all Law.

In this podcast, we have explored how, despite not being a statutory remedy, the revival of Insolvency proceedings is permitted if the same was withdrawn pursuant to a settlement. We have discussed the process of revival. The process of revival would only arise if the terms of the settlement pursuant to which the IBC Proceeding was withdrawn, have not been honoured  by the parties to the said settlement. We have further examined the concept of ‘liberty’ that is required in the National Company Law Tribunal’s order vide which the withdrawal of the IBC Proceeding was permitted. We further went on to examine the effect of the settlement agreement on the nature of debt if the settlement was entered between the parties after the IBC Proceeding was initiated. We have concluded that (a) revival of IBC Proceeding is permitted on certain conditions; (b) by virtue of entering into Settlement after IBC Proceeding is initiated would not change the nature of the debt.

Link: Revival of insolvency proceedings: Analysis and way forward | Lakshmikumaran & Sridharan Attorneys (lakshmisri.com)

Source: An article published on the LKS website in June 2023

Authors: Aman Gupta Mayank Kumar

Voice: Pratyush Jain and Falguni Gupta

The Government of India’s consistent push to promote domestic electronic industry’s manufacturing capabilities faced a slight dent due to the recent adverse judgement from the WTO. The judgement held that India’s import duty measures were inconsistent with its commitments & obligations under the WTO Agreements. The complainant’s (EU and several other countries) viewpoint was that India had breached the bound rates under the Schedule of concessions by imposing the disputed custom duties on imports of certain electronic goods. However, India maintained that bound rates in the Schedule were not applicable to the products in question as those products were not in existence at the time of India’s commitments, and they got included in India’s commitment by an inadvertent oversight. Although the arguments advanced were insightful & contained merit, the Panel was of the view that India’s primary obligations stem from her WTO Agreements and not from the commitments under the ITA which formed the fulcrum of India’s arguments. While the industry may face headwinds in the short term, the government will find alternative measures to keep the electronics industry competitive in the long term as envisioned.


Link: India loses the fight for electronic goods against EU at the WTO | Lakshmikumaran & Sridharan Attorneys (lakshmisri.com)
Audio Source: An article published on the LKS website in June 2023

Authors: Rizwan Shah

Voice: Sanjhi Agarwal and Gaurav Tiwari

The Hon’ble Supreme Court of India (“Hon’ble SC”) in the recent decision in Saraf Exports v. CIT settled the issue of entitlement of deduction as per Section 80IB of the Income Tax Act, 1961 (‘IT Act’). The issue was pertaining to the receipts under Duty Drawback scheme (‘DDS’) and transfer of Duty Entitlement Pass book scheme (‘DEPB’). During the subject period, the taxpayer received certain incentives under DDS and DEPB. These said benefits were claimed as deduction u/s Section 80IB of the IT Act, as being ‘derived from’ its industrial undertaking of manufacturing wooden handicrafts. The Hon’ble Supreme Court held that export incentives will not qualify as first-degree nexus for the purposes of claim of deduction under Section 80-IB.  The decision has reiterated the principle laid down earlier that restrictive meaning must be given to the expression ‘derived from’.

Link: Impact analysis of the Supreme Court decision in Saraf Exports v. CIT: Worth the wager?
Audio Source: An article published on the LKS website in June 2023.
Authors: Krishna Laasya V
Voice: Dikshita Damodaran, Amrusha Monga

When producers/exporters export goods to other countries, they are likely to face anti-dumping and anti-subsidy investigations. To successfully face such investigations, the producers/exporters need to be trade-remedy ready. This podcast provides a short guide on the certain steps that producers/exporters should take in this regard. One, entities must employ a robust ERP system for reporting their data seamlessly and accurately. Second, entities must ensure support from their traders, especially when the supply chains are complex. Third, they must monitor their export prices regularly. Producers/exporters must aim to secure their market position by participating in the investigation and getting the best results.

Link: Becoming trade remedies-ready – A practical guide for producers and exporters | Lakshmikumaran & Sridharan Attorneys (lakshmisri.com)

Audio Source: An article published on the LKS website in May 2023.
Authors: Devinder Bagia Jayant Raghu Ram

Voice: Prashant Phillips and Bhavya Shukla 

The Hon’ble Supreme Court of India (“Court”) in the recent decision by the five-judge Bench in N.N. Global Mercantile Pvt. Ltd. v. Indo Unique Flame Ltd. (Judgment dated 25 April 2023), which is a reference from the decision of three judge Bench delivered by the Court on 1 January 2021 [(2021) 4 SCC 379], clarified the stance on the validity / enforceability of the arbitration agreement or arbitration clause contained in an agreement / contract, which is not stamped in accordance with the Indian Stamp Act, 1899 (“Stamp Act”). The Court finally settled the conundrum and held that the arbitration or the appointment of arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996 (“Arbitration Act”) cannot be invoked if the arbitration agreement or clause is contained in an unstamped or insufficiently stamped agreement or contract.

Link: Arbitration agreement, which is part of an unstamped contract, has no existence | Lakshmikumaran & Sridharan Attorneys (lakshmisri.com)

Audio Source: An article published on the LKS website in May 2023.
Authors: Manasa Tantravahi Aman Gupta
Expert: Dhruv Matta 

This podcast examines the decision made by Hon’ble High Court of Delhi (‘High Court’) on an appeal filed under Section 117A of the Patents Act, 1970 (‘Act’). The appeal was filed by Societe Des Produits Nestle Sa (‘Appellant’) seeking to set aside an order passed by the Controller of Patents and Design (‘Respondent’) refusing the grant of the Appellant’s Patent Application for lacking inventive step and for not being patentable under Section 3(i), Section 3(e), and Section 59 of the Act. The High Court after considering the facts of the case, decided that the assessment of the claimed invention by the Respondent was erroneous and directed that the Patent Application may proceed for a grant. The High Court has redefined the boundaries of permissible claim amendments for overcoming the objections on non-patentability especially Section 3(i) of the Act without jeopardizing the requirements of Section 59 of the Act. Therefore, the primary focus of this podcast is on the interpretation of Section 3(i) and Section 59 of the Act provided by the High Court.

Link: De-blurring Section 59 of the Indian Patents Act 1970 | Lakshmikumaran & Sridharan Attorneys (lakshmisri.com)

Audio Source: An article published on the LKS website in May' 2023
Authors:  Malathi Lakshmikumaran, Srinivasan T, Eeshita Das, and Aashmeen Kaur 
Expert:  Falguni Gupta
Host:  Arnab Bhattacharya

This podcast focuses on the interesting issue settled by the Hon’ble Madras High Court in the case of Eastman Exports Case pertaining to the reversal of ITC on the loss of inputs inherent to the process of manufacturing. The Hon’ble Court held that ITC can be claimed on the inputs which are lost in manufacture as such loss is inherent to the process of manufacture itself. To arrive at the decision, the Hon’ble Court primarily relied on the principles laid down in the JK Cotton Spinning & Weaving Mills Case. The Hon’ble Court also resorted to the principles of indispensability and commercial expediency of the inputs to arrive at the aforesaid conclusion. The Article also focuses on the ratios laid down in the subsequent decisions under diverse indirect tax legislations, wherein, similar conclusions were arrived at. The Article also compares S.19(9)(iii) of the TNVAT Act with Section 17(5)(h) of the CGST Act and opines that the Impugned Judgement might come to assistance if similar demands are raised under the GST regime. The Podcast ends on a cautious note that each claim/reversal of ITC must be independently dealt with.

Link:Eligibility of Input Tax Credit vis-à-vis inherent loss of inputs during manufacture | Lakshmikumaran & Sridharan Attorneys (lakshmisri.com)

Audio Source:  An article published on the LKS website in May 2023.

Authors: Charulatha R Nimrah Ali

While the inclusion of interest amounts in ‘financial debt’, for the purposes of the Insolvency and Bankruptcy Code, 2016 (‘IBC’), is clearly provided for in the IBC, the interest component in the case of operational debt has always been a point of contention.

Definition of the term ‘financial debt’under Section 5(8) of the IBC expressly includes the term ‘interest’ to be a part of the debt that can form a part of the claim against the corporate debtor. However, the definition of the term ‘operational debt’ under Section 5(21) of the IBC does not specifically mention the term ‘interest’ to be included as a part of the debt. There appears to be a deliberate difference in the language used for both terms. Accordingly, the understanding between the parties over levy of interest plays a key role while computing the amount of ‘operational debt’.

Link: Interest as part of Operational Debt: A conundrum | Lakshmikumaran & Sridharan Attorneys (lakshmisri.com)

Audio Source:  An article published on the LKS website in April 2023.

Authors: Noorul Hassan Aishwarya Narasimhan

The podcast discusses the intricacies of TDS (tax deducted at source) withholding, which affects the taxable value under the Goods and Services Tax (GST) system in India. Under the Income Tax Act, 1961, TDS is withheld by Indian service recipients on the amount payable to foreign service providers. To clarify the taxable value under service tax, the Central Board of Excise and Customs (CBEC) stated that the taxable value shall be the gross value, including TDS. However, the net receipt in the hands of foreign service providers is reduced to the extent of TDS, which can be overcome by restructuring the transaction. The issue is whether the taxable value for discharging GST should be confined only to the contractual payment or whether the amount of TDS should also be added. The podcasr discusses court decisions on the valuation provisions in the Finance Act, 1994, and the GST law. 

The author highlights the intricacies of TDS withholding, which has been a matter of dispute in the past. While some court decisions have held that TDS should not be added to the taxable value, the podcast suggests that the valuation provisions under the GST law require a closer examination of whether the contractual payment made to the supplier can be equated with 'sole consideration.'

 While the Finance Act considers the contractually agreed amount as the gross amount charged, the GST law provides that the taxable value shall be the transaction value, i.e., the price actually paid or payable. However, the presence of 'sole consideration' would depend on the facts and circumstances of each case, and it needs to be examined whether the contractual payment made to the supplier can be equated with 'sole consideration', wherein TDS is borne by the service recipient.

The podcast concludes that the presence of 'sole consideration' would largely depend on the facts and circumstances of each case.

Link:Withholding Income Tax: Withholding the ambiguity in GST Valuation? | Lakshmikumaran & Sridharan Attorneys (lakshmisri.com)

Audio Source:  An article published on the LKS website in April 2023.

Authors:  Shiwani Kaushik, Associate LKS