Case Details: Ponnusamy Thangaraj, In re - [2026] 183 taxmann.com 704 (AAR-TAMILNADU)

Judiciary and Counsel Details

• C. Thiyagarajan & B. Suseel Kumar, Member

Facts of the Case

The applicant, a proprietary concern, had purchased a new car in April 2025 for the personal use of its proprietor and capitalised the vehicle in the business accounts. No input tax credit (ITC) was claimed on the purchase of the car and depreciation was also not claimed for the financial year 2025-26. The applicant later decided to sell the vehicle as a used car and sought an advance ruling on whether GST was payable on the full sale value or only on the profit/margin in terms of Notification No. 08/2018-Central Tax (Rate) dated 25-01-2018 relating to valuation of old and used vehicles.

AAR Held

The Authority for Advance Ruling held that the margin scheme under Rule 32 of the CGST Rules read with Notification No. 08/2018-CT (Rate) applies only to persons engaged in the business of buying and selling second-hand goods in the normal course of business. Since the applicant was not dealing in second-hand goods and the vehicle had originally been purchased as a new car for the personal use of the proprietor, the margin-based valuation method was not available. Accordingly, the value of supply had to be determined under Section 15(1) of the CGST Act on the basis of transaction value, and GST was payable on the full sale consideration received for the car. The ruling was therefore in favour of the Revenue.

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The Customs Baggage Rules, 2026 are rules framed by the Central Government under the Customs Act, 1962 to regulate the import and clearance of goods carried by passengers as baggage when entering India. These rules lay down the conditions, limits, and procedures relating to duty-free allowances available to passengers, import restrictions and prohibited items, and the treatment of personal effects carried for personal use. They also provide provisions for the temporary import of goods by tourists and the re-import of articles that were earlier taken out of India. The objective of the Baggage Rules, 2026 is to facilitate genuine passenger travel while maintaining customs control over goods entering the country and preventing misuse of baggage provisions for commercial imports or illegal trade.

Table of Contents

1. Customs Control Over Baggage
2. Duty Free Imports of Personal Effects
3. Re-import of Articles Which Were Taken Out
4. Temporary Import by Tourist
5. General Free Allowance

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1. Customs Control Over Baggage

Provisions in respect of importing goods as baggage are summarised in Baggage Rules, 2026.

1.1 Goods Prohibited for Imports in Baggage

Following articles are prohibited to import as baggage:

(A) Articles Specified As Prohibited in Appendix 1 to Baggage Rules, 2026:

(1) Fire arms

(2) Cartridges of fire arms exceeding 50

(3) Cigarettes exceeding 100 sticks or cigars exceeding 25 or tobacco exceeding 125 gms

(4) Alcoholic liquor or wines in excess of two litres

(5) Gold or silver in any form other than ornaments

(6) Television

(B) Articles Prohibited for Import As Per Form CBD-I to Customs Baggage (Declaration and Processing) Regulations, 2026:

(1) Maps and literature where Indian external boundaries have been shown incorrectly

(2) Narcotic Drugs and Psychotropic Substances

(3) Goods violating any of the legally enforceable intellectual property rights

(4) Wild life products

(5) Indian counterfeit currency notes or coin

(6) Specified live birds and animals

2. Duty Free Imports of Personal Effects

A passenger, including an infant arriving in India, shall be allowed clearance of used personal effects required for satisfying daily necessities of life and travel souvenirs, carried on the person or in his bona fide baggage, free of duty, other than those articles mentioned in Annexure-I – Rule 3 of Baggage Rules, 2026.

“Personal effects” means all articles (new or used) which a passenger may reasonably require for his personal use during the journey, taking into account all the circumstances of the journey, but excluding any goods imported or exported for commercial purposes – Rule 1(g) of Baggage Rules, 2026.

“Infant” means a child not more than two years of age – Rule 1(e) of Baggage Rules, 2026.

Jewellery, Furniture Can Be ‘Personal Effects’ – In Jayantilal A Shah v. K N Anantharam Aiyar, CIT (1985) 156 ITR 448 = 23 Taxman 14 (Bom. HC), it was held that those need not be used daily. As long as the effects are meant for personal use, those will be ‘personal effects’. Even furniture can be ‘personal effects’.

In CIT v. Sitadevi N Poddar (1984) 148 ITR 506 = 17 Taxman 345 (Bom. HC DB), it was held that personal effects do not have to be those worn on person of assessee. Personal effects should be clearly, commonly and ordinarily intended for personal or household use.

In Pushpa Lakhumpal Tulani v. ACC (2008) 227 ELT 368 (Del. HC DB), a wealthy lady brought jewellery (some was used and some appeared to be new) of value of Rs. 25 lakhs. There was no evidence that these have been brought with view to dispose them off. It was held that these are ‘personal effects’ and these cannot be confiscated – view confirmed in DRI v. Pushpa Lekhumal Tolani (2017) 353 ELT 129 (SC), where in fact, value of gold and diamond jewellery was Rs. 1.27 crores – followed in Razia Begum v. CC (2025) 394 ELT 270 = 33 Centax 320 (Del. HC DB) * Mohammad Idres v. CC (2025) 394 ELT 280 = 32 Centax 261 (Del. HC DB).

In Rubeena Khalid v. CC 2001(137) ELT 446 (CEGAT), it was held that a college girl bringing one gold chain and six gold bangles (total weight 135 gms) cannot be considered as an attempt to smuggle those ornaments.

In H. H. Maharaja Rana Hemany Singhji v. CIT AIR 1976 SC 662 = 103 ITR 61 (SC), it was observed, ‘To constitute ‘personal effects’, an intimate connection between the effects and the person of the assessee must be shown to exist’. In this case, it was held that furniture, household utensils, wearing apparel etc. could be ‘personal effects’. However, silver coins, gold sovereigns, silver bars which were used on festivals cannot be said to be for personal use.

In CIT v. HH Maharani Usha Devi (1998) 231 ITR 793 = 98 Taxman 309 (SC), it was held that jewellery for personal use is ‘personal effects’, even if it is used on ceremonial occasions only.

In Smt Shree Kumari Mundra v. CIT (2000) 112 Taxman 253 (Cal. HC DB), it was held that household articles and utensils could be ‘personal effects’ though not very expensive decorative pieces. It was held that silver utensils in reasonable quantity can be ‘personal effects’. In Himatlal C Valia v. CIT (2001) 114 Taxman 269 (Guj. HC DB), silver dinner sets used occasionally for dinner parties were held as ‘personal effects’.

Jewellery in Personal Use is ‘Personal Effects’ and is Not Required to Be Declared – Jewellery or ornaments in bona fide personal use of tourist would not be excluded from ‘personal effects’ defined in Baggage Rules, 2016. Gold bangles tourist worn may be part of her personal effects are not required to be declared.  Baggage Rules interpretation should not unnecessarily burden tourist – Anjali Pandey v. Union of India (2025) 27 Centax 32 (Del HC DB) * Saba Simran v. Union of India (2025) 27 Centax 34 = 394 ELT 403 (Del HC DB) – SLP dismissed by SC – CC v. Saba Simran  (2025) 32 Centax 132 = 394 ELT 27 (SC) – followed in Razia Begum v. CC (2025) 394 ELT 270 = 33 Centax 320 (Del HC DB).

Used jewellery worn by passenger would fall within ambit of personal effects in terms of Baggage Rules and detention of the same itself would be contrary to law – Manan Karan Sharma v. Commissioner of Customs (2025) 31 Centax 380 (Del HC DB).

Personal Jewellery Not Acquired Abroad Not Subject to Monetary Limit – Jewellery’ in Rule 2(vi) of Baggage Rules, 2016 must be read:

(a) in conjunction with previous versions of Baggage Rules and CBEC’s clarificatory Circular No. 72/98-Cus., dated 24-9-1998; and

(b) as inclusive of articles newly acquired as opposed to used personal jewellery which may have been borne on person while exiting country or carried in their baggage; hence, personal jewellery, not acquired on overseas trip and used personal effect of passenger, would not be subject to monetary limit – Saba Simran v. Union of India (2025) 27 Centax 34 = 394 ELT 403 (Del HC DB) – SLP dismissed by SC – CC v. Saba Simran  (2025) 32 Centax 132 (SC) – followed in Razia Begum v. CC (2025) 394 ELT 270 = 33 Centax 320 (Del HC DB).

2.1 CBIC Instructions in Respect of Jewellery

Import of jewellery is always looked with suspicion by customs department.

Views of CBIC, as given in para 2(iv) of CBIC circular No. 04/2026-Customs, dated 1-2-2026 are as follows. [It is clear that views of department and of customs are widely different]. Views of Customs are as follows:

(a) Used Personal jewellery and valuables as used personal effects. Used personal effects, including personal jewellery and valuables required for daily necessities of life, carried on the person or in bona fide baggage, shall be allowed duty free clearance under the Baggage Rules, 2026, subject to risk-based verification.

(b) Jewellery and valuables not forming part of used personal effect:

(i) Jewellery and valuable, other than those required for daily necessities of life, brought by a passenger in bona fide baggage, shall not be allowed duty free, however, the same may be allowed on payment of applicable duty.

(ii) Jewellery and valuable, other than those required for daily necessities of life, brought by a resident, tourist of Indian origin, or a foreigner with a valid visa, other than tourist visa, in bona fide baggage may be allowed duty free clearance at the time of its re-import, on the basis of an export certificate where such articles had been taken out earlier from India.

(iii) Jewellery and valuable, other than those required for daily necessities of life, bi ought by tourists in bona fide baggage for use during their stay in India, may be allowed subject to declaration at the time of arrival, issuance of temporary baggage import certificate and mandatory re-export at the time of departure.

(iv) Non-bona fide jewellery or valuables or such articles, not declared or not complying with the prescribed conditions, shall attract duty as per the Baggage Rules, 2026 and shall be dealt with strictly under the Customs Act, 1962.

(c) Special Allowance or Jewellery – Eligible residents and tourists of Indian origin residing abroad for more than one year shall be allowed a special duty-free jewellery allowance as prescribed under the Baggage Rules, 2026. Jewellery within the prescribed allowance shall be cleared duty free, while jewellery in excess of such allowance shall be assessed to applicable customs duty.

3. Re-import of Articles Which Were Taken Out

Any article of personal effects other than used personal effects required for satisfying daily necessities of life, taken out earlier by the resident or tourist of Indian origin or foreigner with a valid visa, other than tourist visa, or member of his family, from India shall be allowed free of duty, on submission of declaration made at the time of his departure from India electronically or otherwise, subject to the satisfaction of the same by the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be – Rule 4(1) of Baggage Rules, 2026.

“Tourist” means a person not ordinarily resident in India and who enters India for a stay of not more than six months in the course of any twelve months period for legitimate non-immigrant purposes – Rule 1(i) of Baggage Rules, 2026.

“Resident” means a person ordinarily residing in India and holding a valid passport issued under the Passports Act, 1967 – Rule 1(h) of Baggage Rules, 2026.

“Foreigner with a valid visa, other than tourist visa” means a foreigner possessing a valid visa, other than a tourist visa and staying in India for more than six months – Rule 1(d) of Baggage Rules, 2026.

Risk Based Verification – The passengers availing the facility under this rule, may be subject to risk based verification – Rule 4(3) of Baggage Rules, 2026.

4. Temporary Import by Tourist

Any article of personal effects other than used personal effects required for satisfying daily necessities of life, carried by a tourist, required for his stay in India, may be allowed to be imported temporarily free of duty, on submission of a declaration made electronically or otherwise, and subject to their re-export at the time of leaving India for a foreign destination – Rule 4(2) of Baggage Rules, 2026.

“Personal effects” means all articles (new or used) which a passenger may reasonably require for his personal use during the journey, taking into account all the circumstances of the journey, but excluding any goods imported or exported for commercial purposes – Rule 1(g) of Baggage Rules, 2026.

Risk Based Verification – The passengers availing the facility under this rule, may be subject to risk based verification – Rule 4(3) of Baggage Rules, 2026.

5. General Free Allowance

Goods upto certain limited can be imported as baggage without payment of customs duty. This is termed as ‘General Free Allowance’.

5.1 General Free Allowance for Resident or Tourist or Foreigner with Valid Visa

A resident or a tourist of Indian origin or foreigner with a valid visa, other than tourist visa, not being an infant, arriving in India other than by land, shall be allowed clearance free of duty articles other than those mentioned in Annexure-I, up to the value of Rs. 75,000, if such articles are carried on the person or in the bona fide accompanied baggage of the passenger – Rule 5 of Baggage Rules, 2026.

“Foreigner with a valid visa, other than tourist visa” means a foreigner possessing a valid visa, other than a tourist visa and staying in India for more than six months – Rule 1(d) of Baggage Rules, 2026.

“Infant” means a child not more than two years of age – Rule 1(e) of Baggage Rules, 2026.

“Resident” means a person ordinarily residing in India and holding a valid passport issued under the Passports Act, 1967 – Rule 1(h) of Baggage Rules, 2026.

A passenger of the eighteen years of age or above, other than a crew member, shall be allowed clearance of one new laptop including notepad free of duty in bona fide baggage– third proviso to Rule 5 of Baggage Rules, 2026.

The free allowance of a passenger shall not be allowed to pool with the free allowance of any other passenger – Explanation to Rule 5 of Baggage Rules, 2026.

5.2 General Free Allowance for Tourist of Foreign Origin

A tourist of foreign origin, not being an infant, arriving in India other than by land, shall be allowed clearance free of duty articles other than those mentioned in Annexure-I, up to the value of rupees 25,000, if these are carried on the person or in the bona fide accompanied baggage of the passenger – first proviso to Rule 5 of Baggage Rules, 2026.

“Infant” means a child not more than two years of age – Rule 1(e) of Baggage Rules, 2026.

5.3 General Free Allowance Cannot be Pooled

The free allowance of a passenger shall not be allowed to pool with the free allowance of any other passenger – Explanation to Rule 5 of Baggage Rules, 2026.

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Manish Harchandani – [2026] 184 taxmann.com 74 (Article)

1. Introduction

In the Union Budget 2024-25, the Government announced a comprehensive review of the Income-tax Act, 1961, with the goal of making the law concise, lucid, and easy to understand. As a result, the Income Tax Act, 2025 has been enacted to streamline and modernise the direct tax framework in India. Among the numerous structural changes is the repositioning of the revisional powers of the tax administration. The power to revise orders prejudicial to the revenue, famously known under Section 263 of the old Act, has now been reincarnated as Section 377 in the new Act.

This article provides a comparative analysis of both sections, examining the differences in wording, the impact of the new enactment, and the crucial judicial precedents that remain firmly intact under the new regime.

Before moving forward, it is essential to trace the historical evolution of revisional powers within the Income Tax Law.

The history of revisional powers under Section 263 of the Income Tax Act, 1961, traces back to the earlier 1922 Act and is marked by continuous legislative amendments aimed at overcoming judicial limitations and plugging revenue leakage.

2. Origins under the 1922 Act

Prior to the Income-tax Act of 1922, there was no provision enabling the Revenue to revise assessment orders that were prejudicial to its interests. This omission was later addressed by inserting Section 33B into the 1922 Act via the Income-tax and Business Profits Tax (Amendment) Act, 1948, with effect from 30 March 1948. Section 33B granted the Commissioner the power to revise orders prejudicial to the interests of the revenue.

3. Transition to the Income Tax Act, 1961

When the Income Tax Act, 1961, was enacted, the powers under the old Section 33B were reincarnated as Section 263. Sub-sections (1) and (2) of Section 263 directly corresponded to the old provisions. However, the legislature proactively added a new sub-section (3) to overcome difficulties caused by the Bombay High Court’s decision in CIT v. Kishoresinh Kalyansinh Solanki [1960] 39 ITR 522 specifically providing that the two-year time bar for revising an order would not apply when the revision is made to give effect to a finding or direction of an appellate authority or court.

Click Here To Read The Full Article

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Business Documents are written or recorded instruments used in commercial and legal transactions to communicate information, establish rights and obligations, and create legally recognisable records between parties. These documents include instruments such as deeds, agreements, contracts, circulars, public notices, tenders, and financial guarantees that facilitate business operations and ensure clarity in dealings. By formally documenting commitments, responsibilities, and terms of transactions, business documents help prevent disputes, maintain transparency, and provide evidence of business arrangements in legal or administrative proceedings.

Table of Contents

1. Introduction
2. Deeds
3. Agreements
4. Contract
5. Circulars
6. Public Notices
7. Standard Bids and Tenders
8. Letter of Credit, Bank Guarantee, and Performance Guarantee

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1. Introduction

FAQ 1. What role do inclusive definitions of “document” play in business operations, and how do they contribute to clarity?

• Inclusive definitions of “document” in various legislations, including the General Clauses Act and the Companies Act, provide a comprehensive framework that covers a wide range of written or recorded matters.
• These definitions contribute to the effective functioning of businesses by reducing misunderstanding and vagueness during transactions.
• Business documents, such as deeds, contracts, circulars, public notices, tenders, etc., fall under these inclusive definitions, ensuring clarity and facilitating smooth business operations.

2. Deeds

FAQ 2. What is the legal significance of a deed, and what does it generally encompass?

In legal terms, a deed is a solemn document used to describe various instruments through which two or more individuals agree to establish a right or liability. This includes documents like Gift Deeds, Sale Deeds, Deeds of Partition, Partnership Deeds, Deeds of Family Settlement, Lease Deeds, Mortgage Deeds, and more. Even a power of attorney has been considered a deed in older English cases. The term “deed” also includes a bond within its scope. A deed is a present grant rather than a mere promise to be performed in the future. Deeds are in writing, signed, sealed and delivered.

3. Agreements

FAQ 3. What is the legal distinction between an agreement and a contract?

An agreement which is enforceable at law is called a contract. Generally, when a contract is reduced to writing, the document itself is called an agreement.

Accordingly, there cannot be an agreement unless there are two or more parties that agree to perform certain acts or refrain from doing something.

In other words, an agreement between the parties is an instrument whereby the parties freely agree to perform certain acts or refrain from doing something, unilaterally or bilaterally. The purpose of the instrument is to bind the parties to the terms and conditions agreed upon.

FAQ 4. What are the various kinds of agreements?

Few types of Agreement and their purposes are as under:

1. Sale/Purchase Agreements – Sale and Purchase agreements are entered into by the parties for the purpose of transfer to property. These agreements ensure that the property legally transferred and conveyed to the other party without dispute.
2. Commercial Agency Agreements – Sometimes businesses are conducted by traders not directly with their counterparts but through the agency of independent agents appointed for the purpose. Such agents would locate customers for the principal’s goods and in certain conditions, would have an implied authority to deal with the goods of the principal, allow credit terms to customers and receive payment from the customers on behalf of the principal. Commercial Agency Contracts are entered into by organisations for running businesses though this mode of business operation.
3. Collaboration Agreements – When two parties join hands for exchange of technical know-how, technical designs and drawings; training of technical personnel of one of the parties in the manufacturing and/or research and development divisions of the other party; continuous provision of technical, administrative and/or managerial services, they are said to be collaborating in a desired venture. Commercial Agency Contracts are used in such scenarios.
4. Arbitration Agreements – The ‘arbitration agreement’ means an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of defined relationship whether contractual or not. It may be in the form of an arbitration clause in a contract or in the form of a separate agreement.
5. Hypothecation Agreement – Hypothecation agreement is a document by which legal property in goods passes to the person who lends money on them, but the possession does not pass.
6. Outsourcing Agreements – Outsourcing is the contracting out of a company’s non-core, non-revenue producing activities to specialists. It differs from contracting in that outsourcing is a strategic management tool that involves the restructuring of an organisation around what it does best its core competencies.
7. Agreement for Assignment – An assignment is a form of transfer of property and it is commonly used to refer the transfer of an actionable claim or a debt or any beneficial interest in movable property. An important aspect of intellectual property laws deals with assignment agreements. A transfer of an actionable claim is usually called an assignment thereof. For example, Assignment of Patents, Assignment of Trade Marks, Assignment of Copyrights, Assignment of Business and Goodwill etc.
8. Shareholders’ Agreements – Shareholders’ agreements (SHA) are quite common in business. In India, shareholder’s agreement has gained popularity and currency only lately with bloom in newer forms of businesses. There are numerous situations where such agreements are entered into – family companies, JV companies, venture capital investments, private equity investments, strategic alliances, and so on. Shareholders’ agreement is a contractual arrangement between the shareholders of a company describing how the company should be operated and the defining inter-se shareholders’ rights and obligations.
9. Employment Agreements – They are entered into between parties for the purpose securing the availability of manpower for an organisation.

4. Contract

FAQ 5. What is a contract?

An agreement gives birth to a contract. As per Section 2(e) of the Indian Contract Act, 1872 “every promise and every set of promises, forming the consideration for each other, is an agreement.

It is apparent from the definition that an agreement is based on a promise.

According to Section 2(b) of the Indian Contract Act, 1872, “when the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted. A proposal, when accepted, becomes a promise. An agreement, therefore, comes into existence when one party makes a proposal or offer to the other party and that other party signifies his assent thereto.

Therefore, every contract is an agreement but not vice versa. Agreements in which the idea of bargain is absent and there is no intention to create legal relations are not contracts.

FAQ 6. What is the difference between Deeds, Agreements and Contract?

Basis	Deeds	Agreements	Contract
Meaning	Deed is the term normally used to describe all the instruments by which two or more persons agree to effect any right or liability	Every promise and every set of promises, forming the consideration for each other, is an agreement	An agreement enforceable by law is a contract
Mode	Preferable in writing	It may be oral or in writing	Preferable in writing
Purpose	Effecting a Right or Liability	Agreement on certain Act or Omission	Enforceability of agreements according to Law
Creation of Records	Yes	Not necessary	Yes
Relation	Deed may be agreements and contracts	Agreements are not necessarily Deeds or Contracts	It succeeds Agreement
Example	Sale Deed, Lease Deed etc.	Non-Disclosure Agreements, Joint Venture Agreements	Agreements reduced into writing and enforceable under any law

5. Circulars

FAQ 7. What are the important points for drafting a Circular, and a specimen of the Circular?

• Circular is a letter or notice sent to a large number of people. The purpose of circulars is to disseminate the information to large number of individuals. Generally, circulars are in written form so as to create a permanent record of the information and the same may be accessed to by the individuals in present as well as in future.
• A circular may be issued and circulated in various modes but in present era, the prevalent mode in which circulars are issued are in electronic form such as by placing them at the website, sending them by emails etc.
• For Example –Central Government may issue a circular for giving clarification on any point of Law or providing any other necessary information to public at large.

Important Points for drafting a circular are:

• Issuing Authority – It is important to mention the name of the issuing authority on the circular for communicating the position and authority of the addressor. It reduces the chance of confusion in addresses and increase the chances of observance.
• Details of Addressee – It is essential to mention the details of addressees by name, designation etc. in circulars. The addressees are required to comply with the information specified a circular. Therefore, mentioning the details of addressees make the circulars effective.
• Subject – The mention of subject in a circular ensures that the circular receives the required attention. This will make circular more effective and chances of avoidance gets reduced.
• Reference to Preceding information – It is mandatory to mention the reference to the information already provided before the present circulars. It ensures the completeness of information and the addressee may understand the complete matter contained therein.
• Main Information – The main purpose of the circular is to disseminate the information to selected group of individuals. The information should be complete and in understandable language leaving no chance of ambiguity.
• Source of Authority – It is always preferable to mention the source of authority under which the signatory has issued the circular. This gives emphasis on observance of the circular and increases the chances of amenableness.
• Signature – The signature on the circular makes it more reliable.

Specimen Circular General Circular No. ______ File No. Policy ___________ Government of India ________ (Name of the Ministry) ________ (Address) Dated:____________ To, The DGCoA, All Regional Director, All Regional of Companies, All Stakeholders.

Subject – Clarification of holding of Annual General Meeting (AGM) Through Video Conference (VC) Or Audio-visual Means (OAVM)-reg. Sir/Madam, (1) In continuation to this Ministry’s General Circular NO. 20/2020 dated 05,05.2020 and General Circular No. 02/2022 dated 05.05.2022 and after due examination, it has been decided to allow the companies whose AGMs are due in the year 2023, to conduct their AGMs on or before 30th September, 2023 in accordance with the requirements laid down in para 3 and para 4 of the General Circular No. 20/2020 dated 05.05.2020. (2) It is clarified that this General Circular shall not be construed as conferring any extension of time for holding of AGMs by the companies under the Companies Act, 2013 (the Act) and the companies which have not adhered to the relevant timelines shall be liable to legal action under the appropriate provisions of the Act. (3)  This issues with the approval of the Competent Authority. Yours Faithfully

FAQ 8. What are the advantages of issuing a circular?

The advantages of issuing circular are:

• Ease of Dissemination of Information – Circulars play significant part in the development and easy working of the businesses of organisations. Through circulars the information is circulated with ease.
• Economical – Circulars are economical way of dissemination of information effectively. Through circulars, large number of individuals may be reached.
• Expeditious – Through circulars, important information can be disseminated to a large number of people expeditiously. Hence, it saves time and efforts of the authority.
• Less Efforts – Issuing circular for dissemination of information requires less efforts and can produce upright results.
• Develop Consciousness – Systematic and regular use of circulars for dissemination of information develop consciousness in the addressees and improves effectiveness.

6. Public Notices

FAQ 9. What is the concept of “public notice”, and identify the entities or individuals authorised to issue such notices?

Public notices are issued to convey information to large number of receivers that may called public. These are announcements made on a happening of a certain event of public interest. These may be issued by a Government Agency or by an individual including organisations.

These may be issued for varied reasons such as providing information relating to, change in a law, struck off the name of companies by Registrar of Companies, Status of Complaints by an authority, Call for Information regarding submission of information pertaining to ‘Unclaimed Non-convertible Securities’, Public Notices by companies etc.

They are published though websites, newspapers or any other prevalent way.

Entities or individuals authorised to issue such notices:

• Central Government
• State Government
• Corporates
• Statutory corporations
• Authorised persons of various authorities

FAQ 10. Draft the Public Notice of the extract of the standalone unaudited financial results for the quarter and nine months

Public Notice of Extract of Standalone Unaudited Financial Results for the Quarter and Nine Months XYZ Limited (Name of Company) CIN:________________ Regd. Office:______________ Cont. No.__________ Email id._____________ Fax. No.___________Website_________________ Extract of Standalone Unaudited Financial Results for the Quarter and Nine Months Ended 31st December,________________ (Year) S. No. Particulars Quarter Ended Nine Month Ended Year Ended 31/12/21 30/09/21 31/12/20 31/12/21 31/12/20 31/03/21 The above is an extract of the detailed format of quarterly and nine months ended unaudited financial results filed with the stock exchange under Regulation 33 of the SEBI (Listing Obligation and Disclosure Requirements) Regulation, 2015. The full format of the Quarterly Financial Results are available on the stock exchange websites (www___________ com and www_________ com) and also hosted on the Company’s website at www______________ Date: Place: __________________(Name) For and On Behalf of Board of Directors XYZ Limited

7. Standard Bids and Tenders

FAQ 11. What are the important points for preparing a document for the Tendering Process?

• Name and Address of the Organisation – The name and address of the organisation be mentioned on the initial page of the document.
• Subject of the Document – The subject of the tender documents to be mentioned in clear and comprehensive manner in order to attract the attention of the Bidder.
• Index of the Tender Document – The index of the documents can make the document convenient for the prospective bidder.
• Important Dates and Necessary Information – The information such as Tender Publication Date, Last date and time for sending Pre-Bid Queries in writing, Cost of Tender, Earnest Money Deposit, Pre-Bid Meeting date, time & venue, Last Date & address of Submission of Bids, Date, time & Venue of opening of Technical Bids and Financial Bids, contact details etc. should be provided in the tender document.
• Disclaimer Clause – A disclaimer clause with respect to reservations or observation on the tender documents should be placed in the tender document.
• Job Description – The job description in details should be mentioned in the tender document in order to acquaint prospective bidders with the requirements attached with the Job and evaluate and prepare their bids accordingly.
• Division of Tender Documents in Parts – The tender document be preferably prepared asking for Bid submissions in two parts i.e. Technical Bid and Financial Bids.
• Fees and Deposits – The tender document should mention the fees and deposits commensurating the nature and quantum of work. The cost of the tender document may be required from the prospective bidder. Further, the provisions relating to Earned Money Deposit (EMD) and Security Deposit are also to be placed in the tender document.
• Conditions for Forfeitures of EMD – The clause providing for the circumstances in which EMD may be forfeited to be mentioned in the tender document. The general conditions in which EMD be forfeited are as under:

1. 1. If the bidder withdraws its bid;
   2. the selected bidder delays or does not accept the Purchase/Work Order;
   3. the selected bidder fails to supply goods/services as per the terms of the Tender or fails to execute Purchase/Work Order.

• Pre-Bid Meeting – Pre-Bid Meetings be conducted in order to provide any clarification sought on the tender.
• Scope of Work – The scope of work in details be mentioned in the tender documents.
• Mention of Technical and Administrative Requirements – The technical and administrative requirement be mentioned comprehensively in order to prevent the halt in the Job at the later stage. The document should be clear and specific with respect to technical and administrative requirements for performing the Job.
• Eligibility Criteria – Essential Requirements are to be mentioned in the tender document.
• Necessary Forms and Documents – Formats such as of Technical Bids, Financial bids, past experience of the bidder, Tender Acceptance Letter, Standard Terms and Condition of Agreement may be mentioned in the tender document. Further, a list of document required to be attached in the tender document may also be provided in the document.

8. Letter of Credit, Bank Guarantee, and Performance Guarantee

FAQ 12. What is a Letter of Credit (LC) and its involved parties?

• Letter of Credit (‘LC’), also known as a documentary credit is a payment mechanism used specially in international trade. In an LC, buyer’s bank undertakes to make payment to seller on production of documents stipulated in the document of LC.
• LC play an important role in the trade of a country, especially in its international trade.
• In most of the cases, the exporters (sellers) are personally not acquainted with the importers (buyers) in foreign countries. In such cases the exporters bear great risk, if they draw bills on importers, after having dispatched the goods as per their orders, because if the latter default in accepting the bills or making the payment, the exporter will suffer heavy losses. To avoid such risks, the exporters ask the importers to arrange a letter of credit from their banker in favour of themselves, on the basis of which goods may be exported to the foreign importers.

Parties to Letter of Credit (LC):

There are following four main parties to LC transaction:

• Applicant Bank – Applicant or he is also called as Opener of LC. The bank opens LC on behalf of the applicant customer who is buyer/importer of goods.
• Issuing Bank – Issuing bank is a bank which opens LC and undertakes to make payment to the beneficiary (seller/exporter) on submission of document as per the terms of LC.
• Beneficiary – Beneficiary is the seller/exporter of goods in whose favour LC is opened.
• Advising Bank – Advising Bank is the bank through whom LC is advised to the beneficiary. Normally it is located in seller’s location/country.

FAQ 13. What are the Types of Letters of Credit?

1. Documentary LC and Clean LC – When the LC contains a clause that the payment is conditional on submission of document of title to goods such as bill of lading (evidence of dispatch of good), it is called Documentary LC. If no such clause is in the LC, it is called a clean LC.
2. Fixed Credit and Revolving Credit – Fixed credit is where LC specifies the amount up to which one or more bills can be drawn by the beneficiary within the specified time. The LC remains effective till the specified amount is exhausted within specified time. In Revolving Credit, the LC opening bank does not specify the total amount up to which bills may be drawn, but mentions total amount up to which the bills may remain outstanding at a time.
3. Revocable and Irrevocable LC – In case of revocable LC, the opening bank reserves the right to cancel or modify the credit at any moment without prior notice to beneficiary. Irrevocable credit constitutes a definite undertaking of the issuing bank. Such a LC once established and advised cannot be cancelled or amended except with the consent of interested parties – beneficiary and negotiating bank.
4. Confirmed and Unconfirmed LCs – When the opening bank requests the advising bank in the exporter’s country to add its confirmation to an irrevocable LC and the advising bank does so, the LC is “irrevocable and confirmed”. The advising bank is then called as ‘confirming bank’ and its liability then becomes similar to the issuing bank. The confirmation cannot be cancelled or amended unless agreed by all the parties. A confirmed irrevocable LC provides absolute security to the beneficiary. If the advising bank does not add its confirmation, the LC remains as unconfirmed. In such case there will be no such obligation on the advising bank.
5. ‘With’ and ‘Without Recourse’ Credit – In case of “with Recourse” bills, the banker as a holder of the bill, can recover the amount of the bill from the drawer, in case the drawee of the bill fails to pay it. In order to avoid such liability, the seller/exporter/drawer asks the importer/buyer to arrange credit “Without Recourse” to the drawer. In such a credit the issuing bank will have no recourse to the drawer (exporter) if the drawee (importer) fails to honour the bill. The liability of such a bill ends as soon as the bill is negotiated.
6. Transferable LCs – Ordinarily the beneficiary is authorized to draw bills of exchange under LC. But if the beneficiary is an intermediary in the transaction and the goods are actually to be supplied by someone else, the beneficiary may request the opener to arrange a transferable credit.

The post Business Documents – Deeds | Agreements | Contracts appeared first on Taxmann Blog.

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MSME Registration After Contract refers to a situation where a business obtains registration as a Micro, Small, or Medium Enterprise under the Micro, Small and Medium Enterprises Development Act, 2006 after entering into a commercial agreement or contract with another party. In legal terms, when an enterprise registers as an MSME only after the contract has already been executed, the statutory benefits and protections available under the MSMED Act—such as dispute resolution through the MSME Facilitation Council under Section 18 and interest on delayed payments under Section 16—generally do not apply to disputes arising from that earlier contract.

Table of Contents

1. Abstract/Headnote
2. Keywords
3. Case Details
4. Introduction and Background of Judgment
5. Facts of the Case
6. Legal Issues Raised
7. Petitioner/Appellant’s Arguments
8. Respondent’s Arguments
9. Related Legal Provisions
10. Judgment
11. Guidelines
12. Conclusion & Comments
13. References

Check out Taxmann's MSME Digest which is a structured and authoritative judicial compendium that consolidates 50+ landmark decisions of the Supreme Court and various High Courts governing MSME law in India. It offers a coherent, research-oriented analysis of critical issues under the MSMED Act 2006, including delayed payments, statutory interest, the Facilitation Council's jurisdiction, arbitration conflicts, award enforceability, and the interplay with insolvency. Each case is presented in a uniform analytical format, enabling clarity, efficiency, and practical application. Supported by integrated statutory texts and policy references, the book serves as a reliable resource for entrepreneurs, legal practitioners, advisors, policymakers, and researchers within the MSME ecosystem.

[2022] 145 taxmann.com 683 (SC)

SUPREME COURT OF INDIA

M/s. Vaishno Enterprises
v.
Hamilton Medical AG & Anr.

This case revolves around the central issue of whether the Micro and Small Medium Enterprises Facilitation Council had jurisdiction under Section 18 of the MSMED Act, 2006 to entertain a dispute where the supplier was not registered as an MSME at the time of contract execution. The Court, interpreting Sections 2(n) and 8 of the Act, held that since the appellant was registered as an MSME only after entering into the agreement, the Act did not apply, and the Council lacked jurisdiction accordingly.

1. Abstract/Headnote

The Supreme Court in M/s. Vaishno Enterprises v. Hamilton Medical AG & Anr. clarified the applicability of the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act) in contractual disputes involving foreign entities. The appellant, a consultancy service provider, entered into agreements with the Swiss-based respondent company for facilitating ventilator procurement in India. The central issue was whether the MSME Facilitation Council had jurisdiction under Section 18 of the MSMED Act when the appellant registered as an MSME only after the agreement was executed. The Court held that since the MSME registration was subsequent to the agreement, the provisions of the MSMED Act could not be retrospectively applied to cover disputes arising from the contract. Therefore, the Facilitation Council lacked jurisdiction. However, the Court left open larger questions such as whether a foreign buyer conducting business in India through Indian agents would fall under MSMED Act jurisdiction and whether post-contract MSME registration could later vest jurisdiction. This decision, while resolving the specific facts, left substantial interpretive space for future cases, especially involving cross-border commercial engagements and delayed MSME registrations.

2. Keywords

MSMED Act, jurisdiction, foreign buyer, retrospective application, facilitation council, micro and small enterprise

3. Case Details

Particulars	Details
(i) Judgement Cause Title	M/s. Vaishno Enterprises v. Hamilton Medical AG & Anr.
(ii) Case Number	Civil Appeal No. 1892 of 2022
(iii) Judgement Date	24 March 2022
(iv) Court	Supreme Court of India
(v) Quorum	Justice M. R. Shah and Justice B. V. Nagarathna
(vi) Author	Justice M. R. Shah
(vii) Citation	[2022] 145 taxmann.com 683 (SC)
(viii) Legal Provisions Involved	Sections 2(n), 8, and 18 of the MSMED Act, 2006
(ix) Judgments overruled by the Case	None
(x) Related Law Subjects	Commercial Law, MSME Law, Contract Law, Arbitration Law, Private International Law

4. Introduction and Background of Judgment

This appeal arose from a conflict concerning the applicability of the MSMED Act to contracts executed with a non-MSME at the time of execution but registered post-facto. The appellant, M/s Vaishno Enterprises, was engaged in consultancy for foreign medical equipment manufacturers and entered into agreements with Hamilton Medical AG, a Swiss company. The contracts included provision of services in India, particularly regarding the supply of ventilators via a government tender floated by HLL Infra-Tech Services Limited. Initially, the appellant was unregistered under the MSMED Act. However, a few days after the second consulting agreement was signed, the appellant obtained MSME registration. Subsequently, disputes emerged relating to payment of invoices and termination of the agreement, leading to the appellant invoking the jurisdiction of the MSME Facilitation Council. The Council issued notices to the foreign respondent, prompting the latter to challenge its jurisdiction through a writ petition before the High Court. Both the Single Judge and Division Bench concluded that the Council lacked jurisdiction as the registration occurred post-contract. The appellant contended before the Supreme Court that the services were rendered in India and that the buyer had substantial presence through agents and offices in India, thereby invoking domestic law. The Supreme Court examined the temporal application of the MSMED Act and upheld the High Court’s conclusion while keeping broader jurisdictional questions open for future adjudication.

5. Facts of the Case

The appellant, a partnership firm based in India, specialised in consultancy for foreign medical companies and approached Hamilton Medical AG a Swiss manufacturer of critical care ventilation systems for a consulting arrangement. On 10 February 2020, both parties signed a consulting agreement valid for six months, where Vaishno Enterprises was to assist with procurement and related services in India. The appellant raised multiple invoices under this agreement. Upon expiration, the parties renewed their engagement through another consulting agreement on 24 August 2020. Significantly, the appellant got registered under the MSMED Act on 28 August 2020, four days after the second agreement was signed.

Subsequent to this, disputes arose. The appellant issued legal notices claiming unpaid invoices and sought substantial compensation, alleging arbitrary termination. The respondent terminated the agreement on 22 October 2020. On the same day, the appellant filed a reference before the MSME Facilitation Council under Section 18 of the Act, seeking adjudication and conciliation. The Council issued notices to Hamilton Medical AG, which contested jurisdiction on grounds that it was a Swiss entity with no Indian establishment and that the consulting firm wasn’t an MSME at the time of contract execution.

Hamilton Medical AG moved the High Court of Telangana, where a Single Judge quashed the Council’s notices citing lack of jurisdiction due to the appellant’s post-facto MSME registration. The Division Bench upheld this ruling. Vaishno Enterprises then approached the Supreme Court challenging the decision, claiming that post-registration disputes fell within the Council’s jurisdiction and asserting the respondent’s operational presence in India via service centers and agents. The primary issue thus pivoted on whether post-contract MSME registration after contract would empower retrospective application of the MSMED Act and whether a foreign buyer could be subject to its jurisdiction.

6. Legal Issues Raised

1. Whether a supplier not registered as an MSME on the date of contract execution can invoke jurisdiction under Section 18 of the MSMED Act for disputes arising from that contract?
2. Whether a foreign buyer, who avails services in India and conducts business through Indian agents, falls within the jurisdictional scope of the MSME Facilitation Council?
3. Whether the timing of MSME registration after contract impacts the applicability of statutory rights under the MSMED Act for existing commercial agreements?

7. Petitioner/Appellant’s Arguments

1. The counsels for the petitioner/appellant submitted that since the agreement was executed in India, and the services under the consulting agreement were also performed within Indian territory, the laws of India including the MSMED Act should be deemed applicable regardless of the buyer’s foreign status. They argued that Section 18 of the MSMED Act vested the Council with jurisdiction where disputes involved a “supplier” (like the appellant) and “buyer” (Hamilton Medical AG) in commercial relationships where services were rendered in India.
2. The appellant emphasised that the registration as an MSME on 28 August 2020, though post-contract, was prior to the date of dispute initiation. Thus, they argued, the entity was entitled to statutory protection under the Act, as the cause of action for payment arose only thereafter. They claimed that MSME status at the time of dispute, not necessarily at contract formation, was the relevant criteria for jurisdiction.
3. They contended that the MSMED Act being a beneficial legislation must be interpreted liberally. Reliance was placed on the decision in M/s Shilpi Industries v. Kerala State Road Transport Corporation [2021 SCC OnLine SC 439], which recognised the primacy of facilitating MSMEs through procedural simplification and dispute resolution.
4. The appellant further argued that the High Court’s intervention at a pre-arbitration stage was premature, as Section 18 mandates conciliation before arbitration and the issue of jurisdiction could be determined later by the Arbitrator. They submitted that the respondent’s conduct by executing the contract in India and engaging Indian agents amounted to submission to Indian jurisdiction.

8. Respondent’s Arguments

1. The counsels for the respondent submitted that the MSMED Act was inapplicable as the appellant was not an MSME on the date of executing the contract. Since statutory rights cannot be conferred retrospectively unless explicitly stated, no jurisdiction could be vested in the Council based on later registration.
2. They highlighted that both consulting agreements dated 10 February 2020 and 24 August 2020 expressly mentioned Hamilton Medical AG’s registered office as being in Switzerland. The respondent had no registered office in India, which made it ineligible to be classified as a “buyer” under Indian statutory jurisdiction, particularly under the MSMED framework.
3. They argued that the choice of law clause in the agreement stated Indian laws would apply “at the time of execution”, thereby restricting applicability to the legal regime as it existed on 24 August 2020, when the appellant was not registered under the MSMED Act.
4. The respondent relied on Shanti Conductors Pvt. Ltd. v. Assam State Electricity Board (2019) 19 SCC 529, which emphasised the necessity of pre-existing registration for availing protections under statutes like the MSMED Act and its predecessors.

9. Related Legal Provisions

Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act)

1. Section 2(n) defines “supplier” to include micro or small enterprises registered with the prescribed authority.
2. Section 8(1) mandates that any such enterprise must file a memorandum to be recognised as an MSME.
3. Section 18 provides the framework for dispute resolution between buyers and MSMEs through Facilitation Councils.
4. Section 16 allows for interest on delayed payments to registered MSMEs.

10. Judgment

10.1 Ratio Decidendi

The Supreme Court held that the jurisdiction of the Micro and Small Medium Enterprises Facilitation Council (MSMEFC) is determined by the legal status of the supplier at the time of execution of the agreement. The appellant, M/s Vaishno Enterprises, was not registered as a Micro or Small Enterprise under Section 8 of the MSMED Act on the date when the second consulting agreement was executed (24 August 2020). The registration took place only four days later on 28 August 2020. The Court emphasised that the applicability of the MSMED Act requires that the supplier must be a registered MSME at the time of entering into the contractual relationship, not merely at the time when the dispute arises or is referred.

The judgment also pointed out that the applicable law as per the contract was the law of India prevailing at the time of execution. Since the MSMED Act would only apply to registered MSMEs as per Sections 2(n) and 8, and the appellant was not registered on the date of execution, the Act could not be applied retrospectively. Therefore, the Facilitation Council had no jurisdiction under Section 18 of the Act to entertain the dispute.

In support, the Court referred to the precedents in M/s Shilpi Industries v. Kerala State Road Transport Corporation [2021 SCC OnLine SC 439] and Shanti Conductors Pvt. Ltd. v. Assam State Electricity Board (2019) 19 SCC 529. These decisions underline that statutory rights under the MSMED Act are contingent on prior registration and cannot be claimed retrospectively.

Moreover, the Court acknowledged the foreign status of the respondent (Hamilton Medical AG), reiterating that both the agreements mentioned Switzerland as the buyer’s principal place of business. Despite the presence of Indian agents and service centers, such elements were not deemed sufficient to override the contractual and jurisdictional facts of the case. The Court thus upheld the decisions of the Telangana High Court’s Single Judge and Division Bench that quashed the Council’s proceedings for want of jurisdiction under Section 18 of the MSMED Act.

10.2 Obiter Dicta

While ruling on the immediate matter, the Court left open two broader legal questions that may arise in future:

1. Whether a foreign buyer who avails services in India and conducts business with an Indian supplier can be subjected to MSME jurisdiction under Section 18 when the contract is executed in India.
2. Whether a supplier who is registered as an MSME after contract execution but before the dispute arises can still invoke the jurisdiction of the Facilitation Council.

By not conclusively deciding on these issues, the Court reserved them for future adjudication, acknowledging their complexity and potential implications in a globalised business environment where cross-border commercial agreements are increasingly common. These questions are likely to invite legislative clarification or detailed judicial pronouncements in the future, particularly with India’s aim to protect its MSME sector under liberalised foreign trade frameworks.

11. Guidelines

While the Court did not lay down binding operational guidelines, the ruling establishes certain judicial standards:

1. MSME Registration Date is Crucial – Only those entities registered as MSMEs at the time of contract execution are entitled to invoke the MSMED Act’s protective provisions.
2. No Retrospective Application of MSMED Act – Registration under the MSMED Act does not retrospectively confer jurisdiction to Facilitation Councils for contracts predating such registration.
3. Choice of Law Clauses Are Binding – Where parties agree to the applicability of Indian law at the time of execution, only such legal provisions as were enforceable at that point will apply.
4. Foreign Buyer Not Automatically Subject to MSMED Act – Even if services are rendered in India, the mere conduct of business in India by a foreign company through agents does not ipso facto attract MSMED Act jurisdiction unless explicitly provided or legislatively mandated.
5. Council Cannot Override Contractual Framework – Dispute resolution mechanisms under the MSMED Act must respect contractual stipulations and cannot usurp jurisdiction where the foundational requirements under Sections 2(n) and 8 are unmet.

12. Conclusion & Comments

The Supreme Court’s ruling in Vaishno Enterprises v. Hamilton Medical AG delineates a clear boundary on the retrospective applicability of the MSMED Act and the jurisdictional reach of the Facilitation Council under Section 18. By holding that MSME registration must precede contract formation, the Court ensures that parties cannot retrospectively claim the statute’s benefits. This ruling fortifies legal certainty and predictability in commercial agreements involving MSMEs. However, the Court’s decision to keep open certain broader questions reflects judicial prudence. It acknowledges the evolving nature of transnational contracts and the increasing interplay between domestic regulatory protections and international commercial arrangements. Particularly, the treatment of foreign buyers operating within India-either directly or through agents may require legislative intervention or authoritative clarification in future jurisprudence. The case also underscores the importance for Indian enterprises to secure MSME registration after contract prior to entering into any commercial agreement if they intend to avail the protections of the MSMED Act. Moreover, foreign entities engaging Indian service providers must remain cautious of legal exposure under Indian regulatory mechanisms, especially in sectors involving public tenders and consultancy services.

13. References

13.1 Important Cases Referred

1. M/s Shilpi Industries v. Kerala State Road Transport Corporation, Civil Appeal No. 1570-78 of 2021, [2021 SCC OnLine SC 439].
2. Shanti Conductors Pvt. Ltd. v. Assam State Electricity Board, (2019) 19 SCC 529.

13.2 Important Statutes Referred

Micro, Small and Medium Enterprises Development Act, 2006, particularly:

• Section 2(n) – Definition of “supplier”
• Section 8 – Filing of memorandum for MSME recognition
• Section 16 – Interest on delayed payments
• Section 18 – Dispute resolution through Facilitation Council

The post MSME Registration After Contract | SC Ruling in Vaishno Enterprises Case appeared first on Taxmann Blog.

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Editorial Team – [2026] 184 taxmann.com 76 (Article)

World Tax News provides a weekly snippet of tax news from around the globe. Here is a glimpse of the tax happening in the world this week:

1. Sri Lanka Releases Draft Bill to Amend the Inland Revenue Act

Sri Lanka has released a draft Bill proposing amendments to the Inland Revenue Act, No. 24 of 2017. The proposed changes, some of which have retrospective effect, are summarised below:

• Capital Gains Tax Rates – Increased from 10% to 15% for individuals and partnerships, and from 10% to 30% for trusts, unit trusts, mutual funds and NGOs (effective from the date of enactment).
• Interest Waiver – The Commissioner-General of Inland Revenue may write off outstanding interest on certain tax underpayments and late payments if the taxpayer pays the full principal tax and penalties within six months (effective from the date of enactment).
• Estimated Tax Statement – The requirement to file a Statement of Estimated Tax (SET) is removed. Instalment payments will generally be based on the taxable income of the preceding year, unless otherwise determined under procedures prescribed by the CGIR (effective 1 April 2026).
• Acceptance of Return – An individual’s return will be accepted without further assessment if the declared tax is at least 120% of the previous year’s tax, the full amount is paid without refund claims, and an affidavit confirms absence of fraud, evasion or wilful default (effective 1 April 2025).
• Cash Transaction Deduction – The restriction on deductions for cash payments exceeding LKR 500,000 is relaxed where the cash is directly deposited into the payee’s bank account (effective 8 May 2023).
• Definition of Reserves – The definition is expanded to include negative retained earnings, accumulated losses and deficits, but excludes revaluation reserves (effective 1 April 2025).
• Carry Forward of Excess Payments – Where qualifying payments to specified government institutions cannot be fully deducted due to insufficient assessable income, the excess may be carried forward to subsequent years (effective 1 April 2025).
• Export-related Payments – A deduction is allowed for payments relating to exports of goods or services from Sri Lanka even if the payment has no Sri Lankan source (effective 1 April 2018).
• Head Office Expenditure – Non-residents operating through a Sri Lankan permanent establishment may deduct head office expenditure up to the lower of the actual expenditure or 10% of assessable business income (effective 1 April 2025).
• Expanded Withholding Tax – The 5% withholding requirement is extended to additional professions such as auditors, personal trainers, actors, musicians, photographers, beauticians, cooks, social media specialists and translators (effective from the date of enactment).
• Return Filing Exemption – Individuals are exempt from filing a tax return where employment income is subject to advance personal income tax and interest income for the year does not exceed LKR 5,000 (effective 1 April 2025).
• Foreign Loan Interest – Interest on foreign loans is exempt where the loan is remitted to Sri Lanka in foreign currency through a bank and used locally (effective 1 April 2025).
• Capital Allowance for New Investments – A 100% capital allowance is available for investments in depreciable assets (excluding intangibles) for new undertakings with investments between USD 250,000 and USD 3 million (effective 1 April 2026).
• Enhanced Capital Allowance for Expansion – Claims for enhanced capital allowance on expansion projects require approval from the Board of Investment (effective 1 April 2026).

Source – Draft Bill

2. Georgia Introduces an Annual Reporting Requirement for International Controlled Transactions

Georgia has issued Order No. 52, dated 24 February 2026, published in the Official Gazette, introducing a new annual reporting requirement for information on international controlled transactions. Taxpayers must submit such information where the total value of international controlled transactions in the preceding calendar year exceeds GEL 500,000. This threshold also includes the market value of controlled transactions carried out at no cost, as well as the amounts of outstanding payables and receivables.

Taxpayers who file standard monthly tax returns are required to report this information through Annex 4, which is to be attached to the March monthly return (generally due on 15 April). The annex requires details such as the relevant related parties, the nature of their relationship, the type of transaction, the transaction value in both the transaction currency and GEL, and the transaction date, among other particulars. Additionally, taxpayers must disclose the status of their transfer pricing documentation, including whether the documentation has been prepared, is under preparation, or is intended to be prepared.

Taxpayers filing annual tax returns must provide the same information through Annex M, which is submitted along with the annual return (generally due on 1 April). The information required in Annex M is identical to that required in Annex 4 for the March monthly return.

Order No. 52 entered into force on 25 February 2026 and applies from the 2025 reporting period.

Source – Order No. 52

Click Here To Read The Full Article

The post [World Tax News] Sri Lanka Releases Draft Bill to Amend the Inland Revenue Act and More appeared first on Taxmann Blog.

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Case Details: Md Shoriful Islam vs. State of Assam - [2026] 183 taxmann.com 669 (Gauhati)

Judiciary and Counsel Details

• Soumitra Saikia, J.
• R S Mishra, Ms M Dey & Ms B Sarma for the Petitioner.
• M Bhuyan, Ld. Counsel for the Respondent.

Facts of the Case

Demand proceedings were initiated against the petitioner-assessee under Section 73 of the CGST Act and the Assam GST Act in respect of tax or input tax credit not involving allegations of fraud. The petitioner-assessee was issued only a summary of show cause notice in Form DRC-01 which stated that the show cause notice was attached, along with an attachment titled ‘determination of tax’. No separate or detailed show cause notice specifying the reasons and circumstances for invoking the provisions of law was served upon the petitioner-assessee. As no reply was filed, an order was subsequently passed in Form DRC-07 recording that the petitioner-assessee had not submitted any response and had therefore deemed to have agreed with the determination. Aggrieved by the initiation of proceedings and the consequential order passed solely on the basis of the summary and attachment, the petitioner-assessee filed a writ petition challenging the legality of such action. The matter was accordingly placed before the High Court.

High Court Held

The High Court held that the statutory scheme governing demands not involving fraud under Section 73 of the CGST Act and the Assam GST Act required issuance of a proper show cause notice specifying the reasons and circumstances for invoking the provisions of law before determination of liability. The Court observed that the statement of determination contemplated under the relevant sub-provisions was distinct from the show cause notice and could not substitute the statutory requirement of issuing a detailed notice. It was further noted that Rule 142 of the CGST Rules and the Assam GST Rules prescribed issuance of a summary in Form DRC-01 or DRC-02 in addition to a proper show cause notice and not as a replacement for it. The Court therefore held that issuance of only a summary along with an attachment containing determination of tax did not satisfy the statutory mandate of a proper show cause notice. Accordingly, the initiation of proceedings and the consequential order founded solely on such summary and attachment were held to be contrary to law and the matter was remanded for fresh action in accordance with law.

List of Cases Referred to

• Silver Oak Villas LLP v. Asstt. Commissioner (ST) [2024] 161 taxmann.com 103/103 GST 713/86 GSTL 161 (Telangana) (para 3)
• A V Bhanoji Row v. Asstt. Commissioner (ST) [2025] 170 taxmann.com 799/94 GSTL 430 (Andhra Pradesh) (para 3)
• NKAS Services (P.) Ltd. v. State of Jharkhand [2022] 136 taxmann.com 138/91 GST 736/58 GSTL 257 (Jharkhand) (para 3)
• LC Infra Projects (P.) Ltd. v. UOI [2019] 109 taxmann.com 141/75 GST 751/28 GSTL 3 (Karnataka) (para 3)
• Railsys Engineers (P.) Ltd. v. Additional Commissioner of Central GST, Appeals-II [2022] 141 taxmann.com 527/94 GST 51/65 GSTL 159 (Delhi) (para 20).

The post HC Quashes GST Order for Lack of Proper SCN appeared first on Taxmann Blog.

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Case Details: Imperial Graphics (P.) Ltd., In re - [2026] 183 taxmann.com 705 (AAR-TAMILNADU)

Judiciary and Counsel Details

• C. Thiyagarajan & B. Suseel Kumar, Member

Facts of the Case

The applicant, registered under the CGST Act and the Tamil Nadu GST Act, had leased certain residential properties situated at Coimbatore to an educational trust for use as hostel accommodation. The applicant collected GST on the rent charged to the tenant for such leasing of residential premises. An application for advance ruling was thereafter filed seeking clarification on whether hostel or residential accommodation supplied by the tenant to students would qualify for exemption under the GST law. The applicant also sought a ruling on whether the incidental activity of supply of in-house food to inmates of the hostel by the tenant would be exempt as a composite supply of exempt services. The application thus sought determination on the taxability and exemption status of services provided by the tenant operating the hostel. The matter was accordingly placed before the Authority for Advance Ruling (AAR).

AAR Held

The AAR held that under the advance ruling mechanism provided in the CGST Act and the Tamil Nadu GST Act, a ruling can be sought only in respect of supplies undertaken or proposed to be undertaken by the applicant. The Authority observed that the queries raised in the application related to the services of hostel accommodation and supply of food being provided by the tenant and not by the applicant. It was therefore held that the issues raised did not pertain to supplies made or proposed to be made by the applicant and consequently fell outside the scope of advance ruling under the statutory scheme. The Authority accordingly concluded that the application was not liable for admission and rejected the advance ruling application as not maintainable.

List of Cases Referred to

• Thai Mookambikaa Ladies Hostel v. Union of India [2024] 160 taxmann.com 667/103 GST 295/84 GSTL 209 (Madras) (para 1.4)
• Taghar Vasudeva Ambrish v. Appellate Authority for Advanced Ruling [2022] 135 taxmann.com 287/91 GST 750/63 GSTL 445 (Karnataka) (para 1.4)
• Bharatiya Vidya Bhavan’s Residential Public School v. State of Andhra Pradesh [W.P. No. 7417 of 2006, dated 30-1-2023] (para 3.1)
• Uratemp Ventures Limited v. Collins (AP) [2001] UKHL 43 (HL) (para 3.1).

The post AAR Rejects GST Ruling on Tenant’s Hostel Activity appeared first on Taxmann Blog.

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Case Details: N. Manoharan, etc. vs. Administrative Officer - [2026] 183 taxmann.com 358 (SC)

Judiciary and Counsel Details

• Pankaj Mithal & S.V.N. Bhatti, JJ.
• Shrutanjay Bhardwaj, Siddhi Nagwekar, Aayushman Aggarwal, Advs., Raghunatha Sethupathy B., K. Paari Vendhan, Aors & Ms Haripriya Padmanabhan, Sr. Adv. for the Petitioner.
• S.D Sanjay, A.S.G., Ms Aurnima Diwedi, Rajeev Ranjan, Dharmendra Kumar Pandey, Raman Yadav, Saurabh Kumar Kaushik, Advs., Amrish Kumar, Raj Bahadur Yadav & Gurmeet Singh Makker, Aors for the Respondent.

Facts of the Case

In the instant case, the Government of India/DAE issued Office Memorandum No. 12/7/69-(P) for the constitution of a Board to administer the Heavy Water Production Projects of the DAE. The HWP in Tuticorin is one of the Heavy Water Boards established by the DAE. The circumstance precipitating a dispute between the retired employees and HWP can be traced to one of the pension payment orders issued by HWP. The pension payment order in favour of retired employee, was issued under the CCS (Pension) Rules, 1972. The CCS (Pension) Rules, 1972 deal with comprehensively the retirement benefits to which a retired employee is entitled, including gratuity.

The sum payable as gratuity under the PG Act and CCS (Pension) Rules, 1972, is less than the sum payable under the PG Act. This led to an employee of HWP filing an application before the Controlling Authority under the PG Act. The Controlling Authority held that the provisions of the PG Act are attracted to the employees of HWP, and a direction was ordered to pay the difference between the PG Act and CCS (Pensions) Rules, 1972. The Controlling Authority, on jurisdictional fact and the applicability of the PG Act, held that HWP, constitutes an industry under the Industrial Disputes Act, 1947, making the applicant-employee eligible for coverage under Section 1(3)(b) of the PG Act.

HWP, Tuticorin, challenging the Order of the Controlling Authority, filed an appeal before the Deputy Chief Labour Commissioner, and the appeal filed was dismissed. HWP assailed the orders before the High Court in Writ Petition and batch, which were dismissed, resulting in the filing of Writ Appeal. HWP filed Writ Petition and batch challenging the subsequent orders of the Controlling Authority directing payment of the difference of gratuity to the retired employees of HWP.

Supreme Court Held

The Division Bench of the High Court of Madras dealt with the Writ Appeals as lead cases and, by the Impugned Judgment, and allowed the Writ Appeals as well as Writ Petitions filed by HWP. The Impugned Judgment held and declared that the employees of HWP are not covered by the definition of section 2(e) of the PG Act. Then, an appeal was made before the Supreme Court.

List of Cases Reviewed

• Madras High Court order dated 21.06.2023 in Writ Appeal No. 1687 of 2021 (Para 14) affirmed

List of Cases Referred to

• Union of India v. Regional Labour Commissioner (Central) [W. P. Nos. 23577 to 23579 of 2015, dated 29-1-2016] (para 6)
• Municipal Corporation of Delhi v. Dharam Prakash Sharma (1998) 7 SCC 22 (para 7)
• Arun Kumar v. Union of India [2006] 155 Taxman 659 (SC) (para 10)
• Mahalakshmi Oil Mills v. State of A.P. 1990 taxmann.com 1344 (SC) (para 12)
• P. Kasilingam v. P.S.G. College of Technology (1995) supp 2 SCC 348 (para 12).

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The Accounting Standards Board (ASB) of the Institute of Chartered Accountants of India (ICAI) has invited comments from stakeholders on an exposure draft issued by the International Accounting Standards Board (IASB) relating to amendments to IAS 28, Investments in Associates and Joint Ventures.

Indian Accounting Standards (Ind AS) are largely converged with the IFRS Standards issued by the IASB under the IFRS Foundation. Before issuing new standards or amendments, the IASB releases consultative documents such as Discussion Papers (DPs) and Exposure Drafts (EDs) to seek feedback from stakeholders worldwide. In line with this process, the ASB of ICAI circulates these consultative documents in India to provide an opportunity for Indian stakeholders to submit their views at an early stage of international standard-setting. This also enables entities in India to remain informed about potential changes and prepare for the implementation of Ind AS in line with global developments.

Recently, the IASB issued an exposure draft proposing amendments to IAS 28, specifically relating to the fair value option. The exposure draft proposes amendments to paragraphs 18 and 19 of IAS 28 to clarify that an entity whose main business activity involves investing in particular types of assets, as described in paragraph 49(a) of IFRS 18, would be eligible to elect the fair value option for investments in associates and joint ventures.

Stakeholders may submit their comments on the exposure draft by 2nd April 2026.

Click Here to Access the ICAI Notification

Click Here To Read The Full Story

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