India updates

Arbitration & ADR

Contributed by Khaitan & Co
Revisiting Supreme Court Centrotrade decision and utility of two-tier arbitration clauses
  • India
  • 13 December 2018

Two-tier arbitration clauses or appellate arbitration mechanisms were upheld by a three-judge bench of the Supreme Court in Centrotrade Minerals and Metal Inc v Hindustan Copper Limited. This article discusses the evolution of the jurisprudence surrounding two-tier arbitration in India and analyses both the utility of such a mechanism for the parties and its usefulness in certain situations.

Unsigned arbitration agreement does not bar arbitration
  • India
  • 29 November 2018

The Supreme Court recently held that the only prerequisite for an arbitration agreement is that it be in writing. Through this decision, the court has adopted a pro-arbitration approach and, as such, may contribute positively to the existing jurisprudence on the Indian arbitration regime. By relying on the unsigned bill of lading, the court focused on the parties' conduct and intent, both of which indicated that there was an arbitration agreement between them.

Non-signatory to arbitration: right to appeal under Section 37
  • India
  • 18 October 2018

The Bombay High Court recently issued a landmark ruling regarding third parties' right to challenge interim measures granted by an arbitral tribunal under the Arbitration and Conciliation Act. The ruling is a welcome reprieve for non-signatories to arbitration proceedings in situations where disputes between arbitrating parties have a bearing on their rights and interests, as well as a step towards balancing innocent parties' interests.

Analysis of Section 11(6A) – a conundrum
  • India
  • 11 October 2018

Before its amendment in 2015, the Arbitration and Conciliation Act 1996 neither promoted institutional arbitration nor discouraged parties from considering it. The 2015 amendment was an attempt to reduce judiciary intervention in arbitration proceedings and promote a culture of institutional arbitration. One of the proposed changes was the amendment to Section 11 of the 1996 act, which provides for the appointment of arbitrators by the competent court.

Arbitration and Conciliation (Amendment) Bill 2018: coherence or chaos?
  • India
  • 13 September 2018

Following the enforcement of the Arbitration and Conciliation (Amendment) Act 2015, the Arbitration and Conciliation (Amendment) Bill 2018 proposes to further amend the Arbitration and Conciliation Act 1996. The bill is another step by policymakers towards making India "a robust centre for international and domestic arbitration" and attempts to make it an investor-friendly jurisdiction and a preferred seat of arbitration for dispute resolution.


Changes to merchant discount rate framework: impact on stakeholders
  • India
  • 02 March 2018

The Reserve Bank of India and the Ministry of Electronics and Information Technology recently established a new regulatory framework for setting limits on and payments of merchant discount rates and encouraging digital payments. Rates will now be determined based not only on the basis of transaction value, but also on turnover. However, in its effort to curb transaction costs for merchants, the government risks imposing significant charges on other system participants.

Competition & Antitrust

Contributed by Vaish Associates Advocates
NCLAT upholds highest ever penalty imposed by CCI in cartel case
  • India
  • 20 December 2018

The National Company Law Appellate Tribunal (NCLAT) recently upheld the Competition Commission of India's decision to impose a Rs63 billion penalty on 11 cement companies for cartelisation. The NCLAT observed that the companies had used their trade association to discuss pricing and sensitive information relating to production, capacity and dispatch. Further, there had been a simultaneous reduction in the cement companies' dispatches and several instances where they had hiked their prices.

CCI approves Walmart's acquisition of majority stake in Flipkart
  • India
  • 06 December 2018

The Competition Commission of India (CCI) recently approved Walmart International Holding's acquisition of 51% to 77% of the outstanding shares in Flipkart Private Limited. The CCI noted that both parties were engaged in business-to-business sales and that, as such, there was a horizontal overlap between them in the relevant market. Further, the CCI observed that Flipkart and Walmart's combined market share would remain less than 5%.

CCI finds Karnataka Film Chamber of Commerce guilty of anti-competitive conduct for fifth time
  • India
  • 29 November 2018

The Competition Commission of India (CCI) has penalised the Karnataka Film Chamber of Commerce (KFCC), the Kannada Okkuta and various individuals – including the presidents of both organisations – for engaging in anti-competitive conduct by posting incendiary posts on Twitter and threatening to commit acts of violence. Although this is the fifth time that the KFCC has been found guilty of anti-competitive conduct, it is only the second time that it has been penalised by the CCI.

CCI penalises Geep Industries for its part in bilateral ancillary cartel
  • India
  • 22 November 2018

The Competition Commission of India has imposed a penalty of Rs96.4 million on Geep Industries (India) Private Limited, holding that although the company was merely a recipient of information on pricing within a larger, primary cartel, it could not escape liability for anti-competitive behaviour. This is the first case in which a party which was not part of an original primary cartel has been held liable on the grounds that it was part of a bilateral ancillary cartel with one of the primary cartel members.

CCI ignores market realities and penalises sugar mills for cartel
  • India
  • 15 November 2018

The Competition Commission of India (CCI) recently penalised several sugar mills and their trade associations for indulging in cartelisation in contravention of the Competition Act 2002. This case demonstrates the CCI's shift towards punishing apparent coordination between competitors based on legal grounds and ignoring the market realities. It also illustrates how trade associations facilitate coordination between competitors.

Corporate Tax

Contributed by BDO in India
Taxability of back-office support services provided to overseas companies
  • India
  • 21 December 2018

A recent advanced ruling examined the applicability of goods and services tax (GST) to back-office support services provided by an Indian company to a foreign client. The Advance Ruling Authority held that the back-office support services in question should be treated as intermediary services, which are not eligible to be exempt from the GST applicable to an export of services since, as per GST law, intermediary services provided by Indian companies are treated as services supplied in India.

Do liaison offices have to pay GST?
  • India
  • 07 December 2018

The Advance Ruling Authority (ARA) was constituted under Indian goods and services tax law and entrusted with the responsibility of answering questions regarding the applicability of tax, the admissibility of input tax credit, the classification of goods and services and the eligibility to receive the exemption. While an ARA ruling is binding only on the taxpayer that raises the question, it carries persuasive value in identical situations.

Transfer pricing update
  • India
  • 30 November 2018

There have been several recent cases regarding transfer pricing. For example, the tax tribunal found that a taxpayer was not a contract manufacturer, as sales and purchases from an associated enterprise had been negligible. In another case, the tax tribunal ruled that high turnover is a relevant criterion for accepting or rejecting a comparable. Further, a high court found that final assessment orders cannot be passed without a draft assessment order.

Strict interpretation of exemption notifications under tax laws
  • India
  • 23 November 2018

The Supreme Court recently pronounced a landmark judgment on the question of taxpayers' eligibility to receive tax exemptions when more than one interpretation is possible – namely, one in favour of the taxpayer and the other in favour of the tax authority. The court concluded that where a tax exemption must be interpreted, the tax authority will be given the benefit of the doubt, unlike in the case of ambiguity in the charging section of a particular statute. This judgment has completely unsettled the earlier dicta.

New updates on direct taxes
  • India
  • 16 November 2018

Alongside new guidance from the Central Board of Taxes regarding securities transaction tax, potential legislative amendments may be introduced regarding interest income on rupee denominated bonds. Further, the Chennai Tax Tribunal recently considered whether a tax officer had been correct in invoking Section 56(2)(viib) of the Income Tax Act, citing an unrealistic premium, in a case where a company had issued shares to one of its shareholders at a premium.

Employment & Benefits

Contributed by Shardul Amarchand Mangaldas & Co
Reducing minimum period of unemployment to withdraw provident fund accumulations
  • India
  • 22 August 2018

The Central Board of Trustees of the Employees' Provident Fund Organisation recently approved a proposal to permit provident fund members to withdraw 75% of their accumulations after a period of one month of continuous unemployment instead of two months. The proposal would come into effect when the Employees' Provident Funds and Miscellaneous Provisions Act and the Employees' Provident Funds Scheme are amended.

Code on Wages soon to be introduced
  • India
  • 28 March 2018

The new Code on Wages 2017 was recently introduced in Lok Sabha and is currently pending approval. The code seeks to integrate, amend and simplify the four central labour laws in order to reduce the multiplicity of definitions given under various labour legislation and foster a conducive labour environment by facilitating ease of compliance, thereby promoting the establishment of more organisations and creating more employment opportunities.

Increase in gratuity limit
  • India
  • 15 November 2017

The Payment of Gratuity Act 1972 is a form of social security legislation which prescribes a scheme for the payment of gratuity. For the private sector, gratuity is capped at Rs1 million, whereas central government employees can receive gratuity of up to Rs2 million. There is a proposal to increase the cap for the private sector in order to align it with the central government. Although this is a step forward in ensuring better benefits to eligible employees, it will increase employers' financial burden.

Disabilities Act and role of private employers
  • India
  • 04 October 2017

The federal government recently enacted a new act in order to empower disabled individuals and ensure their inclusion in the education and employment spheres. Although the government is primarily responsible for ensuring that disabled individuals receive equal treatment under the act, private organisations have also been made accountable for various obligations.

Social security obligation for outbound employees
  • India
  • 28 June 2017

With the growing landscape of global businesses, there is a constant need to deploy employees for international assignments not only for skill development, but also for the business needs of the organisation. In order to abate similar obligations in a host country, India has entered into social security agreements (SSAs) with many countries. SSAs offer various benefits, such as the totalisation of benefits and exemption from dual contributions of social security.