[Opinion] India SC Rules on Permanent Establishment in Hyatt Case

CA Rahul Singh

The Supreme Court of India, in the case of Hyatt International Southwest Asia Ltd. [2025] 176 taxmann.com 783 (SC), has delivered a landmark ruling affirming the existence of a Permanent Establishment (PE) in India under Article 5(1) of the Indo-UAE DTAA. This decision holds significant implications for multinational corporations, especially those engaged in providing strategic or managerial services to Indian affiliates. The Court emphasized that a PE can exist even without a formal office or legal right over premises, provided there is a fixed place of business through which substantial business is conducted.

Hyatt, a UAE-based entity, provided Strategic Oversight Services to Indian hotels under the Hyatt brand. While it argued that it had no control or legal access to premises in India, the Court found that the company had a continuous and meaningful presence through its personnel and strategic involvement in hotel operations. The ruling stressed that substance must prevail over form in determining PE, and that repeated access and significant control may amount to a fixed place of business.

This judgment underscores the growing scrutiny on service-based PEs in India. It serves as a cautionary note for multinational enterprises to reassess their business arrangements, especially where overseas entities exercise operational or managerial control over Indian operations. The decision reinforces the importance of economic substance and could potentially lead to increased tax exposure for foreign companies operating in India without a physical office.