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Issues: (i) Whether the certificate dated 28.01.2026 issued under Section 195 should be treated as a 'Nil' rate certificate instead of a 5.25% certificate; (ii) Whether the competent authority is obliged to issue 'Nil' rate certificates for the financial year 2025-26 and subsequent years on the petitioner's applications, and under what conditions that obligation may be displaced.
Issue (i): Whether the certificate dated 28.01.2026 issued under Section 195 should be treated as a 'Nil' rate certificate instead of a 5.25% certificate.
Analysis: The competent authority issued a 5.25% certificate after an earlier order in the petitioner's favour; the authority's action was found to be bona fide but contrary to the earlier decision which recorded no taxability and remitted for any residual consideration. The Court exercised remedial powers to correct the certificate in view of the prior finding of no taxability and to avoid undermining that finding while warning the authority about future care.
Conclusion: The certificate dated 28.01.2026 shall be treated as a 'Nil' rate certificate and the competent authority is directed to issue an amended/rectified 'Nil' rate certificate within seven days of production of a web-copy of this order.
Issue (ii): Whether the competent authority is obliged to issue 'Nil' rate certificates for the financial year 2025-26 and subsequent years on the petitioner's applications, and under what conditions that obligation may be displaced.
Analysis: Considering the prior order in the petitioner's case and the need for procedural clarity, the Court directed that 'Nil' rate certificates be issued for FY 2025-26 and for subsequent years on timely application, subject to the competent authority's power to arrive at a contrary conclusion upon recording a specific finding of the existence of a permanent establishment (including virtual PE) after issuing notice to the petitioner. The Court required honest disclosure and cooperation by the petitioner for subsequent applications.
Conclusion: The competent authority shall issue 'Nil' rate certificates within 30 days of application for FY 2025-26 and subsequent years unless it records a finding of permanent establishment after issuing notice; the petitioner must fully and truly disclose relevant facts and cooperate with any such notice.
Final Conclusion: The order corrects the impugned certificate to a 'Nil' rate and establishes a forward-looking procedure requiring the competent authority to grant 'Nil' rate certificates expeditiously on application, while preserving the authority's power to revisit taxability on specified and notified grounds.
Ratio Decidendi: Where a competent authority's certificate under Section 195 conflicts with a prior court finding of no taxability, the court may direct rectification to a 'Nil' rate and prescribe a limited procedural framework for future certificates, permitting departure only upon a recorded finding of permanent establishment after notice to the applicant.
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