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Case Laws GST
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School affiliation services fall outside educational exemption without a direct nexus to admissions or examination conduct.
Consolidated show cause notices may combine financial years governed by Sections 73 and 74 where liabilities are segregated period-wise, each component independently meets limitation and notice requirements, the additional ingredients for fraud-based proceedings are satisfied, and no actual prejudice arises. School affiliation and affiliation-form processing charges are independent taxable supplies where they concern institutional eligibility and compliance, rather than directly and immediately relating to student admission or the conduct of examinations. A broad connection with education does not satisfy the educational-services exemption.
Case Laws GST
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Fraudulent input tax credit requires proof of fictitious supplies, absent goods receipt, and fraud-linked self-assessment, not cancellation alone.
Input tax credit from allegedly non-existent suppliers depends on proof of genuine supply and actual receipt of goods or services, not merely invoices, accounting entries, or banking-channel payments. Section 155 places the burden of establishing ITC eligibility on the claimant. Section 74 requires more than ineligible credit: the wrongful availment must be linked to fraud, wilful misstatement, or suppression to evade tax. Retrospective supplier-registration cancellation is relevant evidence but is not conclusive. A fraud-based notice must disclose facts showing fictitious suppliers, absence of supply, and a basis for inferring the recipient's knowledge or participation.
Case Laws Money Laundering
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Prolonged pre-trial incarceration may justify conditional PMLA bail when delayed trials make continued detention constitutionally disproportionate.
Section 45 of the Prevention of Money-Laundering Act remains the stringent ordinary bail threshold, requiring prosecutorial opportunity and, on opposition, reasonable grounds to believe that the accused is not guilty and unlikely to offend while on bail. Article 21 nevertheless requires a separate, fact-sensitive inquiry where prolonged pre-trial detention and an unrealistic trial timetable make custody disproportionate. Relevant factors include custody length, trial progress, remaining witnesses, secured documentary evidence, source of delay, predicate-case status, and risks of absconding or witness interference. Conditions such as passport surrender, attendance, non-contact directions, and residence disclosure may safeguard the trial.
Case Laws Income Tax
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Prospective operation of stamp-value taxation prevents retrospective application where property agreements and substantial payments predate the charging provision.
Section 56(2)(x)(b) applies to immovable property received for inadequate consideration only where its temporal and valuation conditions are satisfied. A stamp-value difference alone does not establish taxability. Where consideration was fixed and substantial payments or contractual performance occurred before the charging provision commenced, later conveyance or registration does not by itself attract the later charge. Agreement-date valuation is available only for covered transactions where consideration was fixed and paid, wholly or partly, through prescribed banking or electronic modes on or before the agreement date. The tax authority must identify the correct statutory basis and provide a meaningful opportunity to respond.
Case Laws GST
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GST cash seizure limits require statutory relevance and restitutionary interest for unlawfully retained currency following searches.
GST seizure powers cannot be used to take cash as a general investigative measure or security for a possible tax demand. Currency is excluded from goods, and "things" is confined contextually to articles useful or relevant as evidence in GST proceedings. Valid seizure and retention require recorded statutory reasons, procedural compliance and observance of return timelines. Unauthorised retention engages property protections; later return does not cure the deprivation, and accrued interest is restitutionary rather than delayed-refund interest.
Case Laws Income Tax
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Salary expense genuineness requires proof of actual services, business purpose, and fair testing of adverse third-party statements.
Under Section 37(1), salary expenditure is deductible only where it is actually incurred wholly and exclusively for business purposes and is supported by proof of genuine employment, services rendered, business nexus, and payment. Bank transfers and accounting entries alone are not conclusive. Where a third-party statement is central to an allegation of non-genuine salary, the taxpayer should receive disclosure and a meaningful opportunity to rebut it, including cross-examination where appropriate. A retracted and uncorroborated statement is vulnerable as the sole basis for disallowance.
Case Laws Income Tax
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Discounted cash flow valuation remains taxpayer-selected under prescribed rules, while tax scrutiny must identify specific valuation-date defects.
The taxpayer may elect a prescribed DCF valuation for unquoted equity shares, and scrutiny of that method does not permit substitution with Net Asset Value merely because it produces a lower fair market value. The Assessing Officer may examine projections, discount rates, terminal assumptions, computations and source data, but rejection requires demonstrably wrong facts, material errors, a wholly erroneous basis or objectively unsupported assumptions. Subsequent financial performance cannot alone invalidate a bona fide DCF valuation; the relevant inquiry remains the reasonableness of valuation-date information.
Case Laws GST
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Excess IGST on exports remains refundable when later correction triggers automated refund and reconciliation proves duplicate payment.
Refund of excess IGST paid on zero-rated exports may arise where turnover and tax are mistakenly entered under non-zero-rated supplies in FORM GSTR-3B while export invoices and shipping bills are correctly reported in FORM GSTR-1. If the exporter then pays the same IGST in the correct zero-rated field and the automated refund is credited against that later payment, the earlier payment remains a separately identifiable potential excess; its claim is not a repeat request for the same export-tax refund.
Case Laws GST
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GST registration revocation requires timely application, return compliance, payment of dues, and a reasoned statutory decision.
GST registration revocation after cancellation for return default is a conditional, time-bound process. An application under Section 30 and Rule 23 must ordinarily be filed within ninety days, subject to prescribed extension, and cannot be made until pending returns are filed and tax, interest, penalty and late fee are paid. Portal non-acceptance may permit online or physical submission where technically unavailable, but does not condone delay or ensure revocation. The competent authority must assess statutory eligibility, sufficient grounds and compliance while following notice and hearing requirements before rejection.
Case Laws Income Tax
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Reassessment limitation under TOLA requires final notices to issue within surviving time and satisfy statutory safeguards.
Reassessment limitation under TOLA is a jurisdictional restraint. Transitional notices issued between 1 April 2021 and 30 June 2021 are treated as Section 148A(b) show-cause notices, but only the surviving time remaining until 30 June 2021 is available for completing the reassessment process. Periods for supply of material and the assessee's response are excluded, but the Section 148A(d) decision, statutory approval and final Section 148 notice must issue within the remaining period. For Assessment Year 2015-16, post-1 April 2021 notices are treated as time-barred.
Case Laws Customs
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Unseized food consignments cannot face indefinite detention without lawful seizure, valid sampling, and prompt assessment.
Provisional release of an unseized imported food consignment is not mechanically governed by Section 110A, which applies to goods seized under Section 110. Customs may examine, test, verify and reassess imports, but indefinite retention without a seizure memorandum or disclosed reasons connecting the goods with confiscation is not justified. Food sampling should follow the specialised food-safety process through an authorised officer. A valid food-safety report may support conditional clearance, while classification, duty liability, confiscation and adjudication remain open. Revenue may be protected through proportionate security.
Case Laws Customs
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Anti-dumping duty recovery permits post-clearance demands and consequential import IGST where self-assessment omitted an applicable levy.
Unpaid anti-dumping duty omitted during self-assessment may be pursued through the customs recovery procedure without prior appellate modification of the self-assessment. The recovery framework applies to anti-dumping duty through statutory incorporation of provisions concerning assessment, non-levy, short-levy, interest and recovery. Where anti-dumping duty is chargeable, it forms part of the aggregate value used to compute IGST on imports, potentially creating a consequential IGST short-payment. Recovery requires accurate assessment of notification coverage, product, origin, rate, valuation, limitation and procedural safeguards.
Case Laws GST
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Project-wise anti-profiteering requires actual input tax credit measurement and area-based allocation of benefits to real-estate purchasers.
Real-estate anti-profiteering under Section 171 requires project-level identification of additional input tax credit and allocation of the saving across total project area on a per-square-foot basis. Purchase value may quantify credit attributable to project expenditure, but turnover or collections cannot serve as the allocation basis. The comparison must use pre-GST credit actually availed rather than merely available credit. GST collected on consideration inflated by an undistributed benefit forms part of the amount not passed on and remains distinct from statutory interest.
Case Laws Income Tax
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Retirement leave encashment exemption applies under the enhanced notified ceiling while preserving non-government employee classification and statutory conditions.
Section 10(10AA)(ii) governs retirement leave-encashment exemption for non-Government employees, subject to the ten-month earned-leave measure, average-salary computation, and the notified monetary ceiling. Notification No. 31/2023 specifies an enhanced ceiling of Rs. 25,00,000, is deemed effective from 1 April 2023, and certifies that retrospective effect causes no adverse effect. The enhanced ceiling is treated as a remedial rationalisation of an existing exemption and may govern pending earlier-period matters, while preserving the distinction between Government and non-Government employees.
Case Laws GST
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Transit GST jurisdiction limits detention penalties for documented inter-State supplies lacking a local taxable nexus.
Transit-State jurisdiction under GST permits interception, document production, e-way bill verification and authorised physical inspection of goods moving through an intermediate State. It does not, in a pure transit movement, support detention-related penalty for an external inter-State supply where origin and destination lie outside the intercepting State, no tax is payable there, and there is no evidence of diversion, local supply, fictitious or mismatched documents, or mismatch of goods. Cross-empowerment is administrative and does not create an independent territorial taxable nexus.
Case Laws SEBI
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Shareholder ratification cannot cure preferential-issue fund diversion when disclosed objectives are abandoned, triggering securities-market fraud and disclosure concerns.
Post-facto shareholder approval cannot retrospectively validate diversion of preferential-issue proceeds contrary to issue-specific objects disclosed to shareholders and the market. A special resolution authorises the issue but does not permit unrestricted use of proceeds. Periodic deviation reporting, audit-committee review and utilisation disclosures promote transparency; they do not enable diversion followed by later regularisation. Immediate diversion, inadequate commercial justification and missing documentation may indicate that disclosed objects were not genuinely intended to be performed. Later amendment of corporate objects or shareholder ratification cannot cure a completed securities-market disclosure breach.
Case Laws Income Tax
Show AI Summary
Cross-border software payments require copyright-right, technical-service, and permanent-establishment analysis before withholding obligations are determined under applicable treaties.
Section 195 requires withholding only from a remittance to a non-resident that includes income chargeable in India. For software, royalty depends on transfer of copyright rights, not merely the right to install, access, use, or distribute a copyrighted article under restrictive terms. Where a DTAA is more beneficial, its royalty and FTS definitions control; treaty FTS may require technology to be made available. Amounts that are neither royalty nor FTS require consideration as business profits, ordinarily taxable only where profits are attributable to a permanent establishment. Composite payments require component-wise allocation and analysis.
Case Laws GST
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Personal GST penalty requires proof that the beneficiary retained benefit and directed a covered invoice or credit transaction.
Section 122(1A) may impose personal GST penalty on a registered or unregistered person only for a covered invoice or input tax credit transaction. Liability requires cumulative proof that the individual retained an identifiable personal benefit and that the transaction was conducted at that person's instance. Directorship, employment, registration, signature authority, or association with the taxable entity neither independently establishes nor excludes liability. Proceedings require transaction-specific and person-specific allegations and findings. The provision operates prospectively for underlying acts or transactions occurring on or after 01.01.2021.
Case Laws IBC
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Proof of tenancy rights governs insolvency recovery of corporate-debtor premises from occupants lacking enforceable possessory interests.
Where premises form part of the corporate debtor's assets, Sections 18 and 25 of the Insolvency and Bankruptcy Code, 2016 require the resolution professional to take custody, control, preservation and protection measures. An occupant resisting recovery must prove a subsisting tenancy, leasehold interest or enforceable licence through reliable evidence of the parties' intended relationship and its essential terms. Permission to stock goods or conduct limited business activity, prolonged occupation, and business or utility records do not independently create rights in the premises. Section 60(5)(c) supports insolvency jurisdiction over asset-recovery measures connected with the insolvency estate.
Case Laws GST
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GST portal service requires statutory validity and practical accessibility before ex parte adjudication can fairly proceed.
GST portal service is a statutory method under Section 169, but its use in an ex parte demand proceeding depends on effective accessibility and a meaningful opportunity to reply and be heard. Rule 142 requires electronic DRC-01 and DRC-07 summaries to operate alongside the underlying show-cause notice and reasoned order. Portal placement, complete communication, e-mail transmission, technical reliability and proof of actual access may determine whether service is effective, whether waiver applies, and whether appellate limitation begins.

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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