Volume 2, Issue 5, September 05, 2012
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Law & Policy
Notifications, Circulars (July – August, 2012)
General Circular No. 24/2012 dated August 09, 2012
The Ministry of Corporate Affairs clarified applicability of Service Tax on commission payable to Non-Whole Time Directors under Section 309(4) of the Companies Act, 1956.
Non-Whole Time Directors are not covered under the exempted category and therefore sitting fees and commission payable to them are liable to Service Tax.
The Government decided that any increase in remuneration solely because of Service Tax liability shall not require Central Government approval even if it exceeds limits under Section 309(4).
SEBI Circular CIR/CFD/DIL/6/2012 dated July 13, 2012
SEBI mandated listed companies to provide e-voting facilities to shareholders for businesses transacted through postal ballot.
Initially, the requirement applied to top 500 listed entities on BSE and NSE based on market capitalization.
Clause 35B was inserted into the Equity Listing Agreement.
The amendment became applicable for shareholder meetings where notices were issued on or after October 01, 2012.
Press Note No. 3 (2012 Series)
The Government of India permitted citizens and entities incorporated in Pakistan to make investments in India under Government route in sectors other than:
- Defence
- Space
- Atomic Energy
Paragraph 3.1.1 of the Consolidated FDI Policy was amended accordingly.
Press Note No. 2 (2012 Series)
The Government reviewed policies relating to downstream investments by banking companies owned or controlled by non-residents.
Downstream investments under:
- Corporate Debt Restructuring (CDR)
- Loan restructuring mechanisms
- Trading books
- Acquisition of shares due to loan defaults
shall not count towards indirect foreign investment.
However, strategic downstream investments in subsidiaries, joint ventures and associates shall count towards indirect foreign investment.
General Circular No. 14/2012 dated June 21, 2012
The Ministry of Corporate Affairs imposed fees on several e-forms filed with ROC, RD or MCA under MCA-21.
The Circular became effective from July 22, 2012.
Fees were imposed on forms including:
- Form 1 of Investor Education Protection Fund Rule
- Form 23B
- Form 24A
- Form 36
- Form 61
- Form 62
- Form 65
Legal Pronouncements
Property Law
Sabhia Mohammed Yusuf Abdul Hamid Mulla Vs. Special Land Acquisition Officer
The Supreme Court held that the Land Acquisition Collector must consider:
- Geographical situation of land
- Existing use of land
- Advantages such as road access and developed area proximity
- Market value of nearby lands
The Court also discussed the development cost deduction factor in determining compensation.
Income Tax Act, 1961
Columbia Sportswear Company Vs. Director of Income Tax, Bangalore
The Supreme Court held that the Authority for Advance Rulings (AAR) is a tribunal under Articles 136 and 227 of the Constitution.
Rulings of AAR may be challenged before High Courts under Articles 226 and 227.
Special Leave Petitions before the Supreme Court would be entertained only in exceptional circumstances involving important legal questions.
COFEPOSA
Dropti Devi Vs. Union of India
The Supreme Court held that preventive detention provisions under COFEPOSA continue to remain relevant even after repeal of FERA.
The Court clarified that even if an act is not declared an offence, preventive detention may still apply if the activity threatens state security.
The Trade Marks Act, 1999
Costa And Company Pvt Ltd Vs. Union of India
The Delhi High Court examined whether the Intellectual Property Appellate Board had powers to transfer rectification applications pending before the Registrar.
The Court held that the Trade Marks Act does not grant such supervisory or transfer powers to the Appellate Board.
Godfrey Phillips India Ltd Vs. Dharampal Satyapal Ltd.
The Delhi High Court held that in trademark infringement matters, where essential features of the plaintiff’s trademark are adopted by the defendant, additional differences in packaging or get-up become immaterial.
However, in passing off actions, defendants may avoid liability if distinguishing features sufficiently differentiate their goods.
Competition Law
Lt. Col. (Retd) Dr. Mohinder Kumar Yadav Vs. Universal Buildwell Pvt. Ltd.
The Competition Commission of India held that determination of relevant market is essential before applying Sections 3 and 4 of the Competition Act, 2002.
The Commission observed that shops in single-storied complexes are substitutable with shops in multi-storied commercial complexes.
Unique selling features alone do not make products non-substitutable.
Business News
July 2, 2012
- Finance Ministry and SEBI considering use of call and put options in M&A transactions.
- RBI introduced internet-based platform for government securities trading.
- Google unified its privacy policies across products.
- DoT released initial rules for spectrum auctions.
July 5, 2012
The Supreme Court clarified that foreign law firms cannot open liaison offices in India under Section 29 of the Advocates Act.
The Court also clarified that “practice” includes:
- Consultation
- Legal drafting
- Non-litigious matters
- Litigious matters
July 6, 2012
SEBI proposed guidelines for electronic Initial Public Offers (e-IPOs).
July 11, 2012
Government stated CSR spending under Companies Bill may not be mandatory.
July 24, 2012
Supreme Court prohibited tourism activities in core zones of tiger reserves.
July 27, 2012
FSSAI extended compliance deadline under Food Safety and Standards Act to February 05, 2013.
July 30, 2012
Service tax implications extended to employee benefits such as:
- Insurance cover
- Phone benefits
- Car benefits
Independent directors also became liable to service tax on remuneration.
July 31, 2012
RBI allowed corporates and exporters to retain entire forex earnings in foreign currency for a limited period.
August 3, 2012
RBI prescribed minimum net owned fund requirements for NBFC-MFIs.
August 10, 2012
- Facebook settled US privacy charges and agreed to audits.
- DoT proposed telecom merger and spectrum-sharing guidelines.
August 11, 2012
Environment Ministry advised against installation of mobile towers within one-kilometre radius of existing towers.
August 12, 2012
Supreme Court directed transfer of environmental cases to National Green Tribunal.
August 13, 2012
- Government proposed Advance Pricing Arrangement rules.
- Government considering amendments to Registration Act, 1908.
August 14, 2012
- Government planning revised SEZ norms.
- CCI investigating Google for anti-competitive practices.
August 15, 2012
India introduced stricter mobile radiation norms effective September 01, 2012.
SAR levels were restricted to 1.6 watt/kg.
August 17, 2012
- Cabinet approved EPC model agreement for highways.
- Street Vendors Bill approved.
August 20, 2012
Supreme Court heard Novartis patent dispute involving cancer drug Glivec.
August 21, 2012
MAIT requested simplified authorization procedures for e-waste disposal.
August 22, 2012
Telecom companies agreed to comply with revised tower emission norms.
August 23, 2012
India eased overseas borrowing rules and allowed foreign entities to provide credit enhancement for rupee bonds.
August 24, 2012
- Government proposed law regulating sectoral regulators.
- SEBI barred employee welfare trusts from secondary market share purchases.
August 25, 2012
- Apple won patent case against Samsung.
- Supreme Court considered extending spectrum auction deadlines.
August 27, 2012
Supreme Court extended telecom spectrum auction deadline to January 11, 2013.
August 28, 2012
- Delhi High Court ruled renovation costs in employer-provided accommodation are not taxable perks.
- TRAI amended quality of service penalty rules.
