all Law.

The United States imposed additional duties of 25% ad valorem on steel imports into the country. Section 232 of the Trade Expansion Act of 1962 imposed additional duties. Several provisions of the General Agreement on Tariffs and Trade ('GATT') were violated, most notably the security exception in Article XXI. The US argued that the measures were justified under GATT Article XXI (b)(iii), which allows a WTO Member to take measures necessary to protect its essential security interests. The panel determined that this did not negate the requirement that such action be taken in accordance with the conditions and circumstances specified in clause XXI. The panel in Russia – Traffic in Transit has also explained what might constitute an 'essential security interest ‘While it has recognized that every Member has the discretion to define what it considers to be its essential security interests, it has drawn a red line by stating that this does not mean that a Member is free to elevate any concern to that of an 'essential security interest', and the designation of any concern as an essential security interest must be in 'good faith ‘In this context, the panel's ruling in Russia – Traffic in Transit set an important precedent for the present dispute in holding that the measure must be connected and be plausible in relation to the essential security interest articulated by the defending Member. This excess capacity, according to the US, constituted an 'emergency in international relations’. The panel further held that the Section 232 steel and aluminum reports issued by the US Department of Commerce did not identify or address the existence of an 'emergency in international relations'. It was expected that the US Government would tone down its nihilistic rhetoric towards the multilateral trading system and withdraw measures that seemingly violate WTO law. The US is quite likely to appeal the panel report to the Appellate Body, which ironically, the US has driven to the ground.

Audio Source: An article published on the LKS website in December 2022

Playing on the wrong side – United States’ Section 232 measures held inconsistent with WTO law | Lakshmikumaran & Sridharan Attorneys (lakshmisri.com)

Author: Jayant Raghu Ram, Partner (LKS)

The Supreme Court’s landmark judgment in Ahmedabad Urban Development Authority laid down new law on claim of tax exemptions by charitable entities engaged in activities of General Public Utility (i.e., GPU) and deriving incidental business income. This judgment overruled the earlier “predominant object test” set by the Supreme Court in Surat Art Silk ruling for checking the eligibility for claiming exemption under section 11 of the Income-tax Act, 1961. The Supreme Court has analyzed section 2(15) of the Income-tax Act, 1961, and replaced the old test of a predominant object with a new test i.e., nominal vs. substantial profits. The Court essentially held that the GPU entity earning nominal profits will not be debarred from claiming exemption on its incidental business income. However, a GPU entity earning substantial profits can claim exemption only if the prescribed threshold (i.e., business receipts not exceeding 20% of the total receipts of such entity) is adhered to. 

The authors through this podcast have analyzed the key findings of the judgment and the ramifications it may have on the GPU entities going forward. 

Audio Source: An article published on the LKS website in December 2022
Normal and substantial profits – A new yardstick for charitable purpose | Lakshmikumaran & Sridharan Attorneys (lakshmisri.com)

Authors: Prachi Bhardwaj, Associate LKS) and  Sanjhi Agarwal Associate (LKS)

The article discusses workplace investigations in India. It notes that due to the subjective nature of the investigations under consideration, there is no set mechanism or strict procedure which needs to be adhered to, for conducting such investigations. The authors however discuss the broad guidelines related to requisition, review and questionnaire, investigation interviews, transcripts, and preparing the investigation report, which aids the investigation team and is to be read along with the internal policies of the concerned organization. They also note that organizations now prefer the engagement of external lawyers for such investigations, who besides providing credibility would also be well-equipped with similar exercises and prepared to discuss and advise concerned officials of the organization on the future course of action, as recommendation measures. According to the authors, proper policies need to be put in place and it is to be also ensured, that the stakeholders are made aware of the same, including any amendments thereto, as this may not only assist in creating a better work environment but also in investigating allegations later.

Audio Source: An article published on the LKS website in December 2022
Navigating a workplace investigation | Lakshmikumaran & Sridharan Attorneys (lakshmisri.com)

Authors:  Sudish Sharma, Executive Partner and Ayushi Agrawal, Associate

Recent cases on divisional applications, in India, redefine the requirements with respect to divisional applications. An applicant, to whom divisional applications have been invaluable for securing multiple patents arising out of a single inventive platform, the recent decisions may appear more restrictive. To bring uniformity in practice and in the best interest of justice certain principles have been laid down by the courts that are to be adhered to while dealing with divisional applications. In exercising the Applicant’s right to file a divisional application, the principles may be relied upon for guidance in strategizing national phase entries and divisional applications thereon.

Audio Source: An article published on the LKS website in December 2022
Divisional Applications in India: Evolving jurisprudence | Lakshmikumaran & Sridharan Attorneys (lakshmisri.com)

Author: Prosenjit Chattopadhyay, Partner LKS and Supriya Ramacha, Principal Associate  

In the previous Podcast, we started navigating trade in a world of sanctions. We understood that among the numerous measures adopted by the US, the war has brought into focus the use of sanctions as an instrument to penalize Russia and its allies such as Belarus. As a leading user of sanctions, the United States has one of the most comprehensive legal frameworks for the imposition of sanctions that can be mind-boggling for both US and foreign businesses alike. One of the key agencies implementing sanctions in the United States is the Office of Foreign Assets Control. 

The podcast discusses some of the salient aspects of the US sanctions regime as administered by the OFAC. It also discusses how can Indian businesses provide more attention to the implications of sanctions on them, the challenges that Indian businesses face, and how they comply with provisions of OFAC to overcome these challenges.

Audio Source: An article published on the LKS website in December 2022
OFAC - Insights into the US sanctions regime | Lakshmikumaran & Sridharan Attorneys (lakshmisri.com)

Author: Arpit Mehra, Associate LKS

The Government has with effect from 19 November 2022 rolled back export duty on iron ore pellets and steel products, including pig iron, flat-rolled products of carbon steel and stainless steel, bars, rods, and non-alloy steel. Export duty on iron ores with a grade higher than 58% has been reduced from 50% to 30%, while the lower grade iron ores no longer attract export duty restoring back the exemption granted up to 21 May 2022.

The duty on the export of iron ore pellets and select steel products was imposed with effect from 22 May 2022, and parallelly, the duty on the export of iron ores and concentrates was increased with the objective of checking on the rising steel prices in the Indian market, addressing shortages and curbing inflation. The move to roll back the export duty within a period of six months is taken considering the stability in domestic prices of the steel products and taking all stakeholders’ concerns into account because the inventory of steel products has risen drastically, and India has become a net importer of steel in October 2022 due to curtailed exports.
 
In this podcast, the authors are explaining the impacts and implications of why the government has withdrawn the export duty imposed on Iron and Steel items.
 
 
 Audio Source: An article published on the LKS website in November 2022
Export duty on iron ore and steel intermediaries – An industry perspective! | Lakshmikumaran & Sridharan Attorneys (lakshmisri.com)

Author: Ravi Raghavan, Senior Partner (LKS) and Brijesh Kothary, Associate Partner (LKS) 

The company secretary (CS) of Deccan Chronicle Holding Limited ('DCHL') was absolved by the Securities Appellate Tribunal ('SAT'), Mumbai, from the liability imposed by the Adjudicating Officer ('AO') of the Securities Exchange Board of India ('SEBI') on DCHL for misleading financial statements and information given by the company. 

Earlier this year, SEBI had investigated the scrip of DCHL to ascertain if the company shares were fraudulently pledged without appropriate disclosures. From the investigation, it was specifically gleaned that the public announcement made in 2011 for buying back its equity shares had misled the investors/shareholders. Mr. Shankar filed an appeal before the SAT which examined the provisions of the 1956 Act under Section 68 and Section 77. 

Section 68 provides that 'any person knowingly or recklessly makes a statement which is false, deceptive, or misleading he would be punishable with imprisonment for a term which may extend to five years or with fine or both’. 

The tribunal also examined the provision laid under Section 215 (Authentication of balance sheet and profit and loss account) of the 1956 Act.

 A company secretary is under no obligation to undertake utmost due diligence to check the veracity of the buyback offer before ascribing his signatures to the same. Once the balance sheet or profit and loss account are approved by the Board of Directors, the role of a company secretary in signing them is merely Administrative in nature. 

NCLT earlier this year in Technology Frontiers (India) Private Limited v. Global Sports Commerce Pte Ltd & Ors. took an alternative stance and held that a company Secretary is a 'Watchdog of protecting the Principles of Corporate Governance.


Audio Source: An article published on the LKS website in November 2022
Company Secretary whether liable for misleading financial information given by a company | Lakshmikumaran & Sridharan Attorneys (lakshmisri.com)

Author: Manan Chhabra, Senior Associate (LKS)

In the context of dividend income of French and Netherlands shareholders, the applicability of MFN clause has been a subject matter of dispute between the taxpayers and the Revenue authorities. The taxpayers have argued that MFN clause is applicable on dividend income received by Netherlands and French shareholders, and as a result, the dividend income is taxable in India at the rate of 5% (provided in tax treaty with Slovenia) instead of the higher rate of 10% provided in respective treaties.

The High Court of Delhi has decided the above matter in favour of the taxpayers. The Revenue authorities have preferred SLP against said Orders which is pending for consideration before the Supreme Court. The Revenue authorities have also clarified their stance by issuing a circular.

In this podcast, the authors attempt to explain the controversy and the key arguments which in the authors’ view weigh in favour of both the taxpayer and the Revenue authorities.

Audio Source: An article published on the LKS website in November 2022
https://www.lakshmisri.com/insights/articles/benefit-of-most-favoured-nation-clause-for-dividend-income-of-non-resident-interesting-battle-to-watch-out-for-before-apex-court/#

Author: Harshit Khurana, Principal Associate (LKS), Devashish Jain, Senior Associate (LKS)

The Ministry of Electronics & Information Technology notified an amendment to the Intermediary Guidelines proposing certain enhanced due diligence obligations for intermediaries apart from introducing grievance appellate committees. In this podcast, the authors discuss the amendment in light of enhanced obligations such as publication of policies in other languages and enhanced content restrictions apart from compliance with expectations of privacy, transparency and respect of fundamental rights of citizens, typically enforceable against the State in terms of the impact of these additional obligations on intermediaries and their functioning. The amendment also establishes grievance appellate committees (GACs) which may be set up by the Central Government as appellate mechanisms against decisions of grievance officers of intermediaries.

Audio Source: An article published on the LKS website in November 2022
https://www.lakshmisri.com/insights/articles/amendment-to-the-intermediary-guidelines-increased-due-diligence-and-grievance-redressal/

Author: Prashant Phillips, Partner (LKS) and Sameer Avasarala, Senior Associate (LKS)
Voice: Yashraj Chauhan, Associate (LKS)

The outbreak of the war in Ukraine has brought into focus the use of sanctions as a tool by Western countries to punish Russia and Russian entities. While the use of sanctions as a tool to achieve foreign policy and military objectives is well known, Indian businesses are less aware of the implications of Western unilateral sanctions for dealing with sanctioned countries and sanctioned entities. After providing an introduction to the origin and nature of sanctions, this article also provides an overview of the legal framework of Western unilateral sanctions and their extra-territorial operation with the objective of sensitizing Indian businesses.


Audio Source: An article published on the LKS website in October 2022
Beware of sharks in the water – Navigating trade in a world of sanctions

Author: Jayant Raghu Ram, Principal Associate (LKS)
Voice: Yashraj Chauhan, Associate (LKS)