The week of 20th-26th January 2025 saw notable developments in taxation and trade regulations. The CBDT issued a notification allowing appeals filed after July 22, 2024, to be eligible under the Vivad se Vishwas Scheme. For cruise ship operations, special tax provisions under section 44BBC were clarified, detailing eligibility for non-residents operating cruise ships. Additionally, guidance on the Principal Purpose Test under India’s Double Taxation Avoidance Agreements was provided. In GST, provisions were introduced for temporary identification numbers (TINs) for GST payments, and late fees for GSTR-9C filings from 2017-18 to 2022-23 were waived. New updates in the excise domain clarified the non-transaction value of petroleum prices under MoUs and clarified central excise officer appointments. DGFT extended the free import policy for Tur until 2026 and introduced the Diamond Imprest Authorisation Scheme, allowing import and export of natural cut and polished diamonds under specific conditions. SEBI proposed changes in mutual fund schemes and issued a consultation paper to review the Social Stock Exchange framework. The RBI issued updated guidelines for the settlement of dues by borrowers to Asset Reconstruction Companies (ARCs), requiring rigorous evaluations. Lastly, judicial decisions included cases on the forfeiture of earnest money deposits and the rights of guarantors under insolvency.
Notifications & Circulars issued during week (20th – 26th Jan 2025)
A. Income Tax
CBDT addresses concern regarding the eligibility criteria for the Vivad se Vishwas Scheme: The scheme allowed for filing declarations where an appeal was pending as of 22nd July 2024. However, cases where an appeal was filed after this date, but within the allowed time frame were not eligible. This issue led to a writ petition before the Delhi High Court, which directed the CBDT to reconsider this apparent anomaly. CBDT has now issued a notification to provide that appeals filed after 22nd July 2024, but within the prescribed filing period, will be eligible for the scheme. (Income Tax Notification 08/2025 Dated 20/01/2025)
Conditions for Non-Residents in Cruise Ship Business under section 44BBC: The section 44BBC relates to special provision for computing profits and gains of business of operation of cruise ships in case of non-residents. The notification inserts Rule 6GB, outlining special provisions for applicability of presumptive taxation regime for non-resident cruise ship operators under this section. To qualify, such ships must carry over 200 passengers or be at least 75 meters long, provide leisure and recreational services with dining and cabin facilities, operate on scheduled voyages or excursions touching at least two or the same Indian sea ports twice, primarily transport passengers rather than cargo, and adhere to procedures or guidelines issued by the Ministry of Tourism or Shipping. (Income Tax Notification 09/2025 Dated 21/01/2025) (Income Tax Press Release Dated 21/01/2025)
Guidance for application of the Principal Purpose Test (PPT) under India’s Double Taxation Avoidance Agreements: The Multilateral Convention to Implement Tax Treaty Related Provisions to Prevent Base Erosion and Profit Shifting (“MLI”) entered into force for India on 1st October 2019. A key provision of the MLI is the Principal Purpose Test (PPT), which seeks to curb revenue leakage by preventing treaty abuse. While the PPT is included in most of India’s DTAAs through the MLI, it is part of some other DTAAs through bilateral processes. The guidance clarifies that the PPT applies prospectively from the date of the MLI’s entry into force (1st October 2019 for India) or bilateral agreements’ effective dates. Special provisions apply for certain treaties with grandfathering clauses, including those with Cyprus, Mauritius, and Singapore, which remain unaffected by the PPT. The circular highlights that PPT application requires a case-specific, fact-based assessment and may consider additional resources like the BEPS Action Plan 6 Report and the UN Model Tax Convention. (Income Tax Circular 01/2025 Dated 21/01/2025)
SC, Reduction in share capital of subsidiary company amounts to transfer of capital asset: Case of PCIT vs Jupiter Capital Pvt Ltd, SC Judgement Dated 2nd January 2025. The apex court held that the reduction in share capital of the subsidiary company and subsequent proportionate reduction in the shareholding of the assessee would be squarely covered within the ambit of the expression “sale, exchange or relinquishment of the asset”. It held that both reduction of share capital and redemption of shares involve the purchase of its own shares by the company and hence will be included within the meaning of transfer under Section 2(47) of the Income Tax Act. (SC Judgement Dated 02/01/2025)
HC, No power to Designated Authority to reopen concluded cases under Vivad se Vishwas Act: Case of SAN Garments Manufacturing Pvt Ltd vs PCIT, HC Delhi Judgement dated 12th December 2024. It has been held that there was no provision under the DTVSV Act that empowered a Designated Authority to reopen a concluded settlement. Once a final certificate was issued under Section 5(1), all disputes with regard to the ‘tax arrear’ stood concluded. (HC Delhi Judgement Dated 12/12/2024)
B. GST
Temporary Identification Number (TIN) for GST Payments: The notification introduce new provisions for granting temporary identification numbers (TIN) to individuals or entities not required to register under the Act but obligated to make payments under it. Rule 16A has been inserted to allow the proper officer to grant a temporary ID and issue an order in FORM GST REG-12. (CGST Notification 07/2025 Dated 23/01/2025)
CBIC waived Late Fee for FORM GSTR-9C for FY 2017-18 to FY 2022-23: This waiver applies to late fees incurred for filing reconciliation statements in FORM GSTR-9C along with annual returns in FORM GSTR-9 for financial years 2017-18 to 2022-23. Registered persons who missed submitting FORM GSTR-9C along with FORM GSTR-9 but later furnished the reconciliation statement by 31st March 2025 will benefit from this waiver. However, late fees already paid for delayed filing of FORM GSTR-9C will not be refunded. (CGST Notification 08/2025 Dated 23/01/2025)
Advisory, Implementation of mandatory mentioning of HSN codes in GSTR-1 & GSTR 1A: After successful implementation of Phase-I & Phase-II now Phase-III regarding Table 12 of GSTR-1 & 1A is being implemented, from return period February 2025. In this phase manual entry of HSN has been replaced by choosing correct HSN from given Drop down. Also, Table-12 has been bifurcated into two tabs namely B2B and B2C, to report these supplies separately. Further, validation regarding values of the supplies and tax amounts involved in the same, have also been introduced. However in initial period these validations have been kept in warning mode only, which means failing the validation will not be a blocker for filling. (GSTN Advisory Dated 22/01/2025)
Advisory on Business Continuity for e-Invoice and e-Waybill Systems: GSTN emphasizes integrating alternate mechanisms into existing systems by coordinating with system integrators, Invoice Registration Portals (IRPs), ERPs, GSPs, or ASPs.
— For e-Invoice services, six IRPs (NIC-IRP 1 & 2, Cygnet, Clear, EY, and IRIS) are operational and all IRPs can be used in case of service downtime. Testing can be conducted using the NIC sandbox environment. For e-Waybill operations, two portals (eWaybill1 and eWaybill2) ensure redundancy. A unified authentication token generated on one NIC portal is valid across all NIC e-Invoice and e-Waybill portals.
— API interoperability allows seamless operations, with cross-portal functionalities like retrieving IRN details, cancelling IRNs, and updating Part B in e-Waybills. Taxpayers should verify API compatibility, engage service providers to enable alternate mechanisms, and explore additional IRPs for uninterrupted operations. (GSTN Advisory Dated 24/01/2025)
C. Central Excise
Central Excise Officer Appointments: The notification appoints specific officers as Central Excise Officers under the Central Excise Act, 1944, the Finance Act, 1994, and related rules. These officers are vested with the authority to act within specified jurisdictions, as outlined in the notification, for handling appeals under Section 35 of the Central Excise Act and Section 85 of the Finance Act. It also specifies the officers’ roles, jurisdictions, and purposes, including appeals filed on or after 1st July 2017 with Commissioner (Appeals). (Central Excise Notification 01/2025 Dated 23/01/2025)
SC, Price of petroleum products agreed under MoU by Oil Marketing Companies is not transaction value: Case of BPCL vs Comm Central Excise, SC Judgement Dated 20th January 2025. The object of the MOU is not to sell petroleum products on a commercial basis to other OMCs. The real object is to ensure that each OMC gets a smooth supply of petroleum products and any disruption of supply is avoided. Therefore, the emphasis is on allowing individual OMCs access to each other’s products and facilitating the sale of petroleum products to their respective dealers/customers. The value of the goods for the purpose of computation of excise duty will be the transaction value, only if all three conditions (sale of goods for delivery at time and place of the removal, seller and the buyer are not related; and price is the sole consideration for the sale) are fulfilled. In the given case, if it is not proved that the price was the sole consideration for sale. Supreme Court held that the agreement between the oil marketing companies indicates that the price of petroleum products agreed under MoU is not a normal price and, therefore, is not a transaction value. (SC Judgement Dated 20/01/2025)
D. Custom Duty
New substances added to NDPS schedules: The notification amends the Narcotic Drugs and Psychotropic Substances (Regulation of Controlled Substances) Order, 2013. It adds several new substances to Schedules B and C of the order, such as 4-piperidone, 1-boc-4-piperidone, and various methyl glycidic acid derivatives, In order to regulate their production, distribution, and use. (Fin Min Notification Dated 23/01/2025)
HC directs CBIC to review Baggage Rules to prevent harassment: Case of Qamar Jahan vs Union of India, HC Delhi Judgement Dated 13th January 2025. Under the Baggage Rules, jewellery is not classified as “personal effects.” Passengers residing abroad for over a year are allowed to carry jewellery duty-free within specific limits: 20 grams valued at ₹50,000 for men and 40 grams valued at ₹1,00,000 for women. The court noted that these thresholds, set in 2016, are outdated given the current market price of gold, making the permissible weight significantly lower than intended. Furthermore, the court raised concerns about the lack of clarity in the declaration process, which leads to arbitrary actions by customs officials, often causing harassment to genuine travellers attending social events like weddings. The court recommended a comprehensive review of the Baggage Rules by the Central Board of Indirect Taxes and Customs (CBIC) to address these issues. (HC Delhi Judgement Dated 13/01/2025)
E. Directorate General of Foreign Trade (DGFT)
Free Import policy for Tur extended until 31st March 2026: The notification extends the “Free” import policy for Tur/Pigeon Peas under the Foreign Trade Policy earlier from 31st March 2025, to 31st March 2026. (DGFT Notification 51/2025 Dated 20/01/2025)
Increase in State-wise Annual Export Limits for Agarwood & Agar Oil: The notification amends the export policy for Agarwood (Aquilaria Malaccensis) chips, powder, and agar oil obtained from artificially propagated sources. The annual export quota for Agarwood chips and powder has been increased from 25,000 kg to 1,51,080 kg, and for agar oil from 1,500 kg to 7,050 kg, for the period 2024-25 to 2026-27. The policy permits exports from states including Assam, Tripura, Manipur, Nagaland, Karnataka, Meghalaya, and Kerala, with specified state-wise annual limits. (DGFT Notification 52/2025 Dated 20/01/2025)
Diamond Imprest Authorisation Scheme introduced: The scheme, introduced from 1st April 2025, permits eligible exporters to import natural cut and polished diamonds (up to 25 cents each) for re-export, with a mandatory minimum value addition of 10% in freely convertible foreign exchange. Only exporters with Two Star Export House status or higher, a minimum annual export performance of USD 15 million in cut and polished diamonds over the last three financial years, and compliance with GST and income tax filings are eligible.
— Imports under the scheme are limited to 5% of the exporter’s average annual export performance, capped at USD 115 million. All imports and exports must be routed through Mumbai Airport, with an export obligation completion deadline of six months from the import clearance date. The authorization and imported materials are bound by the ‘Actual User’ and pre- import conditions, prohibiting their transfer even after fulfilling the export obligation. (DGFT Notification 53/2025 Dated 21/01/2025)
Extension of Import Policy (MIP condition) for Glufosinate and its salts: The notification extends the Minimum Import Price (MIP) condition for Glufosinate and its salts (with a purity of at least 95% w/w) for one year, from 24th January 2025, to 23rd January 2026. The import of Glufosinate and its salts with a CIF value below Rs. 1289 per kg is now “Restricted,” while imports with a CIF value of Rs. 1289 per kg or above remain “Free.” These changes aim to regulate the import of Glufosinate in compliance with the Insecticides Act, 1968. (DGFT Notification 54/2025 Dated 24/01/2025)
EPCG Scheme, Relief in Average Export Obligation for 2023-24: As per Paragraph 5.17(a) of the Handbook of Procedures (HBP) of the Foreign Trade Policy (FTP), exporters in sectors where total exports declined by more than 5% in 2023- 24 compared to 2022-23 are eligible for a proportional reduction in Average Export Obligation (EO). The Regional Authorities are directed to adjust the Annual Average EO for EPCG Authorizations for 2023-24 based on this decline. Any reductions must be updated in the relevant license files and amendment sheets for EPCG authorization holders. (DGFT Circular 11/2025 Dated 21/01/2025)
Diamond Imprest Authorization (DIA) Scheme Procedure: The scheme, effective from April 1, 2025, allows import and export of natural cut and polished diamonds under specific conditions. Applications for DIA must be submitted online using Form ANF 4J, and all imports and exports are restricted to Mumbai Airport. Export obligations must be fulfilled exclusively through the physical export of diamonds, with a minimum value addition of 10% in freely convertible currency. Deemed exports and one-to-one correlation between imports and exports are not permitted under this scheme. The scheme mandates a bond and performance bank guarantee equal to the export obligation and duty foregone, respectively. Export obligations must be met within 18 months of the authorization issuance, with no extensions or revalidation permitted. (DGFT Public Notice 42/2025 Dated 21/01/2025)
F. Securities and Exchange Board of India (SEBI)
Draft Circular, Change in cut-off timings to determine applicable NAV with respect to repurchase/ redemption of units in overnight schemes of Mutual Funds: The draft circular proposing a change in cut-off timings, from the current 3:00 PM to 7:00 PM, for determining the applicable NAV for the repurchase/redemption of units in overnight mutual fund schemes. The circular mandates stock brokers (SBs) and clearing members (CMs) to deposit all client credit balances with clearing corporations in specified forms, including mutual fund overnight scheme (MFOS) units. These funds, being invested in risk-free government securities, provide minimal risk transformation for client funds. The comments/ feedback from stakeholders is invited. (SEBI Draft Circular Dated 20/01/2025)
Consultation Paper on Review of Social Stock Exchange (SSE) Framework: The SSE framework, introduced in 2022, aims to enable Non-Profit Organizations (NPOs) to raise funds via SSE segments of NSE and BSE. The consultation focuses on refining various regulations, including the definition of NPOs, the role of Social Impact Assessment (SIA) firms, and registration procedures. Notably, the paper proposes expanding the types of legal structures eligible for NPO registration and modifying the role of social impact assessors. SEBI also addresses challenges faced by NPOs in meeting regulatory timelines, extending deadlines for the 2023-24 financial year. The comments/ feedback from stakeholders is invited. (SEBI Consultation Paper Dated 20/01/2025)
Consultation Paper on Promoting Financial Inclusion Through Sachetisation of Investment in Mutual Fund Schemes: SEBI has proposed a sachetized mutual fund initiative to enhance financial inclusion by enabling small-ticket investments through Systematic Investment Plans (SIPs) of Rs. 250. Under this proposal, investors can start with up to three subsidized small-ticket SIPs across different Asset Management Companies (AMCs), supported by discounted fees and incentives from intermediaries. Payments will be facilitated via NACH and UPI auto-pay modes. Costs incurred by AMCs will be subsidized through SEBI’s Investor Education and Awareness Fund. An incentive of Rs. 500 will be offered to distributors and platforms for each new investor completing 24 SIP installments, promoting outreach efforts. Small-ticket SIPs will be limited to growth options and excluded from certain schemes like debt or thematic funds. The comments/ feedback from stakeholders is invited. (SEBI Consultation Paper Dated 22/01/2025)
G. Ministry of Corporate Affairs (MCA)
No Notification/ Circular during the week.
H. Insolvency and Bankruptcy Board of India (IBBI)
NCLAT, Forfeiture of entire Earnest Money Deposit not justified owing to Covid-19: Case of Nimmagadda Surya Pradeep Bio-tech Pvt Ltd vs Kamineni Steel and Power India Pvt Ltd, NCLAT Chennai Judgement Dated 16th December 2024. NCLAT held that owing to the situation prevailing due to Covid-19, the earnest money should not be permitted to be forfeited, where a subsequent fresh auction has taken place and the property has been sold at a higher price. Accordingly, directed to refund 75% EMD and retain 25% EMD. (NCLAT Chennai Judgement Dated 16/12/2024)
NCLAT, Acquisition cannot be claimed on basis of unregistered document: Case of Rahat Hussain vs Divyesh Desai, NCLAT Delhi Judgement Dated 7th January 2025. The Appellant is claiming right on the basis of the Sale Agreement which is admittedly unregistered and executed on a stamp of 20 rupees. Executive director who executed agreement was not authorized. Property is shown in the name of corporate debtor and liquidator has every right to take possession of the shop on which appellant could not prove title. (NCLAT Delhi Judgement Dated 07/01/2025)
NCLAT, SBI filed valid application under section 95 against personal guarantor: Case of Mavijbhai Nagarbhai Patel vs State Bank of India, NCLAT Delhi Judgement Dated 18th December 2024. Bank was justified in initiating insolvency proceedings against the personal guarantor by timely filing and proper authorization under section 95. The deed of guarantee was a continuing guarantee, which meant the appellant’s liability was triggered by the bank’s demand, not necessarily by the corporate debtor’s default. (NCLAT Delhi Judgement Dated 18/12/2024)
NCLAT, Payment of pre-CIRP electricity dues cannot be insisted for restoring electricity connection: Case of Uttrakhand Power Corp Ltd vs Shyam Baba Developers & Builders Pvt Ltd, NCLAT Delhi Judgement Dated 6th January 2025. NCLAT Delhi held that the Appellant had filed claim in the liquidation proceeding which was admitted by the Liquidator. Appellant is entitled for treatment of its dues as per Section 53 of the IBC. Appellant’s dues having been dealt in the liquidation process as per the IBC, Appellant cannot insist pre-CIRP dues to be paid before electricity connection is energised/ restored. The stand taken by the Respondent is contrary to the law laid down by this Tribunal as well as the Supreme Court. (NCLAT Delhi Judgement Dated 06/01/2025)
NCLAT, Unilateral guarantee revocation doesn’t absolve guarantor’s obligation as revocation not agreed by Financial Creditor: Case of State Bank of India vs Gaurishankar Poddar, NCLAT Delhi Judgement Dated 6th January 2025. NCLAT Delhi held that unilateral revocation of guarantee by the guarantor does not absolve him from his obligations under the guarantee agreement as the Financial Creditor has not agreed to such revocation. The terms of contract agreement also clearly show that the contract was irrevocable. (NCLAT Delhi Judgement Dated 06/01/2025)
NCLAT, Deprival of remedies under Article 21 of the Constitution not justifiable: Case of Tejinder Singh Bhathal vs MRF Limited, NCLAT Chennai Judgement Dated 24th December 2024. NCLAT held that a right to judicial remedies is a right which is safeguarded by Article 21 of the Constitution of India. Thus, deprival of remedies available under Article 21 is unjustifiable and hence it is directed to revive back the company petition. The Appellant had contended that he was not aware of the investments thus made by his father in his name but however he was made conscious of the aforesaid transaction/purchase of the shares only when, he was called upon for the purposes of collecting the information, as to whether he happens to be the holder of 100 equity shares of MRF company, since they have been transferred to the Investor Education and Protection Fund (IEPF). MRF had denied to issue the Duplicate Share Certificates to the Appellant. The Appellant has been deprived of pursuing any of the remedies. (NCLAT Chennai Judgement Dated 24/12/2024)
I. Reserve Bank of India (RBI)
Guidelines on Settlement of Dues of borrowers by ARCs: RBI has issued updated guidelines for the settlement of dues payable by borrowers to Asset Reconstruction Companies (ARCs). ARCs must develop Board-approved policies detailing criteria such as eligibility cut-offs, permissible concessions, and valuation methodologies for settling dues. These stipulate that settlements should be pursued only after all possible ways to recover the dues have been examined and settlement is considered as the best option available, with payments preferably made in lump sums. For accounts with outstanding principal amounts exceeding ₹1 crore, Independent Advisory Committee (IAC) recommendations and Board approvals are mandatory, ensuring rigorous evaluation of the borrower’s financial position and other relevant factors. Settlements involving borrowers classified as frauds or wilful defaulters must follow the same stringent processes as high-value accounts. (RBI Notification 106/2025 Dated 20/01/2025)
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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)
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