Reservation – Public Employment – Migration of Reserved Category Candidates – Selection on Own Merit – Appointment Against Unreserved Posts – High Court Interference Set Aside – Recruitment to the post of Junior Assistant (Fire Service) in Airport Authority of India – Reserved category candidates selected against unreserved posts on basis of higher or equal merit without availing any relaxation – High Court directed appointment of writ petitioner and reworking of roster – Supreme Court held that a reserved category candidate securing marks higher than or equal to general category candidates must be treated as an unreserved candidate – Appointment against unreserved post on own merit valid – High Court orders unsustainable [Paras 18, 27–34].

Reservation Roster – Nature and Purpose – Not a Tool for Selection – Reservation roster is a post-based administrative mechanism to monitor cadre strength and identify future vacancies – Roster comes into operation only after completion of selection and joining of candidates – Roster cannot be applied as a parallel or overriding selection mechanism – Division Bench erred in applying roster at the selection stage [Paras 19, 28–30].

Merit List – Inclusion of Reserved Category Candidates in Unreserved List – Legally Permissible – All candidates initially considered on merit – Reserved category candidates who did not avail any concession and outperformed general category candidates rightly included in unreserved list – Remaining candidates considered for respective reserved categories – Selection methodology upheld as consistent with DoPT instructions and settled law [Paras 27–31].

Reservation Law – Migration on Merit – Settled Legal Position Reaffirmed – Supreme Court relied upon Indra Sawhney, Saurav Yadav and Rajasthan High Court v. Rajat Yadav – Open category is not a quota but is open to all candidates irrespective of caste or category – Merit alone governs appointment to unreserved posts – Concept of “migration” clarified as merit-based adjustment and not conferment of double benefit [Paras 32–33].

Judicial Review – Recruitment Process – Limits on Court’s Power – Courts should not interfere with recruitment conducted strictly as per rules and settled reservation principles – No vested right to appointment merely because reserved vacancies remain unfilled – High Court erred in directing appointment when all unreserved posts were filled strictly on merit [Paras 33–34].

Delay and Laches – Challenge to Selection – Though issue of delay was raised, Supreme Court decided the matter on merits in view of crystallised law governing migration and merit-based selection [Paras 21–22].

Decision: Appeal arising out of SLP (C) No. 10686 of 2020 allowed – Judgment of Single Judge and Division Bench of Kerala High Court set aside – Appeal arising out of SLP (C) No. 12937 of 2021 dismissed – No order as to costs.

Judges (Inquiry) Act, 1968 – Section 3(2) – First Proviso – Interpretation – Notices of motion for removal of a Judge given in Lok Sabha and Rajya Sabha on the same day – Motion admitted in Lok Sabha but refused in Rajya Sabha – Contention that Joint Committee was mandatory and Speaker lacked authority to constitute Committee unilaterally rejected – Held: First proviso is situational and applies only where motions given on the same day are admitted in both Houses – Mere giving of notices on the same day does not disable the Presiding Officer of one House from proceeding independently where the motion is not admitted in the other House – Proviso cannot be read as exhaustive or as creating a disabling consequence not expressed by Parliament.

Statutory Interpretation – Proviso – Limits of operation – Proviso cannot be construed to nullify or curtail the substantive provision unless such intent is manifest – Main provision of Section 3(2) vests power in the Speaker or Chairman upon admission of motion – Rejection of a motion in one House does not render the other House incompetent to proceed – Interpretation suggested by petitioner would amount to judicial legislation and lead to absurd and obstructive consequences.

Parliamentary Autonomy – Removal of Judges – Constitutional Scheme – Interpretation that one House’s refusal to admit a motion would veto proceedings in the other House rejected – Such construction would undermine autonomy of Houses and frustrate mechanism for investigation into allegations of misbehaviour – Safeguards for Judges cannot be read so as to paralyse the statutory removal process itself.

Constitution of India – Article 91 – Deputy Chairman of Rajya Sabha – Powers – Office of Chairman of Rajya Sabha falling vacant due to resignation of Vice-President – Deputy Chairman acting under Article 91(1) – Held: Deputy Chairman is constitutionally empowered to perform all duties of the Chairman during vacancy – Definition of “Chairman” in Section 2(a) of the Inquiry Act cannot be read in isolation or so as to override constitutional mandate – Deputy Chairman was competent to refuse admission of the motion.

Judges (Inquiry) Rules, 1969 – Role of Deputy Chairman – Constitution prevailing over statutory silence – Argument that Rules 16 and 17 limit Deputy Chairman’s powers rejected – Held: Where statute is silent, constitutional provisions must fill the gap – Doctrine of constitutional silence and necessity applied – Vacancy in constitutional office cannot be allowed to bring statutory machinery to a standstill.

Bias – Hypothetical Apprehension – Doctrine of Necessity – Contention that Deputy Chairman could be a signatory to the motion and hence judge in his own cause rejected as speculative – Even otherwise, recusal or doctrine of necessity would apply – Constitutional and statutory functioning cannot be impeded by hypothetical bias.

Effect of refusal of motion by Deputy Chairman – Validity of Speaker’s action – Even assuming refusal by Deputy Chairman to be illegal – Speaker’s admission of Lok Sabha motion and constitution of Committee not vitiated – Applicability of first proviso depends on existence of admitted motions in both Houses at the time of Speaker’s action – No retrospective invalidation of Speaker’s lawful exercise of power.

Prejudice – Removal Proceedings against Judge – Threshold – Constitution of Inquiry Committee does not by itself cause demonstrable or legal prejudice – Committee report not self-executory – Multiple constitutional and statutory safeguards remain, including special majority requirement under Article 124(4) – Alleged loss of Joint Committee does not amount to prejudice warranting interference under Article 32.

Writ Jurisdiction – Article 32 – Maintainability – Absence of challenge to impugned order – Decision of Deputy Chairman refusing admission not specifically challenged by pleadings or prayer – Courts cannot quash or ignore an order not put in issue – Relief cannot be granted on hypothesis or assumptions – Settled limits of writ jurisdiction reiterated.

Secretary-General of Rajya Sabha – Administrative role – Limits (Observations for future guidance) – Secretariat exceeded administrative remit by undertaking substantive scrutiny of notice and facts – Inquiry Act does not contemplate adjudicatory role for Secretariat – Observations held academic and not forming basis for relief, decision of Deputy Chairman remaining unchallenged.

Decision: Writ Petition dismissed – Constitution of Inquiry Committee by Speaker of the Lok Sabha upheld – No relief granted to petitioner.

Service Tax – Event Management Service – Reverse Charge Mechanism – Classification of Service – Booking of Foreign Speakers for Leadership Summit – Demand of Service Tax Set Aside – Appellant conducted annual “Hindustan Times Leadership Summit” and engaged foreign speakers through international booking agents – Revenue sought to levy Service Tax under Section 65(105)(zu) treating booking agents as “event managers” – Tribunal upheld tax demand for normal limitation period – Supreme Court examined statutory definitions of “event management” and “event manager” – Held: Mere booking of speakers and facilitation of their appearance does not amount to planning, promotion, organizing or presentation of an event – Booking contracts were not event management contracts – Levy under “Event Management Service” unsustainable [Paras 21–41].

Taxation – Strict Interpretation of Charging Provisions – Scope of Taxing Statute – Court reiterated that taxing statutes must be strictly construed – If activity does not fall squarely within charging provision, tax cannot be imposed by inference or analogy – Revenue failed to establish that service in question falls within four corners of Section 65(105)(zu) – Benefit of strict interpretation goes to assessee [Paras 42–44].

Service Tax – Role of Booking Agents – Principal–Agent Relationship Irrelevant for Classification – Revenue focused on absence of principal–agent relationship between speakers and booking agents – Supreme Court held that such inquiry was irrelevant – Core issue was nature of service rendered – Booking of speakers for participation cannot be equated with management of the event itself – Participation in event is not management of event [Paras 39–41].

Circulars – Binding Nature – TRU Circular dated 08.08.2002 – Circular clarifies that event managers are engaged in managing venues, logistics, publicity, stage arrangements and overall execution of event – Booking agents performed none of these activities – Circular supports assessee’s contention and limits scope of taxable event management services [Paras 28, 43–44].

Service Tax – Classification Dispute – Manpower Recruitment or Supply Service – International Merchandising Case Distinguished – Appellant relied on International Merchandising Company LLC v. CST to argue alternative classification – Supreme Court held that while dual classification is impermissible, facts of present case are distinguishable – Nevertheless, even without reclassification, levy under event management fails on merits – Revenue cannot sustain demand merely by rejecting alternative classification [Paras 45(a)–(e)].

Interpretation – Common Parlance Test – Meaning of Event Management – Applying common parlance test, Court held that event management is ordinarily understood as comprehensive organization and execution of events – Individual contracts for booking speakers are not commonly understood as event management – Supports exclusion of impugned service from taxable category [Paras 46–48].

Decision: Appeals allowed – Impugned judgment of CESTAT dated 31.08.2017 set aside – Demand of Service Tax under “Event Management Service” quashed – No Service Tax payable on booking of speakers for Leadership Summit.

Service Law - Public Employment – Pharmacist Recruitment – Essential Qualification – Diploma in Pharmacy – Validity of Cadre Rules Upheld – Appellants holding B.Pharma/M.Pharma challenged Rule 6(1) of Bihar Pharmacists Cadre Rules, 2014 (as amended in 2024) prescribing Diploma in Pharmacy as minimum qualification – Supreme Court held that fixation of eligibility criteria lies within exclusive domain of employer – Prescription of Diploma as essential qualification not arbitrary or unconstitutional – High Court’s view affirmed [Paras 41, 61–65].

Constitution of India – Article 309 – Rule-Making Power – Limited Scope of Judicial Review – Rules framed under proviso to Article 309 can be struck down only on grounds of lack of competence or violation of fundamental rights – Courts cannot rewrite service rules or substitute employer’s policy with judicial opinion – State entitled to determine suitability of qualifications for public posts [Paras 50, 59].

Repugnancy – Central Legislation vs State Service Rules – Pharmacy Act, 1948 – No Conflict Found – Pharmacy Act and Pharmacy Practice Regulations govern professional education, standards and registration – Cadre Rules operate in field of public employment – Registration as Pharmacist does not confer right to public employment – No repugnancy between Cadre Rules and Central enactment [Paras 46–49].

Higher Qualification – Degree vs Diploma – Not Automatically Equivalent – Bachelor/Master of Pharmacy cannot be treated as higher qualification presupposing Diploma in Pharmacy – Diploma and Degree courses are distinct streams with different objectives and training – Lateral entry provision does not establish equivalence – State justified in treating Diploma as essential qualification [Paras 53–56, 62].

Equality – Articles 14 and 16 – Reasonable Classification – Diploma Holders as Separate Class – Classification based on Diploma qualification has intelligible differentia and rational nexus with object of effective public health delivery – Emphasis on compulsory hospital-based practical training for Diploma holders – No hostile discrimination or arbitrariness established [Paras 37–38, 61–64].

Minimum Qualification – Meaning of “Minimum” – Exclusion of Degree Holders Valid – Expression “minimum qualification” does not imply automatic inclusion of higher qualifications – In absence of specific rule permitting equivalence, higher qualification cannot be read into eligibility criteria – Note in Appendix-I validly requires degree holders to also possess Diploma [Paras 44–45, 53–55].

Judicial Precedents – Employer’s Discretion in Recruitment Policy Reaffirmed – Supreme Court relied on consistent line of authorities holding that prescription of qualifications is policy matter – Courts cannot expand eligibility by interpretative process – Decisions in Jyoti K.K., Zahoor Ahmad Rather, Anita, and others applied [Paras 51–60].

Decision: Appeals dismissed – Constitutional validity of Bihar Pharmacists Cadre Rules, 2014 as amended in 2024 upheld – Contempt Petition dismissed – No order as to costs.

Criminal Law – Murder – Acquittal Restored – Appeal Against Conviction – High Court reversed Trial Court’s acquittal and convicted the accused under Sections 302, 120-B, 201, 506 read with Section 34 IPC – Supreme Court held that High Court erred in interfering with the plausible view of the Trial Court – Sole eye-witness (PW-5) found unreliable – Confessional statements not duly proved – Medical evidence inconsistent with prosecution’s version – Circumstantial evidence failed to establish complete chain – Conviction set aside – Trial Court’s acquittal order restored [Paras 1, 3, 8, 9, 10, 16–25, 29–31]

Appellate Jurisdiction – Interference with Acquittal – Legal Standards – Reaffirmed that interference by Appellate Court in acquittal is permissible only where judgment is perverse, based on misreading of evidence, or when no two views are possible – Trial Court’s view held to be plausible and based on appreciation of evidence – High Court erred in substituting its view in absence of compelling reasons – Judgment of conviction by High Court set aside [Paras 27–29]

Witness Testimony – Reliability of Sole Eye-Witness – PW-5, driver of vehicle allegedly used in abduction, gave delayed statement 21 days after incident – PW-5 did not inform police despite witnessing alleged murder and having opportunity – Admitted criminal antecedents – Did not know accused personally – Discrepancies between statements under Sections 161 and 164 CrPC – Held: PW-5 is not a trustworthy witness and appears to be a planted witness – Conviction cannot rest solely on his testimony [Paras 17–21]

Medical Evidence – Post-Mortem Report – PW-14 (Doctor) opined that death occurred 10 days prior to autopsy – Contradicts prosecution version that murder occurred on 11.12.2011 and body found on 04.01.2012 (i.e., after 21 days) – Medical evidence creates doubt on prosecution timeline – Held: Medical evidence does not support case beyond reasonable doubt [Para 22]

Evidence – Confessional Statement and Discovery – Statements under Section 27 of Evidence Act made by accused nos. 2–4 led to recovery of body – However, prosecution failed to examine key witnesses (CW-22 & CW-23) who recovered the body from canal – Confessional statements not duly proved – Held: Conviction cannot be sustained solely on discovery without independent corroboration [Paras 10, 23]

Criminal Conspiracy – Ingredients Not Proved – Alleged motive of land dispute, strained relations and illicit relationship – Trial Court held these were speculative and not proved – High Court itself did not find involvement of accused nos. 5 & 6 in conspiracy – Held: Prosecution failed to establish meeting of minds or concerted action necessary for conviction under Section 120-B IPC [Paras 6, 7, 24, 25]

Decision – Appeal allowed – Supreme Court held that Trial Court’s acquittal was based on plausible view and prosecution failed to prove guilt beyond reasonable doubt – High Court's judgment dated 28.11.2023 set aside – Trial Court's judgment dated 30.03.2019 restored – Appellants ordered to be released forthwith if not required in any other case [Paras 31–33]

Student Suicides – Mandatory FIR – Institutional Responsibility – Higher Educational Institutions – Supreme Court earlier clarified mandatory registration of FIR on disclosure of cognizable offence in cases of student suicides and reiterated the unequivocal moral and legal obligation of educational institutions to promptly report such incidents – Rising incidents of student suicides across HEIs necessitated structural intervention beyond penal accountability – Held: HEIs cannot shirk their duty to provide safe, inclusive and supportive environments irrespective of individual autonomy of students [Paras 1, 5, 10].

National Task Force (NTF) – Constitution – Scope and Functions – Court constituted a National Task Force to examine causes of student suicides, assess existing legal and institutional frameworks and recommend preventive, remedial and reformative measures – NTF undertook extensive data analysis, stakeholder surveys, institutional visits and consultations across States – Interim report placed before Court highlighting systemic failures and institutional gaps [Paras 3, 11].

Student Mental Health – Structural Inequalities – Marginalised Groups – Students from SC/ST/OBC communities, PwDs, transgender persons, women, rural and non-English backgrounds face disproportionate stressors within HEIs – Affirmative action cannot end at access but must extend to support systems – Tokenistic functioning of Equal Opportunity Cells and Internal Complaints Committees noted – Held: Inclusion must be substantive and institutionalised, not symbolic [Paras 18–22].

Ragging – Academic Pressure – Institutional Stressors – Persistence of ragging despite regulatory frameworks – Normalisation of exploitative academic cultures, rigid attendance norms, faculty shortages, excessive workload and opaque evaluation systems identified as major contributors to distress – Medical and technical institutions found particularly vulnerable – Held: Competitive institutional culture directly impacts student mental health and social isolation [Paras 23–28].

Mental Health Services in HEIs – Treatment Gap – Faculty Limitations – Majority of HEIs lack full-time qualified mental health service providers – Stigma, confidentiality concerns and administrative mistrust reduce service uptake – Faculty members overburdened and ill-equipped to manage crises – Held: Mental health services must be professional, student-centric and confidentiality-driven, not ad-hoc or symbolic [Paras 29–33].

Financial Stress – Scholarships – Administrative Failures – Delays and inconsistencies in scholarship disbursement exacerbate student distress – Institutions imposing adverse academic consequences on students for governmental delays deprecated – Held: No student shall be denied classes, examinations, hostels or degrees due to delayed scholarship payments [Paras 34–35, 45(viii)].

Existing Legal and Policy Framework – Fragmentation – Lack of Accountability – Multiple UGC regulations, national policies and programmes exist but remain scattered and weakly enforced – Absence of implementation roadmaps and consequences for non-compliance identified as major gaps – Held: Binding compliance mechanisms are essential to translate policy into practice [Paras 36–43].

Exercise of Article 142 – Binding Directions to HEIs and Authorities – Supreme Court issued comprehensive directions mandating suicide reporting, data maintenance, faculty recruitment, administrative appointments, medical access, scholarship clearance and strict compliance with UGC regulations – Directions declared binding on all HEIs with accountability to Central and State Governments [Paras 45–52].

Future Framework – SOPs – Well-being Audits – Universal Design – Court directed NTF to prepare model SOPs for well-being audits, faculty sensitisation and mental health services – Objective to create a unified Student Well-being and Suicide Prevention Framework integrating all existing mechanisms – Held: Preventive governance must be measurable, enforceable and integrated into accreditation systems [Paras 47–50].

Decision: Interim directions issued under Article 142 of the Constitution – Union of India and State Governments directed to ensure immediate communication and compliance by all Higher Educational Institutions – Matter to continue for consideration of final report of National Task Force.

IBC – Section 7 – Admission of CIRP – Debt and Default – Mandatory Admission – Financial creditor sought initiation of CIRP against real estate developer – NCLT dismissed petition holding IBC was invoked as recovery mechanism and project was viable – NCLAT reversed and admitted CIRP – Held: Once existence of financial debt and occurrence of default are established, admission under Section 7 is mandatory – Considerations of project viability, stage of completion, receivables, or prejudice to homebuyers are extraneous at admission stage [Paras 12.1–12.7, 12.21–12.22].

Section 7(5)(a) IBC – Discretion – Limited Scope – Vidarbha Industries Exception – Corporate debtor relied on Vidarbha Industries to contend discretionary power to refuse admission – Supreme Court reiterated that Vidarbha Industries is a narrow exception confined to peculiar facts involving adjudicated and realisable counter-claims – Innoventive Industries and E.S. Krishnamurthy reaffirmed as governing law – Held: No discretion survives once debt and default are proved except in rare Vidarbha-type situations [Paras 12.5–12.7].

IBC Not a Recovery Tool – Parallel Proceedings under SARFAESI and DRT – Allegation of misuse of IBC by financial creditor pursuing SARFAESI and DRT remedies – Held: Pendency or initiation of recovery proceedings does not bar invocation of Section 7 – Overriding effect of Section 238 IBC – Allegations of mala fides must be specifically pleaded and proved under Section 65 [Paras 12.11–12.15].

Restructuring / OTS – Default – Effect – Corporate debtor entered restructuring-cum-OTS and defaulted in instalment payments – Revocation of restructuring by financial creditor held contractually justified – Subsequent alleged non-cooperation by creditor cannot erase admitted default – Held: Failure to honour instalments constitutes valid trigger for CIRP [Paras 12.9–12.10, 12.19].

Commercial Wisdom – Committee of Creditors – Non-justiciability – Issues of feasibility, viability, revival, liquidation or project completion fall exclusively within domain of CoC – Courts cannot examine such issues at Section 7 admission stage – Held: Judicial review is limited and commercial wisdom of CoC is non-justiciable except on statutory grounds [Paras 12.16–12.17].

Real Estate Insolvency – Homebuyers’ Interests – Statutory Safeguards – Court acknowledged vulnerability of homebuyers when projects enter CIRP – However, IBC framework provides safeguards through authorised representatives, Regulation 4E and exclusion of possessed units from liquidation estate – Held: Protection of homebuyers must operate strictly within the IBC framework and cannot dilute statutory trigger of insolvency [Paras 10–10.5, 13.21].

Proceedings under Section 7 – Nature – In Personam at Pre-admission Stage – Supreme Court reiterated that proceedings under Section 7 remain in personam until admission – Only financial creditor and corporate debtor have right of audience at pre-admission stage – Other creditors or third parties have no independent right to intervene [Paras 13.5, 13.11].

Intervention – Locus Standi – Housing Society – Co-operative housing society sought intervention claiming to represent homebuyers – Society neither financial creditor nor operational creditor – No privity of contract or statutory recognition as authorised representative – Held: Society lacks locus standi to intervene at Section 7 stage or in appeal against admission [Paras 13.1–13.5, 13.7–13.13].

Homebuyers as Financial Creditors – Mode of Participation – Individual allottees recognised as financial creditors under Section 5(8)(f) – Participation statutorily channelised through authorised representatives under Section 21(6A) read with Regulation 16A – Collective representation outside statutory framework impermissible [Paras 13.12–13.14].

Rule 11 NCLAT Rules – Inherent Powers – Limits – Inherent powers cannot override statutory scheme of IBC or create substantive participatory rights – Held: Rule 11 cannot be invoked to permit intervention where statute consciously excludes such participation [Paras 13.15–13.16].

Natural Justice – Audi Alteram Partem – No Vested Right – Denial of hearing to non-stakeholder does not violate natural justice absent legally vested right – Held: No prejudice shown as homebuyers’ interests are adequately safeguarded post-admission under IBC [Paras 13.19–13.21].

Directions to CoC – Transparency and Accountability – Supreme Court issued prospective directions requiring disclosure of complete allottee details in Information Memorandum – Mandatory recording of reasons where CoC declines handover of possession under Regulation 4E or recommends liquidation – Objective: transparency, accountability and protection of homebuyers [Para 15.1].

Decision: Civil Appeals dismissed – Judgment of NCLAT admitting Corporate Debtor into CIRP upheld – Rejection of intervention application by housing society affirmed – Interim stay vacated – Directions issued to Committee of Creditors regarding transparency and reasoned decision-making – No order as to costs.

Taxation Law - International Taxation – Double Taxation Avoidance Agreement (DTAA) – India-Mauritius DTAA – Capital Gains – Indirect Transfers – Tax Avoidance – GAAR – TRC Conclusiveness – The Supreme Court held that capital gains arising from the transfer of unlisted equity shares, which were part of an impermissible arrangement under law, are not entitled to exemption under Article 13(4) of the India-Mauritius DTAA – The Revenue successfully demonstrated that the transactions constituted impermissible tax-avoidance arrangements, lacking commercial substance and not qualifying as lawful – Consequently, Chapter X-A (GAAR) of the Income Tax Act, 1961, is applicable – The AAR's rejection of the applications for advance ruling on the ground of prima facie tax avoidance, as per proviso (iii) to Section 245R(2) of the Act, was upheld – The Court found that capital gains from transfers effected after the cut-off date of April 1, 2017, are taxable in India under the Income Tax Act read with the DTAA – The High Court's judgment setting aside the AAR's order was reversed – The Court emphasized that post-amendment, a TRC alone is not sufficient to avail DTAA benefits, and the tax authorities are empowered to investigate the real residence and management of entities to prevent treaty abuse – The transaction involved the sale of shares of a Singapore company deriving substantial value from Indian assets, by Mauritius-based entities controlled by an American company, which the AAR deemed a preordained arrangement for tax avoidance – The Court reiterated that while tax planning is permissible, it must conform to legal parameters and not be a sham or impermissible avoidance – The burden of proof to rebut the presumption of tax avoidance lies with the taxpayer [Paras 11, 18, 19, 28, 29, 33, 36, 37, 41, 46, 49, 50].

Income Tax Act, 1961 – Section 245R(2) – Authority for Advance Rulings (AAR) – Jurisdiction – Prima Facie Tax Avoidance – The Supreme Court clarified that the AAR is empowered to reject applications for advance rulings at the threshold if the transaction appears prima facie designed for tax avoidance – The term "prima facie" in Section 245R(2) implies that an initial examination of documents, satisfying the AAR that the transaction is for tax avoidance, is sufficient to reject the application – The burden of proof lies with the applicant to demonstrate otherwise – The High Court erred in adjudicating the issue on merits when the AAR had only made a prima facie finding of tax avoidance [Paras 11, 32, 33, 34].

Income Tax Act, 1961 – Section 9(1)(i) – Indirect Transfers – Source-Based Taxation – Explanations 4 & 5 – The Supreme Court affirmed that the retrospective amendments to Section 9(1)(i) of the Income Tax Act, 1961, through Explanations 4 and 5 (introduced by the Finance Act, 2012), codify the "look-through" principle – These amendments clarify that gains from the transfer of shares or interests in a foreign entity deriving substantial value from assets located in India are taxable in India, thereby establishing India as the source State for such income – This expanded scope of Section 9 ensures source-based taxation, irrespective of the entity's residence, where the economic nexus of income exists in India [Paras 7.4, 12.13, 12.14, 12.15, 28].

Income Tax Act, 1961 – Chapter XA – General Anti-Avoidance Rule (GAAR) – Applicability – Grandfathering Provisions – Rule 10U – The Supreme Court held that GAAR provisions under Chapter XA of the Income Tax Act, 1961, are applicable to the assessment year under consideration (AY 2019-20) – The Court clarified that while Rule 10U(1)(d) provides for grandfathering of investments made before April 1, 2017, Rule 10U(2) dilutes this by stating that GAAR applies to "any arrangement" irrespective of its entry date, if a tax benefit is obtained from such arrangement on or after April 1, 2017 – This means that even pre-2017 investments are subject to GAAR scrutiny if they form part of an impermissible avoidance arrangement yielding a tax benefit exceeding Rs. 3 crores after the cut-off date – The Court rejected the argument that all pre-2017 investments are immune from GAAR, emphasizing that GAAR targets abusive arrangements, not genuine investments [Paras 7.16, 7.17, 7.18, 7.19, 7.20, 7.21, 12.16, 12.17, 12.18, 12.28, 12.29, 12.30, 12.35, 46, 47].

Income Tax Act, 1961 – Section 90(4) & 90(5) – Tax Residency Certificate (TRC) – Evidentiary Value – Treaty Benefits – The Supreme Court ruled that post-amendment, a TRC issued by Mauritian authorities is an "eligibility condition" but not "sufficient evidence" for claiming DTAA benefits – The amendments to Section 90(4) and the insertion of Section 90(5) (Finance Act, 2012 and 2013) empower Indian tax authorities to seek additional documents and information, and to investigate the actual residence and management of entities – This position supersedes earlier CBDT Circulars (No. 789 and 682) that treated TRCs as conclusive proof of residence and beneficial ownership – The Court emphasized that the TRC is not binding on statutory authorities or courts without independent verification, especially in cases of fraudulent or fictitious transactions [Paras 7.5, 7.8, 7.10, 7.13, 7.25, 7.26, 7.27, 8.3, 8.4, 8.10, 8.17, 8.19, 8.21, 12.20, 12.21, 12.22, 12.23, 12.26, 36, 37, 44].

International Taxation – Treaty Interpretation – Substance Over Form – Judicial Anti-Avoidance Rules (JAAR) – The Supreme Court reiterated the principle of "substance over form" and the applicability of Judicial Anti-Avoidance Rules (JAAR) in Indian tax jurisprudence – It held that even if GAAR is inapplicable, JAAR can be invoked to deny treaty benefits in cases of treaty abuse or conduit structures lacking genuine commercial substance – The Court emphasized that the Revenue has the burden to establish abuse, but once established, the real transaction can be subjected to tax, disregarding interposed devices – The "look at" test, as enunciated in Ramsay and Vodafone, requires examining the entire transaction holistically to ascertain its true legal nature and dominant purpose, rather than adopting a dissecting approach [Paras 6.8, 6.15, 6.18, 7.5, 7.6, 7.8, 7.13, 7.24, 7.25, 8.6, 8.11, 8.12, 13.1, 60, 61, 63, 64, 65, 68, 69, 70, 71, 72, 73, 74, 75, 76, 77, 79, 80, 81, 82, 96, 97, 98, 99, 100, 101, 102, 103, 130, 131].

DTAA Amendment – Protocol of 2016 – Article 13(3A), 13(3B), 13(4), 27A – Grandfathering – The Supreme Court noted that the 2016 Protocol to the India-Mauritius DTAA introduced Articles 13(3A) and 13(3B), vesting source-based taxation rights for capital gains from shares acquired on or after April 1, 2017 – Existing investments made before this date were grandfathered – However, Article 13(4), a residuary provision, continues to allocate taxing rights to the residence State for properties not covered by other paragraphs – The LOB clause (Article 27A) was introduced to deny benefits to shell/conduit companies, defining them based on negligible business operations or low expenditure – The Court clarified that the grandfathering under the DTAA applies to direct transfers of shares of an Indian company, but indirect transfers of shares of a foreign company deriving value from Indian assets, especially if part of a tax avoidance arrangement, are not automatically exempt [Paras 6.6, 6.7, 6.9, 6.18, 7.14, 7.15, 8.7, 8.15, 8.16, 12.31, 12.32, 12.33, 12.34, 41, 45].

Tax Sovereignty – International Treaties – Policy Considerations – Justice J.B. Pardiwala, in a concurring opinion, emphasized the paramount importance of a nation's tax sovereignty in the global economic landscape – He highlighted that while international treaties are crucial for economic growth and cooperation, they should not compromise a nation's inherent right to tax income arising within its territory – The exercise of tax sovereignty requires a balance between domestic priorities and international obligations, with a focus on preventing tax evasion, money laundering, and other illicit financial activities – Treaties should include safeguards like Limitation of Benefits (LOB) clauses, GAAR override provisions, source-based taxation rights, tax credit methods (over exemptions), and exit/renegotiation clauses to protect national interests and adapt to evolving global trade dynamics – The Court stressed that India must assert its right to tax profits generated from its soil and avoid self-defeating compromises of its sovereignty [Paras 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 135, 136, 137, 138, 139, 140, 141, 142, 143, 144, 145, 146, 147, 148, 149, 150, 151].

Decision: Appeal allowed – Impugned judgment of the High Court set aside – Paras [51].

Stamp Duty – Agreement to Sell – Tenant in Possession – Deemed Conveyance – A.P. Stamp Act – Appellant tenant in possession of suit property for nearly fifty years entered into agreement to sell with landlady – Trial Court and High Court held agreement chargeable as “sale” under Explanation I to Article 47A – Supreme Court reversed – Held: Mere recital that purchaser was already in possession as tenant does not attract deemed conveyance – Possession must follow from or be referable to agreement to sell – Possession independent of agreement cannot trigger stamp duty as sale [Paras 4.2–4.3, 6.1, 10.1–10.3, 11–11.2].

Explanation I to Article 47A – Interpretation – Nexus with Agreement – Expression “followed by or evidencing delivery of possession” requires delivery of possession to have direct nexus with agreement to sell – Possession may be prior or contemporaneous only if referable to agreement – Long-standing possession as tenant unconnected with agreement falls outside Explanation I [Paras 6.1, 8, 10.1].

Landlord–Tenant Relationship – Agreement to Sell – No Automatic Conversion to Vendor–Vendee – Execution of agreement to sell does not by itself terminate tenancy – No express or implied surrender under Section 111 TPA established – Eviction order passed subsequent to agreement establishes continuance of tenancy – Held: Jural relationship remained that of landlord and tenant [Paras 5, 4.3, 11–11.1].

Express and Implied Surrender – Section 111 TPA – Principles Restated – Express surrender requires mutual agreement and yielding of possession – Implied surrender arises only from conduct inconsistent with continuance of tenancy – Mere execution of agreement to sell without change in character of possession does not amount to surrender [Paras 5.3–5.7, 11.1].

Agreement to Sell – Nature – No Transfer of Title – Agreement to sell does not create any right, title or interest in immovable property – Sale can be effected only by registered conveyance – Agreement to sell simpliciter is not a conveyance and cannot be treated as such for stamp duty unless statutory conditions are met [Paras 5.8–5.10].

Section 53A TPA – Part Performance – Inapplicability – Protection under Section 53A applies only where possession is taken or continued in part performance of contract – Continued possession of tenant independent of agreement does not amount to part performance – Held: Section 53A not attracted where tenancy subsists and possession pre-exists agreement [Paras 5.11–5.13, 10.2–10.3].

Gafoor Case – Distinguished – Ratnamala Approved – In Gafoor, recitals showed implied surrender of tenancy and transformation of tenant into vendee – Hence deemed conveyance applied – Ratnamala correctly overruled Gafoor on facts – Present case distinguishable as no surrender or change of status occurred [Paras 8.1–8.3, 11.2].

Bombay Stamp Act vs A.P. Stamp Act – Statutory Distinction – Explanation I to Article 25 of Bombay Stamp Act materially wider than Explanation I to Article 47A of A.P. Stamp Act – Bombay provision covers possession transferred or agreed to be transferred – A.P. provision requires possession to follow from or be evidenced by agreement – Held: Bombay precedents cannot be bodily imported [Paras 9.6, 10–10.1].

Ramesh Mishrimal Jain – Distinguished – Case decided under Bombay Stamp Act and on application of Section 53A TPA – In present case, tenancy continued and eviction order passed after agreement – Held: Ratio confined to its facts and not applicable [Paras 9.6, 10.3, 12].

Impounding of Document – Improper Exercise – Trial Court erred in directing payment of stamp duty and penalty treating agreement as conveyance – High Court misdirected itself in sustaining order – Held: Agreement to sell liable to be admitted in evidence on stamp duty already paid [Paras 12–12.1].

Decision: Appeals allowed – Orders of Trial Court and High Court set aside – Agreement to sell dated 14.10.2009 held not chargeable as sale or deemed conveyance – Trial Court directed to mark agreement as exhibit and dispose of suit for specific performance expeditiously, preferably within six months – No costs.