Case Details: Unitas Foods (P.) Ltd. vs. Gyanender [2025] 181 taxmann.com 444 (HC-Delhi)

Judiciary and Counsel Details

• Tara Vitasta Ganju, J.
• Ms Naomi Chandra, Adv. for the Petitioner.
• Pran Krishna Jana, Adv. for the Respondent.

Facts of the Case

In the instant case, the respondent was appointed as a Marketing Executive by the petitioner and later promoted to Purchase Manager. The services of the respondent were terminated and thereafter respondent filed a claim petition before the Labour Court claiming that the petitioner management was not providing the facilities like appointment letter, weekly and yearly leave, overtime, bonus and other allowances and when the same were demanded, the petitioner/management terminated the services without any notice and without payment of earned salary for the period.

Since the petitioner-management didn’t come forward to cross-examine the respondent-claimant, the respondent’s evidence remained uncontroverted and unrebutted and was thus accepted on face value.

The Labour Court concluded that the services of the respondent were terminated illegally and unjustifiably by the petitioner and thus awarded the relief of reinstatement with full back wages, along with continuity of services and all other consequential benefits.

It was the case of the petitioner that the petitioner had engaged a counsel before the Labour Court and had also filed a reply to the claim of the respondent. Subsequently, the petitioner’s counsel stopped appearing in the matter and did not inform the petitioner of this. The petitioner further stated that on multiple occasions, the counsel did not appear and sought adjournments. Hence, the petitioner’s evidence was closed.

The petitioner also challenged the impugned award on another ground. The petitioner submitted that the impugned award was bereft of any reasons and that there was no finding with respect to the issues raised before the Labour Court.

High Court Held

The High Court held that the impugned award contained no findings or reasons, suffered from a material irregularity, and was accordingly set aside. Thus, the matter was remanded to the Labour Court, and the petitioner was directed to cross-examine the respondent on the next date of hearing.

List of Cases Referred to

• Uttar Pradesh State Road Transport Corporation v. Jagdish Prasad Gupta (2009) 12 SCC 609 (para 16)
• Kranti Associates (P) Ltd. v. Masood Ahmed Khan (2010) 9 SCC 496 (para 17).

The post HC Sets Aside Reinstatement Order for Lack of Reasons appeared first on Taxmann Blog.

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Case Details: Paradeep Phosphates Ltd. vs. Additional Commissioner Goods and Services Tax [2026] 182 taxmann.com 587 (Orissa)

Judiciary and Counsel Details

• Harish Tandon, CJ. & Murahari Sri Raman, J.
• Jagabandhu Sahoo, Sr. Adv., Ronit Ghosh, Subhajeet Sahu, Urmila Sahoo, Romeet Panigrahi & Ms Kajal Sahoo, Advs. for the Petitioner.
• Sujan Kumar Roy Choudhury, Senior Standing Counsel for the Opposite Parties.

Facts of the Case

The petitioner, being a manufacturer of fertiliser, imported raw materials and discharged customs duty on the assessable value of such imports. It paid IGST under the reverse charge mechanism on ocean freight. The petitioner challenged the levy of IGST on ocean freight. However, the Department declined to grant interest on such a refund, contending that the refund was processed within the statutory time under Section 54 of the CGST Act and that the statute did not expressly provide for interest in such circumstances. The matter was accordingly placed before the High Court.

High Court Held

The High Court held that the IGST collected on ocean freight was without authority of law, as such a levy had been declared unconstitutional by the Supreme Court in Mohit Minerals (P.) Ltd. The Court held that where a tax is collected pursuant to a levy that is subsequently found to be illegal and unconstitutional, the petitioner is entitled to interest on the refunded amount. The refund not arose from any misinterpretation by a quasi-judicial authority, and therefore, the Department’s denial of interest was unsustainable. It was further held that the interest was payable under Section 56 read with Section 54 of the CGST Act and the Odisha GST Act from the date of payment of IGST on ocean freight until the date of actual refund.

List of Cases Referred to

• Mohit Minerals (P.) Ltd. v. Union of India [2020] 113 taxmann.com 436 (Gujarat)/[2020] 78 GST 519 (Gujarat)/[2020] 33 GSTL 321 (Gujarat) (para 2.3)
• Union of India v. Mohit Minerals (P.) Ltd. [2022] 138 taxmann.com 331 (SC)/[2022] 61 GSTL 257 (SC)/[2022] 92 GST 101 (SC) (para 2.4)
• Commissioner, Commercial and Sales Taxes v. Orient Paper Mills Ltd. (2004) 2 SCR 451 (para 6.10)
• Ujjam Bai v. State of Uttar Pradesh (1963) 1 SCR 778 (para 6.12)
• Union of India v. Hamdard (Waqf) Laboratories [2016] 67 taxmann.com 125 (SC)/[2016] 54 GST 341 (SC)/[2016] 333 ELT 193 (SC)/[2016] 37 GSTR 413 (SC) (para 6.15)
• West India Continental Oils Fats (P.) Ltd. v. Union of India [2025] 179 taxmann.com 603 (Bombay)/[2026] 104 GSTL 208 (Bombay) (para 6.15)
• ADI Enterprises v. Union of India [2022] 143 taxmann.com 47 (Gujarat)/[2022] 94 GST 866 (Gujarat)/[2022] 64 GSTL 392 (Gujarat) (para 6.16)
• ETC Agro Processing (India) (P.) Ltd. v. Union of India [2023] 150 taxmann.com 376 (Gujarat)/[2023] 98 GST 531 (Gujarat)/[2023] 75 GSTL 32 (Gujarat) (para 6.16)
• Jupiter Comtex (P.) Ltd. v. Union of India [2024] 160 taxmann.com 116 (Gujarat)/[2024] 104 GST 167 (Gujarat)/[2024] 86 GSTL 95 (Gujarat) (para 6.17)
• Mohd. Ekram Khan & Sons v. CTT 2004 taxmann.com 1806 (SC) (para 6.20)
• Vijaya Vasava Motors v. Asstt. Commissioner (2009) 19 VST 322 (AP) (para 6.20)
• Himmatlal Harilal Metha v. State of Madhya Pradesh, (1954) 1 SCC 405 (para 6.21)
• South Eastern Coalfields Ltd. v. State of M.P. (2003) 8 SCC 648 (para 6.5)
• Union of India v. Rajeev Bansal [2024] 167 taxmann.com 70 (SC)/[2024] 301 Taxman 238 (SC)/[2024] 469 ITR 46 (SC) (para 6.6)
• Sandhu Overseas v. State of Haryana (2011) 45 VST 244 (P&H) (para 6.7)
• Dr Poornima Advani v. Government of NCT (2025) 2 SCR 1178 (para 6.8).

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The Finance Minister Smt. Nirmala Sitharaman presented the Economic Survey 2025-26 in Parliament on January 29, 2026. The Survey reviews the performance of the Indian economy in the backdrop of a challenging global environment marked by geopolitical tensions, trade fragmentation and financial market volatility. It notes that despite these headwinds, India remains one of the fastest-growing major economies, supported by strong macroeconomic fundamentals, policy reforms, and sustained public investment.

The Survey provides a comprehensive assessment of developments in growth, inflation, fiscal position, monetary conditions, the external sector, and financial stability, along with a detailed review of sectoral performance across agriculture, industry, and services. It also analyses emerging issues such as manufacturing competitiveness, cost of capital, export performance, climate transition, employment and skill development, and the role of technology, including artificial intelligence, in shaping the economy.

The Economic Survey 2025-26 underlines the need to strengthen domestic growth drivers while building resilience against external shocks. It emphasises the importance of improving state capacity, enhancing productivity, promoting competitive manufacturing and exports, and maintaining policy credibility to sustain growth over the medium term.

The Survey serves as an important reference document for policymakers, businesses, and other stakeholders to understand the economy’s current position and future direction. The following are the key points related to direct taxes:

1. India’s potential growth rate has been revised upward to 7%, indicating a stronger medium-term growth outlook supported by reforms and infrastructure investment.
2. The Survey underscores the Government’s continued commitment to fiscal consolidation, with the fiscal deficit for FY25 contained at 4.8% of GDP and a target of 4.4% for FY26.
3. Direct tax collections continue to show strong buoyancy, reflecting improved compliance, formalisation of the economy and widening of the tax base.
4. Greater emphasis has been placed on tax certainty, stability and predictability as key factors for improving investor confidence and capital formation.
5. Manufacturing and exports are identified as strategic priorities, with tax and policy frameworks expected to play a supportive role in enhancing competitiveness.
6. The Survey reiterates the importance of rationalising subsidies and improving the quality of public expenditure to create fiscal space for growth-oriented spending.
7. High cost of capital and structural current account deficit are flagged as macro challenges, reinforcing the need for policy and tax reforms that support investment and savings.
8. Nudge-based interventions have enhanced tax collection efficiency by shifting the focus from post-facto enforcement to preventive, technology-enabled compliance, thereby reducing litigation and compliance costs while improving voluntary tax compliance.
9. As of November 2025, major direct taxes accounted for nearly 53 per cent of Budget Estimates, down from 56.6 per cent in the corresponding period of the previous year, while personal income tax and corporate tax recorded year-on-year growth despite tax concessions.
10. The improvement in tax collections was supported by tax base expansion, with income-tax returns filed increasing from 6.9 crore in FY22 to 9.2 crore in FY25, reflecting improved compliance, technology-driven administration, and rising incomes.

Click Here To Read The Full Update

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Press Release; Dated: 29.01.2026

The Ministry of Corporate Affairs (MCA), through the Investor Education and Protection Fund Authority (IEPFA), has invited public comments on the proposed amendments to the IEPFA (Accounting, Audit, Transfer and Refund) Rules, 2016. The proposed changes are aimed at improving the efficiency, transparency, and investor-friendliness of the IEPF refund framework.

1. Objective of the Proposed Amendments

The key objective of the amendments is to simplify existing procedures, reduce documentation burdens, and significantly expedite the processing of refund claims. The focus is particularly on low-value claims, which currently face delays despite their relatively straightforward nature.

2. Faster Disposal Timeline for Refund Claims

A major reform proposed under the amendments is the introduction of a defined timeline for claim disposal. Refund claims—especially low-value ones—are proposed to be processed and disposed of within 30 days, subject to verification by the concerned company. This is expected to bring predictability and accountability into the refund process.

3. Definition of Low-Value Claims

For the purpose of fast-track processing, the amendments define “low-value claims” as follows:

• Physical shares with a market value of up to ₹5 lakh
• Dematerialised shares with a market value of up to ₹15 lakh
• Dividend claims of up to ₹10,000

These categories are intended to cover the majority of small investors seeking refunds from the IEPF.

4. Simplification and Rationalisation of Procedures

The proposed amendments also seek to bring enhanced procedural clarity by:

• Rationalising documentation requirements
• Eliminating repetitive and unnecessary compliance steps
• Clearly defining the roles and responsibilities of companies involved in verification and processing

This is expected to reduce friction for both investors and companies.

5. Introduction of a Formal Appeal Mechanism

To further strengthen investor protection, the amendments propose the introduction of a formal appeal mechanism. This will allow claimants to challenge the rejection of refund claims through a structured process, ensuring greater transparency, accountability, and fairness in decision-making.

6. Towards a More Investor-Friendly Refund Framework

Overall, the proposed amendments reflect MCA’s intent to make the IEPF refund process faster, more transparent, and aligned with investor-centric governance. By streamlining procedures and introducing clear timelines and safeguards, the changes aim to restore investor confidence and improve ease of compliance.

Click Here To Read The Full Press Release

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Global Financial Insights is a weekly feature for the Accounts and Audit Module subscribers of Taxmann.com. It provides you with the latest updates on financial reporting and auditing practices from across the globe. Here is this week’s financial update:

1. Financial Reporting Council Issues Guidance on Pension Rule Amendments, Providing Clarity to Actuaries and Scheme Stakeholders

The Financial Reporting Council (FRC) has issued new guidance to support pension scheme actuaries in providing retrospective confirmation to validate historic amendments to pension scheme rules. The guidance responds to situations where past changes to pension benefits or rules were made incorrectly, inconsistently applied, or not properly documented, creating uncertainty in actuarial valuations and financial reporting.

In response, the FRC’s “Technical Actuarial Guidance” provides a practical framework to help actuaries apply professional judgement and strengthen confidence that historic amendments complied with legal requirements.

Further, the guidance offers non-prescriptive, proportionate approaches, including examples to assist actuaries where historic records are incomplete. The FRC clarifies that actuaries should not simply assume that historic practices are valid; instead, they must evaluate whether amendments were effective and how corrections should be reflected in funding assessments and accounting figures. This guidance is expected to enhance consistency, strengthen governance, and improve confidence in pension-related reporting amid increasing scrutiny of legacy pension issues.

Source – Financial Reporting Council

2. ASIC action highlights serious breaches of Independence and Professional Standards by SMSF Auditors

The Australian Securities and Investments Commission (ASIC) has taken regulatory action against 28 self-managed superannuation fund (SMSF) auditors, signalling heightened scrutiny of in-house audit breaches. The action includes the cancellation or suspension of auditor registrations and the imposition of conditions on auditors who failed to meet independence and competency requirements.

ASIC took this action after identifying multiple breaches of professional obligations and auditing standards by SMSF auditors. The key areas of non-compliance included:

(a) failing to comply with auditing and assurance standards, independence and continuing professional development requirements or to hold professional indemnity insurance

(b) failing to provide ASIC with annual statements

(c) failing to advise ASIC of changes to their contact details on the public register of SMSF auditors and not responding to regulatory compliance requests

(d) failing to carry out enough audit work to meet the practical experience requirements

ASIC noted that these failures compromise audit quality and confidence in the SMSF system, and reinforced that auditors must strictly adhere to independence requirements and professional standards.

Source – Australian Securities and Investments Commission

Click Here To Read The Full Article

The post [Global Financial Insights] FRC Pension Rule Guidance and ASIC Action appeared first on Taxmann Blog.

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Case Details: Adv Utkarsh Tiwari vs. Eros International Media Ltd. [2026] 182 taxmann.com 151 (CCI)

Judiciary and Counsel Details

• Ravneet Kaur, Chairperson, Sweta Kakkad & Deepak Anurag, Member

Facts of the Case

In the instant case, the Informants filed information against OP, a production house, alleging contravention of sections 3 and 4 of the Competition Act, 2002. The Informants alleged that OP had rights for theatrical and television distribution of the film ‘Raanjhanaa’ in India and globally.

However, OP didn’t have any rights to alter the film’s content, which belonged solely to the director and the artists involved in writing, producing, and directing the feature film, who earned royalties from media houses.

After almost 8 years, OP re-released the feature film ‘Raanjhanaa’ in the State of Tamil Nadu, where it changed the film’s ending as per its own wishes with the help of Artificial Intelligence (AI), thereby contravening the provisions of section 3 of the Act.

Further, the misuse of dominant position by OP in the relevant market of the motion picture industry was done to earn profit in the absence of any regulations in Indian jurisprudence regarding such usage of technology to alter original works.

Moreover, OP had taken a step forward by executing the same and broadcasting the altered film in theatres in Tamil Nadu and was planning to release it on OTT platforms in order to adversely affect competition in India, which made any understanding/agreement anti-competitive as per section 3 of the Act.

It was noted that, considering facts and circumstances of the present case and allegations levelled therein, it was observed that such issues appeared to be like a dispute, if any, between concerned/relevant parties, which ipso facto did not require the intervention of CCI.

CCI Held

The CCI held that since informant had made multiple allegations alleging contravention of sections 3 and 4 of the Act, but had failed to furnish any evidence to substantiate such allegations or establish a nexus between impugned conduct and alleged contraventions of Act, issues raised in instant matter did not fall under ambit of Act and remedies, if any, lay before an appropriate forum/elsewhere. Thus, no prima facie case of contravention of provisions of sections 3 and 4 of the Act could be made out against OP.

The post No Abuse of Dominance Found – Information Closed | CCI appeared first on Taxmann Blog.

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[2026] 182 taxmann.com 706 (Article)

World Corporate Law News provides a weekly snapshot of corporate law developments from around the globe. Here’s a glimpse of the key corporate law update this week.

1. Securities Law

1.1 MAS proposes legislative and regulatory changes to facilitate dual listings on Global Listing Board

On January 9, 2026, the Monetary Authority of Singapore (MAS) invited feedback on proposed amendments to the Securities and Futures Act 2001 (SFA) and draft regulations to facilitate dual listings on the Global Listing Board (GLB). The GLB, to be set up for dual listings on SGX and Nasdaq, was announced on 19 November 2025.

The proposed amendments aim to minimise friction for dual listings in three ways: to enable the use of a single prospectus; to align initial public offering (IPO) timelines between the U.S. and Singapore; and to permit issuers to conduct certain activities, such as practices in the U.S., when making forward-looking statements.

The regulations will streamline the listing process for issuers seeking a dual listing on the Global Listing Board.

(a) The use of a single set of offer documents will be facilitated by requiring that the Singapore prospectus contain information that is in line with that already required for listing in the U.S.

(b) Alignment of the IPO timeline between the U.S. and Singapore will be facilitated by shortening the registration process in Singapore.

The regulations will also include safe-harbour provisions in line with U.S. market practices to facilitate the publication of forward-looking statements, the undertaking of share repurchases, and the execution of predetermined trades. These safe harbours do not provide a valid defence against fraud or dishonesty and will only apply if certain conditions are met.

The proposed amendments to the SFA provide MAS with the flexibility to, should future opportunities arise, adopt a similar streamlined regulatory framework for dual listings from jurisdictions with disclosure requirements comparable to and in line with international disclosure standards.

Aside from the above, MAS is proposing other amendments to facilitate the offering process for all listings. The key amendment is to permit issuers to engage retail investors earlier in the IPO process. This will support book building efforts and give investors more time to familiarise themselves with the issuers and their intended offers. Specifically for issuers seeking a dual listing on the Global Listing Board, the proposal will allow them to align the timing of their engagement with retail investors in both the U.S. and Singapore.

Further, MAS and SGX will make the final decision on all listings and prospectus registrations in Singapore. MAS will also continue to work with the relevant authorities in Singapore to investigate and take action against breaches of disclosure requirements and market misconduct under the SFA.
SGX Reg. Co has issued a consultation paper dated 9 January 2026 seeking feedback on the listing rules for the Global Listing Board.

MAS invites interested parties to submit their views and suggestions on the proposals set out in the consultation paper. Comments may be submitted via the Form SG by 8 February 2026.

Source – Official announcement

Click Here To Read The Full Article 

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Case Details: Hithaishi Infra Machine vs. Assistant Commissioner ST FAC - [2026] 182 taxmann.com 520 (Andhra Pradesh)

Judiciary and Counsel Details

• R Raghunanadan Rao & T.C.D. Sekhar, JJ.
• Anil Kumar Bezawada for the Petitioner.
• Santhi Chandra, Sr. Standing Counsel for the Respondent.

Facts of the Case

The petitioner received a show cause notice (SCN) proposing cancellation of GST registration on the ground that the principal place of business was not operational. It did not respond to the SCN, and the authority cancelled the registration with retrospective effect. An assessment order confirming the reversal of closing ITC was issued, noting that the petitioner had neither filed Form GSTR-10 nor obtained a new registration to transfer the closing credit. The assessment order was challenged, arguing that the GST registration had been restored. The matter was accordingly placed before the High Court.

High Court Held

The High Court held that the impugned assessment order was based on the premise that the registration cancellation was in effect and that it had not complied with the statutory requirements for transfer of closing credit, such as filing Form GSTR-10 or obtaining a new registration. However, it was observed that the registration had been restored in separate proceedings, rendering the cancellation ineffective. As the cancellation ceased to exist, the statutory obligation to reverse the closing ITC did not arise and could not be sustained. Consequently, the Court set aside the assessment order confirming the reversal of the closing ITC and allowed the writ petition.

List of Cases Referred to

• Hithaishi Infra Machine v. Superintendent of Central Tax [2025] 179 taxmann.com 306 (Andhra Pradesh) (para 4).

The post Closing ITC Reversal Unsustainable After Registration Restored | HC appeared first on Taxmann Blog.

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Case Details: FCS Computer Systems S PTE Ltd. vs. ACIT, International Taxation - [2026] 182 taxmann.com 469 (Delhi - Trib.) 

Judiciary and Counsel Details

• Vimal Kumar, Judicial Member
•  M. Balaganesh, Accountant Member
• Ashwani Taneja, Shivam Kukreja, Divyansh Dubery & Ms. Ria Toyal, Advs. for the Appellant.
• Ms. Ekta Jain, CIT DR for the Respondent.

Facts of the Case

The assessee was a company incorporated and resident in Singapore. It was engaged in the business of providing hospitality guest service, software applications, and solution and design services for individual hotels, international chain hotels, and integrated resorts. The assessee had established a branch office in India to handle sales and distribution.

The assessee sold FCS software, a comprehensive solution for the hotel industry, to prominent hotel chains. It places orders with the Singapore head office, which sources the software from FCS Malaysia and supplies it to the branch without any markup. Additionally, maintenance services for FCS software are provided to customers in India by FCS Malaysia, with charges directed to the head office in Singapore. These expenses are then cross-charged to the branch office in India without any markup.

During the year, the branch office received a debit memo from the Head Office for the procurement of software products and software maintenance services, and for reimbursement of expenditure in connection with its operations in India. The assessee, being a Permanent Establishment (PE) in India, offered the income attributable to the PE in India and filed returns of income for the business profits of the branch office.

The AO issued a draft assessment order under Section 144C(1) by disallowing the expenses. The matter was referred to the Dispute Resolution Panel (DRP) and subsequently to the Tribunal.

High Court Held

The Tribunal held that the Special Bench of Mumbai Tribunal in the case of Mashreq Bank Psc v. DCIT [2025] 171 taxmann.com 230 (Mumbai – Trib.) (SB) had held that Article 7(3) of the Treaty, as it existed prior to its amendment, provides the mode of computation of the profit of PE. In that context, it says that, in determining the PE’s profits, all expenses incurred in the PE’s business, including executive and general administrative expenses, whether incurred in the State where the PE is located or elsewhere, must be allowed as deductions.

Therefore, Article 25(1) cannot be interpreted in a manner to say that it will influence the computation of business profits under Article 7(3) or thrust the restriction imposed under the domestic law for computing the business profits. Article 25(1) and Article 7(3) operate in different situations. While Article 25(1) addresses the reduction of double taxation, Article 7 addresses the taxability of business profits, and paragraph 3 of Article 7 sets out the mechanism for computing the business profits of a PE.

There are no restrictions/conditions imposed in Article 7(3) of the Treaty to limit the expenditure to a particular percentage. Therefore, in the absence of any restrictions/conditions expressly provided in Article 7(3), no such restrictions/conditions can either be imported or read between the lines. Accordingly, the assessee would be allowed to claim deductions for expenses while computing the business profits of the PE in India.

List of Cases Reviewed

• Hyatt International Southwest Asia Ltd v. ADIT [2025] 176 taxmann.com 783 /[2025] 306 Taxman 241 /[2025] 478 ITR 238 (SC)
• Mashreq Bank Psc v. DCIT [2025] 171 taxmann.com 230 /[2025] 211 ITD 511 (Mumbai – Trib.) (SB) (para 11) followed

List of Cases Referred to

• Hyatt International Southwest Asia Ltd. v. ADIT [2025] 176 taxmann.com 783 (SC)/[2025] 306 Taxman 241 (SC)/[2025] 478 ITR 238 (SC) (para 9)
• Mashreq Bank Psc v. Dy. CIT (International Taxation) [2025] 171 taxmann.com 230 (Mumbai – Trib.)/[2025] 211 ITD 511 (Mumbai – Trib.) (para 10).

The post Software Procurement Expense Allowed To Indian Branch| ITAT appeared first on Taxmann Blog.

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Facts:

Insta Oil & Gas Limited, hereinafter referred to as “the Company”, has entered into a Production Sharing Contract (PSC) with the Government of India (GoI) for exploration and production of crude oil from a designated oil block in India. As per the PSC, the company and the GoI participate in the oil block through a joint operation, without forming a separate legal entity.

Under the terms of the PSC, the crude oil produced from the block is jointly owned by the company and the GoI, in their respective participating interests, as specified in the contract. Each party is entitled to its share of the produced oil and the economic benefits arising therefrom.

For operational convenience, the joint operation enters into sale contracts with domestic refineries for the supply of crude oil. The joint operation issues a single consolidated invoice to the refineries for the entire quantity of crude oil sold during the period. The invoice clearly specifies the total quantity of crude oil supplied, the total sale consideration, and the sharing ratio between the company and the Government in accordance with the PSC.

Although the crude oil belongs to both parties, the company acts as the selling party on behalf of the joint operation and undertakes invoicing, collection, and settlement with the customers. The refineries make payment of the full invoiced amount to the Company.

Subsequently, the Company remits to the Government of India an amount equivalent to the Government’s share of crude oil sold, as determined under the PSC. This remittance represents the proceeds from crude oil owned by the Government that the company sold on its behalf.

Considering that the crude oil is jointly owned and the company invoices and collects sale proceeds on behalf of the joint operation, an important question arises as to whether revenue should be recognised for the entire sale value or only to the extent of the Company’s share, having regard to the principles governing joint operations and principal–agent arrangements?

Relevant Provisions

Ind AS 111 – Joint Arrangements

Para 15 of Ind AS 111

A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets, and obligations for the liabilities, relating to the arrangement. Those parties are called joint operators.

Para 20 of Ind AS 111

A joint operator shall recognise in relation to its interest in ajoint operation:

a) its assets, including its share of any assets held jointly

b) its liabilities, including its share of any liabilities incurred jointly

c) its revenue from the sale of its share of the output arising from the joint operation

d) its share of the revenue from the sale of the output by the joint operation and

e) its expenses, including its share of any expenses incurred jointly.

Para 21 of Ind AS 111

A joint operator shall account for the assets, liabilities, revenues and expenses relating to its involvement in a joint operation in accordance with the relevant Ind AS.

Ind AS 115 – Revenue from Contracts with Customers

Para B35 of Ind AS 115

An entity is a principal if it controls the specified good or service before that good or service is transferred to a customer. However, an entity does not necessarily control a specified good if the entity obtains legal title to that good only momentarily before legal title is transferred to a customer. An entity that is a principal may satisfy its performance obligation to provide the specified good or service itself,or it may engage another party (for example, a subcontractor) to satisfy some or all of the performance obligation on its behalf.

Para B36 of Ind AS 115

An entity is an agent if the entity’s performance obligation is to arrange for the provision of the specified good or service by another party. An entity that is an agent does not control the specified good or service provided by another party before that good or service is transferred to the customer. When (or as) an entity that is an agent satisfies a performance obligation, the entity recognises revenue in the amount of any fee or commission to which it expects to be entitled in exchange for arranging for the specified goods or services to be provided by the other party.

Para B37 of Ind AS 115

Indicators that an entity controls the specified good or service before it is transferred to the customer (and is therefore a principal (see paragraph B35)) include, but are not limited to, the following:

a) the entity is primarily responsible for fulfilling the promise to provide the specified good or service.

b) the entity has inventory risk before the specified good or service has been transferred to a customer or after transfer of control to the customer.

c) the entity has discretion in establishing the price for the specified good or service.

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