relevant product market. It observed that for the banana to be regarded as forming a market which is sufficiently differentiated from other fruit markets it must be possible for it to be singled out by such special features distinguishing it from other fruits that it is only to a limited extent interchangeable with them and is only exposed to their competition in a way that it is hardly perceptible.

It is widely recognised that enterprises in the market are subjected to three kinds of competitive constraint i.e. demand substitutability, supply substitutability and potential competition. Since demand substitutability is the most effective and immediate constraint on an enterprise, it plays a major role in defining relevant market.

European Commission also recognises the role of supply side substitutability in defining the relevant market.39 It is defined as the extent to which alternative suppliers would switch, or begin, production in response to a hypothetical price increase. Supply-side substitutability may also be considered when defining markets in those situations in which its effects are equivalent to those of demand substitution in terms of effectiveness and immediacy. In India, the CCI referred to supply side substitutability in the Apple case40. Dealing with the differences between GSM and CDMA technologies, it relied on the different handsets requires for these technologies and stated that

‘(E)ven from the supply side, the two are not substitutable in as much as each require set of equipments that are not compatible with other’.

3.2 Supply Side Substitutability and Competition (Amendment) Act, 2023

The current definition of “relevant product market” under Section 2(t) of the Competition Act focuses on substitutability of the product from a consumer side or a demand side perspective. It is equally important to consider the supply side perspective while assessing substitutability between different products. For instance, suppliers may be able to switch production from other products to the product in question, in the short term and without incurring significant costs and risks. In cases where a supplier can easily switch production and market the products without incurring significant cost or risk, the additional production will have an impact in the market and should be considered as part of the relevant product market. This concept focuses on the supplier’s perspective, assessing whether competing firms can quickly and economically shift their production to constrain the market power of a dominant firm. Supply-side substitutability ensures that the market definition accounts for producers who can readily enter the market to counter price increases or anti-competitive behaviour.

The Competition (Amendment) Act, 2023 seeks to add supply side substitutability as an

alternate means to delineate RPM. The amended definition now reads as:

i. “relevant product market” means a market comprising of all those products or services— which are regarded as interchangeable or substitutable by the consumer, by reason of characteristics of the products or services, their prices and intended use; or

ii. the production or supply of, which are regarded as interchangeable or substitutable by the supplier, by reason of the ease of switching production between such products and services and marketing them in the short term without incurring significant additional costs or risks in response to small and permanent changes in relative prices;’

In addition, “costs associated with switching supply or demand to other areas” has been added as a factor under Section 19(7) to delineate RGM. The application of supply-side substitutability is conditional and depends on factors such as:

  • Ease of switching production without significant costs.
  • Availability of production assets for the relevant product.
  • Incentives for suppliers to switch (e.g., profitability from price increases).
  • Consumer perception of the switched products as equivalent substitutes.
  • Number of suppliers capable of switching production in response to price changes.

Factors to determine RPM

Section 19(7) of the Competition Act gives the following factors which the CCI will consider which defining the relevant product market:

(a) Physical characteristics or end-use of goods – CCI will consider the physical characteristics or end-use of goods/services. In Three D Integrated Solutions Ltd. v. VeriFone India Sales Pvt. Ltd.41 the CCI distinguished between Electronic Ticketing Machines (ETM) and Point of Sale terminals (POS) as the physical characteristics and end use of ETMs which do not have electronic payment system are entirely different from the POS. In Apple case,42 CCI distinguished between CDMA and GSM technologies as the handset to be used for availing service from CDMA and GSM technologies were different from each other. In Exclusive Motors Case,43 CCI distinguished between market for super sports car and market for other automobiles because of its characteristics, price, intended use etc. The CCI has in context to different products delineated separate product markets by distinguishing the product or service in question with others

(animation course in comparison to other vocational courses44; residential units in comparison to commercial space45; mobile data services in comparison to land-line services46; bottled water in comparison to tap water47; smart phones in comparison to feature phones48; online market platform in comparison to online retail store49; instant communication applications in comparison to traditional electronic communications50)

on the basis of their physical characteristics.

Similarly, the CCI has noted that there is a clear distinction between residential and commercial real estate projects. This is because all the relevant stakeholders, including, the Government/statutory authorities, builders/developers, brokers/sales agents etc. distinguished residential properties such as residential apartments, villas and plots from other types of properties such as commercial spaces, commercial plots, farm houses and agricultural lands primarily on the basis of their usages. Further, the development norms for residential properties are entirely different from those relating to other types of properties.51

In Grasim Industries Limited52, the CCI defined the relevant market as the market for supply of VSF to spinners in India. The CCI noted that textile fibres can be classified into two broad categories based on the source from which they are obtained – natural fibres and man-made fibres. Owing to the difference in characteristics such as composition, resilience, moisture absorption power, and resistance to moth, the CCI opined that natural and man-made fibres ought to be considered as two distinct categories of products which are used as raw materials by spinners to manufacture yarn. Further, the CCI noted that within man-made fibres, VSF possessed characteristics which made it distinct


  1. DGCOM Buyers and Owners Association, Chennai v. DLF Ltd., New Delhi and DLF Southern Homes Pvt. Ltd., Chennai [2012] 28 taxmann.com 240 (CCI).
  2. Coal India Limited v. Competition Commission of India [2017] 80 taxmann.com 199 (CAT – New Delhi).
  3. Bangalore Water Supply and Sewage Board v. A. Rajappa (1978) 2 SCC 213.
  4. Manju Tharad v. Eastern India Motion Picture Association [2012] 114 SCL 20 (CCI).
  5. Hofner and Elser v. Macrotron GmBH, C-41/90; SAT Fluggesellschaft v. Eurocontrol C-364/92; FENIN v. Commission C-205/03P.
  6. Confederation of Professional Baseball Softball Club v. Amateur Baseball Federation of India [2021] 129 taxmann.com 242 (CCI).
  7. Arshiya Rail Infrastructure Limited v. Ministry of Railways [2013] 112 CLA 297 (CCI), Meet Shah v. Union of India [2020] 114 taxmann.com 73 (CCI).
  8. R & R Tech Mach Limited v. Chief Executive Officer [2014] 126 SCL 395 (CCI).
  9. Jatin Kumar v. Estate Officer [2016] 74 taxmann.com 286 (CCI).
  10. Arshiya Rail Infrastructure Limited v. Ministry of Railways [2013] 112 CLA 297 (CCI). See also, Meet Shah v. Union of India [2020] 114 taxmann.com 73 (CCI).
  11. Satyendra Singh v. Ghaziabad Development Authority [2018] 91 taxmann.com 305 (CCI).
  12. Rajat Verma v. Haryana Public Works (B&R) Department 2016 SCC OnLine Comp AT 53.
  13. Surinder Singh Barmi v. Board for Control of Cricket in India (BCCI) [2013] 113 CLA 579 (CCI); In the Matter of Dhanraj Pillay v. Hockey India 2013 SCC OnLine CCI 36; Hemant Sharma v. Union of India [2018] 96 taxmann.com 35 (CCI). See also, Confederation of Professional Baseball Softball Clubs v. Amateur Baseball Federation of India [2021] 129 taxmann.com 242 (CCI)
  14. 1994 AIR 787.
  15. Mrs Manju Tharad v. Eastern India Motion Picture Association (EIMPA), Kolkata and the Central Board of Film Certification (CBFC) [2012] 110 CLA 136.
  16. Shri Dilip Modwil v. Insurance Regulatory and Development Authority 2014 SCC Online CCI 106.
  17. Prem Prakash v. Bureau of Indian Standards 2017 SCC Online CCI 33.
  18. Institute of Chartered Accountants of India v. Competition Commission of India (2023) 3 HCC (Del.) 467.
  19. See, Thupili Raveendra Babu v. The Competition Commission of India 2021 SCC Online
    NCLAT 2321.
  20. [1992] OJ L326/31.
  21. [2006] ECR I-6295 (ECJ).
  22. [2012] 5 CMLR 13 (ECJ).
  23. AXA India Holdings and Société Beaujon, In re 2015 SCC OnLine CCI 247. See also, Aviva International Holdings Limited, In re 2015 SCC OnLine CCI 214.
  24. In re, SPE Holdings 2012 SCC OnLine CCI 132. See also, In re, Independent Media Trust 2002; In re, Century Tokyo 2012 SCC OnLine CCI 138; In re, FIH Mauritius Investments Limited 2015 SCC OnLine CCI 127 and In re, AIA International Limited 15 SCC OnLine CCI 276.
  25. Competition Commission of India v. Coordination Committee of Artistes and Technicians of West Bengal Film and Television (2017) 5 SCC 17.
  26. British Airways v. Commission [2003] ECR II – 5917; Michelin v. Commission [1983] ECR 3461; Kish Glass v. Commission [2000] ECR II – 1885
  27. Competition Commission of India v. Coordination Committee of Artistes and Technicians of West Bengal Film and Television (2017) 5 SCC 17; See also, Competition Commission of India v. Bharti Airtel Limited (2019) 2 SCC 521.
  28. Shri Shamsher Kataria v. Honda Siel Cars India Ltd. 2015 SCC OnLine CCI 114.
  29. Pankaj Aggarwal v. DLF Gurgaon Home Developers Private Limited and Mr. Sachin Aggarwal v. DLF Gurgaon Home Developers Private Limited 2015 SCC OnLine CCI 77.
  30. Toyota Kirloskar Motor (P) Ltd. v. CCI 2016 SCC OnLine Comp AT 176.
  31. Hyundai Motor India Ltd. v. Competition Commission of India 2018 SCC OnLine NCLAT 513.
  32. Ashutosh Bhardwaj v. DLF Limited 2014 SCC OnLine CCI 30. See also, Ashutosh Bhardwaj v. DLF Limited 2017 SCC OnLine CCI 1.
  33. Para 33-34, Competition Commission of India v. Coordination Committee of Artistes and Technicians of West Bengal Film and Television (2017) 5 SCC 17.
  34. Three D Integrated Solutions Ltd. v. VeriFone India Sales Pvt. Ltd. 2015 SCC Online CCI 55. See also, Matrimony.com Limited v. Google LLC [2018] 91 taxmann.com 428 (CCI).
  35. Id.
  36. Competition Commission of India v. Coordination Committee of Artistes and Technicians of West Bengal Film and Television (2017) 5 SCC 17.
  37. Matrimony.com Limited v. Google LLC 2018 SCC OnLine CCI 1.
  38. United Brands v. Commission [1978] ECR 207 (ECJ).
  39. EC Notice on the definition of relevant market for the purposes of Community competition law (97/C 372 /03).
  40. Sonam Sharma v. Apple Inc. USA 2013 SCC OnLine CCI 25.
  41. Three D Integrated Solutions Ltd. v. VeriFone India Sales Pvt. Ltd. 2015 SCC OnLine CCI 55.
  42. Sonam Sharma v. Apple Inc. USA 2013 SCC OnLine CCI 25.
  43. Exclusive Motors Pvt. Limited v. Automobili Lamborghini S.P.A. 2012 SCC OnLine CCI 69.
  44. Picasso Animation Pvt. Ltd (PAPL) and Picasso Digital Media Pvt. Ltd (PDMPL) [2016] 75 taxmann.com 237 (CCI) [25-10-2016].
  45. Oberoi Cars Pvt. Ltd v. Imperial Housing Ventures Pvt. Ltd. 2016 SCC OnLine CCI 86; Shri Sameer Agarwal v. Bestech India Pvt. Ltd. 2016 SCC OnLine CCI 56.
  46. Vishwambhar M. Doiphode v. Vodafone India Limited 2016 SCC OnLine CCI 82.
  47. Aniket Sitaram Kokane v. Ganesh Agency 2016 SCC OnLine CCI 24.
  48. Tamil Nadu Consumer Products Distributors Association v. Fangs Technology Private Limited 2018 SCC OnLine CCI 95.
  49. All India Online Vendors Association v. Flipkart India Private Limited 2018 SCC OnLine CCI 97.
  50. Vinod Kumar Gupta v. WhatsApp Inc. 2017 SCC OnLine CCI 32.
  51. Sunil Bansal v. Jaiprakash Associates Ltd. 2015 SCC OnLine CCI 178.
  52. XYZ v. Association of Man-made Fibre Industry of India 2016 SCC OnLine CCI 71.

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Derivatives – Definition | Key Economic Functions | Products

derivatives

Derivatives are financial instruments whose value is derived from an underlying asset, rate, or index—such as commodities, currencies, interest rates, equities, or market indices. They do not have an independent value of their own and exist only because of the underlying. Derivatives are typically settled at a future date and are widely used for risk management (hedging), price discovery, and, in some cases, speculation.

Table of Contents

  1. Derivatives – Definition
  2. Key Economic Functions of Derivatives
  3. Derivative Products
  4. Growth Drivers of Derivatives
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1. Derivatives Definition

Derivative is something that is derived from another called the underlying. The underlying is independent, and the derivative is dependent on and derived from the underlying. The derivative cannot exist without the underlying. This is the general definition of derivative. For example, wheat farmers may wish to sell their harvest at a future date to eliminate the risk of a change in prices by that date. Such a transaction is an example of a derivative. The price of this derivative is driven by the spot price of wheat which is the “underlying”.

However, accounting standards like FAS 133 (in the US), IAS 39 (in the EU) and AS 30 (in India) impose more qualifications for derivatives. For example, IAS 39 and AS 30 require the following three criteria to be satisfied for financial derivatives.

  1. Value of derivative is linked to the value of underlying
  2. Trade settled on a “future” date
  3. On trade date, there should be no full cash outlay

FAS 133 requires an additional qualification:

  1. Trade must settle (or capable of being settled) on net basis and not on gross basis.

The first requirement implies that the price of derivatives is determined by the price of underlying, and not by the demand-supply for derivative. The underlying is the raw material and derivative is the finished product. If the underlying price goes up (or down), the derivative price will go up (or down) regardless of demand-supply for derivative.

The “future” date in the second requirement means that the settlement of the derivative must be later than that for underlying. For example, if the underlying settles on two business days after trade date (T+2), the derivative on that underlying must settle later than T+2; if the underlying settles in T+5, the derivative on that underlying must settle later than T+5; and so on.

The third requirement provides “leverage” – ability to buy the underlying without fully paying for it immediately or sell it without delivering it immediately.

NISM X Taxmann's Currency Derivatives

Derivatives are classified into five asset classes – interest rate, credit, equity, forex and commodity. In each asset class, there are four generic products – forward, futures, swap and option.

Derivative products initially emerged as hedging devices against fluctuations in commodity prices, and commodity linked derivatives remained the sole form of such products for almost three hundred years. Financial derivatives came into spotlight in the post 1970 period due to growing instability in the financial markets. However, since their emergence, these products have become very popular and by 1990s, they accounted for about two thirds of total transactions in derivative products. In recent years, the market for financial derivatives has grown tremendously in terms of variety of instruments available, their complexity and also turnover.

Derivatives are tools to manage price risk. How you manage risk depends on your approach to risk. If you want to take risk, you will trade in derivatives which is called speculation. When you want to avoid risk, you manage it one of the three ways – elimination (called hedging); insurance and minimisation (called diversification). The following table summarises the approaches to market risk management.

The following table summarises the approaches to risk management.

Approach Explanation
Speculation Taking risk (more formally called “trading”)

It results in the possibility of a positive return (i.e. profit) or a negative return (i.e. loss) in future

Hedging You are already exposed to risk and hedging substantially reduces that risk and locks in the future return at a known level.
Insurance You are already exposed to risk and insurance selectively eliminates the negative return but retains the positive return. It has an explicit upfront cost, and requires a particular derivative called option to implement it.
Diversification It reduces both return and risk but in such a way that risk is reduced more than return so that risk is minimised per unit return (or, alternately, return is maximised per unit risk).

2. Key Economic Functions of Derivatives

While the primary function of derivatives is risk management, the derivatives market also performs the following functions:

  • Hedging Risk Exposure  Since the value of the derivatives is linked to the value of the underlying asset, the contracts are primarily used for hedging risks. For example, an investor may purchase a derivative contract whose value moves in the opposite direction to the value of an asset the investor owns. In this way, profits in the derivative contract may offset losses in the underlying asset.
  • Price Discovery  Derivative market serves as an important source of information about prices. Prices of derivative instruments such as futures and forwards can be used to determine what the market expects future spot prices to be. In most cases, the information is accurate and reliable. Thus, the futures and forwards markets are especially helpful in price discovery mechanism.
  • Market Efficiency  It is considered that derivatives increase the efficiency of financial markets. By using derivative contracts, one can replicate the payoff of the assets. Therefore, the prices of the underlying asset and the associated derivative tend to be in equilibrium to avoid arbitrage opportunities.
  • Access to Unavailable Assets or Markets  Derivatives can help organisations get access to otherwise unavailable assets or markets. By employing interest rate swaps, a company may obtain a more favorable interest rate relative to interest rates available from direct borrowing.
  • Price Stability It has been seen that central banks of many countries use derivatives for stabilising the currency prices. In India, RBI also intervenes in the forex market through derivatives for INR stability.
  • Derivatives, due to their inherent nature, are linked to the underlying cash markets. With the introduction of derivatives, the underlying market witnesses higher trading volumes because of participation by more players who would not otherwise participate for lack of an arrangement to transfer risk.
  • Speculation  This is not the only use, and probably not the most important use, of financial derivatives. Financial derivatives are considered to be risky. If not used properly, these can lead to financial destruction in an organisation. However, these derivatives act as a powerful instrument for knowledgeable traders to expose them to calculated and well understood risks in search of a reward, that is, profit.
  • Derivatives market helps shift of speculative trades from unorganised market to organised market. Risk management mechanisms and surveillance of activities of various participants in organised space provide stability to the financial system.

Market Participants must understand that derivatives, being leveraged instruments, have risks like counterparty risk (default by counterparty), price risk (loss on position because of price move), leverage risk (magnifying the gain and losses), liquidity risk (inability to exit from a position), legal or regulatory risk (enforceability of contracts), operational risk (fraud, inadequate documentation, improper execution, etc.) and may not be an appropriate avenue for someone of limited resources, less trading experience and low risk tolerance. A market participant should therefore carefully consider whether such trading is suitable for him/her based on these parameters. Market participants who trade in derivatives are advised to carefully read the Risk Disclosure Document, given by the broker to his clients at the time of signing agreement.

3. Derivative Products

As specified earlier, derivatives can be classified into five asset classes – interest rate, credit, equity, forex (currency) and commodity. In each asset class, there are four generic products – forward, futures, swap and option. We will examine this product with currency as asset class. A foreign exchange derivative (currency derivative) is a financial derivative whose payoff depends on the exchange rates of two (or more) currencies. In Indian context “Foreign exchange derivative contract”1 means a financial contract which derives its value from the change in the exchange rate of two currencies at least one of which is not Indian Rupee, or which derives its value from the change in the interest rate of a foreign currency and which is for settlement at a future date, i.e. any date later than the spot settlement date, provided that contracts involving currencies of Nepal and Bhutan shall not qualify under this definition.

“Exchange traded currency derivatives’” means a standardised foreign exchange derivative contract traded on a recognised stock exchange to buy or sell one currency against another on a specified future date, at a price specified on the date of the contract.

3.1 Forwards

It is a contractual agreement between two parties to buy/sell an underlying asset at a certain future date for a particular price that is predetermined on the date of contract. Both the contracting parties are committed and are obliged to honour the transaction irrespective of the price of the underlying asset at the time of delivery. Since forwards are negotiated between two parties, the terms and conditions of contracts are customised.

These are Over-the-counter (OTC) contracts. Contracts are mainly settled by delivery. However, in certain cases, they are settled in cash on the expiration date. Generally, no initial margin or mark-to-market margin is collected for such contracts.

Foreign exchange forward’ means an OTC derivative involving the exchange of two currencies on a specified date in the future (more than two business days later) at a rate agreed on the date of the contract.

For e.g. – “XYZ” has exported cashews to the US and the total value of the shipment is $5,000,000 (Dollar 5 million) which is due after 3 months. The current rate (spot rate) for exchange is 1 USD = INR 75.10. “XYZ” enters into forward agreement with the bank to realise the proceeds after 3 months at the rate of INR 75.80 per dollar. Agreed rate of 1USD=INR 75.80 shall be the forward rate for the particular transaction.

How does this type of forward cover benefit XYZ?

  • Assurance that company will realise inflow of Rs. 37.90 Crs. (5,000,000×75.80)
  • If the rupee appreciates to Rs. 74.50/USD or remain same at Rs. 75.10/USD, does not have much to worry because they have already locked in the exchange forward rate of Rs. 75.80/USD
  • Businesses generally have payables against their receivable. Company confident that the inflow will take care of the payable with minimum risk of cash flow uncertainty
  • Notional loss in case rupee weakens beyond Rs. 75.80/USD.

3.2 Futures

A futures contract is similar to a forward, except that the deal is made through an organised and regulated exchange rather than being negotiated directly between two parties. Indeed, we may say futures are standardised exchange-traded forward contracts. The futures contracts are standardised in terms of lot size, underlying, expiry date etc. Contracts are mainly settled in cash; however, in certain cases they are settled physically on the expiration date. Margins and mark to market are applicable for such contracts. Settlement guarantee is provided by the clearing corporation of the Exchanges.

Currency Futures means a standardised foreign exchange derivative contract traded on a recognised stock exchange to buy or sell one currency against another on a specified future date, at a price specified on the date of contract, but does not include a forward contract.

3.3 Options

An Option is a contract that gives the right, but not an obligation, to buy or sell the underlying on or before a stated date and at a stated price. While the buyer of an option pays the premium and buys the right, the writer/seller of the option receives the premium with the obligation to sell/buy the underlying asset, if the buyer exercises his right. A call option gives the buyer the call the right to buy the asset and a put option gives the buyer of the put the right to sell the asset. In case of futures/forwards it is an obligation for both buyer as well as seller to settle the contract, however in an option contract, the option buyer has the right but not the obligation to buy/sell the underlying asset.

‘Foreign exchange option (Currency Option)’ is an option that gives the buyer the right, but not the obligation, to buy or sell an agreed amount of a certain currency with another currency at a specified exchange rate on or before a specified date in the future.

3.4 Swaps

A swap is an agreement made between two parties, to exchange cash flows in the future, according to a prearranged formula. Swaps are, broadly speaking, a series of forward contracts. Swaps help market participants to manage the risk associated with volatile interest rates, currency exchange rates, commodity prices etc. Most swaps involve cash flows based on a notional principal amount such as a loan or bond, although the instrument can be almost anything. One cash flow is generally fixed (can be floating), while the other is variable and based on a benchmark interest rate, floating currency exchange rate, or index price etc.

Interest rate swap is a derivative contract that involves exchange of a stream of agreed interest payments on a `notional principal’ amount during a specified period. Such contracts generally involve exchange of a `fixed to floating’ or `floating to floating’ rates of interest. On each payment date that occurs during the swap period, cash payments based on fixed/floating and floating rates, are made by the parties to one another.

In forex market there are two kinds of swaps namely, foreign exchange swap and currency swap. The two are basically the same but there are slight differences.

  • ‘Foreign exchange swap’ means an OTC derivative involving the actual exchange of two currencies (principal amount only) on a specified date (the short leg) and a reverse exchange of the same two currencies at a date further in the future (the long leg), at rates agreed at the time of the contract.
A Pays $ National

 

A Receives INR Notional

>

$ 1000000

<

INR 73000000

B Receives $ National

 

B Pay INR Notional

Initial Notional Exchange @ Spot Rate
A Receives $ Notional

A Pays INR Notional

<

$ 1000000

INR 73500000

B Pays $ Notional

 

B Receives INR Notional

Final Notional Exchange @ Forward Rate

In the example given above, the spot rate for the short leg is Rs. 73 while the rate agreed upon for the long leg is Rs. 73.50.

  • ‘Currency swap’ (also known as cross currency swap) means an OTC derivative which commits two counterparties to exchange streams of interest payments and/or principal amounts in different currencies on specified dates over the duration of the swap at a pre-agreed exchange rate. The rate is based on a prevailing spot or predetermined forward rate (for forward start swaps) and agreed upon at the time of the transaction. For example, a customer in India with a long-term USD borrowing is typically exposed to exchange rate risk between the USD and the INR as well as USD interest rate risk. The company can eliminate the risk by entering into a USD/INR currency swap with a bank at the spot exchange rate of Rs. 74. The customer receives from the bank USD floating interest rate payments and USD principal amortisations. Simultaneously, the customer pays the bank fixed interest rate in INR and the equivalent INR principal amortisations at an exchange rate based on a spot rate (or forward rate) prevailing at the time of the transaction and locked in for the entire tenure of the swap. At the start, initial principal is exchanged, though not obligatory.
No Initial Exchange of Principal Amount
Corporate Receives $

 

 

Corporate Pays INR

<

6-month LIBOR+100 on $ 50mn

–>

6% on INR 370 Crs

Banks Pays $

 

 

 

Bank Receives INR

Continuing Interest Payment during SWAP period
Corporate Receives $ Notional

Corporate Pays INR Notional

<–>

$ 50 mn

–>

INR 370 Crs/INR 400 Crs

Banks Pays $ Notional

Banks Receives INR National

Final Notional Exchange @ Initial Spot Rate/Forward Rate

The following table summarises the key feature of four generic types of derivatives.

Generic Derivative Key Feature Market
Forward To buy or sell the underlying asset with cash for settlement on a future date. Customised contract. OTC
Futures To buy or sell the underlying asset with cash for settlement on a future date. Standardised contract. Exchange
Swap To buy or sell returns from the underlying asset with returns from other underlying asset/cash over a period Mainly OTC
Option A right to buy or sell on underlying with cash for settlement on a future date OTC and Exchange

Different kind of derivatives based on underlying

Underlying Derivatives
Forward Futures Swap Option
Interest Rate & Interest Rate Instrument Forward Rate Agreement and Bond forward Interest rate & Bond futures Interest rate swap Interest rate and Bond option
Equity & Equity Indices Equity forward Equity futures Equity swap Equity option
Currency Pairs FX forward/Currency forward FX futures/Currency futures FX swap and Currency swap FX option/Currency option
Commodity Commodity forward Commodity futures Commodity swap Commodity option

Additionally, “Credit” risk as underlying, Credit Default Swaps (CDS) are also very popular in the financial market. One counterparty in the CDS contract (the “buyer of protection”) makes a regular periodic payment to the other counterparty (the “seller of protection”); in exchange the protection seller agrees to pay the protection buyer any loss in value on the specified reference obligation if a “credit event” (e.g., default) were to occur during the life of the CDS contract.

4. Growth Drivers of Derivatives

Over the last three decades, the derivatives market has seen a phenomenal growth. A large variety of derivative contracts have been launched at exchanges across the world. Some of the factors driving the growth of financial derivatives are:

  1. Increased volatility in asset prices in financial markets,
  2. Increased integration of national financial markets with the international financial markets,
  3. A significant growth of derivative instruments has been driven by technological breakthroughs. Advances in this area include the development of high-speed processors, network systems and improved methods of data entry.
  4. Development of more sophisticated risk management tools, providing a wider choice of risk management strategies, and
  5. Innovations in the derivatives markets, which optimally combine the risks and returns over a large number of financial assets, leading to higher returns, reduced risk and lower transactions costs as compared to individual financial assets.

Currency derivatives are one of the most important among all derivatives, as shown in the following tables of notional outstanding amount:

Notional Amount Outstanding (USD Billion) in OTC Derivative Products as of June 2023

Foreign exchange contracts 120250
Interest rate contracts 573697
Equity-linked contracts 7838
Commodity contracts 2244
Credit derivatives (including Credit default swaps) 10122
Other derivatives 593
Total 714744

Source – Bank for International Settlement


  1. Foreign Exchange Management (Foreign exchange derivative contracts) Regulations, 2000.

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GPF Nomination in Favour of Mother Invalid After Marriage – Amount to Be Shared with Wife | SC

GPF nomination invalid after marriage

Case Details: Smt. Bolla Malathi vs. B. Suguna - [2025] 181 taxmann.com 299 (SC)

Judiciary and Counsel Details

  • Sanjay Karol & Nongmeikapam Kotiswar Singh, JJ.
  • Hari VishnuLikhi Chand, Advs. & Venkita Subramoniam T.R., AOR for the Petitioner.
  • A. Selvin RajaMukesh Kumar Maroria, AORs, Brijender ChaharJagdish ChandraBhakti Vardhan SinghMs Gayatri Mishra, Advs. for the Respondent.

Facts of the Case

In the instant case, the Deceased was employed in the Defence Accounts Department. At the time of joining service in 2000, he nominated his mother (respondent no. 1) for General Provident Fund (GPF), Central Government Employees Insurance Scheme (CGEIS), and Death-Cum Retirement Gratuity (DCRG).

After marrying appellant in 2003, he nominated appellant for CGEIS and DCRG but did not alter the GPF nomination. He died in service in 2021. When the appellant applied for the release of accumulated GPF, authorities refused, citing a subsisting GPF nomination in favour of the mother.

The appellant approached the Central Administrative Tribunal, which held that the initial GPF nomination in favour of the mother became invalid upon the deceased acquiring a family and, no valid nomination subsisting at death, directed the release of the GPF in equal shares to the appellant and respondent no. 1.

The High Court set aside the Tribunal’s order, proceeded on the basis that the mother continued as a valid sole nominee for GPF, and directed that the GPF amount be paid to her. Thereafter, an appeal was made before the Supreme Court.

Supreme Court Held

The Supreme Court noted that since nomination in favour of respondent no.1 was made with a stipulation that it would become invalid upon subscriber acquiring a family (marriage or otherwise), as such, by function thereof, it became invalid.

The Supreme Court held that, since the deceased had not altered the nomination to comply therewith, the earlier nomination could not be held valid. Therefore, the GPF of the deceased was to be distributed between the appellant and respondent no. 1.

List of Cases Reviewed

  • Order of High Court of Judicature at Bombay in Writ Petition No. 5756 of 2024, dated 11-02-2025 (para 10) set aside

List of Cases Referred to

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Bail Denied in Cross-State Fake GST ITC Racket Due to Gravity and Ongoing Probe | HC

bail denied fake GST credit racket

Case Details: Bahadur Islam vs. Union of India - [2025] 181 taxmann.com 481 (Gauhati)

Judiciary and Counsel Details

  • Pranjal Das, J.
  • S.C. BiswasB.D. DasF.A. Hassan for the Petitioner.
  • S C Keyal, Ld. Standing Counsel for the Respondent.

Facts of the Case

The petitioner was arrested for his alleged involvement in GST fraud using fake registrations and invoices to pass on Rs. 8.59 crore bogus input tax credit. He was arrested under Section 132 of the CGST Act. The case diary and statements indicated the petitioner’s participation, receipt of illegal remuneration, evasive disclosure on bank accounts, and assistance in fraudulent registrations.

High Court Held

The High Court held that the safeguards for arrest were held applicable to GST arrests as well. Notices of grounds and authorisation were examined. Investigation materials, if accepted at face value, showed conscious participation and illegal benefit. The network appeared organised across states, and the probe remained active. Given gravity, ongoing investigation, and punishment up to five years, bail at this stage was declined.

List of Cases Reviewed

List of Cases Referred to

The post Bail Denied in Cross-State Fake GST ITC Racket Due to Gravity and Ongoing Probe | HC appeared first on Taxmann Blog.

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