This weekly newsletter analytically summarises the key stories reported at taxmann.com during the previous week from Nov 24th to Nov 29th 2025, namely:
- OECD releases “2025 update to Model Tax Convention”;
- Judicial officers with seven years’ combined experience as an advocate or judge are eligible for District Judge appointment under Article 233: SC;
- SEBI amends minimum qualification norms for Research Analysts and Investment Advisers revising degree and certification requirements;
- Refund of unutilised Cess ITC on coal for export admissible as export goods not liable to Cess: HC;
- ITC on GST under RCM for industrial land lease used for battery cell factory construction not admissible: AAR;
- Refund of wrongly paid IGST directed as limitation not bars refund where liability discharged as CGST+SGST: HC; and
- Accounting treatment of manufacturing, warranty, and royalty costs in measuring inventory under Ind AS 2.
1. OECD releases “2025 update to Model Tax Convention”
The Organisation for Economic Co-operation and Development (OECD) has released the ‘2025 Update to the OECD Model Tax Convention’. This update was approved by the Committee on Fiscal Affairs on 13 October 2025 and by the OECD Council on 18 November 2025.
The following are the key changes to the OECD Model Tax Convention included in the 2025 Update:
a) Dispute Resolution (Article 25)
OECD amends Article 25 and its Commentary to clarify the relationship between the Model Convention and the General Agreement on Trade in Services (GATS). A new paragraph 6 is added, which clarifies that, for purposes of GATS Article XXII(3), a measure will fall within a tax treaty’s scope only if Article 24 applies to it.
Any dispute between treaty partners over whether a measure falls within the scope of the treaty must be resolved under the Mutual Agreement Procedure (MAP) under Article 25(3) or by such other procedure mutually agreed. This amendment prevents overlapping or contradictory dispute-settlement routes between the tax treaty and WTO’s GATS, thereby reinforcing the primacy of MAP for tax-related jurisdictional disputes.
b) An individual’s home could constitute a “place of business”
Recognising rising remote-work models, Commentary to Article 5 (Permanent Establishment) is amended to clarify the circumstances in which an individual’s home could constitute a “place of business” of the enterprise for which the individual works. The OECD notes that these clarifications are an evolution of established principles but have been refined to provide modern certainty.
c) Optional alternative PE rule for extractible natural resources
The Commentary to Article 5 now includes an optional alternative provision addressing activities relating to exploration and exploitation of natural resources. This provision introduces a lower PE threshold that is crossed once a non-resident enterprise operates in a source State for a bilaterally agreed period.
d) Transfer pricing and interest limitation
The Commentary on Article 9 has been revised to address queries arising from Working Party 6’s review of transfer pricing rules for financial transactions (as detailed in Chapter X of the Transfer Pricing Guidelines). These updates clarify the operation of Article 9, particularly in relation to domestic interest-deductibility rules, including those recommended under the BEPS Action 4 final report. Corresponding amendments have also been made to the Commentaries on Articles 7 and 24.
e) Update to Article 25 Commentary on Amount B
The Commentary on Article 25 has been modified to incorporate references to the tax-certainty framework and double-taxation relief outlined in the Amount B report. These revisions aim to ensure that all dispute-resolution mechanisms remain optional for jurisdictions that choose not to adopt Amount B.
f) Exchange of Information (Article 26)
Two major changes are introduced in Article 26 Commentary:
- Information received under exchange-of-information provisions may be used for tax matters relating to persons other than those for whom the information was originally obtained.
Agreed interpretative guidance has been incorporated on taxpayer access to exchanged information and the disclosure of reflective, non-taxpayer-specific information generated from or based on exchanged data.
2. Judicial officers with seven years’ combined experience as an advocate or judge are eligible for District Judge appointment under Article 233: SC
The Supreme Court, in the matter of Rejanish K.V. vs. K. Deepa [2025] 179 taxmann.com 369 (SC), ruled that a judicial officer, who has a combined experience of seven years as an advocate or a judge, is eligible to apply for direct appointment as a District Judge under Article 233 of the Constitution. The eligibility for appointment as a District Judge/Additional District Judge is to be determined as on the date of the application.
Article 233 of the Constitution read as follows –
Article 233(1) states that
“Appointments of persons to be, and the posting and promotion of, district judges in any State shall be made by the Governor of the State in consultation with the High Court exercising jurisdiction in relation to such State.”
Article 233(2) states that
“A person not already in the service of the Union or of the State shall only be eligible to be appointed a district judge if he has been for not less than seven years an advocate or a pleader and is recommended by the High Court for appointment.”
Questions placed before the Supreme Court
The following questions were placed before the Supreme Court for consideration –
a) Whether a judicial officer who has already completed seven years in the Bar, being recruited for subordinate judicial services, would be entitled to appointment as an Additional District Judge against the Bar vacancy?
b) Whether the eligibility for appointment as a District Judge is to be seen only at the time of appointment, or at the time of application, or both?
c) Whether there is any eligibility prescribed for a person already in the judicial service of the Union or State under Article 233(2) for being appointed as a District Judge?
d) Whether a person who has been a Civil Judge for a period of seven years or has been an Advocate and Civil Judge for a combined period of seven years would be eligible for appointment as a District Judge under Article 233 of the Constitution?
Supreme Court Observations –
Referring to Article 233 of the Constitution, the Supreme Court applied the rule of literal interpretation to analyse the provision. The Court stated that Article 233(1) provides for appointments of persons as district judges in a State, as well as for posting and promotions thereof.
Whereas, a plain reading of Article 233(2) reveals that for appointment of a person to the post of district judge, two streams are provided, (a) a person not already in service of the Union or of the State, and (b) an advocate or a pleader if he has been an advocate or a pleader for not less than seven years.
The Supreme Court noted that Article 233 of the Constitution is a self-contained provision governing the appointment of district judges. A combined reading of clauses (1) and (2) of Article 233 of the Constitution would, therefore, reveal that the Constitution under clause (2) of Article 233 does not provide a qualification for an in-service candidate for direct recruitment. It only provides qualification for advocates/pleaders who are desirous of competing for the post of District Judge.
Further, the Supreme Court noted that the phrase ‘a person not already in service of Union or of State’ in clause (2) of Article 233 has to be read as ‘other than a person already in service of Union or of State’ or ‘except person already in service of Union or of State’ so as to avoid rendering first part of clause (2) of Article 233 being rendered redundant.
Supreme Court Ruling –
The Supreme Court held the following
- Judicial Officers who have already completed 7 years in the Bar before they were recruited in the subordinate judicial service would be entitled to be appointed as District Judge/Additional District Judge in the selection process for the post of District Judges in the direct recruitment process.
- The eligibility for appointment as a District Judge/Additional District Judge is to be seen at the time of application.
- There is no eligibility prescribed under Article 233(2) of the Constitution for a person already in judicial service of the Union or of the State to be appointed as a District Judge. However, in order to provide a level playing field, a candidate applying as an in-service candidate should have seven years’ combined experience as a Judicial Officer and an advocate.
- A person who has been a Civil Judge for a period of seven years or has been an Advocate and Civil Judge for a combined period of seven years or more than seven years would be eligible for appointment as District Judge under Article 233 of the Constitution of India.
The minimum age for being considered and appointed as a District Judge/Additional District Judge for both advocates and Judicial Officers would be 35 years of age as on the date of application.
3. SEBI amends minimum qualification norms for Research Analysts and Investment Advisers revising degree and certification requirements
On November 25, 2025, the SEBI notified two parallel amendments to the SEBI (Research Analysts) (Second Amendment) Regulations, 2025 and the SEBI (Investment Advisers) (Second Amendment) Regulations, 2025. These amendments revise the qualification and certification regime under Regulation 7 of their respective principal regulations — the SEBI (Research Analysts) Regulations, 2014 and the SEBI (Investment Advisers) Regulations, 2013.
3.1 Part A — Research Analysts (RA)
Earlier Framework under Regulation 7
Regulation 7 deals with ‘Qualification and Certification Requirements’. Under the earlier framework, an individual research analyst, a principal officer of a non-individual research analyst, employees acting as research analysts and partners engaged in research services were required to meet specified minimum qualifications.
These included either a professional qualification or a graduate or postgraduate degree or diploma in finance, accountancy, business management, commerce, economics, capital markets, banking, insurance, actuarial science or other financial services from a recognised Indian or foreign university.
Alternatively, eligibility could be obtained by completing a one-year Post Graduate Program in the Securities Market (Research Analysis) from NISM or by holding the CFA Charter from the CFA Institute.
Revised Qualification Requirements (Substituted Regulation 7(1))
The revised Regulation 7(1) requires a graduate degree or an equivalent educational qualification from a university or institution recognised by the Central Government or any State Government, or a recognised foreign university, institution, or association or a CFA Charter from the CFA Institute and relevant certification from NISM or from any other organisation or institution accredited by NISM
Alternatively, a Post Graduate Program in the Securities Market (Research Analysis) from the NISM or any other program of NISM as specified by the Board.
Associated Personnel (Now covered within 7(1) itself)
The amendment expands the scope of Regulation 7(1) by inserting the phrase “or persons associated with research services”, thereby bringing client-facing and research-support personnel within the same qualification requirement. Such associated individuals must hold at least a graduate degree, as required for the research analyst.
Certification Requirements (Regulation 7(3))
The substituted Regulation 7(3) now governs all certification norms, as the earlier Regulation 7(2) has been omitted. Every research analyst, principal officer, partner, employee acting as analyst and person associated with research services must obtain a fresh NISM certification before the expiry of the validity of the existing certification or within three years from the date of registration certificate, as the case may be, to ensure continuity in compliance with certification requirements.
3.2 Part B — Investment Advisers (IA)
Earlier Framework under Regulation 7
Regulation 7 deals with ‘Qualification and Certification Requirements’. Under the earlier framework, an individual investment adviser or a principal officer of a non-individual investment adviser were required to hold a professional qualification or a graduate degree or postgraduate degree or a two-year postgraduate diploma in finance, accountancy, business management, commerce, economics, capital markets, banking, insurance, actuarial science or other specified financial services from a recognised Indian or foreign university.
Eligibility could also be met by completing a one-year Post Graduate Program in the Securities Market (Investment Advisory) from NISM or by obtaining the CFA Charter from the CFA Institute.
Further, persons associated with investment advice were required to hold at least a graduate degree in any discipline from a recognised foreign university or institution. Transitional relaxations were available for advisers registered at the time the regulations commenced.
Revised Qualification Requirements (Amended Regulation 7(1))
The amended Regulation 7(1) aligns closely with the RA amendment and now inserts the phrase “or persons associated with investment advice” into the opening line. An individual IA, principal officer or person associated with investment advice must hold a graduate degree or any equivalent qualification from a recognised Indian or foreign university. The provision also recognises the CFA Charter from the CFA Institute, coupled with the relevant NISM certification.
Further, a Post Graduate Program in the Securities Market (Investment Advisory) from NISM, a Post Graduate Program in Financial Planning from NISM, or any other program of NISM as specified by the Board is also treated as an eligible qualification.
Revised Certification Requirements (Regulation 7(2))
All individual IAs, principal officers, partners engaged in advisory functions, and persons associated with investment advice must obtain a fresh NISM certification before the expiry of the existing certification or within three years from the date of registration certificate, as the case may be, to ensure continuity in compliance with certification requirements.
3. Conclusion
The amendments streamline and modernise the qualification framework for both Research Analysts and Investment Advisers by shifting to a clearer, degree-based eligibility structure and bringing associated personnel directly within the same standards. Overall, the changes improve consistency, raise the baseline of academic qualification and strengthen regulatory discipline in research and advisory activities.
4. Refund of unutilised Cess ITC on coal for export admissible as export goods not liable to Cess: HC
The High Court held that refund of unutilised Cess Input Tax Credit (ITC) on coal was admissible since the exported goods were not liable to Cess, resulting in accumulation of such credit. This was held in Atul Ltd. vs. Assistant Commissioner, CGST and Central Excise Division VIII [2025].
Facts of the case
The petitioner, a manufacturer-exporter made zero-rated supplies, including exports and SEZ sales, and procured coal for captive power generation, on which Compensation Cess was paid and ITC was availed. It was submitted a claim for refund of accumulated unutilised Cess credit attributable to zero-rated supplies made with payment of IGST, contending that exported goods were not leviable to Cess. The jurisdictional officer under CGST issued a show-cause notice proposing rejection of the refund, subsequent adjudication and first appeal also rejected the claim. The matter was accordingly placed before the High Court.
High Court Held
The High Court held that the jurisdictional officer under CGST and the Department of Revenue misinterpreted the circulars. It was observed that since exports were subject to IGST and the final goods were not liable to Compensation Cess, the Cess ITC on coal remained unutilised. The Court concluded that, considering Section 54(3) of the CGST Act, Section 16(3) of the IGST Act, and Section 11(2) of the GST (Compensation to States) Act together, the petitioner could claim a refund of the unused Cess credit on coal used to manufacture exported goods. It also ruled that the proviso to Section 11(2) did not apply and therefore set aside the earlier orders, allowing the refund.
5. ITC on GST under RCM for industrial land lease used for battery cell factory construction not admissible: AAR
The AAR held that Input Tax Credit (ITC) on GST paid under Reverse Charge Mechanism (RCM) on industrial land lease for setting up the battery cell facility was not admissible as the lease services were tied to construction of immovable property. This was held in Agratas Energy Storage Solutions (P.) Ltd., In re [2025].
Facts of the case
The applicant, a GST-registered entity, took a 50-year industrial lease from the Government for setting up a battery cell manufacturing facility. The lease mandated industrial use of the land and commencement of production within three years, with annual rent at 6% of market price subject to five-year escalations. The applicant paid GST on lease rentals under reverse charge and sought an advance ruling on the admissibility of input tax credit (ITC) on such lease payments. It was contended that ITC should be available on recurring rent and for portions of land not immediately used in construction. The matter was accordingly placed before the Authority for Advance Ruling (AAR).
AAR Held
The AAR held that ITC on GST paid on lease rentals of land used for industrial construction is blocked, including recurring rent and amounts attributable to repair, renovation, or vacant areas, as all such services are linked to the construction of immovable property. Exemption for upfront premiums does not extend to recurring lease rentals, and credits cannot be claimed on portions of land held vacant for environmental compliance, as they form part of the industrial facility. Consequently, the applicant is not entitled to ITC on GST paid on lease rentals for any portion of the industrial land during the lease period.
6. Refund of wrongly paid IGST directed as limitation not bars refund where liability discharged as CGST+SGST: HC
The High Court held that refund of wrongly paid IGST could not be denied since the petitioner had already discharged the correct liability as CGST+SGST, and retention of IGST lacked authority of law. This was held in Merck Life Science (P.) Ltd. vs. Union of India [2025].
Facts of the case
The petitioner, provided intermediary services to foreign entities and initially discharged IGST, treating the supplies as inter-state/export transactions. Subsequently, the petitioner reassessed the same transactions as intra-State and discharged CGST and SGST liability. It was contended that the refund could not be denied as the liability for the transactions had been duly discharged under CGST and SGST, and that constitutional and legal principles prevented retention of tax without authority of law. The matter was accordingly placed before the High Court.
High Court Held
The High Court held that the constitutional mandate under Article 265 of the Constitution of India prohibits the collection or retention of tax without authority of law, and that principles of restitution and prevention of unjust enrichment required a refund of the IGST to the petitioner. The Court observed that limitation provisions under the IGST Act, operate as directory in such circumstances where liability has been discharged through CGST and SGST, and cannot bar the refund. The impugned orders were set aside, and the matter was remitted to the jurisdictional officer.
7. Accounting treatment of manufacturing, warranty, and royalty costs in measuring inventory under Ind AS 2
Ind AS 2, Inventories lays down the fundamental principle that inventories must be measured at the lower of cost and net realisable value, with cost comprising all expenditures incurred in bringing the inventory to its present location and condition. This includes costs of purchase, costs of conversion, and other directly attributable costs. At the same time, the standard also specifies categories of expenses that cannot be included in inventory valuation, such as abnormal wastage, post-production storage costs, administrative overheads unrelated to bringing the inventory to its present condition, and selling or distribution expenses. The distinction between directly attributable production costs and post-sale or revenue-linked obligations is therefore essential when determining what forms part of inventory cost.
In applying these principles, consider a manufacturing company producing a new line of smart air purifiers. During the pre-dispatch quality review, certain defects were identified, requiring Rs. 10 lakh of replacement components and Rs. 2 lakh of additional labour to rectify 1,000 affected units before they were transferred to finished goods. The company also estimated post-sale warranty obligations of Rs. 5 lakh based on past experience of repairs expected over a two-year warranty period. Alongside this, two royalty arrangements were in place, namely a 3 per cent sales-linked royalty payable to an investor and a 2 per cent production-linked royalty payable to a technical know-how provider, amounting to Rs. 6 lakh and Rs. 4 lakh, respectively, for the current cycle.
Evaluating these costs under Ind AS 2, the rectification expenditure incurred before dispatch is necessary to make the goods fit for sale and therefore forms part of the cost of conversion. It directly contributes to bringing the inventory to its present condition. In contrast, the warranty provision relates to future after-sale service obligations and does not enhance the condition of the inventory before sale, making it a period cost to be expensed as incurred. The same principle guides the royalty assessment, wherein the sales-based royalty arises only upon sale and is not a production cost. In contrast, the production-linked technical know-how royalty is directly attributable to manufacturing and therefore qualifies to be included in inventory cost.
In conclusion, only those costs that support the manufacturing process or bring the goods to a saleable condition, such as pre-dispatch rectification and production-based royalties, may be capitalised into inventory. Obligations that arise after sale or depend on revenue, such as warranty provisions and sales-linked royalties, must be recognised as expenses in the period in which they arise, consistent with the exclusions set out in Ind AS 2.
The post Weekly Round-up on Tax and Corporate Laws | 24th November to 29th November 2025 appeared first on Taxmann Blog.
source
