In the Hon’ble Supreme Court’s judgment in the matter of AO Vs Nestle SA [2023 INSC 928], one of the issues which came up for consideration before Their Lordships was, to borrow their own words, “whether MFN clause is to be given effect to automatically or if it is to come into effect after a notification is issued”. The lead order in challenge before Their Lordships was Steria India Ltd Vs CIT [(2016) 386 ITR 390 (Del)]. On this aspect, the facts noted by the Hon’ble Supreme Court are as follows:

In other words, Steria’s plea that clause 7 of the Protocol (in the Indo-French DTAA) did not require any separate notification and could straightaway be operationalised was not accepted by the AAR. Upon challenge in a writ petition before the High Court, this was reversed; the Court accepted Steria’s contention and held that a protocol is to be considered as a part of the treaty itself and does not have to be separately notified for the purpose of the application of the MFN clause.

On this aspect, the limited argument of the learned ASG, as noted in para 7, 8 and 9, mainly was that without enabling parliamentary legislation, treaties are unenforceable and that Section 90 requires the issuance of notification to give effect to any treaty or convention, apart from reliance on Gramophone India and Azadi Bachao judgments. Upholding the plea of the learned ASG, the Hon’ble Supreme Court has finally concluded that “The legal position discernable from the previous discussion is that upon India entering into a treaty or protocol does not result in automatic enforceability in the courts and tribunals; the provisions of such treaties and protocols do not, therefore, confer rights upon the parties, till such time as appropriate notifications are issued in terms of Section 90(1)”.