Latest updates

Taxability of back-office support services provided to overseas companies
BDO in India
  • Corporate Tax
  • 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.

NCLAT upholds highest ever penalty imposed by CCI in cartel case
Vaish Associates Advocates
  • Competition & Antitrust
  • 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.

Bombay High Court upholds constitutionality of Maharashtra's right to tax lottery schemes
  • Litigation
  • India
  • 18 December 2018

The Bombay High Court recently upheld the constitutionality of the Maharashtra Tax on Lotteries Act 2006. The legality and taxation of lottery schemes in Maharashtra has been at the centre of a catena of judgments, including State of Bombay v RMD Chamarbaugwala and Writ Petition 854/2007. The latest judgment clarifies that the taxation of lotteries falls within the ambit of the term 'betting and gambling' under Entry 62 of the State List of the Constitution.

Revisiting Supreme Court Centrotrade decision and utility of two-tier arbitration clauses
Khaitan & Co
  • Arbitration & ADR
  • 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.

Do liaison offices have to pay GST?
BDO in India
  • Corporate Tax
  • 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.

CCI approves Walmart's acquisition of majority stake in Flipkart
Vaish Associates Advocates
  • Competition & Antitrust
  • 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%.

Transfer pricing update
BDO in India
  • Corporate Tax
  • 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.

CCI finds Karnataka Film Chamber of Commerce guilty of anti-competitive conduct for fifth time
Vaish Associates Advocates
  • Competition & Antitrust
  • 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.

Unsigned arbitration agreement does not bar arbitration
Khaitan & Co
  • Arbitration & ADR
  • 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.

Strict interpretation of exemption notifications under tax laws
BDO in India
  • Corporate Tax
  • 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.

CCI penalises Geep Industries for its part in bilateral ancillary cartel
Vaish Associates Advocates
  • Competition & Antitrust
  • 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.

Motor insurance – recent regulatory changes
Tuli & Co
  • Insurance
  • India
  • 20 November 2018

The Insurance Regulatory and Development Authority of India recently introduced changes to the regulations governing motor insurance in India. Under the Motor Vehicles Act 1988, insurance cover for third-party liability is mandatory for all motor vehicles at the time of purchase. However, until recently, this third-party liability insurance had a mandatory one-year cover term and had to be renewed by the policyholder each year.

New updates on direct taxes
BDO in India
  • Corporate Tax
  • 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.

CCI ignores market realities and penalises sugar mills for cartel
Vaish Associates Advocates
  • Competition & Antitrust
  • 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.

Direct tax updates – circulars, notifications and press releases
BDO in India
  • Corporate Tax
  • India
  • 02 November 2018

A number of new circulars, notifications and press releases have been issued in recent months. Among other things, they introduce new valuation rules for the conversion or treatment of inventory as capital assets, grant taxpayers immunity from the penalty for under-reporting income and clarify the deductions available for free trade zone undertakings.

Delhi High Court clarifies procedural and jurisdictional issues in CCI antitrust inquiry
Vaish Associates Advocates
  • Competition & Antitrust
  • India
  • 18 October 2018

By way of a landmark judgment, the Delhi High Court recently clarified some important procedural ambiguities surrounding an inquiry by the Competition Commission of India (CCI) under the Competition Act. Significantly, the court clarified when a recall application can be filed and stated that while exercising its discretion in permitting cross-examinations under the Competition Commission of India (General) Regulations, the CCI must act judicially.

Non-signatory to arbitration: right to appeal under Section 37
Khaitan & Co
  • Arbitration & ADR
  • 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.

CCI introduces concept of 'relevant period' in market definition
Vaish Associates Advocates
  • Competition & Antitrust
  • India
  • 11 October 2018

By way of two separate orders, the Competition Commission of India (CCI) dismissed two allegations of abuse of dominance against DLF Limited and DLF New Gurgaon Home Developers Pvt Limited by holding that the enterprises were not in a dominant position in Gurgaon during the relevant period. This is the first time that the CCI has introduced the concept of 'relevant period' when determining the market position of an enterprise which was previously held to be dominant in the same relevant market.

Analysis of Section 11(6A) – a conundrum
Khaitan & Co
  • Arbitration & ADR
  • 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?
Khaitan & Co
  • Arbitration & ADR
  • 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.