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Case Laws GST
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Non-business construction concessions for spinning mills require eligible recipient status and predominantly non-industrial use of the constructed buildings.
For the disputed period, the works-contract concession required both an eligible governmental recipient and structures predominantly meant for use other than commerce, industry, business or profession. Government Entity status required evidence of the recipient's constitution and qualifying governmental participation, while procurement had to relate to entrusted work. Project funding, tender approval and supervision did not by themselves establish governmental constitution or control. The spinning-mill factory buildings and allied works were intended for yarn production and related commercial activities. The residual construction-services entry carried aggregate GST of 18% for services outside the specified concessional entries.
Case Laws Customs
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Import document handling alone does not establish customs abetment or knowing use of materially false declarations.
Personal customs penalties depend on the person's own conduct, not merely on the confiscability of imported goods. Under Section 112(a) of the Customs Act, 1962, liability may arise from a person's own act or omission rendering goods liable to confiscation or from abetment of such conduct. The direct limb can operate on a strict-liability basis where a person's own act or omission renders goods confiscable; an allegation of abetment instead requires evidence of participation or culpable facilitation. Section 114AA requires knowing or intentional making, signing or use, or causing the making, signing or use, of a declaration, statement or document that is materially false or incorrect in customs business.
Case Laws GST
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Subcontracted services performed on own account are not intermediary services merely because they support overseas recruitment and customer-facing activities.
Intermediary classification under Section 2(13) of the IGST Act distinguishes arranging or facilitating supplies between other persons from supplying services on one's own account. The intermediary framework requires at least three parties, a main supply and a distinct ancillary facilitating supply, with conduct resembling that of a broker or agent. Subcontracting the whole or part of a service is not intermediary activity merely because performance supports another supplier's business or involves its customers. Neither a bilateral agreement, contractual label nor remuneration method is conclusive.
Case Laws Customs
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Split air conditioner classification requires capacity and refrigeration features to be assessed against the applicable tariff hierarchy.
Classification of ductless split air conditioners depends on the complete tariff description and the machine's technical characteristics. A complete, cooling-only, two-ton split air conditioner incorporating a refrigerating unit and lacking a heat-reversal valve falls within tariff item 8415 82 10 rather than the general split-system item 8415 10 10. Item 8415 82 10 inherits its parent subheading's refrigerating-unit requirement, while item 8415 83 10 requires the absence of such a unit. Capacity alone does not establish the applicable refrigeration-based entry. Technical evidence should establish whether the goods are a complete machine and identify their capacity and operating features.
Case Laws Income Tax
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Convertible debenture interest requires evidence-based pricing before conversion; future equity conversion alone cannot establish a nil arm's length price.
Pre-conversion interest on compulsorily convertible debentures (CCDs) issued to a non-resident associated enterprise requires arm's length pricing. Compulsory future conversion and hybrid classification do not, by themselves, establish a nil price or extinguish an existing coupon obligation. Rule 10AB's Other Method requires a price charged, paid or expected in comparable uncontrolled circumstances, with reasonably accurate adjustments for material differences under Rule 10B. Currency, benchmark date, tenure, credit risk, security, non-redemption and conversion benefits affect comparability; a conventional bank lending rate is not automatically comparable to a long-tenor CCD.
Case Laws Customs
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Split motorcycle consignments require evidence of deliberate fragmentation for composite classification, with valuation assessed independently of classification.
Clubbing of split consignments for customs classification depends on proof that apparently separate imports form one deliberately fragmented transaction, not merely on the possibility of assembly. Rule 2(a) extends a tariff heading to an incomplete article possessing the essential character of the complete article and also covers a complete article presented disassembled. A change of tariff heading alone does not establish that the transaction value is inaccurate; substantive misdescription of the goods requires separate evidentiary consideration. Replacement value must follow the prescribed sequence of methods.
Case Laws GST
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Corporate guarantee taxation depends on distinguishing taxable supply from valuation, particularly for unpaid support between related businesses.
GST on corporate guarantees requires separate consideration of whether a taxable supply exists and how that supply is valued. Section 7(1)(c) and Schedule I encompass qualifying supplies between related or distinct persons without consideration when made in the course or furtherance of business. Rule 28(2) deems the value of a guarantee furnished to a banking company or financial institution for a related recipient in India to be one per cent of the guaranteed amount per annum or actual consideration, whichever is higher. Where the recipient is eligible for full input tax credit, the proviso treats the value declared in the invoice as the value of the supply.
Case Laws Income Tax
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Employee secondment taxation depends on employment rights, service consideration and demonstrable transfer of technical capability to host entities.
Local operational control and a stated suspension of foreign employment do not, by themselves, resolve whether underlying foreign employment rights survive. Under Article 12(4)(b) of the India-USA DTAA, technical or consultancy services must make technical knowledge, experience, skill, know-how or processes available, or involve development and transfer of a technical plan or design. Under the knowledge-transfer limb, the recipient must acquire a capability it can use independently; the mere application of expertise or presence of qualified personnel is insufficient. Recovery at actual cost and absence of markup do not, by themselves, establish that a foreign enterprise's receipt is non-taxable.
Case Laws GST
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GST appellate pre-deposits may be satisfied by verified earlier payments after demand reduction, but filing fees remain independently payable.
When the first appellate authority substantially reduces the disputed tax demand, an earlier deposit may be sufficient to satisfy the Tribunal-stage requirement, subject to verification. Sufficiency depends on the reduced liability, the applicable appellate requirements and the amount actually deposited; a first appellate payment does not automatically eliminate the additional obligation. Tribunal filing fees under Section 112(7) operate independently of pre-deposit. Where a fee shortfall and earlier deposit require verification, proof of fee payment and verification of the deposit precede consideration of admission.
Case Laws Income Tax
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Inter-co-operative society interest exemption preserves non-deduction by co-operative banks when depositors are co-operative societies under the statutory withholding framework.
Section 194A(3)(v) separately addresses interest paid by a co-operative bank to a member and interest paid by a co-operative society to another co-operative society. The exclusion of co-operative banks is confined to the member-payment limb; a co-operative bank remains a co-operative society for the inter-co-operative society limb. Paragraph 42.7 of Circular No. 19/2015 preserves non-deduction, including time-deposit interest, where the depositor is a co-operative society. Section 80P does not determine this withholding obligation.
Case Laws GST
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Input tax credit reversal requires evidence linking supplier non-payment to recipient ineligibility and a reasoned statutory inquiry.
Input tax credit under Section 16(2)(c) remains conditional on actual payment of tax to Government, but supplier non-payment or retrospective cancellation cannot by itself justify reversal. The recipient must establish eligibility through transactional evidence, while the proper officer must investigate the particular supply, disclose supplier-default and recovery material, apply the law applicable to the relevant period, and issue a reasoned, notice-bound determination. Supplier recovery status and protection against duplicate collection are material considerations.
Case Laws Customs
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Baggage-related customs appeals proceed through statutory revision when the jurisdictional exclusion applies to passenger imports.
The first proviso to section 129A(1) excludes Appellate Tribunal jurisdiction over an order under section 128A relating to goods imported or exported as baggage. The decisive issue is the order's connection with baggage, not disputes concerning confiscation, declaration, duty, personal effects, concealment, concession, or penalty. Articles carried by an international passenger in luggage or on the person may constitute baggage. Section 129DD provides revision before the Central Government, ordinarily within three months, subject to a further period on sufficient cause.
Case Laws GST
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Departmental GST appeal monetary limits regulate officers, while composite orders and proven recurring issues may permit appeals.
Sections 120 and 168 of the Central Goods and Services Tax Act, 2017 make monetary-limit directions binding within the Central tax hierarchy, while they regulate the executive decision to file rather than create an inflexible jurisdictional bar before the Tribunal. In a composite order disposing of multiple appeals or demand notices, the relevant amount is the total disputed tax, interest, penalty or late fee, as applicable. The recurring or interpretative-issue exclusion requires a reasoned, case-specific basis, and Commissioner authorisation does not itself establish compliance with the litigation policy.
Case Laws GST
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E-way bill re-use allegations require corroborated proof identifying the same goods; vehicle movement alone cannot establish contravention.
Alleged re-use of invoices and e-way bills requires the seizing authority to establish through positive, corroborated evidence that the intercepted goods are the same consignment previously transported under those documents. Toll data, vehicle movements and photographs may justify inquiry but do not alone prove prior delivery, identity of goods or re-use. Where invoices and e-way bills accompany the goods and physical verification shows no discrepancy, the authority must investigate and address any explanation of a different earlier consignment. Cases involving absent or expired transport documents remain factually distinct.
Case Laws GST
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Zero-rated supply turnover includes export invoices from the refund period when actual export is subsequently established under bond or LUT.
Under Rule 89(4), invoice values for goods invoiced before or at removal for export under bond or Letter of Undertaking may be included in zero-rated turnover for the relevant refund period, although physical export occurs later. The invoice and removal determine period-wise attribution for the refund formula, while actual export remains essential to sustain the claim. Shipping bills, bills of export and related export records must correlate with the export invoices to establish that the goods were ultimately exported. Compliance with valuation, input tax credit eligibility and bond or Letter of Undertaking conditions remains necessary.
Case Laws Income Tax
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Reassessment objections require speaking disposal and a four-week pause before scrutiny or information requests can begin.
Under the pre-amendment Section 148 framework, reassessment jurisdiction must be resolved before merits-stage scrutiny begins. The Assessing Officer must furnish recorded reasons when requested, permit objections, and decide them through a separate speaking order. A Section 143(2) notice commences scrutiny, while a Section 142(1) notice is a substantive inquiry step; neither may issue before objections are decided. Following rejection, a four-week period from service of the speaking order must be allowed before further reassessment action, preserving an effective opportunity to challenge reopening.
Case Laws GST
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Suppression of facts requires proof of deliberate tax evasion; ineligible input tax credit alone cannot support enhanced proceedings.
Section 74 permits enhanced tax determination for wrongly availed or utilised input tax credit only where fraud, wilful misstatement, or suppression of facts to evade tax is established. Wrong or ineligible credit is distinct from substantive credit eligibility and cannot, without evidence of deliberate conduct and intent, amount to suppression. Under historical Explanation 2, suppression required either omitted information legally required in prescribed filings or failure to provide information sought in writing; both operate subject to the statutory evasion requirement. Disclosed reconciliations and portal records materially weaken a bare allegation of non-declaration.
Case Laws Customs
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Organic surface-active agent classification requires water solubility and stability; phase-separating low-ethoxylated products fall outside Heading 3402.
Classification of low-ethoxylated non-ionic fatty alcohol ethoxylates under Heading 3402 requires satisfaction of the cumulative water test in Chapter Note 3. At the prescribed concentration, temperature, and standing period, the product must both remain a transparent or translucent liquid, or stable emulsion, without phase separation and reduce water surface tension to the stated threshold. Non-ionic character or surface activity alone is insufficient. Where a low-ethoxylated product separates into layers and fails the solubility and stability requirement, Heading 3824 may be considered after exclusion from Heading 3402.
Case Laws Customs
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Lawful customs seizure requires recorded confiscation grounds, formal restraint where needed, and timely notice; detention cannot bypass safeguards.
Customs seizure of an imported car requires recorded reason to believe that it is liable to confiscation. A panchnama restraint cannot replace a lawful seizure order, an undertaking where seized goods remain in custody, or a served non-dealing order where seizure is impracticable. Section 110(2) requires prompt notice under Section 124, subject only to the prescribed extension mechanism. Prolonged effective detention cannot postpone those safeguards. Provisional release under Section 110A applies only to goods lawfully seized and cannot validate an earlier detention without statutory authority.
Case Laws Companies Law
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Corporate veil-piercing permits forensic scrutiny in execution where promoter-controlled entities may dissipate shareholding despite judicial assurances.
Corporate veil-piercing in execution is an exceptional response where promoters allegedly use layered entities and securities transactions to deplete shareholding represented as security through judicial assurances. Separate personality remains the rule, and control or ownership alone does not suffice; there must be a nexus between control, misuse of the corporate form, and frustration of enforcement. A forensic audit reconstructs share movements, pledges, sales, financing, approvals, disclosures, and fund flows, distinguishing legitimate enforcement of pre-existing security from coordinated asset dissipation.

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Comparison of SCHEDULE VII "PERSONS EXEMPT FROM TAX" between the Income-Tax Act, 2025 (as passed) and the Income-Tax Bill, 2025 (as originally introduced)

18 September, 2025

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SCHEDULE VII - PERSONS EXEMPT FROM TAX

Income-tax Act, 2025

At a Glance

Schedule VII (Persons Exempt from Tax) as contained in the Income Tax Bill, 2025 - Old Version. It lists categories of persons whose total income is not liable to income-tax subject to specified conditions. It matters to taxpayers, tax administrators and institutions such as funds, trusts, boards, statutory authorities, universities, hospitals and recognised financial entities. Effective date or decision date: Not stated in the document.

Background & Scope

Statutory hook: "See section 11" (Schedule VII attached to the Income Tax Bill, 2025 - Old Version). The Schedule sets out a Table of eligible persons (column B) and conditions for exemption (column C). Notes below the Table define expressions used in specified entries. Coverage: persons and entities enumerated in 48 serial entries, ranging from regimental funds, notified welfare funds, pension and insurance funds, statutory boards and authorities, relief funds, universities and hospitals, mutual funds, approved employee funds, commodity boards, national funds, infrastructure and developmental financing institutions, among others. The Schedule provides conditions applicable to many entries (investment modes, approval requirements, purpose and financing thresholds). Definitions/interpretations: limited to the numbered Notes (Note 1 through Note 6) which supply meanings for terms such as "Controller of Insurance", "khadi"/"village industries", "public financial institution", "Scheduled Castes/Tribes/backward classes", "minority community", and "ex-servicemen".

Statutory Provision Mode

Text & Scope

The document under consideration is SCHEDULE VII (See section 11) titled "PERSONS EXEMPT FROM TAX" from the Income Tax Bill, 2025 - Old Version (Document 2). It lists eligible persons (column B) and conditions (column C) under which those persons "shall not be liable to pay income-tax on the total income for any tax year." The table enumerates 48 serial entries, including funds established by armed forces, notified welfare funds, pension funds set up by insurers, State authorities for khadi and village industries, bodies/authorities administering religious/charitable trusts, several central boards and authorities (e.g., Insurance Regulatory and Development Authority, Central Electricity Regulatory Commission), relief funds (Prime Minister's National Relief Fund, PM CARES), universities and hospitals wholly or substantially financed by Government, registered mutual funds, recognised provident and gratuity funds, various commodity boards, New Pension System Trust, government-financed corporations and specialised funds (credit guarantee funds, infrastructure debt funds), institutions set up for financing infrastructure (with time-limited exclusion) and developmental financing institutions licensed by RBI (time-limited exclusion with extension power for Central Government).

Defined terms and cross-references: Several Notes (1-6) supply definitional cross-references-e.g., "Controller of Insurance" per section 2(5B) of the Insurance Act, 1938; "khadi" and "village industries" per Khadi and Village Industries Commission Act, 1956; "public financial institution" per section 2(72) Companies Act, 2013; meanings of "Scheduled Castes/Scheduled Tribes" per article 366(24)/(25) of the Constitution; "minority community" as notified by the Central Government; and a multi-part definition of "ex-servicemen".

Interpretation

The Schedule operates as a list of entities whose total income is excluded from income-tax subject to stated conditions. Legislative intent, beyond providing categories of exempt entities and prescribed conditions, is not expressly stated in the text. Not stated in the document: any explicit statement of underlying policy objectives (e.g., promoting philanthropy, public welfare) beyond the enumerated objects of the institutions.

Exceptions/Provisos

Conditions and provisos appearing in the table include:

  • Approval requirement for certain employee welfare funds by Principal Commissioner/Commissioner (Sl. No. 2(b)), with approval effective for up to three tax years.
  • Pension schemes must be approved by the Controller of Insurance or IRDAI (Sl. No. 3(b)).
  • Universities and educational institutions, and hospitals, qualify if "wholly or substantially financed by the Government" with a government grant threshold expressed as "such percentage ... as prescribed" (Sl. Nos. 17, 18).
  • Smaller educational institutions/hospitals (Sl. No. 19) qualify where aggregate annual receipts do not exceed Rs. 5,00,00,000 (Document 2); other substantive conditions mirror charitable/philanthropic purpose and non-profit existence.
  • Time-limited exemptions for institutions established for financing infrastructure (Sl. No. 47: ten consecutive tax years) and developmental financing institutions licensed by RBI (Sl. No. 48: five consecutive tax years, with Central Government power to extend by up to five more years subject to conditions).
  • Notification requirement by Central Government for certain bodies to be eligible (e.g., Sl. Nos. 42, 46, 47, 48).

Not stated in the document: any formal mechanism for revocation of notifications or detailed transitional rules for entities moving between notified and non-notified status.

Illustrations

  • Example 1: A university receiving 70% of its receipts as Government grants in a tax year would be "substantially financed" (subject to prescribed percentage). Not stated in the document: the exact percentage threshold; it refers to "as prescribed".
  • Example 2: An infrastructure financing institution notified by the Central Government in tax year X would be exempt from tax on its total income for ten consecutive tax years starting X (subject to notification). This follows Sl. No. 47 as drafted.
  • Example 3: A small hospital with aggregate annual receipts of Rs. 4 crore (below Rs. 5,00,00,000) and meeting philanthropic purpose and non-profit existence would fall under Sl. No. 19 and be exempt, subject to other conditions in that entry.

Interplay

The Schedule cross-references multiple statutes (Insurance Act, 1938; IRDA Act, 1999; Companies Act, 2013; various sectoral Acts). It also references specific sections and tables elsewhere in the income-tax code (e.g., section 337; section 355) for treatment of anonymous donations and specified income, indicating intended interaction between Schedules and other statutory provisions. Not stated in the document: any implementing rules, forms or administrative guidance that would operationalise approval and notification processes; those are left to prescribed procedures or Central Government notification.

Comparison of Differences and Practical Impact

  • Correction/Corrigendum note: Document 1 (SCHEDULE VII of Income-tax Act, 2025) contains a notes section that records a corrigendum dated 03-09-2025 correcting the word "anaonymous" to "anonymous". Document 2 ( Schedule VII of Income Tax Bill, 2025 - Old Version) does not contain this corrigendum entry.
    • Practical impact: The corrigendum in Document 1 clarifies textual error relating to anonymous donations at Sl. No. 19; this reduces ambiguity in statutory text and assists tax administrators and taxpayers in interpreting the anonymous-donation treatment. Document 2 may retain the earlier typographical error and thus could cause uncertainty until corrected.
  • Wording and punctuation variations: Several minor differences in wording and punctuation appear across the two texts (for example, Document 1 uses "in such manner as may be prescribed" at Sl. No.2(b), while Document 2 uses "in such manner as prescribed"; Document 1 uses "Sl. No" styling, Document 2 uses "Sl.No." or similar). Document 2 contains a number of typographical inconsistencies (e.g., "Central Actor State Act" at Sl. No. 29 and broken spacing characters).
    • Practical impact: These drafting and typographical differences are largely formal, but could create interpretive frictions (particularly in administrative guidance or when cross-referencing) until harmonised. Courts/authorities typically prefer the final enacted text (Document 1) for authoritative interpretation.
  • Treatment of anonymous donations / cross-reference language at Sl. No. 19: Document 1 states at Sl. No. 19(e) that where such institutions receive any anonymous donation defined u/s 355(a), the provisions of section 337 (Table: Sl. No. 1) in respect of specified income shall apply mutatis mutandis as they apply in the case of a registered non-profit organisation and such anonymous donations shall be excluded from the income on which no tax is payable. Document 2 instead sets out at Sl. No. 19(d) a monetary aggregate limit ("does not exceed Rs. 5,00,00,000") and uses different phrasing for receipts aggregate in that sub-clause.
    • Practical impact: Document 1's explicit reference to section 355(a) and section 337 (Table: Sl. No. 1) plus the corrigendum suggests a clarified regime for anonymous donations and their exclusion for small educational/hospital entities, tethered to other table provisions. Document 2's numeric formulation (Rs. 5,00,00,000) is clearer on the monetary cap but lacks the cross-referential formulation concerning anonymous donations as in Document 1. Differences could affect eligibility for no-tax exclusion where anonymous donations and aggregate receipts thresholds intersect.
  • Specific enumerations of religious places in Sl. No. 5: Document 1 lists "temples, gurudwaras, wakfs, churches, synagogues, agiaries or a mutt or other places of public religious worship". Document 2 lists "mosques, temples, gurudwaras, wakfs, churches, synagogues, agiaries or other places of public religious worship" (note inclusion of "mosques" and omission of the phrase "a mutt").
    • Practical impact: The slight variation in enumerated religious institutions may reflect drafting inconsistency; however both texts capture core categories of public religious worship. Any omission or change of a category in the enacted text could have material consequences for institutions that expect exemption; the enacted Act (Document 1) should be treated as authoritative.
  • Formatting of exempt entries: Document 1 frequently uses the word "Nil." in the Conditions column for many entries; Document 2 frequently leaves the Conditions cell blank (non-breaking spaces). Functionally, both convey absence of additional conditions, but Document 1 is explicit.
    • Practical impact: Explicit "Nil." reduces ambiguity about conditionality. Blank cells in Document 2 could be misread; administrative officers prefer explicit notation.
  • Use of statutory citations and drafting consistency: Document 1 consistently uses "section" with lower-case and precise cross-references and includes Notes numbered 1-6 like Document 2, but with minor textual variations. Document 2 contains inconsistent spacing and capitalization in notes (e.g., "Scheduled Castes" quotation issues) and minor deviations in wording of Note 4(b) ("as notified" vs "as may be notified").
    • Practical impact: Small differences in note phrasing can influence the scope of delegated powers (e.g., who may notify "backward classes") and administrative discretion. The enacted Act's final wording controls.
  • Entries 46-48 (infrastructure/developmental financing): both documents include similar substantive provisions but differ marginally in punctuation and grammar (e.g., Document 1: "(a) Such institution is notified by the Central Government;" Document 2 similar). No material substantive divergence identified beyond formatting.
    • Practical impact: No substantive change evident; stakeholders should confirm the enacted text for precise compliance timelines and notification requirements.

Practical Implications

  • Compliance and risk areas: Entities claiming exemption must ensure they meet the enumerated substantive conditions (non-profit/philanthropic purpose, substantial government financing thresholds where specified, approvals/notifications where required). Failure to secure required approvals/notifications (e.g., approval by Principal Commissioner or Central Government notification) risks denial of exemption. The multiple cross-references require careful statutory mapping when preparing tax filings.
  • Record-keeping/evidence points: The Schedule implies need for documentary proof of objects/purposes, government grant receipts and percentage calculations, approvals from tax or regulatory authorities, and notifications by Central Government. Not stated in the document: specific forms or timelines for filing proof; such procedural details are left to "prescribed" rules or notifications.

Key Takeaways

  • SCHEDULE VII enumerates discrete categories of persons/institutions whose total income is exempt from income-tax, subject to the conditions specified in the table.
  • Several exemptions hinge on approvals or notifications (e.g., Principal Commissioner/Commissioner approval; Central Government notifications), and on cross-referenced statutory definitions.
  • Time-limited exemptions are provided for certain financing institutions (infrastructure and developmental financing), with Central Government power to extend for developmental financing.
  • Smaller educational institutions and hospitals are given a receipts-based threshold (Document 2 uses Rs. 5,00,00,000) for exemption eligibility; anonymous-donation treatment is cross-referenced to other sections.
  • Drafting inconsistencies and typographical variations (as seen between Bill and Act versions) emphasise the need to consult the final enacted Schedule for authoritative interpretation.

Full Text:

SCHEDULE VII - PERSONS EXEMPT FROM TAX

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Acts Income Tax