During the week of 4th–10th May 2026, major developments were witnessed across Income Tax, GST, Customs, DGFT, SEBI, RBI, and IBC laws. The Supreme Court held that courts cannot validate benami transactions through clever drafting and reaffirmed that reassessment notices require concrete evidence of Permanent Establishment allegations. Under GST, the Principal Bench of GSTAT was empowered to hear Section 101B appeals, while Delhi High Court quashed a GST order for violation of natural justice due to an illusory hearing. Customs authorities revised tariff values for edible oils, gold, silver, and areca nut and introduced safeguard duty mechanisms for steel imports. SEBI issued multiple consultation papers and cybersecurity advisories, while RBI liberalized foreign investment norms in the insurance sector and notified new FEMA Authorised Persons Regulations, 2026. In insolvency matters, the Supreme Court reiterated that IBC cannot be misused as a recovery tool. Several rulings also clarified arbitration, RTI disclosure limits, and specific performance execution principles.
Notifications & Circulars issued during week (4th – 10rd May 2026)
(Income Tax, GST, Central Excise, Custom Duty, DGFT, SEBI, MCA, IBBI, RBI)
(Click the Link for Notification/ Circular as issued)
A. Income Tax
SC, Judicial Process cannot validate Benami Transactions, courts must Pierce The Veil of Clever Drafting & Illusionary Cause Of Action: Case of Manjula vs DA Sirinivas, SC Judgement Dated 8th May 2026. The apex court held that courts must undertake a meaningful and holistic reading of a plaint while exercising powers under Order VII Rule 11 CPC to prevent frivolous or statutorily barred claims from proceeding to trial. The Bench observed that clever drafting cannot create an illusory cause of action to validate transactions prohibited by law.
SC Upholds Quashing of Reassessment Notices due to unproven PE Allegations: Case of ACIT vs GE Steam Power Systems, SC Judgement Dated 4th May 2026. The apex court upheld HC decision to quash reassessment notices issued under Section 148. It emphasizes that reassessment cannot be initiated based on generalized survey findings or without specific, tangible, and concrete material evidence showing a Permanent Establishment (PE) in India.
(Link: SC Judgement Dated 07/05/2026)
B. GST
GSTAT Principal Bench empowered to hear Section 101B Appeals: The notification empowers the Principal Bench of the GST Appellate Tribunal (GSTAT) New Delhi, to hear appeals filed under Section 101B of the CGST Act. It is now authorized to adjudicate appeals arising under the statutory framework relating to advance ruling matters under the GST law.
(Link: CGST Notification 02/2026 Dated 07/05/2026)
AAR, Bakery Products sold without preparation are Supply of Goods under GST: Case of Cremeux Bakeries Private Limited, AAR Goa Ruling Dated 30th March 2026. AAR ruled that the sale of bakery products such as cakes, pastries, sandwiches, savouries, biscuits, slice cakes, bread, rusk and other ready-made items, which are fully manufactured at the factory and sold through bakery outlets without any cooking, preparation or processing, constitutes a supply of goods and as per the HSN classification of particular goods the GST rate would apply. The preparation and sale of semi-finished goods such as pizzas at the outlets, wherein pizza base and toppings are supplied from the factory and are blended/prepared at the outlet upon customer order, constitutes restaurant service, irrespective of whether customer consumes them on restaurant premises or takes away. The taxpayer will be required to maintain separate series of tax invoices for better clarity as the taxpayer will be under legal obligation to comply with all provisions of GST Law particularly in respect of reversal of input tax credit on inward supplies of inputs and input services.
HC Quashes GST Order due to illusory hearing & same day GST Adjudication: Case of Avik Televentres Private Limited vs GST Officer, HC Delhi Judgement Dated 30th March 2026. HC set aside the demand on the petitioner, citing a violation of natural justice principles. The court found the assessment order, was illegal due to inadequate notice and an ‘illusory’ hearing, as the petitioner had less than one working day to respond to findings after a special audit.
C. Central Excise
No notification/ Circular during the week.
D. Custom Duty
Fixation of Tariff Value of Edible Oils, Brass Scrap, Areca Nut, Gold and Silver: CBDT notified the Tariff Values of Edible Oils, Brass Scrap, Areca Nut, Gold and Silver, which shall come into force w.e.f. 9th May 2026. The tariff value for crude palm oil is set at USD 1202 per metric ton, while gold and silver have tariff values of USD 1456 per 10 grams and USD 2603 per kilogram, respectively. The tariff value for areca nuts is fixed at USD 9155 per metric ton.
(Link: Customs Notification 45/2026 (NT) Dated 08/05/2026)
Samrang Border Route Connectivity with Bhutan: CBIC has added Samrang on the Bhutan border as a notified land customs route for movement through the Rangia–Tamulpur–Dimakuchi motorable road connecting Samrang in India with Samrang in Bhutan. The notification inserts the new entry in principal notification 63/1994 dated 21st November 1994, under the table relating to the land frontier of Bhutan.
(Link: Customs Notification 43/2026 (NT) Dated 06/05/2026)
Implementation of Safeguard Duty on import of Non-Alloy and Alloy Steel Flat Products: The Circular introduces system based qualifiers in the Single Window Table of the Bill of Entry to ensure that safeguard duty is not levied on exempted imports. Importers seeking exemption must declare specified details and corresponding INFO-CD codes relating to CIF value thresholds, country of origin, and excluded product categories. It classifies exemptions into three categories, i.e., imports meeting prescribed CIF import prices, imports originating from specified developing countries, and products expressly excluded from safeguard duty scope such as CRGO steel, stainless steel, tinplate, coated steel products, titanium clad plates, and other specialized steel products.
(Link: Customs Circular 23/2026 Dated 07/05/2026)
Extension of Relief due to Strait of Hormuz disruptions Impacting Maritime Trade: CBIC has extended the validity of earlier circulars issued to mitigate challenges arising from disruptions in maritime routes due to the closure of the Strait of Hormuz. The facilities provided through Circular Nos. 09/2026, 10/2026, 12/2026, 15/2026, 19/2026, and 21/2026 shall continue until 15th May 2026, without any changes to their terms and conditions.
(Link: Customs Circular 22/2026 Dated 04/05/2026)
E. Directorate General of Foreign Trade (DGFT)
Enlistment and up-dation of Pre-Shipment Inspection Agencies (PSIAs) in Appendix-2G: The public notice notified the enlistment of fourteen new Pre- Shipment Inspection Agencies (PSIAs) under Appendix-2G of the Foreign Trade Policy (FTP). The enlisted agencies are approved for issuance of Pre- Shipment Inspection Certificates (PSICs) online through the DGFT portal with immediate effect. The notice also permitted two existing PSIAs to add additional approved instruments, including hand-held radiation survey meters and spectrometers, to their existing approved instrument lists.
(Link: DGFT Public Notice 08/2026 Dated 08/05/2026)
Ad-Hoc Norms validity extended till 31st March 2028: The public notice extends the validity of ad-hoc norms ratified by the Norms Committee for Advance Authorisations. These norms will now remain valid until 31st March 2028. It also clarifies that these norms can be reused by other applicants during their validity, except for items listed under Appendix 4P and cases where the Norms Committee explicitly restricts reuse.
(Link: DGFT Public Notice 07/2026 Dated 05/05/2026)
Fixation of four new Standard Input Output Norms (SIONs) under Chemical and Allied Product: The public notice notify four new Standard Input Output Norms (SIONs) under the Chemical and Allied Product Group ‘A’. These norms, numbered A-3698 to A-3701, specify permissible input-output ratios for products such as Cefuroxime Sterile Sodium, NAS-5, Tobramycin Nebuliser Solution, and Schaeffers Acid. Each SION prescribes the quantity of import inputs allowed for manufacturing corresponding export products.
(Link: DGFT Public Notice 06/2026 Dated 04/05/2026)
F. Securities and Exchange Board of India (SEBI)
Norms for sharing and usage of price data for educational purposes: The existing provisions allow sharing of price data with a one-day lag, while entities engaged solely in education could use such data only after a three-month lag. SEBI has now prescribed a uniform 30-day lag for both sharing and usage of market price data for educational and awareness activities. An exception has been granted to the National Institute of Securities Markets (NISM), which may access market price data with a one-day lag exclusively for its simulation lab activities.
(Link: SEBI Circular Dated 08/05/2026)
Discontinuation of Investor Risk Reduction Access (IRRA) platform: SEBI has discontinued the Investor Risk Reduction Access (IRRA) platform. It was operational from 1st October 2023, intended to provide stock brokers an alternative trading access point during disruptions. It noted that several technology-driven reforms, including Business Continuity Planning and Disaster Recovery (BCP-DR) measures, cyber resilience frameworks, Market Security Operations Centre (M- SoC), improved technical glitch mechanisms, and enhanced trading infrastructure, had significantly strengthened brokers’ operational resilience. The IRRA platform remained unused and was considered structurally redundant by Stock Exchanges.
(Link: SEBI Circular Dated 07/05/2026)
Advisory on Emerging Advanced Artificial Intelligence (AI) Tools for Vulnerability Detection (like Mythos): The advisory mandates regulated entities to strengthen cybersecurity frameworks through immediate patch management, AI-assisted vulnerability assessments, enhanced API security, continuous SOC monitoring, system hardening, risk assessments, and onboarding with centralized Market SOC platforms. It also directed entities to engage with third-party vendors for security reviews and develop long-term AI-based detection and mitigation plans.
(Link: SEBI Circular Dated 05/05/2026)
Significant Indices under SEBI Index Providers Regulations: The circular states that an index based on listed securities will qualify as a Significant Index if the daily average cumulative assets under management (AUM) tracking or benchmarking the index across mutual fund schemes exceeds Rs 20,000 crore for each of the past six months ending June 30 and December 31 every year. It has been clarified that an index will continue to remain classified as significant unless its tracked AUM falls below the threshold for three continuous years. SEBI also released a list of Significant Indices, including major indices such as NSE Nifty 50 and BSE Sensex.
(Link: SEBI Circular Dated 05/05/2026)
Consultation Paper on Review and rationalization of Buy Back of Securities Regulations: The paper proposes, reintroducing open market buy-backs through stock exchanges with a completion timeline of 66 working days, mandating electronic intimation to shareholders, removing the requirement for a separate trading window, and freezing promoter holdings at the ISIN level during buy-back periods. It also proposes introducing explicit compliance with Minimum Public Shareholding norms and aligning the interval between two buy-backs with the Companies Act. It also suggests dispensing with the mandatory appointment of merchant bankers. The feedback/ comments from the stakeholders are invited.
(Link: SEBI Consultation Paper Dated 08/05/2026)
Consultation paper on Modification in the regulatory framework for Online Bond Platform Providers (OBPPs): The paper proposes, permitting OBPPs to offer products or securities regulated by the International Financial Services Centres Authority (IFSCA), subject to compliance with applicable foreign exchange laws and guidelines. It also proposes allowing OBPPs to offer tax-saving bonds issued under relevant provisions of the Income Tax Act, along with mandatory disclosures regarding their features and disclaimers on grievance redressal. It also recommends aligning the requirement for appointment of compliance officers for OBPPs with that applicable to stock brokers, thereby removing the mandatory requirement of appointing only a Company Secretary. The feedback/ comments from the stakeholders are invited.
(Link: SEBI Consultation Paper Dated 05/05/2026)
Consultation Paper, Draft Circular clarifying applicability of Early Pay-In Benefit in Commodity Derivatives Segment: The paper proposes to extend the benefit of early pay- in (EPI) in the commodity derivatives segment to options contracts, in addition to its current applicability to futures contracts. The existing framework allows market participants to deposit certified goods against futures contracts, potentially exempting them from certain margins except mark-to-market margins. The Working Group and the Commodity Derivatives Advisory Committee has recommended extending this benefit to options contracts as well. The draft circular proposes to provide EPI for all derivatives contracts. The feedback/ comments from the stakeholders are invited.
(Link: SEBI Consultation Paper Dated 05/05/2026)
Consultation paper on amendments to the SEBI Issue and Listing of Securitised Debt Instruments and Security Receipts Regulations: The paper proposes, permitting single asset securitisation by exempting RBI-regulated entities from concentration limits, shifting periodic disclosure obligations from originators to servicers, revising board composition of SPDEs by limiting originator representation without veto power, and allowing securitisation transactions between originators and SPDEs within the same group for RBI-regulated entities. It also proposes replacing mandatory winding up of securitisation schemes upon trustee cancellation with appointment of a new trustee.
(Link: SEBI Consultation Paper Dated 04/05/2026)
G. Ministry of Corporate Affairs (MCA)
No notification/ Circular during the week.
H. Insolvency and Bankruptcy Board of India (IBBI)
SC, IBC is not a recovery shortcut, rejects CIRP in Builder-Bank-Borrower Dispute: Case of Dhanlaxmi Bank Limited vs Mohammed Javed Sultan, SC Judgement Dated 7th May 2026. The apex court held that insolvency proceedings cannot be invoked as a coercive recovery mechanism where the dispute is predominantly contractual and already pending before an appropriate forum like the DRT.
SC, CIRP initiation for recovery amounts to misuse of Insolvency Framework: Case of Anjani Technoplast Ltd vs Shubh Gautam, SC Judgement Dated 23rd April 2026. The apex court held that IBC cannot be used as a substitute for execution of money decrees or a coercive tool for recovery against solvent companies. The appropriate forum for resolving disputes regarding the calculation and execution of the decree is the High Court, which was already seized of the matter.
NCLAT, Rejection of Resolution Plan upheld over low value and Avoidance Transaction Breaches: Case of Sandeep Lucky vs Rajeev Lochan, NCLAT Delhi Judgement Dated 24th April 2026. The appellate tribunal has upheld the NCLT rejection of a Rs 1.15 crore resolution plan, citing severe breaches in the handling of avoidance transactions and non-compliance with regulations. The bench found that the plan was valued at barely 10% of the corporate debtor liquidation value.
I. Reserve Bank of India (RBI)
Amendments to Foreign Exchange Management Non-debt Instruments Rules: The amendment revise foreign investment norms in the insurance sector. It permits up to 100% foreign direct investment in Indian insurance companies and insurance intermediaries under the automatic route, subject to regulatory approval and compliance with the Insurance Act and applicable IRDAI regulations. However, foreign investment in the Life Insurance Corporation of India remains capped at 20% under the automatic route.
(Link: Fin Min FEMA Notification Dated 02/05/2026)
Foreign Exchange Management Authorised Persons Regulations 2026: The regulations provide a revised framework governing authorisation, eligibility, permitted activities, renewal, compliance conditions, and oversight of authorised persons dealing in foreign exchange. These classify authorised persons into AD Category-I, AD Category-II, AD Category-III, and Full Fledged Money Changers (FFMCs). Fresh authorisation applications are required to be submitted through the PRAVAAH portal.
— The regulations permit AD Category-I entities to undertake all permissible current and capital account transactions, while AD Category-II entities may undertake specified non-trade current account transactions and foreign trade transactions up to Rs 25 lakh per transaction. FFMCs may continue money changing and MTSS- related activities. The regulations create a detailed Forex Correspondent Scheme allowing AD Category-I and II entities to appoint Forex Correspondents under a principal-agent model for money changing activities.
(Link: RBI FEMA Notification Dated 30/04/2026)
Amendments to RBI Payments Banks Prudential Norms on Capital Adequacy Directions: The circular amend provisions governing inclusion of quarterly profits in Common Equity Tier 1 (CET1) capital for payments banks. Under the revised framework, payments banks may recognize profits of the current financial year for Capital to Risk Weighted Assets Ratio (CRAR) calculations on a quarterly basis, provided quarterly financial statements are audited or subjected to limited review. The eligible profit amount is to be determined through a prescribed formula that deducts 25% of the average dividend paid during the preceding three financial years.
(Link: RBI Circular 81/2026 Dated 08/05/2026)
Amendments to RBI Small Finance Banks Prudential Norms on Capital Adequacy Directions: The circular amend provisions governing inclusion of quarterly profits in Common Equity Tier 1 (CET1) capital for small finance banks. Under the revised framework, the banks may recognize profits of the current financial year for Capital to Risk Weighted Assets Ratio (CRAR) calculations on a quarterly basis, provided quarterly financial statements are audited or subjected to limited review. The eligible profit amount is to be determined through a prescribed formula that deducts 25% of the average dividend paid during the preceding three financial years.
(Link: RBI Circular 80/2026 Dated 08/05/2026)
Amendments to RBI Commercial Banks Prudential Norms on Capital Adequacy Directions: The circular amend provisions governing inclusion of quarterly profits in Common Equity Tier 1 (CET1) capital for commercial banks. Under the revised framework, commercial banks may recognize profits of the current financial year for Capital to Risk Weighted Assets Ratio (CRAR) calculations on a quarterly basis, provided quarterly financial statements are audited or subjected to limited review. The eligible profit amount is to be determined through a prescribed formula that deducts 25% of the average dividend paid during the preceding three financial years.
(Link: RBI Circular 79/2026 Dated 08/05/2026)
Issuance of Foreign Exchange Management Authorised Persons Regulations: RBI has notified the Foreign Exchange Management (Authorised Persons) Regulations, 2026 vide notification No. FEMA 401/2026-RB dated 30th April 2026. All Authorised Persons have been directed to comply with the new regulations. The RBI also amended instructions contained in the Master Directions relating to Money Changing Activities and Other Remittance Facilities.
(Link: RBI Circular 78/2026 Dated 06/05/2026)
Draft Prudential Norms on Specified Non-financial Assets (SNFA) Directions: These regulate treatment of immovable assets acquired by regulated entities (REs) in satisfaction of stressed loan exposures. RBI stated that REs are ordinarily not expected to hold non- financial assets during normal lending operations, but may acquire such assets in exceptional cases where exposures become non-performing and recovery alternatives are unviable. It is proposed that SNFAs must be recorded at the lower of the net book value of the extinguished exposure or the distress sale value determined by at least two independent valuers. The draft also prescribes a maximum holding period of seven years for disposal of SNFAs and requires regulated entities to make demonstrable efforts to dispose of such assets through public auction following SARFAESI principles.
(Link: RBI Press Release Dated 05/05/2026, Draft Norms)
J. Miscellaneous
SC, Specific Performance Decree does not die automatically, revives Execution despite Delay in Deposit: Case of Anand Narayan Shukla vs Jagat Dhari, SC Judgement Dated 8th May 2026. The apex court held that a decree for specific performance does not automatically become unenforceable merely because the purchaser failed to deposit the balance sale consideration within the time stipulated in the decree. SC held that there is no automatic rescission, unless the decree itself expressly provides such consequence. The courts must examine the conduct of parties, bona fides of the decree-holder, surrounding circumstances, and whether delay can be compensated monetarily instead of mechanically terminating valuable contractual rights.
SC Allows Collaborator to invoke Arbitration Clause: Case of Elecon Engineering Company Limited vs Bhartiya Rail Bijlee Company Limited, SC Judgement Dated 7th May 2026. The apex court held that a non-signatory collaborator can invoke an arbitration clause where the collaborator is an ‘inextricable and veritable party’ to the underlying contract. It held that the arbitration clause in the principal contract extended to the collaborator because the execution of a Deed of Joint Undertaking (DJU) by both the contractor and collaborator, and collaboration arrangement formed an integral and inseparable component of the main contract itself.
HC, RTI cannot be used to obtain Spouse Income details for Maintenance Dispute: Case of Kapil Agarwal vs CPIO Income Tax Officer, HC Delhi Judgement Dated 28th April 2026. HC held that personal financial information, including income details and tax returns, constitutes ‘personal information’ under RTI Act and matrimonial disputes do not constitute ‘larger public interest’, therefore exempted from disclosure.
******
Compiled by:- CMA Yash Paul Bhola, MBA, FCMA, Former Director (Finance), National Fertilizers Limited.
Disclaimer: The contents of this article are for informational purposes only. The user may refer to the relevant notification/ circular/ decisions issued by the respective authorities for specific interpretation and compliances related to a particular subject matter)
Author Bio
