This question was squarely examined by the High Court of Delhi while deciding a rectification petition under the Trade Marks Act, 1999.

Facts relating to the Issue

• The Petitioner, a China-based technology company, sought rectification of the trademark “LARK” registered in Class 42.
• The Respondent, an Indian engineering company, held registrations of “LARK” across multiple classes since 1994, including Class 42 for design and development of computer hardware and software.
• The challenge was limited to removal of Class 42 services, alleging non-use and false claim of user date.

Arguments of the Appellant

• Registration in Class 42 was obtained without bona fide intention to use.
• Customisation of software within machinery does not amount to commercial software services.
• Invoices relied upon were post-2016, contradicting the claimed user date of 1994.
• Monopoly over a broad class without actual standalone use is impermissible.
• Reliance placed on Vishnudas Trading and Nandhini Deluxe to seek restriction of registration.

Arguments of the Respondent

Software and hardware form an integral part of poultry and cattle feed machinery.

Services are provided in conjunction with goods, through the same trade channel.

Continuous commercial use was evidenced through invoices, promotional material and technical documentation.

The proviso to Section 47(1) protects such associated use.

Expansion of services is a natural business progression.

Decision of the Court

• The rectification petition was dismissed.
• The registration of “LARK” in Class 42 was upheld.

Reasons for such Decision

The Court held that:

• Software and hardware services were inseparable from the machinery sold.
• Source, trade channel, and functional use were common.
• Such services qualify as “services of the same description” under the proviso to Section 47(1).

The Respondent successfully proved prior use, at least from 2016, which was sufficient against the Petitioner’s 2018 proposed-use application.

No evidence of false user claim or mala fide registration was established.

Applicability of Judgment

Crucial precedent for:

• Trademark owners offering bundled goods + services
• Defending registrations where services are ancillary yet essential

Clarifies that standalone commercialisation is not mandatory if services are functionally connected.

Strengthens protection against mechanical rectification attempts in IP disputes.

Professional takeaway:

Trademark law protects commercial reality, not artificial compartmentalisation. If goods and services move together in business, the law will treat them together as well.

If you’re advising clients on trademark structuring, portfolio expansion, or rectification risks — this judgment is worth bookmarking.

Download the judgement – https://counselvise.com/corporate-law/judgements

Over the last few weeks, income-tax demands dating back 15–20 years have suddenly started appearing on the Income-tax portal.

As a Chartered Accountant, it’s important to separate portal disclosure from legal enforceability.

What Is Actually Happening?

• These are old assessment / demand orders, some going back to FY 2005–06
• They are resurfacing due to digitisation and consolidation of legacy records
• In many cases:
  • Taxpayers were never served the original orders
  • No prior reflection appeared in Section 245 intimations
  • Interest has accumulated for years without taxpayer knowledge

This is an administrative upload, not a fresh assessment.

The Real Issue Is Not Tax — It Is Service of Notice

Under settled law:

• An order is valid only when it is properly served
• Limitation periods start from date of service, not date of upload
• If service cannot be proven, the demand does not crystallise

The burden of proof lies squarely on the department to demonstrate:

• How the notice was served
• When it was served
• That it reached the assessee

Digitisation cannot retrospectively cure defective service.

Why Compounded Interest Is Legally Fragile

• Interest is consequential, not independent
• If the taxpayer never had an opportunity to appeal:
  • Interest accumulation becomes unjustifiable
• Courts have consistently taken a liberal view on condonation where service is disputed

A liability that grows silently for a decade fails the test of natural justice.

Section 245 Adjustments Don’t Settle Legality

Yes, refunds can be adjusted against old demands.

But:

• Section 245 is a recovery tool
• It does not validate an unenforceable demand
• Recovery cannot replace due process

Why This Matters

• Taxpayers are being forced into:
  • Defensive payments
  • Partial deposits for stay
  • Litigation for demands they never knew existed
• This impacts:
  • Individuals
  • Businesses
  • Successor entities after mergers or closures

Compliance cannot be built on procedural opacity.

Bottom Line

Not every demand visible on the portal is legally payable.

• Validity depends on proof of service
• Interest cannot survive without opportunity to appeal
• Digitisation improves efficiency, not enforceability

Disclosure on a portal is not the same as a lawful tax demand.

The Ministry of Corporate Affairs (MCA) has amended Rule 12A of the Companies (Appointment & Qualification of Directors) Rules, 2014.

• Annual DIR-3 KYC filing has been replaced
• A simplified KYC intimation once every three years will now apply
• Amendment notified on 31 December 2025
• Effective from 31 March 2026

This follows recommendations of the High Level Committee on Non-Financial Regulatory Reforms (HLC-NFRR) and stakeholder feedback.

Timeline Break-up

Earlier requirement: KYC every year

Revised requirement: KYC once every 3 years

Next KYC due date for compliant directors: 30 June 2028

Directors with pending KYC: DIN reactivation allowed up to 31 March 2026

Gazette reference: G.S.R. 943(E) dated 31 December 2025

What Has Changed Operationally?

A single abridged KYC form can now be used for:

• Periodic KYC compliance
• Mobile number update
• Email ID update
• Residential address update
• DIN reactivation

Digital signature & professional certification required only when details are updated

No annual certification if no changes are made

Underlying Regulatory Trend

Shift from form-driven compliance to event-based compliance

Focus on:

• Ease of doing business
• Reducing repetitive filings
• Targeted verification instead of blanket reporting

Aligns with broader MCA21 digitisation and compliance rationalisation agenda

Why This Matters

• Annual KYC had become a procedural formality, not a risk-control tool
• Triennial KYC preserves:
  • Identity integrity of directors
  • DIN hygiene
• While removing:
  • Unnecessary annual professional certification
  • Repetitive filings without data change

This is compliance simplification without diluting governance safeguards.

Bottom-Line Verdict

This amendment is a structural ease-of-compliance reform, not a relaxation of oversight.

• Less paperwork
• Lower compliance costs
• Same accountability framework

A clear case of regulatory efficiency — not regulatory dilution.

What Happened?

The Institute of Chartered Accountants of India (ICAI) has issued accounting clarifications stating that any incremental gratuity and leave encashment liability arising from the new labour codes must be recognised immediately as an expense.

Key clarification:

• The impact must be recorded in interim financial statements for the December quarter.
• The increase in liability qualifies as past service cost, not a prospective adjustment.
• This applies even though supporting labour code rules are yet to be notified.

In simple terms:
Once the law is effective, the accounting impact cannot be deferred.

What Changed Under the New Labour Codes?

The labour codes consolidated 29 labour laws into four unified codes, fundamentally altering how employee benefits are computed.

Key changes impacting gratuity:

• Redefinition of “wages”
  • Wages must be at least 50% of total remuneration.
  • Includes:
    • Basic Pay
    • Dearness Allowance
    • Retaining Allowance
• Expanded eligibility
  • Fixed-term and contractual employees eligible for gratuity after 1 year of service.
  • Five-year continuous service requirement continues only for permanent employees.

Earlier position:

• Gratuity payable only after five years of continuous service.
• Contractual and fixed-term employees were largely outside the scope.

Result:

• Larger covered employee base
• Higher wage base for computation
• Immediate increase in actuarial obligation

Numerical Break-up of the Impact

While company-specific numbers will vary, the impact typically arises from:

• Increase in Defined Benefit Obligation (DBO)
• Re-measurement of employee service cost
• Inclusion of employees previously excluded

Factors driving quantum:

• Size of workforce
• Proportion of fixed-term and contractual staff
• Wage structure (basic vs allowances)
• Average tenure profile

Importantly:

• This is not linked to new hiring
• It is a re-measurement of existing service obligations

Accounting Treatment — The Core Technicality

The accounting treatment depends on the applicable framework:

Ind AS Entities (Ind AS 19 – Employee Benefits)

Under Ind AS 19:

• Any increase in gratuity liability due to plan amendments or legal changes is treated as past service cost
• Past service cost must be:
  • Recognised immediately in the Profit & Loss Statement
  • Not deferred or amortised

Accounting entries typically result in:

• Debit: Employee Benefit Expense (P&L)
• Credit: Provision for Gratuity / Employee Benefit Liability

This directly impacts:

• EBITDA
• Profit After Tax
• Retained Earnings
• Net Worth

Non–Ind AS Entities (AS 15)

Under AS 15:

• Vested benefits: Immediate recognition
• Unvested benefits: Amortisation permitted

However, most listed companies, banks, NBFCs, and large entities fall under Ind AS.

Leave Encashment: Often Overlooked but Included

ICAI has also clarified that:

• Any additional liability arising from leave encashment changes under the new labour codes must also be recognised immediately.

This further adds to:

• Employee benefit expense
• Short-term earnings volatility

Balance Sheet vs Cash Flow Reality

Critical distinction:

• Accounting liability increases immediately
• Cash outflow occurs over time, when gratuity is actually paid

This means:

• Operating cash flows remain unchanged
• The hit is purely accrual-based
• No immediate liquidity stress

Hence, this is an earnings presentation issue, not a solvency issue.

Market Reaction and Earnings Interpretation

So far:

• No sharp market reaction
• Analysts are treating this as:
  • A one-time adjustment
  • A non-recurring accounting alignment

Likely market behaviour:

• Short-term PAT compression in December and March quarters
• Normalised run-rate earnings thereafter
• Focus shifting to adjusted earnings metrics

Underlying Financial Trend

This clarification reflects a broader shift:

• Moving employee benefits from “future obligations” to present balance-sheet commitments
• Reducing flexibility in wage structuring
• Aligning Indian reporting with global benefit recognition norms

Labour cost transparency is increasing, not labour cost itself.

Why This Matters — Governance and Financial Health

From a governance standpoint:

• Forces recognition of true employee obligations
• Improves inter-company comparability
• Prevents deferral of long-term liabilities
• Strengthens credibility of financial statements

For investors and lenders:

• Better visibility into workforce-linked risks
• Clearer understanding of sustainable profitability

Bottom-Line Verdict

This is not a new cost.
It is the accounting recognition of an existing obligation.

The labour codes did not weaken corporate balance sheets.
They removed timing discretion from accounting.

Professionals should read this as:

• Higher disclosure quality
• Temporary earnings impact
• Improved long-term financial transparency

This is accounting discipline — not financial distress.

For years, solar EPC contracts were stuck in a GST grey area of 5% or 18%?

That uncertainty has now been put to rest. In Sterling and Wilson Private Limited vs. Joint Commissioner (2025) 1 TMI 663 (AP HC), the Andhra Pradesh High Court decisively ruled in favor of the taxpayer, holding that solar EPC contracts are composite supplies taxable at 5%, and not works contracts liable to 18% GST.

This piece unpacks the legal reasoning behind the judgment and explains why the ruling is a turning point for the solar and renewable energy sector.

[1] Key legal issue:

🔸 Whether the installation of a solar power plant results in its classification as immovable property and, consequently, as works contract services liable to 18% GST?

[2] Facts of the case:

🔸 Sterling & Wilson Pvt. Ltd., an Engineering, Procurement, and Construction (EPC) contractor, executed contracts for setting up solar power generating systems.

🔸 They applied 5% GST, treating the transaction as a composite supply with solar modules as the principal supply.

[3] Taxpayer’s main defense:

🔸 A solar project is a composite supply, with goods (solar modules) as the dominant element.

🔸 Solar systems are movable property, foundations are only for operational stability, not permanent enjoyment of land.

[4] Department’s claim and why it mattered:

🔸 Once installed, the solar plant is fixed to the earth and, accordingly, assumes the character of immovable property, thereby classifying the contract as a works contract taxable at 18%.

[5] What the High Court held:

The Division Bench ruled entirely in favor of the assessee, holding that:

1. Mere attachment to the earth for operational stability does not make an asset immovable.
2. The intention of attachment matters—not just physical fixing.
3. Solar power systems can be dismantled and relocated and are movable in nature.

Since the asset is movable in nature, the contract cannot be treated as a works contract.

[6] Why this judgment matters:

This ruling is a landmark clarification for the solar and renewable energy sector:

It confirms that Solar Engineering, Procurement, and Construction (EPC) contracts are not construction contracts and should not be taxed like real estate projects.

[7] Bottom line:

Solar power generating systems are movable assets, and their supply and installation constitute a composite supply under GST.

Facts of the case: 

• The petitioner, Alstom Transport India Limited (“Alstom India”), operates in infrastructure projects (railways/metro), including design, manufacturing, installation and services. 

• Between July 2017 and March 2023, employees from the company’s overseas group entities were “seconded” to work in India.
• These expatriates were formally employed by Alstom India during their secondment; they received salary in India (on which TDS under Indian Income Tax laws was deducted), were governed by Indian employment agreements, and were under the exclusive administrative and functional control of Alstom India. 

• The foreign affiliate continued to provide social security / statutory benefits in the home country. Alstom India reimbursed those costs to the foreign affiliate — without any markup or separate “service fee.” 

• In September 2023, the enforcement wing of the State issued a Show cause notice to Alstom India, demanding IGST under reverse-charge mechanism alleging that the secondment arrangement constituted “import of manpower supply services.”  

Arguments of the Appellant (Assessee): 

• Alstom India contended that the arrangement was a genuine employer–employee relationship: the seconded expatriates were placed on its Indian payroll, worked under its exclusive control and supervision, had Indian employment contracts, and were integrated into its organizational structure not functioning as “outsourced manpower.” 

• No invoice was issued by the foreign affiliate for “manpower services.”
• The costs reimbursed related only to social security/benefits with no markup or service charge. 

• Alstom India invoked Circular 210/4/2024-GST dated 26 June 2024, which provides that in related-party import of services, where no invoice is raised and full ITC is claimed, the value of supply may be deemed “Nil.” 

• Therefore, even if the secondment were treated as “supply of services,” the value for GST purposes would be “Nil,” resulting in no IGST liability. 

Arguments of the Revenue: 

• The Revenue maintained that the secondment arrangement qualified as an import of manpower supply services from the foreign affiliate. 
• Accordingly, Alstom India, as recipient, was liable to pay IGST under the reverse-charge mechanism. 

• The payments made to the foreign affiliate, including reimbursements for social security benefits, were considered “consideration” for service; hence should attract GST. 

Decision of the court: 

The High Court of Karnataka, in its order dated 15 July 2025 in Writ Petition No. 1779 of 2025, held that the secondment of expatriate employees to Alstom India does not constitute a taxable supply of manpower services under GST. Accordingly, the IGST demand was quashed. 

Reasons for such decision: 

• The Court accepted that there was a genuine employer–employee relationship: expatriates were on Alstom India’s payroll, performed under its control and supervision, and were governed by Indian employment contracts — not functioning as outsourced manpower. 

• The Court noted absence of any invoice raised by the foreign affiliate for “services,” and the fact that reimbursements bore no markup. Thus there was no “consideration” as such under GST for manpower supply. 

• The Court applied Circular 210/4/2024-GST: since full ITC was claimed and no invoice was issued, value of the supply must be treated as “Nil” under second proviso to Rule 28(1) of the CGST Rules, 2017. 

Cases relied upon: 

• Circular 210/4/2024-GST dated 26 June 2024 clarifying valuation in related-party service import when no invoice is issued and full ITC is claimed.   

• Pre-GST precedents under service tax regime: Metal One Corporation India Pvt. Ltd. v. Union of India & Ors. as recognized by the Karnataka High Court to support “employer–employee” based exclusion. 

Applicability of judgment: 

• The judgment provides important relief for multinational companies (MNCs) operating in India via subsidiaries especially where expatriate secondments are structured with genuine employer–employee relationships. 

• It underscores that substance-over-form analysis matters: a mere fact of secondment from a foreign group entity does not automatically trigger GST; control, payroll, contract terms, and absence of service-fee/invoice are key. 

• Circular 210/4/2024-GST and the second proviso to Rule 28(1) become important tools: in related-party service imports with full ITC and no invoice, value can be deemed “Nil.” 

To download the full judgement of the same – M/S. Alstom Transport India Limited V. Commissioner of Commercial Taxes and Additional Commissioner of Commercial Taxes (Enforcement), South Zone and Deputy Commissioner of Commercial Taxes (Enforcement)-08, South Zone and Assistant Commissioner of Commercial Taxes Enforcement-20, South Zone