Existence of dispute under insolvency code

By Abhishek Dutta, Vineet V Shrivastava and Manish Parmar, Aureus Law Partners

2 February 2019

Under the Insolvency and Bankruptcy Code, 2016, the corporate insolvency resolution process (CIRP) can be initiated by an operational creditor if there is no dispute in relation to the default on the part of the corporate debtor.

Abhishek Dutta Aureus Law Partners
Abhishek Dutta
Aureus Law Partners

The application filed with the National Tribunal (NCLT) must be preceded, under section 8, by a demand to repay the debt. The corporate debtor should, within a period of 10 days from the date of receipt of notice, either repay the unpaid operational debt or mention the existence of a dispute or record of the pending suit or arbitration proceedings filed before the receipt of such notice or an invoice in relation to such a dispute.

While a record of a pending suit or an arbitration proceeding filed before the receipt of notice or invoice in relation to the dispute would lead to an immediate cessation of further proceedings, the stand-alone term “dispute” has lent itself to interpretation by the courts. Under section 5(6) of the code, “dispute” includes a suit or arbitration proceedings relating to (a) the existence of the amount of debt; (b) the quality of goods or service; or (c) the breach of a representation or warranty.

Evaluation of dispute: The definition clause provides that the term “dispute” shall include a suit or an arbitration proceeding. Principles of statutory interpretation provide that the word in respect of which “includes” is used, bears both its extended statutory meaning and its ordinary, popular and natural sense, whatever is properly applicable. Also, the definition in relation to which “includes” is used would have an extended meaning, and cannot be restricted to receive its ordinary, popular and natural meaning.

Vineet-V-Shrivastava-Aureus-Law-Partners
Vineet V Shrivastava
Aureus Law Partners

Further, where the word is defined to “include” something, the definition is prima facie extensive. The word “include” is generally used in interpretation clauses in order to enlarge the meaning of words or phrases occurring in the statute. It is also instructive to note that in the code as enacted, the word “includes” was substituted for the word “means”, which occurred in the Insolvency and Bankruptcy Bill.

In view of the above, the meaning of the term “dispute” as defined in the code would include other forms of dispute which have not culminated in judicial proceedings, in addition to the suit or arbitration proceedings.

According to the definition of “dispute”, suits or arbitrations are examples of dispute. However, such suits or arbitrations should be specifically related as provided under section 5(6) of the code.

As discussed, being inclusive, the definition of “dispute” can be extended. The Supreme Court, in Mobilox Innovations Pvt Ltd v Kirusa Software Pvt Ltd (2017), held that the dispute in the form of suits or arbitration proceedings must relate to one of three conditions laid down under section 5(6) of the code either directly or indirectly. Further, the Supreme Court has held that passing of an arbitral award and steps taken to challenge the arbitral award constitutes a valid dispute with regard to operational debt, as well as a pending appeal under the Arbitration and Conciliation Act, 1996.

A part settlement of the disputed amount as opposed to arbitration proceedings would not entitle the creditor to contend that a dispute did not exist.

Existence of dispute: The Supreme Court has observed that the dispute must be pre-existing prior to the receipt of the demand notice or invoice. A dispute raised after the application for CIRP cannot be a ground for rejection of such application.

Manish Parmar Aureus Law Partners
Manish Parmar
Aureus Law Partners

The true meaning of section 8(2)(a) read with section 5(6) of the code clearly brings out the intent of the code, that the corporate debtor must raise a dispute with sufficient particulars. In case a dispute is being raised by showing the records of dispute in a pending suit or arbitration, the dispute must also be relatable to the conditions provided under section 5(6). In addition, such dispute should have been raised with or brought to the notice of the creditor.

Hence, for rejection of an insolvency application, the adjudicating authority does not have to go into the merits of the dispute as to whether such a dispute would withstand judicial scrutiny. However, it is important that the authority determines two things – firstly that the dispute raised is valid in its estimation and secondly that the dispute has been brought to the notice of the creditor before the notice is served. The first of these two aspects is subjective, but the second is an objective assessment. Remedying this, in the authors’ view, would lead to better solutions under the law.

Data, Privacy: What’s on the Cards

The Data Lawyer and Aureus Law Partners wish you a very happy 2019 (and we sincerely hope that in the new year, no one infringes your privacy, steals your data or leaves you with a lack of choice!). 

In this post, we take stock of some imminent developments within the realm of data privacy in India, and its potential impact on individuals and businesses alike. Needless to say, what’s on the horizon is mostly tied to what transpired in the last year.  

Aadhaar and Other Laws Amendment Bill

On December 17, 2018, the Cabinet approved certain amendments to the Prevention of Money Laundering Act, 2002 (the “PMLA”), the Telegraph Act, 1885, and the Aadhaar (Targeted Delivery of Financial and other Subsidies, benefits and services) Act, 2016 (the “Aadhaar Act”) that are intended to pave the way for use of Aadhaar details for obtaining new mobile numbers or opening bank accounts when customers opt for its use ‘voluntarily’. We had written about the possible outcomes of this here: https://thedata.lawyer/2018/12/18/what-the-proposed-pmla-amendments-might-mean/.

The Bill was introduced in Parliament in this week. The Bill proposes a regime for allowing every client, beneficial owner, or person (such terminology depending on whether the necessary identification is in relation to telecom or PMLA requirements) who is sought to be identified, the voluntary choice of one of the following modes of identity verification:

  1. authentication under the Aadhaar Act if the party doing the verification is a banking company (under the PMLA regime), and by all persons licensed to ‘establish, maintain, or work a telegraph’ (read: telcos and ISPs); or
  2. offline verification under the Aadhaar Act (whether the offline verification will be paper-based or paperless mechanisms is not currently known and will be “through such offline modes as may be specified by regulations” says the Bill); or
  3. use of passport issued under Section 4 of the Passports Act, 1967; or
  4. use of any other officially valid document (“OVD”) or modes of identification as may be notified by the Central Government.

Simply put, the Bill allows Aadhaar e-KYC, Aadhaar offline KYC and other forms of KYC through passport or other OVDs, depending on the individual’s choice. 

Note that there are several additional steps that need to occur before we see the result of these amendments: these include the issuance of specific regulations that would, presumably, set out the details of how each of these various forms of identity verification are to take place. Here are a few additional points about the changes proposed in the Bill that one needs to keep in mind:

  • While the proposed changes to the PMLA currently contemplate the use of Aadhaar eKYC only by banking companies, the Bill also states that the Central Government may permit other types of entities that to use Aadhaar eKYC is they meet the standards or privacy and security set out under the Aadhaar Act. This leaves significant opportunity for regulatory widening of the permissibility of Aadhaar eKYC by – you guessed it – ‘fintech’ companies
  • Several industry bodies and associations have made representations to regulators in the past months, urging the adoption of ‘paperless’ processes for non-Aadhaar-authentication-based (read: non-Aadhaar-eKYC) identification processes; whether these have been accepted, and if so, to what extent, would only be apparent once the updated regulations are published and made available.
  • The Bill states emphatically that no person may be denied services for not having an Aadhaar number. But it keeps a window open for mandatory authentication of an Aadhaar number holder for the provision of any ‘service’ if such authentication is required by a law made by Parliament. Possibly, the ‘service’ in question is one for which the expenditure is incurred from, or the receipt thereform forms part of, the Consolidated Fund of India, as described in Section 7 of the Aadhaar Act.
  • Other noteworthy changes proposed by the Bill relate to granting of teeth to the UIDAI by allowing it to appoint officers and employees to discharge its functions, issue directions to any entity in the ‘Aadhaar ecosystem’, and also impose hefty fines ranging from one crore to additional penalties of upto ten lakh per day of an unremedied contravention. This is important, because one of the grounds on which the compulsory use of Aadhaar eKYC was challenged is that private players were allowed to gather demographic data without much oversight over their use, retention, or processing of such data. These changes may result in greater compliance by entities within the ‘Aadhaar ecosystem’; but note that the proposed changes in the Bill do not include specific provisions under which an Aadhaar number holder could file a complaint against an erring ‘Aadhaar ecosystem’ member: inquiries under the new Section 33A(l) of the Aadhaar Act may only be initiated upon a complaint made by the UIDAI. 

Watch this space for timely updates on the Bill’s journey through Parliament. 

Review Petition against the Aadhaar Judgment

Even as the Government and the regulators showed sluggishness in reacting to the Supreme Court’s Aadhaar judgment (in the matter of Justice K.S. Puttaswamy (Retd.) v. Union of India & Others), we hear that a petitioner by the name of Imtiyaz Ali Palsaniya has made some quick moves to file a review petition against this judgment, contending that various grounds urged in applications filed in the matter had not been considered by the Hon’ble Court in its judgment. The petition purportedly sets out eight grounds for reviewof the judgment, of which the following is of interest to us:

“The absence in the judgment of any direction by the Hon’ble Court for deletion of Aadhaar data which already is in the possession of private companies, entities, schools, colleges, work places, banks, post offices, telecommunication service providers, etc. The petitioner contends that such a direction ought to have flowed as a consequence of the Supreme Court Bench’s reading down of Section 57 of the Aadhaar Act. While the contention appears logical, it remains to be seen whether it garners the apex court’s interest. If it does, it is hoped that the directions if any issued, are not impractical to comply with.”

The Information Technology Intermediaries Guidelines (Amendment) Rules

On December 24, 2018, the Ministry of Electronics & Information Technology (“MeitY”) issued a draft of “The Information Technology [Intermediaries Guidelines (Amendment) Rules] 2018” inviting public comments on certain measures to regulate social media, which had Indian social media buzzing for several hours. 
Among others, the draft Rules state: 

“When required by lawful order, the intermediary shall, within 72 hours of communication, provide such information or assistance as asked for by any government agency or assistance concerning security of the State or cyber security; or investigation or detection or prosecution or prevention of offence(s); protective or cyber security and matters connected with or incidental thereto. Any such request can be made in writing or through electronic means stating clearly the purpose of seeking such information or any such assistance. The intermediary shall enable tracing out of such originator of information on its platform as may be required by government agencies who are legally authorised.”

Since a previoushome ministry notification authorising 10 intelligence and security agencies to intercept data on computers, mobile devices, and servers caused uproar, the Government gave a longer reaction time to stakeholders on this one.  

While the Government’s efforts to reign in the internet and social media – much in contrast to the fundamental premises on which these are designed – are nothing new, one wonders what would happen to intermediaries if they are ever called upon to handover information or assistance of a nature that they are ill-equipped to even store, let alone handover. Even a law-abiding intermediary would be hard-pressed to think of all the types of information that might fall under a description as vague as “information concerning cyber security…matters connected with or incidental thereto”. It is hoped that stakeholders take due notice of such draft rules and regulations and make known their difficulty in complying with them. 

And in parting, let’s mention the Draft Personal Data Protection Bill, which generated much discussion and debate, but has not been presented before Parliament in the current session. With general elections around the corner, and a veritable sea of representations and suggestions having been made to MeitY in response to its invitation of comments from the public, the date of the Bill’s passing into law, as well as its final form, remain matters of speculation. 2019 promises to be an interesting year for privacy and data protection!

Here’s how you can reach the authors:
Bhavin Patel (bhavin.patel@aureuslaw.com)
Hemant Krishna (hemant.krishna@aureuslaw.com)

Cross-border insolvency report: A bird’s eye view

By Abhishek Dutta and Astha Srivastava, Aureus Law Partners

The Insolvency Law Committee issued a report on cross-border insolvency in October after considering public comments received on a draft framework issued by the Ministry of Corporate Affairs. The committee considered the UNCITRAL Model Law on Cross-Border Insolvency, 1997 (Model Law), and its implementation in the UK, the US, and Singapore.

Abhishek DuttaFounder and managing partnerAureus Law Partners
Abhishek Dutta
Founder and managing partner
Aureus Law Partners

Applicability: The proposed legislation may be applicable initially to corporate debtors (including foreign companies) under the Insolvency and Bankruptcy Code, 2016 (IBC). Following principles of legal reciprocity, benches of National Company Law Tribunal (NCLT) may be notified for recognition of foreign proceedings and cooperation with foreign courts and foreign representatives. Insolvency professionals or liquidators under IBC also may be authorized to act in foreign countries subject to regulations. NCLT may refuse to take action in a proceeding, if its implementation will be manifestly contrary to India’s public policy. Public policy exception is recommended to be applicable restrictively with the inclusion of the phrase “manifestly contrary”. The central government will be asked to weigh in whenever a question of public policy is involved and international jurisprudence is to be relied upon where an exception is needed. The central government may be granted the power to act on its own cognizance (suo motu) in case it feels that an NCLT order may be against public policy. Amendments to certain sections of Companies Act, 2013, have also been proposed.

Access to foreign representatives: According to the report, foreign representatives should be provided direct access to NCLT, and allowed to exercise their powers under the legislation through an insolvency professional. A code of conduct may be specified for foreign representatives including a penalty for infraction. After recognition of a foreign proceeding, foreign representatives may be permitted to participate in the insolvency proceedings of the debtor under the IBC. Foreign creditors may be extended similar rights as that of the Indian creditors for initiating or participating in insolvency proceedings.

However, claims of foreign tax and social security may be excluded. Notice to foreign creditors of a proceeding under IBC may be provided on the same terms as Indian creditors. The notice of initiation of IBC proceeding will include the time period and place for filing claims, the requirements for secured creditors and other relevant information.

Astha SrivastavaSenior associateAureus Law Partners
Astha Srivastava
Senior associate
Aureus Law Partners

Recognition of foreign proceeding: Foreign representatives may be permitted to apply for recognition of foreign proceedings before NCLT. Such an application has to be filed with documents substantiating the existence of foreign proceedings. Foreign representatives may also be required to submit a statement identifying all foreign and IBC proceedings pending against the corporate debtor in their knowledge. The corporate debtor’s registered office will be presumed to be its center of main interest (COMI).

A lookback period of three months to determine relocation of the registered office for COMI presumption is recommended. However, in case of any contradiction, NCLT may be authorized to ascertain COMI for a debtor. NCLT may recognize a foreign proceeding as foreign main proceeding, or foreign non-main proceeding. Reliefs including moratorium, distribution of Indian assets to foreign representatives may incur upon recognition of foreign proceeding as main or non-main.

With regards to cooperation with foreign courts and representatives, the central government has been mandated to act as a facilitator to ease the burden of NCLT. Notification of relevant authority for transmission of notices and correspondence with foreign courts has been suggested and cooperation and communication by the insolvency professional with foreign courts and representatives may be permitted.

Concurrent proceedings: After recognition of foreign main proceedings against a debtor, the initiation of IBC proceedings may be subject to certain conditions involving the existence of domestic assets. A creditor in receipt of part payment for a claim in a foreign insolvency proceeding may not be eligible for receiving payment in another proceeding against the same debtor. However, additional payment may be received if the same is proportionately less than the payment received by other creditors of same standing. Recognition of foreign main proceeding may be presumed as a proof of default under IBC by corporate debtor for the corporate insolvency resolution process. However, such foreign main proceeding should follow from an inability to pay debts or pursuant to a state of insolvency of the corporate debtor.

Analysis: High court powers down stressed sector

By Abhishek Dutta and Astha Srivastava, Aureus Law Partners

The Reserve Bank of India (RBI) issued a circular on 12 February 2018 under sections 35AA and 35AB (Provisions) of the Banking Regulation Act, 1949, on the identification and resolution of stressed assets.

In case of occurrence of default on accounts of debtors with aggregate exposure of lenders exceeding ₹20 billion (US$272 million) in aggregate (including specified previous RBI schemes). The circular mandates formulation of a resolution plan (RP) within 180 days from 1 March 2018 or from the date of default. In the event that a debt is not repaid, even by a day, RBI requires banks to file an insolvency application under the Insolvency and Bankruptcy Code, 2016 (IBC).

The Independent Power Producers Association of India, Association of Power Producers and Prayagraj Power Generation Company filed writ petitions with the division bench of the Allahabad High Court. The petitioners sought reliefs including, inter alia, a declaration that the Provisions in the circular are ultra vires the constitution and an order for quashing of the circular. This is an analysis of the order of 27 August 2018 delivered by the court.

Main line of attack against the circular was in reference to the “sector agnostic” approach adopted by RBI. The challenge was made that the approach violates Article 14 of the constitution. Power sector should be treated differently due to “severe financial stress”. Fuel shortages, sub-optimal loading, unused capacity, absence of fuel supply agreement(s) and a lack of power purchase agreement(s) were cited as reasons justifying differential treatment. The 37th and the 40th reports of the Standing Committee on Energy (SCE) were submitted as evidence. It was argued that initiation of IBC proceedings would cause grave and irreparable harm to the sector and that the 180-day period should be extended. Petitioners applied for the circular to be suspended till the High-Level Empowered Committee (HLEC) tenders its report. Notably, RBI is not a part of HLEC.

Astha SrivastavaSenior associateAureus Law Partners
Astha Srivastava
Senior associate
Aureus Law Partners

The court observed that reliance could be placed on the SCE reports as the facts in them were not in dispute. However, the reports were not sufficient for granting interim relief as they are in nature of “advised relief”. On the issue of irreversible prejudice following IBC proceedings, the court stated that the core scheme of IBC includes timely identification of default, expeditious implementation of a resolution plan, suspension or removal of existing management.

The court noted that the 180-day period for RP under the circular (as opposed to under IBC) is in addition to the prescribed total period of 270 days under IBC. Further, judicial interference in the operation of economic legislation can take place only if the provisions of such legislation are patently arbitrary or in defiance of logic. As the circular is intended to expedite the resolution of stressed economic and financial assets, the court decided not to intervene. Agreeing with RBI, the court rejected the argument of violation of Article 14. It decided that RBI is a monetary and fiscal regulator, and hence, the formation of protective measures for a particular industry are outside its purview. Lastly, it held that the court cannot give lenders discretion whether or not to apply under IBC, as this would contravene the powers conferred upon RBI by statute.

The court therefore denied the petition for interim relief but directed the government to consider initiating consultative process under the Reserve Bank of India Act, 1934. It directed that HLEC should submit its report within two months from the date of its formation. The court went on to clarify that its order will not curtail the rights and powers of a creditor under IBC, or of RBI from issuing directions to initiate corporate insolvency resolution process.

No appeal has been filed against the order. However, application of RBI for transfer of all cases pending before high courts seeking relief from the provisions of the circular to the Supreme Court was allowed. Supreme Court agreed to transfer such cases to itself with an assertion to maintain status quo as on 11 September 2018 till further order. It appears that Allahabad High Court’s order stands effectively stayed considering the petitioners before the High Court and the Supreme Court are common, being associations of power producers. However, it is unclear if this interim order is applicable on the ongoing resolution plans. It is also unclear whether this order applies to initiation of IBC proceedings by banks in the event of default by these petitioners et al under section 7 of IBC.

Cross-border insolvency requires a new framework

By Abhishek Dutta and the Knowledge Management Team, Aureus Law Partners

While a corporate entity may have creditors, debtors and assets in various countries, the Insolvency and Bankruptcy Code, 2016 (IBC), in its current avatar has no comprehensive legal framework on cross-border insolvency (CBI). The Ministry of Corporate Affairs on 20 June 2018 issued a public notice inviting comments on a draft chapter on cross-border insolvency, which is primarily based on the United Nations Commission on International Trade Law Model Law on Cross-Border Insolvency, 1997.

Currently, sections 234 and 235 of the IBC empower: (i) the government to make bilateral agreements with other countries for enforcing the IBC; and (ii) the National Company Law Tribunal (NCLT) to issue a letter of request to a foreign court for action on a debtor’s assets. Once a bilateral treaty is executed, and these provisions are notified, a foreign proceeding will be recognized in India, as per the Civil Procedure Code, 1908, while an Indian proceeding will be recognized in the foreign country based on its procedural rules.

Dealing with the issue of cross-border insolvency in Macquarie Bank Limited v Shilpi Cable Technologies Ltd, the Supreme Court recently gave foreign creditors the same right as a domestic creditor to initiate and participate in the corporate insolvency resolution process (CIRP). In this context of lack of a comprehensive framework on cross-border insolvency issues, the draft chapter would apply when: (a) assistance is sought in India by a foreign court or a foreign representative regarding a foreign proceeding; (b) assistance is sought in a foreign country regarding an IBC proceeding; (c) foreign and Indian proceedings for a corporate debtor are taking place concurrently; or (d) creditors in a foreign state have an interest in requesting initiation of or participation in the CIRP.

In a major departure from the Model Law, the draft chapter adopts the principle of reciprocity in that it will apply to countries which have adopted the Model Law. Further, access to the CIRP and information on notifications issued to a domestic creditor would be provided to foreign representatives and creditors.

A foreign proceeding could be recognized as a foreign main or non-main proceeding. This is paramount in determining the right to relief that may be granted by the NCLT. In the Model Law, the principle of centre of main interests (COMI) is used to determine the location of the main proceeding. COMI under the draft chapter is presumed as the place of debtor’s registered office.

A foreign main proceeding takes place in the country of the debtor’s COMI, while a non-main proceeding is at the debtor’s place of establishment. During a foreign main proceeding, the NCLT will ensure a moratorium on: (a) all proceedings against the debtor (including execution of judgments); (b) transferring, encumbering or disposing of any assets, rights or interests of the debtor; (c) enforcing any security interest on property of the debtor; and (d) the recovery of any property in the debtor’s possession by its owner or lessor. For non-main foreign proceedings, any relief is at the discretion of the NCLT. Before granting relief in a foreign proceeding, the NCLT is to ensure that the interests of creditors and stakeholders including the corporate debtor are protected. A foreign representative is also entitled to apply to the NCLT to avoid acts harmful to creditors.

The draft chapter provides for cooperation between the NCLT and the foreign court. The NCLT has the power to: (a) conduct a joint hearing with a foreign court; and (b) communicate with, request information or seek cooperation from foreign representatives. Resolution professionals (subject to NCLT supervision) are also empowered to communicate with foreign courts and representatives. Coordination between concurrent insolvency proceedings (for the same debtors) will ensure that the relief granted in a foreign non-main proceeding is consistent with the relief granted in a foreign main proceeding.

The NCLT also has the power not to give effect to the cross-border insolvency provisions if there is a violation of public policy.

The draft chapter is a step in the right direction. Among issues that need redressal, it does not govern cross-border insolvency proceedings of individuals. The term “foreign proceeding” is limited to an insolvency process and does not cover other forms of arrangement. Where the COMI falls outside India, the relief will depend on laws and courts of the foreign country. The draft chapter is silent on the rights and duties of an insolvency professional in a foreign proceeding. As public policy is not defined under the draft, parameters to ring-fence judicial discretion may be adopted, considering the inconsistent judicial approach towards the public policy doctrine.

Thus, once the draft chapter is enacted the question of whether it is better than negotiating bilateral treaties will be determined on the anvil of practical application.

Case Update: Supply of foods/beverages on-board a train to be treated as pure supply of goods

Taxpayer is involved in the business of supplying food to passengers travelling via Rajdhani Trains and other mails/express trains on basis of the menu approved by Indian Railway. Primarily, the Taxpayer was supplying food via three different modes. Firstly, supply of food through the food plaza / food stalls on the railway platforms; Secondly, supply of food on board the trains, including mandatory supply of newspapers; Thirdly, supply of food on board the mail/express trains. The Taxpayer preferred the application for advance ruling under Section 97 of the Central Goods and Services Tax Act, 2017 (“CGST Act”) before the Authority for Advance Ruling (“Authority”). On basis of the materials and records placed before the Authority, an advance ruling was sought in relation to the rate of GST applicable on the said supply of foods/beverages, and the mandatory supply of newspapers on board the trains by the Taxpayer.

Taxpayer was of the view that the supply of foods/beverages from food stalls / food plazas at the platforms and on board the trains would be taxable at the rate of 5% integrated tax (“IGST”) in terms of the Entry No. 7 of Notification No. 11/2017 – Central Tax (Rate) dated June 28, 2017 (“Rate Notification”). Further, the supply of newspaper would be exempt from GST as per the Entry No. 120 of Notification No. 2/2017 – Central Tax (Rate) dated June 28, 2017 (“Exemption Notification”). The jurisdictional Commissioner (CGST) agreed to the views of the Taxpayer except with respect to supply of foods/beverages on board the trains, which would be taxable at the rate of 18% IGST, being the supply of ‘outdoor catering’ services.Basis the perusal of contracts / agreements, the Authority observed that for supply of food on the trains, there are three transactions, one between the passengers and the Indian Railways, second between Indian Railways and Indian Railway Catering and Tourism Corporation (“IRCTC”) and third between IRCTC and the Taxpayer. The present application pertains to the third transaction vis-à-vis between IRCTC and the Taxpayer.

The Authority observed that the train is a mode of transport and hence cannot be treated as a restaurant, eating joint, canteen, etc. Accordingly, the catering services provided on-board a train are not covered under S. No. 7(i) of the Rate Notification, as claimed by the Taxpayer. Further, with respect to the treatment of said supply of food/beverages on-board a train as composite supply of services, the Authority ruled that since no element of service is involved, the same shall be treated as pure supply of goods. In similar terms, the supply of foods/beverages from the food stalls on the platform shall be treated as pure supply of goods. Further, the supply of newspapers, which is separately invoiced, shall be exempted from GST in terms of the S. No. 120 of the Exemption Notification. Accordingly, the application for Advance Ruling was disposed off by the Authority.

(In Re: Deepak and Company; Advance Ruling No. 02/DAAR/2018; Authority for Advance Ruling, New Delhi)

In case of any queries or clarifications on this subject, please feel free to reach out to Manish Parmar, Senior Associate, Aureus Law Partners at manish.parmar@aureuslaw.com.  Views are personal.