Sub-contractor's Service for Works Contract to be exempted from Service Tax: CBEC issues Clarification

(Image taken from here)

The Indian position regarding subjecting Works Contract Service (hereinafter WCS) for building roads, bridges, tunnels, dams and other infrastructure projects to service tax has for quite some time been subject to debates. While WCS in relation to such matters is usually exempted from service tax, queries have been posed as to whether such exemption extends to the sub-contractors appointed by the WCS provider as architect, consulting engineer, constructor of complex service, designer, manager or maintenance personnel. Given that such service provided by those sub-contractors are ‘in relation to' the exempted WCS, thus there seems to be no reason as to why they shouldn’t be classified under WCS so as to avail aforesaid exemption. 

Can’t Hedge Your Bets yet: RBI’s Credit Default Swap Guidelines get postponed by a Month

(Image taken from here) 

For those eagerly awaiting RBI’s Credit Default Swap Guidelines for Corporate Bonds (hereinafter referred to as CDS) to come into force, there is some unwelcome news in the front, since the apex bank has seen it fit to defer it by another month to the end of November, 2011 (see RBI Circular RBI/2011-2012/228IDMD.PCD.No. 12/14.03.04/2011-12). The CDS had been agreed upon in its final form back in May, 2011 and was earlier supposed to operate from October 24, 2011. However, given the complexities of the documentation and operational processes involved, as well as the necessity of putting a functional institutional framework in place, the RBI has decided to give the stakeholders like mutual funds and insurance companies a bit more time to familiarize themselves with the guidelines. The exact revised date of implementation of CDS has not yet been declared.

Legality of Pre-Emptive Rights

A pre-emptive right such as the right to first refusal of shares, a right to buy or to sell shares, and would be covered by the definition of the term “option in securities”, under s. 2(d) of the Securities Contracts (Regulation) Act. This was a relevant classification, when there was still a prohibition on options in securities. However, this was removed by the Securities Laws (Amendment) Act, 1995. 

RBI’s Draft Guidelines for Licensing of new Private Sector Banks in India: a welcome move

In his budget speech in February, 2010, the Union Finance Minister made an announcement with regards to licensing of new private sector banks. Pursuant to this announcement on August 11, 2011, the RBI had put out a discussion paper on its website titled "Entry of New Banks in the Private Sector". Based on the responses received from the non-banking financial institutions, industrial houses, other institutions and the public at large, and after extensive internal discussions and consultation with the Governmentof India, the RBI has come up with the Draft Guidelines on licensing new private sector banks.

The Right to First Refusal in Public Companies: Conflicting decisions and the debate over enforceability

The Right of First Refusal created by a clause of pre-emption provides a company’s shareholders an option of purchasing the shares before being offered to the third parties, in effect providing them protection from wealth transfer and erosion of control. 

Western Maharashtra Development Corporation Ltd. v. Bajaj Auto Limited is a February 2010 decision of the Bombay High Court. It is notable for observations of the Court upon the legality of the right of first refusal in case of public companies under Indian Law.

Whether Third Party Administrator is required to deduct tax at source?

The Delhi High Court has recently reserved its order on whether tax at source can be deducted from a Third Party Administrator (“TPA”). In Vipul Medcorp v. Central Board of Direct Taxes (“CBDT”), a petition has been filed by the TPA challenging the decision of the CBDT requiring them to deduct tax at source from the patients who receive cashless treatment under the Medical Insurance Policy scheme.