List of Current Affairs

Source: Karnataka High Court 

Why in News? 

Justice S.R. Krishna Kumar in the case of M/s Krazybee Services Pvt. Ltd. v. Additional Director, DGGI, BZU (2025) examined whether liquidated damages paid as compensation for contractual breach constituted taxable consideration under the Central Goods and Services Tax Act, 2017 (CGST Act), ultimately holding such payments to be outside the purview of GST. 

What was the Background of M/s Krazybee Services Pvt. Ltd. v. Additional Director, DGGI, BZU (2025) Case? 

• The assessee/petitioner, M/s Krazybee Services Pvt. Ltd., was a non-banking financial company (NBFC) that entered into a Master Service Agreement with Finnovation Tech Solutions Private Limited, a Lending Service Provider (LSP). 
• The agreement contained provisions under Paragraph No.7 that entitled the assessee to claim liquidated damages in case of any breach of contract committed by the LSP. 
• The contractual provisions were in alignment with Circular No.178/10/2022 dated 03.08.2022, which recognized compensation claims for breach under Sections 73 and 74 of the Indian Contract Act, 1872. 
• The Circular dated 03.08.2022 mandated that a party suffering breach would be entitled to claim compensation from the defaulting party towards loss or damage caused by such breach or non-performance. 
• A show cause notice was issued to the assessee by the GST authorities, demanding payment of GST on the liquidated damages received from LSPs. 
• The department alleged that the assessee had supplied similar services to other entities including M/s. IIFL, M/s. PayU Finance India Pvt. Ltd., and M/s. MAS Financial Services Pvt. Ltd., which charged GST under different nomenclature. 
• The authorities contended that the assessee was not entitled to adopt two different methodologies for the same or similar transactions to evade tax liability. 
• The assessee argued that liquidated damages received from LSPs were compensatory in nature and not amenable to GST as per Paragraph Nos. 7.1 and 7.1.6 of the Circular dated 03.08.2022. 

What were the Court's Observations? 

• The Court noted that the department had imposed GST on liquidated damages received by the assessee, which was clearly covered by Paragraph Nos. 7.1 and 7.1.6 of the Circular dated 03.08.2022, making such payments non-taxable. 
• The bench agreed with the assessee's contention that while Paragraphs Nos. 6 and 7 of the Circular were generic in nature, Paragraphs Nos. 7.1 to 7.1.6 were specific and directly applicable to the assessee's case. 
• The Court observed that Paragraphs Nos. 7.1 to 7.1.6 specifically dealt with receipt of compensation by way of liquidated damages arising from contracts between the petitioner and LSPs. 
• The bench held that amounts received by the petitioner from LSPs as liquidated damages fell outside the purview of GST in terms of the said Circular and could not be made amenable to GST liability. 
• The Court stated that the impugned show cause notice wrongly demanded GST on liquidated damages and deserved to be quashed. 
• The bench opined that merely because other transactions existed between the assessee and LSPs, this circumstance could not be made the basis to fasten GST liability on the assessee, especially when liquidated damages were expressly and specifically excluded under Paragraph Nos. 7 to 7.1.6 of the Circular. 
• The Court emphasized that the compensatory nature of liquidated damages distinguished them from consideration for supply of services under the GST framework. 
• In view of the above observations, the bench allowed the petition and quashed the show cause notice demanding GST on liquidated damages. 

What is the Goods and Services Tax (GST)? 

About:  

• Introduced by the 101st Constitutional Amendment Act, 2017, is a comprehensive indirect tax levied on the supply of goods and services in India. 
• It is a value-added tax (VAT) that replaced multiple indirect taxes previously levied by the Centre and States. 

Key Features: 

• Dual GST Structure: Includes Central GST (CGST) and State GST (SGST); Integrated GST (IGST) is applicable for inter-state transactions. 
• GST Council: It is the primary body for GST policymaking and rate decisions. 
• The GST Council is a joint forum of the Centre and the states. 
• It was set up by the President as per Article 279A (1) of the amended Constitution. 

Members: 

• The members of the Council include the Union Finance Minister (chairperson), the Union Minister of State (Finance) from the Centre. 
• Each state can nominate a minister in-charge of finance or taxation or any other minister as a member. 

Functions: 

• The Council, according to Article 279, is meant to “make recommendations to the Union and the states on important issues related to GST, like the goods and services that may be subjected or exempted from GST, model GST Laws” 
• Goods and Services Tax Network (GSTN): help taxpayers in India to prepare, file returns, make payments of indirect tax liabilities and do other compliances. 
• Threshold Exemption: Small businesses with turnover below a certain limit are exempt from GST. This makes compliance easier and protects micro enterprises from excessive paperwork. 

Source: Delhi High Court 

Why in News? 

Justice Sachin Datta of the Delhi High Court in the case of Professor Alka Acharya v. Government of NCT of Delhi and Ors. (2025) appointed Prof. Alka Acharya as the legal guardian of her husband Mr. Salam Khan, who has been in a persistent vegetative/comatose state since suffering an intracranial haemorrhage in February 2025. 

What was the Background of Professor Alka Acharya v. Government of NCT of Delhi and Ors. (2025) Case? 

Petitioner's Marriage and Family: 

• Prof. Alka Acharya married Mr. Salam Khan on 28.06.1989. 
• They have two children – Ms. Tara Isha (Respondent No. 2) and Mr. Aryaan Ishan (Respondent No. 3). 

Medical Crisis: 

• On 09.02.2025, Mr. Salam Khan was diagnosed with severe intracranial haemorrhage (right ganglion-thalamic bleed). 
• He underwent emergency life-saving surgery at Apollo Hospital, Sarita Vihar, Delhi. 
• On 14.02.2025, he was shifted to Fortis Hospital, Vasant Kunj, Delhi for further treatment. 
• He was discharged on 11.04.2025 but continued to remain in an unconscious and vegetative state. 
• Post-discharge, he required constant care at home, including tracheostomy tube for breathing and Ryle tube for feeding. 

Medical Certification: 

• A certificate dated 11.04.2025 from the Senior Consultant, Department of Neurology, Fortis Hospital certified that Mr. Khan was "bed bound" and in "unconscious state" with 100% disability. 

Legal Vacuum: 

• The petitioner invoked the parens patriae jurisdiction of the High Court as no statutory remedy existed for appointment of guardian for a person in comatose/vegetative state. 
• Existing laws like the Guardians and Wards Act, 1890, Rights of Persons with Disabilities Act, 2016, and Mental Healthcare Act, 2017 do not cover such situations. 

Assets Requiring Management: 

• The petition disclosed various movable and immovable assets owned by Mr. Khan individually and jointly with the petitioner, including bank accounts, mutual funds, insurance policies, vehicles, and residential properties in Delhi and Greater Noida. 

What were the Court's Observations? 

Medical Board Examination: 

• The Court directed constitution of a Medical Board at Govind Ballabh Pant Institute of Post Graduate Medical Education and Research (GIPMER) to examine Mr. Khan at his residence. 
• Medical Board's Opinion (dated 13.12.2025): Patient is in persistent vegetative state with 100% disability, not fit to undertake daily activities or take major decisions, requiring constant supportive care and supervision. 

SDM Inquiry: 

• The Sub-Divisional Magistrate (South-West) was directed to conduct an inquiry regarding the veracity of assertions, relationship, financial condition, and suitability of the petitioner as guardian. 
• SDM's Report (dated 08.12.2025): Confirmed Prof. Alka Acharya is the legally wedded wife since 28.06.1989, verified all properties, found financial condition stable, and concluded that she "fully satisfies all guidelines and is a suitable person to be appointed guardian." 

Children's Consent: 

• Both children filed affidavits of no-objection and appeared virtually before the Court on 18.12.2025, consenting to their mother's appointment as guardian. 

Appointment and Powers Granted: 

• Prof. Alka Acharya was appointed as the legal guardian of Mr. Salam Khan with authority to:  
• Take decisions regarding medical treatment, caretaking, daily expenditures, finances, and management of all assets 
• Deal with movable and immovable assets for his medical and daily expenditures 
• Manage specific assets including bank accounts, mutual funds, insurance policies, vehicles, and residential properties owned solely by Mr. Khan or jointly with the petitioner 

Key Observations: 

• The Court emphasized the constitutional obligation under Article 226 to fill the legal vacuum where no statutory remedy exists. 
• Court noted that persons in comatose/vegetative state fall outside existing disability and mental health legislations. 
• The judgment recognized that parens patriae jurisdiction enables courts to act in the best interest of vulnerable persons who cannot care for themselves. 

What is Parens Patriae Jurisdiction? 

About: 

• Parens patriae is a Latin term meaning "parent of the nation" or "father of the country." 
• It is a doctrine that empowers courts to act as guardians for persons who are unable to care for themselves. 
• This includes minors, mentally ill persons, and those in comatose/vegetative states. 

Constitutional Basis: 

• The jurisdiction is exercised by Constitutional Courts under Article 226/227 of the Constitution of India. 
• It is invoked in exceptional circumstances where no statutory remedy exists. 
• The Supreme Court has repeatedly recognized this jurisdiction in cases like:  
• Aruna Ramchandra Shanbaug v. Union of India (2011) 
• Shafin Jahan v. Asokan K.M. (2018) 

Application in Guardianship Cases: 

• Courts invoke this jurisdiction when:  
• The subject is not mentally or physically capable. 
• There is no other parent or legal guardian. 
• Existing statutes do not provide adequate remedy. 
• The welfare of the person needs protection. 

Legal Vacuum in Indian Law: 

• The Guardians and Wards Act, 1890 applies to minors and persons of unsound mind. 
• The Rights of Persons with Disabilities Act, 2016 requires designation of authorities (not yet fully operational). 
• The Mental Healthcare Act, 2017 does not provide for management of financial affairs or appointment of guardians for property. 
• Persons in comatose/vegetative state fall outside all these statutes. 

Guiding Principle: 

• Courts apply the principle of "best interest" of the individual in light of their "wills and preferences." 
• The Supreme Court emphasized that parens patriae jurisdiction is exercised "to further the cause of justice." 

Guidelines for Guardianship in Comatose Cases 

Based on judicial precedents, courts have established the following procedure: 

Pre-Appointment Requirements: 

1. Disclosure of all movable and immovable properties owned by the person in comatose state. 
2. Medical examination by a duly constituted Medical Board including a qualified Neurologist. 
3. Visit by Revenue authorities (not below the rank of Tahsildar/SDM) to verify facts, family details, and financial conditions. 
4. All legal heirs must be made parties to the proceedings. 

Eligibility of Guardian: 

• Preference given to close relatives (spouse or children). 
• In absence of suitable close relative, a public official like Social Welfare Officer may be appointed. 
• The guardian must be legally competent. 

Scope of Guardianship: 

• Limited to specific properties and bank accounts indicated in the court order. 
• Guardian must act always in the best interest of the person in comatose state. 

Accountability Measures: 

• Periodic reports (every six months) to be filed before the Registrar General. 
• Reports must contain particulars of all transactions and utilization of funds. 
• Social Welfare Officer may conduct random visits. 
• Court permission required for transferring the patient to another state or country. 

Safeguards: 

• Any misuse of power or misappropriation of funds can lead to revocation. 
• Relatives or next friend may apply for removal of guardian for abuse or neglect. 
• Court maintains ongoing supervision and can modify orders as required.