Legislation UpdatesRules & Regulations

The Central Board of Direct Taxes has notified the Income-tax (30th Amendment) Rules, 2021 vide notification dated 24th September, 2021.

  • The amendment has amended Rule 10D of the Income Tax Act and further extended the applicability of provisions under Rule 10D for assessment years 2020-21 and 2021-22. They shall be deemed to have come into force from the April 1, 2021.
  • Rule 10D of Income tax Rules states that where an eligible assessee has entered into an eligible international transaction and the option exercised by the said assessee is valid, the transfer price declared by the assessee in respect of such transaction shall be accepted by the income tax authorities, if it is in accordance with the circumstances provided in the rule.

 


*Tanvi Singh, Editorial Assistant has reported this brief.

Experts CornerTarun Jain (Tax Practitioner)

  1. Introduction

 

Goods and Services Tax (GST) was introduced in India from July 2017. It is a tax on “supply” of goods and services. In the practical mechanics of GST, identification of the supply (technically known as “classification”) is crucial because it determines the rate of tax, time of tax liability, procedural mechanism such as for invoicing, compliances, etc. The ascertainment of the correct classification is therefore the starting point for complying with the GST law. Business dynamics, however, are not straightforward and therefore it is not correct to expect complete segregation of goods and services being supplied in each transaction.

 

To illustrate, a book seller may also arrange for transportation of the goods up to the destination of the buyer. In this simple example, there is a supply of goods (i.e. books) and also services (i.e. transportation). However, depending upon the parties’ dynamics, there can be multiple shades of this transaction involving a host of other supplies. For illustration, where the book seller is based outside India, there is likely to be an element of other services, such as insurance (to insure the books during transit), clearing and forwarding (to arrange for customs clearance of imported books), international transportation service (through courier, shipping, etc. as the case may be), etc. In such transactions, delineation and segregation of the various supplies and ascertaining their classification becomes challenging, if not impossible.

 

In order to address such eventualities, world over it is recognised that there can be a “bundle” of supplies in a single transaction. This concept is adverted differently under distinct laws. For illustration, under the erstwhile service tax law of India, this concept was explained through the “bundled supply” concept. Under the GST laws, the concepts of “composite supply” and “mixed supply” have been evolved to address such instances of bundle of supplies. This article demystifies these two concepts in the GST context by adverting to their conceptual nuances, application, implication, etc.

 

  1. Differentiating “principal supply” and “ancillary supply”

Before we advert to the concepts and distinction between composite supply and mixed supply, it is important to appreciate the concepts of “principal supply” and “ancillary supply” as these form the bedrock on which the differences between composite supply and mixed supply are set out. Principal supply is defined in Section 2(90) of the Central Goods and Services Tax Act, 2017 (CGST Act). Ancillary supply is not defined in the GST laws. Thus one is to be guided by the meaning of principal supply in order to appreciate the scope and coverage of ancillary supply as well. In other words, the definition of principal supply is the key differentiator between composite supply and mixed supply.

 

Under the CGST Act, principal supply means the supply of goods or services which constitutes the predominant element of a composite supply and to which any other supply forming part of that composite supply is ancillary. If one were to look at this definition in isolation, certain aspects stand out. First, principal supply is also a supply; there are no adverbial qualifications attended to a principal supply and any supply can be a principal supply. Thus, one is not required to look for any special features in order to characterise a supply as a principal supply. Second, there cannot be a standalone principal supply; instead there can be a principal supply only in a composite supply. Thus, the significance of principal supply is limited for the purpose of composite supply, and as we shall examine subsequently, also for the purpose of identifying a mixed supply. Third, there is no objective test prescribed in the statutory definition of principal supply; instead it is a subjective determination because one is required to ascertain as to what constitutes the “predominant element of a composite supply” in order to identify the principal supply. The implication is that a supply which may be a principal supply in a transaction may not be so in another. Thus, the determination of what is the principal supply will fluctuate depending upon the ingredients of the composite supply.

 

Let us take a few illustrations to examine how principal supply has been appreciated in practice. To this end, we fall back upon the judicial delineation of the concept. The decision of the Gujarat High Court in Torrent Power[1] appears to be the only High Court decision addressing the concept,[2] albeit briefly. In this case the High Court declared that power distribution companies were engaged in carrying out a composite supply because supply of electricity meters and services such as meter inspection, testing, etc. were not predominant and transmission and distribution of electricity was the principal supply.

 

Then we have a few decisions of the GST Appellate Authority for Advance Ruling (AAAR) which have examined the concept. The AAAR in Kundan[3] opined that “when the goods such sweets, namkeens, cold drinks and other edible items are supplied to customers in the restaurant or as takeaway from the restaurant counter and which are being billed under restaurant sales head should fall under ‘composite supply’ with restaurant service being the principal supply. Since supply of food in this case, is naturally bundled with the restaurant service”. This conclusion was differentiated by the AAAR to conclude that when the “goods which are supplied to customers through sweetshop counter [they] have no direct or indirect nexus with restaurant service. Anyone can come and purchase any item of any quantity from the counter without visiting the restaurant. The billings of such sales are also done separately. Thus such sales, by no stretch of imagination, can be clubbed with restaurant service. These sales do not satisfy the basic requirement of ‘composite supply’ i.e. ‘being naturally bundled and supplied in conjunction with each other’. These sales are completely independent of restaurant activity and will continue even when the restaurant is closed, either temporarily or permanently. Hence such sales will be treated as supply of goods with applicable GST rates on the items sold”.

 

In Doctors Academy[4] the AAAR was dealing with supply of coaching services where some students also opted for lodging and boarding in the furnished facility. On the premise that “no student can choose only lodging or boarding without coaching”, the AAAR concluded that the principal supply was the coaching service and all other supplies were ancillary.

 

In Vidyasagar Rao Constructions[5] the AAAR considered a “combination of services of excavation of sand including loading with machinery at reach, formation of ramps and maintenance of roads, transportation charges for the tractors/tippers of sand from reach to stockyard and loading cost at sand from stockyard to lorries” to opine that in that fact pattern the principal supply was “transportation of goods” and not “excavation of sand”. This is because, according to the AAAR, “the basic intent and purpose of the tender/contract agreement and the concomitant description of the scope of the work therein is to move/shift the mineral sand from one place to another, by means of transport by roads/ramps; for enabling the further dispatch” instead of the excavation of sand itself.

 

A review of these orders, which are only illustrative and in no sense exhaustive, reveals that the determination of what constitutes a principal supply is a fact-based determination which hinges upon a close examination of the factual attributes of a given transaction and ascertainment of what would be the predominant element in such bundle of supplies.

 

The fact that no statutory definition has been ascribed to “ancillary supply”, coupled with the judicial advertence to this concept while determining disputes relating to principal supply, reveals that the expression “ancillary supply” is more of an appendage in the statutory scheme relating to composite supply and principal supply; there is no independent or significant tenet underlying ancillary supply. In an overall perspective, one could arguably conclude that the concept of ancillary supply exists under the GST law as a residuary space which is an omnibus description of all those supplies which are not principal supply in a composite supply.

 

  1. Appreciating composite supply

Once the concept of principal supply is understood, the concept of composite supply unravels easily. The expression “composite supply” is defined in Section 2(30) of the CGST Act, along with a statutory illustration. The definition states as under:

 

(30) “composite supply” means a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both, or any combination thereof, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply.

Illustration.— Where goods are packed and transported with insurance, the supply of goods, packing materials, transport and insurance is a composite supply and supply of goods is a principal supply.

 

An appraisal of the definition reveals that certain conditions need to be satisfied before a composite supply can be considered to exist. These conditions are: (a) there must only be one supplier and one recipient;[6] (b) the supply must consist of two or more supplies; (c) such supplies should be “naturally bundled” and supplied in conjunction with each other in the ordinary course of business; and (d) there must be a principal supply in those naturally bundled supplies. All these conditions must be cumulatively satisfied.

 

The first condition is easy to test and can be objectively satisfied. The second condition also appears to be objectively ascertainable as it is fairly effortless to determine if there is a single supply or multiple supplies exist in a transaction. The third condition is relatively complex as one is required to ascertain if all the supplies in the transaction are: (a) “naturally bundled”; (b) whether they are “supplied in conjunction with each other”; and (c) whether such supply is “in the ordinary course of business”. This is a subjective inquiry as its response would vary depending upon the fact situation of the transaction concerned. The last condition is fairly easy to appreciate. If there is no principal supply then no further inquiry is warranted and no composite supply exists.

 

The illustration reveals a situation wherein both goods and services are being supplied and it is concluded that the supply of goods is the principal supply whereas services such as packing, transportation and insurance are ancillary supplies. Though it is not apparent, perhaps the legislature was guided by the premise that packing, transportation and insurance services are contingent upon the supply of goods and there would be no occasion to supply such services if there is no supply of goods. Having said that, it must be appreciated that packing, transportation and insurance, etc. are certain services which have an independent identity and therefore the specific contextual setting and how these services satisfy the three conditions [i.e. are (a) “naturally bundled”; (b) “supplied in conjunction with each other”; and (c) supplied “in the ordinary course of business”] is very crucial to determine whether the transaction would qualify as a composite supply. This is because failure to satisfy any of these conditions would translate into rendering the classification of the supply to change from composite to mixed supply. This is evident from the discussion in the subsequent section.

 

With this delineation, let us examine certain instances wherein the application of the concept of composite supply has been called for. The AAAR in Kalani[7] rejected the claim that a consolidated amount per month from students against provision of hostel accommodation for residence purposes which would also include ancillary supply of food with certain other facilities amounted to composite supply. According to the AAAR, the provision of hostel accommodation along with food facility, playroom, gym, housekeeping, room cleaning, washing/dry cleaning of bedsheets and linen of rooms, etc. amounted to an independent service and each of the other services could be supplied separately. The AAAR distinguished the illustration appended to definition of composite supply by highlighting that “it is obvious that the packing material or the insurance cannot be supplied separately if there is no transportation of goods” whereas it was equally “obvious that a person can live in the hostel without availing other services like food, TV, gym, etc.; but to make one’s stay more comfortable, the said ancillary services are availed by him”. For this reason the AAAR concluded that all activities were independent, not ancillary, and in case not were not naturally bundled. Similarly, in Vertiv[8] the AAAR opined that even though there was one contract between the service recipient and service provider; (a) bifurcation of work into supply of goods from supplier’s Maharashtra GST registered premises and supply of services from its New Delhi GST registered office; and (b) the nature of the supplies, revealed that both the supply of goods and the supply of services were equally important and indispensable, thereby concluding that they were not a composite supply.

 

Conversely, the AAAR in KSEDC[9] concluded that furnishing of street lighting services was a composite supply of goods and services while carrying out the following activities; Phase I – Preparatory work for installation of smart feeder panels and LED light fixtures; Phase II – Implementation of energy efficient lighting fixtures, brackets and junction box, underground cables and flexible cables; and Phase III – Operation and maintenance up to the end of the contract period. According to the AAAR, the principal supply in this case was a supply of service as it is the operation, management and maintenance of the street lighting system which is the essence of the contract between the parties. Similarly, in Nikhil Comforts[10] the AAAR concluded that execution of air conditioning works in new building for State Corporation involving supply, installation, testing and commissioning of variable refrigerant flow indoor and outdoor units, refrigerant piping with insulation, drain piping with insulation, MS stands, cabling, additional refrigerant and associated electrical works, etc. amounted to a composite supply wherein supply of air conditioning units was the principal supply.

 

Ascertaining whether a transaction constitute a composite supply is a complex process and requires a deep appreciation of the relevant factual variables has been accepted by the Tax Department at well. For illustration, the Central Board of Indirect Taxes and Customs, in context of classification of software development services, inter alia sought to explain the classification process in the following terms:[11]

 

“In contracts where service provider is involved in a composite supply of software development and design for integrated circuits electronically, testing of software on sample prototype hardware is often an ancillary supply, whereas, chip design/software development is the principal supply of the service provider. The service provider is not involved in software testing alone as a separate service. The testing of software/design is aimed at improving the quality of software/design and is an ancillary activity. The entire activity needs to be viewed as one supply and accordingly treated for the purposes of taxation. Artificial vivisection of the contract of a composite supply is not provided in law. These cases are fact based and each case should be examined for the nature of supply contracted.”

 

It is, therefore, evident that the appreciating composite supply is not a small task and requires a close look at the factual setting and the legal provisions, as the review of AAAR orders reveals. Legislatively, however, two exceptions have been carved out wherein the following have been specified as constituting composite supplies:[12] (a) works contract;[13] and (b) “supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink (other than alcoholic liquor for human consumption), where such supply or service is for cash, deferred payment or other valuable consideration”.

 

  1. Appraising mixed supply

 

The expression “mixed supply” is defined in Section 2(74) of the CGST Act in the following terms:

(74) “mixed supply” means two or more individual supplies of goods or services, or any combination thereof, made in conjunction with each other by a taxable person for a single price where such supply does not constitute a composite supply.

Illustration.— A supply of a package consisting of canned foods, sweets, chocolates, cakes, dry fruits, aerated drinks and fruit juices when supplied for a single price is a mixed supply. Each of these items can be supplied separately and is not dependent on any other. It shall not be a mixed supply if these items are supplied separately.

 

In Sarj[14] the AAAR, adverting to this definition, explained that “supply of goods and/or services will be treated as mixed supply if it fulfills the following two criteria: (a) it is a combination of two or more goods or services supplied at a single price; and (b) each of these items can be supplied separately and is not dependent on any other”. On such premise, the AAAR concluded that supply of food, laundry service, housekeeping service, etc. which are not naturally bundled with the lodging service and are independent of each other such that they can be supplied separately, qualify as mixed supply as there is no principal supply in this transaction.

 

The aforesaid reveals the following attributes of mixed supply; the supply must be by one person; it must be for a single price; and it must not be a composite supply. In other words, the multiple ingredients in the transaction must not have a predominant supply which would qualify as a principal supply in order for the transaction to remain within the realm of mixed supply. The illustration appended to the statutory definition of mixed supply also seems to confirm this underlying tenet. It refers to “a package consisting of canned foods, sweets, chocolates, cakes, dry fruits, aerated drinks and fruit juices” which are for a single price. Because each of these supplies are independent and can be made separately, there is no overwhelming element predominating the supply and hence the illustration does not represent a composite supply despite a single price being charged for the transaction and therefore it is an example of mixed supply.

 

In the aforesaid lines, the AAAR in Asahi[15] the AAAR concluded that a bouquet of services relating to corporate accounting, corporate finance, corporate personnel and labour relations, corporate research and development, quality assurance and corporate intellectual property, etc. provided by one entity to another for one consolidated price rendered them classifiable as mixed supply because they lack a predominating principal supply.

 

In Switching Avo[16] the AAAR confirmed that that supply of UPS and battery is to be considered as mixed supply. In this case the AAAR rejected the contention “that UPS cannot function without battery as such it is an integral part of UPS and hence it is naturally bundled and supplied in conjunction with each other and hence the supply of static converter along with external battery should be construed as a composite supply and not a mixed supply”. According to the AAAR, “storage battery has multiple uses and can be put to different uses and when supplied separately with static converter (UPS) it cannot be considered as a composite supply or a naturally bundled supply”, therefore, it is only “when a UPS is supplied with built-in batteries so that supply of the battery is inseparable from supply of the UPS, it should be treated as a composite supply” whereas in all other cases the transaction would constitute a mixed supply.

 

From the aforesaid, it is clear that even in case of mixed supply, one is required to satisfy both objective and subjective tests as in the case of composite supply. Furthermore, whether a principal supply exists in the transaction is a crucial test even for determining whether there is a mixed supply or not. However, the outcome of the classification is rather binary, one with an either/or determination as the transaction can only either be classified as composite supply or mixed supply or neither, but not both.

 

  1. Implications of classifying supplies as composite supply or mixed supply

Having examined the scope and coverage of composite and mixed supplies, one must also appreciate the reason for this distinction. The key rationale highlighting the accentuating importance of composite and mixed supplies is the distinction in the tax incidence. Section 8 of the CGST Act provides a different scheme for levy of tax in such cases. It provides as under:

  1. Tax liability on composite and mixed supplies.— The tax liability on a composite or a mixed supply shall be determined in the following manner, namely:

(a) a composite supply comprising two or more supplies, one of which is a principal supply, shall be treated as a supply of such principal supply; and

(b) a mixed supply comprising two or more supplies shall be treated as a supply of that particular supply which attracts the highest rate of tax.

 

A perusal of the statutory provision reveals that both in case of composite and mixed supplies, GST is not charged on the supplies comprising the individual ingredients of such composite and mixed supplies. To illustrate, if there are four supplies in a transaction and the transaction does not qualify either as composite or mixed supply, then the GST rate applicable against each of the four supplies would be relevant in order to determine the GST liability. However, in case of both composite and mixed supplies, the levy of GST is only on the basis of one of individual ingredients of the four supplies constituting the transaction. The difference between composite and mixed supplies is that in the case of composite supply that individual ingredient is chosen which constitutes the principal supply whereas in the case of mixed supply that individual ingredient is chosen which attracts the highest rate of tax. Thus, classification of supplies and whether these are composite supplies or mixed supplies or none is crucial for the purpose of GST liability of the supplier.

 

  1. Conclusion

Given the tax incidence, it is evident that ordinarily no supplier would prefer for the supply to be categorised as mixed supply[17] because it implies that all components of the transaction suffer the tax rate earmarked for that particular supply which attracts the highest rate of tax. Such inclination may, however, not exist in case of composite supplies where the principal supply determines the classification as also the rate of GST of the entire transaction. Nonetheless, given that it is not anyone’s choice as to the rate of tax, each transaction needs to be closely reviewed to examine the classification of the supply and whether it attracts composite supply or mixed supply characterisation. Even though the determination involves both objective and subjective tests and thus makes the classification exercise onerous, nonetheless, in view of the statutory mandate, it is crucial for the suppliers to appreciate the nuanced concepts underlying composite and mixed supplies and undertake appropriate classification of the supplies.

 


† Tarun Jain, Advocate, Supreme Court of India; LLM (Taxation), London School of Economics.

[1] Torrent Power Ltd. v. Union of India, (2018 SCC OnLine Guj 4808.

[2] The decision of the Kerala High Court in Abbott Healthcare (P) Ltd. v. CST, 2020 SCC OnLine Ker 24 : (2020) 34     GSTL 579 is another decision wherein a High Court had an occasion to consider the concept of principal supply. However, the High Court did not return any finding on the nuances of this concept.

[3] Kundan Misthan Bhandar, In re, 2018 SCC OnLine Utt AAR-GST 16 : (2019) 24 GSTL 94.

[4] Doctors Academy of Educational Society, In re, (2020) 38 GSTL 186 (AAAR).

[5]  R. Vidyasagar Rao Constructions, In re, 2018 SCC OnLine TS AAAR-GST 2.

[6] This appears to be logical conclusion from the usage of the article “a” in the expression “a supply made by a taxable person to a recipient”. See also, Chennai Metro Ride, In re, 2021 SCC OnLine TN AAAR-GST 1 inter alia concluding that “a composite supply is one in which one or more supplies are bundled naturally and supplied in conjunction by the service provider to the recipient. In the case at hand, land is supplied by the land owner to the appellant and the access to the pathway is granted by the appellant to the land owner. The recipient and the supplier are not the same in these supplies and therefore the same is not a ‘composite supply’ “.

[7] Kalani Infrastructure (P) Ltd., In re, 2020 SCC OnLine Raj AAAR-GST 4 : (2021) 46 GSTL 285.

[8] Vertiv Energy (P) Ltd., In re, 2020 SCC OnLine Mah AAAR-GST 11.

[9] Karnataka State Electronics Development Corpn. Ltd., In re, 2020 SCC OnLine Kar AAAR-GST 13.

[10] Nikhil Comforts, In re, 2019 SCC OnLine Mah AAAR-GST 55.

[11] Circular No. 118/37/2019-GST, dated 11-10-2019 issued vide F. No. 354/136/2019-TRU.

[12] Sch. II(6), CGST Act.

[13] Defined in S. 2(119) of the CGST Act.

[14] Sarj Educational Centre, In re, 2019 SCC OnLine WB AAAR-GST 6 :  (2019) 27 GSTL 131.

[15] Commr., GST v. Asahi Kasei India (P) Ltd., 2019 SCC OnLine Mah AAAR-GST 10  : (2019) 28 GSTL 172.

[16] Switching Avo Electro Power Ltd., In re, 2018 SCC OnLine WB AAAR-GST 10 : (2018) 15 GSTL 636.

[17] Except in an unlikely case of inverted duty structure i.e. a situation wherein the inputs (consumed to make the supply) are taxed at a higher rate than the supply which results into excess input tax credit situation. In such a scenario the supplier may instead prefer a higher rate of tax on the supply in order to be able to absorb the input tax credit.

Case BriefsHigh Courts

Chhattisgarh High Court: Rajendra Chandra Singh Samant J. dismissed the revision petitions being devoid of merit.

The facts of the case are such that the petitioners are directors of a company named H.B.N. Dairy & Allied Limited whose business is to seek investment from investors in the business of the company and part of the profit was assured to the investors. Due to irregularities being found, SEBI directed to discontinue the services and to make repayments to the investors. The charges have been framed against the applicants for commission of the offence under Section 420, 409 of the Indian Penal Code and Section 3, 4 & 5 of the Prize Chits Money Circulation Schemes (Banning) Act, 1978 and Section 10 of Protection of Depositors Interest Act, 2005. An application under Section 239 of Criminal Procedure Code i.e. Cr.P.C. was filed seeking discharge from the charges which came to be dismissed. Assailing this order, instant revision petitions were filed.

Counsel for the petitioners Mr. Bhashkar Payashi, Vibhash Tiwari and Rohitashwa Singh submitted that the framing of charges against the applicants in all three cases is erroneous and illegal, as there had been no prima-facie case present against these applicants for framing of such charges. The company has acted in accordance with the direction of SEBI and repaid the amount to various investors in Chhattisgarh. Therefore, the applicants’ company did not have any dishonest intention. Because of the registration of FIR, the applicants’ company is now unable to dispose of its property, which has become hindrance in making repayment to the investors.

Counsel for the respondents Mr. Adil Minhaj submitted that material in the charge-sheet in all three cases contains evidence to show that the applicants had no intention to make any refund to the investors/depositors, therefore, intention of the applicants was fraudulent from the very beginning.

The Court observed that it has been found that the applicants are directors of that company, who have given inducement to numerous persons regarding their fraudulent schemes and taken deposits and none of them have been paid the refund. On this basis charge-sheets have been filed. The applicants have been unable to establish that by any reason present, the applicants’ company, which was Non-Banking Company, had any authority to take such collections of money from the public. The order of SEBI is also not in favour of the applicants’ company. Hence, the allegations present regarding dishonest intention of the applicants cannot be discarded unless and until these applicants establish in the trial that their intention were bonafide.

The Court thus held “it can be said that the activity of the applicants’ company appears to be covered under Section 2 (c) of the Act, 1978 and therefore, promotion of such scheme, which is banned under Section 3 of the Act, 1978 is punishable under Section 4 of the same Act, 1978, regarding which, there is sufficient evidence present for framing of charge against the applicants.”[Amandeep Singh Saran v. State of Chhattisgarh, 2021 SCC OnLine Chh 901, decided on 07-04-2021]


Arunima Bose, Editorial Assistant has reported this brief.

Case BriefsTribunals/Commissions/Regulatory Bodies

National Consumer Disputes Redressal Commission (NCDRC): C. Vishwanath (Presiding Member) upheld the State Commission’s Order.

Petitioner/Complainant who was an account holder of HDFC Bank and was working as an officer with Qatar National Bank had deposited an amount of Rs 4,60,000. He found to his surprise that the entire balance was transferred from his account to another account as per the Bank Statement.

Later on filing a complaint in view of the above, the culprit was found by the police but only an amount of Rs 70,500 could be recovered.

Alleging deficiency in service and seeking recovery of the balance amount the consumer complaint was filed.

OPs denied that any of their employees were involved in any fraudulent act. Funds were transferred as per the instructions received from the Complainant through net banking and since the respondent did not respond to the verification email and messages about the transfer request, the said was affected.

Further, the OPs contended that the complainant was informed after the transaction was completed. Adding to this, it was stated that:

Only a Complainant could know about Net Banking Password ‘IPIN’ and nobody else could operate the account. They also took the plea that the alleged fraudulent transaction was reported to the Bank only on 31.12.2008, i.e., 47 days after the transaction date.

District Forum allowed the complaint, whereas the State Commission held that the complainant failed to establish negligence against the Bank.

State Commission also added that the Bank after following the due procedure, transferred the funds.

Being aggrieved with the State Commission’s Order, the present revision petition was filed.

Analysis and Decision

Bench noted that the petitioner availed of the Net Banking facility and signed the TPT Form agreeing to the terms and conditions. He being a Banker himself was aware of the nature of transactions. He was provided with a customer ID and Net Banking Password (IPIN), which he should have kept with himself. Before the transfer of funds, a customer was to add the name of beneficiaries. On any request for transfer of funds, the Bank sends a mail and SMS alert, which the Bank has done so in the present case.

The Bank waited for 24 hours and not receiving any adverse feed-back, effected the transfer. Once the transfer of funds was made, again the Petitioner was informed of the same by the Respondent/ Bank. Only after 47 days of transaction did the Petitioner choose to complain.

Hence, no deficiency in service on the part of the respondents was found.

Therefore, complainant failed to establish that the Bank had acted mala fidely, fraudulently and in violation of the security procedure. No illegality, jurisdictional error or material irregularity was found in the State Commission’s order.[Nikhil Phutane v. HDFC Bank Ltd., 2021 SCC OnLine NCDRC 51, decided on 09-03-2021]


Advocates before the Commission:

For the Petitioner: Mr Nikhil Jain, Advocate
For the Respondent: Mr Sharique Hussain, Advocate