Author: inavatiq

Punita Bhuchar – [2026] 182 taxmann.com 650 (Article)

As India head into the Union Budget on 1st February 2026, it does so at the backdrop of a rapidly shifting global environment. Geopolitical conflicts, tariff-led trade disruptions, and climate-related risks continue to weigh on economies, even as discussions at forums such as Davos underline the speed at which Artificial Intelligence is reshaping industries worldwide. With yellow metal (24K Gold) touching record highs of around INR 1.5 lakh per 10 grams in India and global uncertainty remaining elevated, the budget is being framed against complex global and domestic realities that demand both stability and course correction.

A peek view of 2025 reveals a defining year for India’s growth wherein real GDP grew 8.2% in Q2 FY 2025-26, up from 7.8% in Q1 and 7.4% in Q4 of FY 2024-25, total exports of goods and services reached a record high of about US$825 billion. The GST rate changes and simplified tax structures in September 2025 have pre-witnessed one of the landmark steps towards effective taxable governance for CY 2026, so from indirect taxation perspective, the Budget 2026 encompasses scope for a next generation change from more of rate rationalization to more of administrative certainty and digital-first processes.

Tax Administrative Certainty

July 2025 marked the bronze anniversary of GST in India and was viewed positively across India Inc.- promoting ease of doing business, improving tax administration and supporting economic growth. This is not a mere statement, but one of the findings of survey conducted by Deloitte1 wherein 85 percent of respondents highlighted a positive experience in their eight-year GST journey. While the momentum got accelerated with the recent GST rates rationalization, a shift in gear is required towards enhancing the administrative certainty.

Administrative certainty is crucial pillar of any taxation framework that primarily focusses on clear and precise provisions, foreseeable outcomes, limited interpretations, less prone to disputes, and structured resolution processes. With 254 GST Circulars, numerous judicial pronouncements by various Hon’ble bodies and courts, certain vagueness still exist even on standard matters that necessitate clarity. To cite, eligible input tax credits are being rejected to the recipients on account of fault by suppliers in filing of returns, applications for refund of accumulated input tax credits against the export of services are being challenged and rejected on the basis that such services are classified as “intermediary” and not exports, despite existing clarifications issued by the government.

While GST regime in India may be largely stabilized, attention must now turn to Customs framework also, where impetus should be put on procedural simplification with the core objective of ease of doing business. A revamp to the Special Valuation Branch framework and an upgrade to AEO programme to a more predictable, risk-based model with faster timelines and clearer documentation is required. The validity of Customs Advance Rulings from 3 years to 5 years is required to provide longer-term predictability on classification/valuation/origin issues and reduce interpretational disputes across ports.

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Editorial Team, [2026] 182 Taxmann.com 651 (Article)

Global IDT Insights provides a weekly snippet of tax news specifically related to Indirect Taxes from around the globe.

Ireland issues guidance on VAT treatment of apartments and apartment blocks that qualify for the second reduced rate (9%)

Ireland has issued a Tax and Duty Manual outlining the VAT treatment applicable to the supply and construction of qualifying apartments and qualifying apartment blocks. The guidance explains the application of the second reduced rate of VAT, being the 9% rate, to qualifying supplies made during a defined period, in accordance with legislative changes introduced as part of Budget 2026.

The document focuses exclusively on when and how the second reduced rate applies to supplies of apartments, apartment blocks, qualifying sites, and construction services.

Key aspects of this guidance include:

(a) Charge to VAT on property and construction services

A property falls within the charge to VAT where it has been developed and supplied for consideration in the course of a business and is regarded as new for VAT purposes. Supplies of property are taxable while the property remains new. Construction services not subject to Relevant Contracts Tax (RCT) are taxable under normal VAT rules, while construction services subject to RCT are taxed under the reverse charge mechanism.

(b) Scope and qualifying period of the second reduced rate

The second reduced rate applied to the supply of qualifying apartments for a limited earlier period and was subsequently extended. From 26-11-2025, the scope of the second reduced rate includes qualifying apartments, qualifying apartment blocks, qualifying student accommodation, qualifying sites, and qualifying construction services. The extended application of the second reduced rate applies up to 31-12-2030.

(c) Conditions for applying the second reduced rate

For supplies of immovable goods to qualify for the second reduced rate, specific conditions must be satisfied. In the case of apartments, the supply must relate to a qualifying apartment located within a qualifying apartment block and must be used, or intended to be used, for residential purposes. In the case of apartment blocks, the supply must relate to a qualifying apartment block that is used, or intended to be used, for residential purposes, with certain qualifying sites and construction services also falling within scope.

(d) Meaning of qualifying apartments

A qualifying apartment includes studios, basement apartments, penthouse apartments, duplex apartments, and student accommodation. An apartment is defined as a self-contained dwelling unit within a larger building. Supplies of such apartments may qualify for the second reduced rate where all other statutory conditions are satisfied.

(e) Definition of a qualifying apartment block

A qualifying apartment block is a multi-storey residential building comprising, or intended to comprise, not less than three apartments with grouped or common access. This includes apartment blocks liable to commercial rates, including student accommodation apartment blocks. Any part of the apartment block not used, or not intended to be used, for residential purposes is excluded from the second reduced rate and is taxable at its appropriate VAT rate.

(f) Meaning of a multi-storey residential building

A multi-storey residential building is a residential building with a minimum of two floors and not less than three apartments. A single apartment under a duplex arrangement, or an apartment located above a shop or townhouse, does not meet this definition and is liable to the reduced rate where taxable. The presence of multiple floors and a sufficient number of apartments is essential for qualification.

(g) Requirement for grouped or common access

To qualify, at least three apartments within the building must share grouped or common access, such as a main entrance or shared external stairwell. The existence of a separate door for an individual apartment does not, in itself, prevent qualification. The decisive factor is whether the grouped or common access condition is met alongside the other statutory criteria.

(h) Residential use requirement and qualifying areas

Apartments and apartment blocks must be used, or intended to be used, for residential purposes to qualify for the second reduced rate. Internal common areas, external common areas, and car parking spaces designated exclusively for residents are treated as part of the qualifying residential use. Amenities such as gyms, work hubs, or swimming pools do not qualify, and apartments in aparthotels are regarded as non-residential for these purposes.

(i) Treatment of mixed-use buildings and shared areas

In mixed buildings containing both qualifying residential apartments and commercial units, shared areas used by both must be apportioned between the second reduced rate and the reduced rate. Apportionment may be carried out on the basis of floor area. Shared areas used exclusively by qualifying residential apartments, such as residential corridors or lifts serving only apartments, are taxable at the second reduced rate.

Source – VAT Rates- Ireland, Official Tax and Duty Manual

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Facts

Apex Limited,hereinafter referred to as “the company” is an Indian wholly owned subsidiary of Apex Global Inc., a foreign multinational enterprise. The company entered in a contract to provide back-office and support services, including finance, compliance, and IT-enabled services, to its parent entity in the Financial Year 2020-21. Since the services are rendered under an inter-company service agreement, the company is remunerated on a cost-plus basis.

For transfer pricing purposes, the company conducted a benchmarking analysis and concluded that a 10% mark-up on total operating costs represented an arm’s length price for the services rendered. Accordingly,the company raised invoices on the parent entity applying a 10% mark-up andrecognised revenue in its financial statements in accordance with Ind AS 115, Revenue from Contracts with Customers.

Subsequently, during the Financial Year 2024-25, the “Income-tax Department” of India initiated a transfer pricing audit and disputed the arm’s length margin adopted by the company. To obtain certainty and avoid prolonged litigation, the company entered into an Advance Pricing Agreement (APA) with the tax authorities. Under the APA, it was agreed that a 15% mark-up on costs represented the arm’s length return for the services rendered by the Company. Pursuant to the APA, during the current financial year, the parent entity remitted to the Company a lump-sum amount representing the cumulative shortfall of 5% for services rendered over the earlier four financial years.

The management of the company while finalizing the books of account for the FY 2024-25 were in dilemma as to whether the additional amount received by the company (Indian subsidiary) pursuant to the Advance Pricing Agreement, representing shortfall in earlier financial years, should be recognised as “revenue in the current financial year” or should be treated as a prior period error requiring restatement of earlier financial statements.Further, what disclosures are required to explain the nature and impact of the aforesaid transaction in the financial statements?

Relevant Provisions

Ind AS 115 – Revenue from Contracts with Customers

Para 31 of Ind AS 115

An entity shall recognise revenue when (or as) the entity satisfies a performance obligation by transferring a promised good or service (i.e an asset) to a customer. An asset is transferred when (or as) the customer obtains control of that asset.

Para 50 of Ind AS 115

If the consideration promised in a contract includes a variable amount, an entity shall estimate the amount of consideration to which the entity will be entitled in exchange for transferring the promised goods or services to a customer.

Para 51 of Ind AS 115

An amount of consideration can vary because of discounts, rebates, refunds, credits, price concessions, incentives, performance bonuses, or other similar items. The promised consideration can also vary if an entity’s entitlement to the consideration is contingent on the occurrence or non-occurrence of a future event. For example, an amount of consideration would be variable if either a product was sold with a right of return or a fixed amount is promised as a performance bonus on achievement of a specified milestone.

Para 88 of Ind AS 115

An entity shall allocate to the performance obligations in the contract any subsequent changes in the transaction price on the same basis as at contract inception. Consequently, an entity shall not reallocate the transaction price to reflect changes in stand-alone selling prices after contract inception. Amounts allocated to a satisfied performance obligation shall be recognised as revenue, or as a reduction of revenue, in the period in which the transaction price changes.

Para 116 of Ind AS 115

An entity shall disclose all of the revenue recognised in the reporting period from performance obligations satisfied (or partially satisfied) in previous periods (for example, changes in transaction price).

Para 123 of Ind AS 115

An entity shall disclose the judgements, and changes in the judgements, made in applying this Standard that significantly affect the determination of the amount and timing of revenue from contracts with customers. In particular, an entity shall explain the judgements, and changes in the judgements, used in determining both of the following:

a) the timing of satisfaction of performance obligations; and

b) the transaction price and the amounts allocated to performance obligations

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Case Details: S.G. Mittal Enterprises (P.) Ltd. vs. Satara Sahakari Bank Ltd. - [2026] 182 taxmann.com 566 (HC - Bombay)

Judiciary and Counsel Details

• Milind N. Jadhav, J.
• Amit Singh, Ms. Shivani Deshmukh & Ms. Shraddha Nagaonkar for the Petitioner.

Facts of the Case

In the instant case, the petitioner/Corporate Debtor and the respondent No. 1/Bank agreed to settle the dispute amicably and thereafter settled it by agreeing to pay a certain amount and, in that regard, executed and signed the Consent Terms.

The NCLT took Consent Terms on record and disposed of the proceedings filed by respondent No. 1/Bank against petitioner vide order in terms of the Agreement. The petitioner made payment of the entire consideration in accordance with the schedule set out in the Consent Terms.

However, despite receiving the full agreed-upon settlement amount, the respondent No. 1/Bank, by letter, demanded payment of the alleged balance, thereby disregarding the Consent Term and the NCLT’s order. Thereafter, the petitioner filed the present Contempt petition.

It was noted that the NCLT and NCLAT have independent and effective jurisdiction to punish for contempt of their own orders, including orders passed while exercising jurisdiction under IBC and once such contempt jurisdiction is vested in the Tribunal, the High Court ought not to exercise parallel contempt jurisdiction under section 10 of the Contempt of Courts Act, 1971.

Further, it was noted that contempt jurisdiction is plenary and self-contained and once contempt powers are conferred by statute, they vest in the Tribunal as an institution and apply to all proceedings before it, irrespective of whether the Tribunal is exercising jurisdiction under the Companies Act, IBC, or any other law for the time being in force.

High Court Held

The High Court observed that contempt proceedings cannot be used as a substitute for the execution or enforcement of orders, nor for resolving disputes arising from Consent Terms, especially when compliance depends on disputed facts or interpretation; in such cases, contempt jurisdiction may not be appropriate.

The High Court held that any supervisory intervention, if required, can be exercised only under Articles 226 and 227 of the Constitution of India, and such supervisory jurisdiction is distinct from contempt jurisdiction and cannot be invoked by filing a Contempt Petition. Therefore, the present Contempt Petition was not maintainable at the threshold and was liable to be dismissed.

List of Cases Referred to

• Gujarat Urja Vikas Nigam Ltd. v. Amit Gupta [2021] 125 taxmann.com 150 (SC)/[2021] 167 SCL 241 (SC) (para 10.3)
• Delhi Judicial Service Association, Tis Hazari Court, Delhi v. State of Gujarat (1991) 4 SCC 406 (para 10.4)
• L. Chandra Kumar v. Union of India 1997 taxmann.com 1023 (SC) (para 10.5)
• S.K. Sarkar, Member, Board of Revenue, U.P. v. Vinay Chandra Misra (1981) 1 SCC 436 (para 10.6)
• Shailendra Singh v. Nisha Malpani (Resolution Professional) [2021] 133 taxmann.com 346 (NCL-AT) (para 10.7)
• Tinsukhia Electric Supply Company Limited v. State of Assam (1989) 3 SCC 709 (para 24)
• Dr. Subramanian Swamy v. Arun Shourie (2014) 12 SCC 344 (para 25).

The post NCLT Alone Can Punish Contempt Of Its Orders | HC appeared first on Taxmann Blog.

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Case Details: D. Bhuvaneswara Reddy vs. Assistant Commissioner ST - [2026] 182 taxmann.com 462 (Andhra Pradesh)

Judiciary and Counsel Details

• R. Raghunandan Rao & T.C.D. Sekhar, JJ.
• Y. Sreenivasa Reddy for the Petitioner.

Facts of the Case

The assessee, being the petitioner, was subjected to an assessment in which an assessment order was passed and served in Form GST DRC-07. The assessee challenged the assessment order solely on the ground that it did not bear the signature of the Assessing Officer. It was contended that, in the absence of such signature, the assessment order was invalid in law and that service of an unsigned order could not amount to valid service. On this basis, the assessee questioned the legal sustainability of the assessment proceedings initiated through the said order. The matter was accordingly placed before the High Court.

High Court Held

The High Court held that an assessment order must necessarily bear the signature of the Assessing Officer and that such authentication cannot be dispensed with. The Court held that an unsigned assessment order is invalid and unenforceable in law and that service of a notice or order without signature does not amount to service at all. It was further held that, where there is no valid service of the assessment order, the question of delay in approaching the High Court does not arise. Applying Section 160 read with Section 168A of the CGST and the corresponding provisions of the Andhra Pradesh GST Act, the Court set aside the impugned assessment order and directed the authority to conduct a fresh assessment after issuing due notice and passing a duly signed assessment order.

List of Cases Reviewed

• A V Bhanoji Row v. Asstt. Commissioner (ST) [2025] 170 taxmann.com 799/94 GSTL 430 (A.P.) (para 8)
• SRK Enterprises v. Asstt. Commissioner (ST) [2023] 157 taxmann.com 93/[2024] 102 GST 450/82 GSTL 142 (A.P.) (para 8)
• SRS Traders v. Asstt. Commissioner (ST) [2024] 162 taxmann.com 430 (A.P.) (para 8)
• Tvl. Deepa Traders v. Deputy Commissioner (ST) [2024] 166 taxmann.com 81/106 GST 584/90 GSTL 411 (Mad) (para 9), followed

List of Cases Referred to

• A V Bhanoji Row v. Asstt. Commissioner (ST) [2025] 170 taxmann.com 799/94 GSTL 430 (A.P.) (para 6)
• SRK Enterprises v. Asstt. Commissioner (ST) [2023] 157 taxmann.com 93/[2024] 102 GST 450/82 GSTL 142 (A.P.) (para 6)
• SRS Traders v. Asstt. Commissioner (ST) [2024] 162 taxmann.com 430 (A.P.) (para 7)
• Tvl. Deepa Traders v. Deputy Commissioner (ST) [2024] 166 taxmann.com 81/106 GST 584/90 GSTL 411 (Mad) (para 9).

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Case Details: M J George vs. Deputy Commissioner of Income-tax - [2026] 182 taxmann.com 243 (Kerala) 

Judiciary and Counsel Details

• DR. A.K.jayasankaran Nambiar & Easwaran S., JJ.
• Nisha John, Adv. for the Appellant.
• Jose Joseph, SC for the Respondent.

Facts of the Case

The appellant-assessee sold an extent of 5.21 Acres of land at Kakkanad village for Rs.977.10 Lakhs vide registered Sale Deed dated 13.2.2006. He reported the income from the sale of land as agricultural income and claimed it to be exempt from tax. However, the Assessing Officer (AO) rejected the assessee’s claim and taxed the income as capital gains.

The assessee preferred an appeal to the CIT(A), and the CIT(A) granted relief to the assessee. Aggrieved by the order, an appeal was filed to the Tribunal. The Tribunal reversed the order of CIT(A) and confirmed the additions made by the AO. The matter then reached the Kerala High Court.

High Court Held

The High Court held that the assessee did not produce any evidence other than a certificate from the Village Officer that the land in question was agricultural land, which certificate went against the revenue records itself, which pointed to the land being in the nature of ‘Purayidam’, which translates as dry land suitable for the construction of houses.

In addition, the assessee also produced copies of some returns showing that he had returned an amount slightly over Rs. 1 lakh as agricultural income derived from the property over many years prior to the sale of the land. The appellant, however, did not produce any other cogent evidence such as wages paid to agricultural labourers, purchase invoices in respect of manure, fertilizers etc., purchase invoices pertaining to agricultural implements, if any, used in connection with the agricultural operations, the details regarding the source of water for irrigation purposes, etc.

It is on account of the absence of any cogent evidence adduced by the appellant that the appellate tribunal proceeded to hold, based on the evidence on record, that the appellant had not established that the land sold by him was agricultural in nature. The above findings of the appellate tribunal are entirely factual and, in the absence of any evidence adduced by the assessee, cannot be said to be arbitrary or perverse for the purposes of maintaining an appeal under Section 260A of the Income Tax Act.

List of Cases Reviewed

• CIT v. M.J. George IT Appeal No. 525 (Coch) of 2011, dated 31-10-2023 (para 10) affirmed

List of Cases Referred to

• CIT v. M.J. George [IT Appeal No. 117 of 2013, dated 3-7-2015] (para 5).

The post Agricultural Land Claim Rejected For Lack Of Proof | HC appeared first on Taxmann Blog.

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1. Introduction

The Securities and Exchange Board of India (SEBI) has notified the SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2026 vide Notification No. SEBI/NRO-GN/2026/295 dated 20 January 2026. The amendments introduce targeted changes to the LODR framework with a specific focus on High Value Debt Listed Entities (HVDLEs) and further strengthen the regulatory push towards complete dematerialisation of securities. The Amendment Regulations come into force from the date of their publication in the Official Gazette.

2. Revision of Threshold for High Value Debt Listed Entities (HVDLEs)

One of the most significant changes introduced by the Amendment Regulations is the upward revision of the threshold for identifying HVDLEs. Earlier, entities with listed non-convertible debt securities of Rs. 1,000 crores or more were classified as HVDLEs.

Under the amended Regulation 15(1A) of the LODR Regulations, an entity shall now be classified as an HVDLE only where the outstanding value of listed non-convertible debt securities is Rs. 5,000 crores or more. This change follows SEBI’s consultation proposal dated 27 October 2025 and is aimed at rationalising compliance requirements by limiting enhanced governance obligations to truly large debt-listed entities. Consequential amendments have been made across the LODR framework to align references with the revised threshold.

3. Mandatory Dematerialisation for Credit of Securities

SEBI has also strengthened investor service norms by amending Regulation 39 of the LODR Regulations. As per the amendment, the credit of securities pursuant to investor service requests—such as subdivision, split, consolidation, exchange, or issuance of duplicate securities—shall be effected only in dematerialised form.

Further, such credit must be completed within thirty days from the receipt of the request, along with all requisite documents. This move seeks to eliminate risks associated with physical securities and ensure faster, safer, and more transparent processing of investor requests.

3. Restriction on Transfer of Securities in Physical Form

To further reinforce the dematerialisation framework, Regulation 40 has been amended to prohibit the processing of transfer requests unless the securities are held in dematerialised form. Additionally, transmission and transposition of securities are also required to be effected only in demat form.

However, limited exceptions have been provided for transfers executed prior to 1 April 2019, recognising legacy transactions that were lawfully completed before the mandatory dematerialisation regime came into effect.

4. Conclusion

The SEBI (LODR) Amendment Regulations, 2026 mark a significant regulatory refinement by easing compliance for mid-sized debt-listed entities while simultaneously strengthening investor protection and operational efficiency through compulsory dematerialisation. The revised HVDLE threshold of Rs. 5,000 crores narrows the scope of enhanced obligations, while the demat-only regime for credit and transfer of securities reinforces market integrity, transparency, and security. Collectively, these amendments reflect SEBI’s continued focus on proportionate regulation and a fully digital securities ecosystem.

Click here to read the full notification

The post SEBI Raises HVDLE Threshold to Rs. 5,000 Cr appeared first on Taxmann Blog.

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Case Details: Sarwar Hussain vs. Managing Director U.P. Rajkiya Nirman Nigam Ltd. - [2025] 181 taxmann.com 283 (HC - Allahabad)

Judiciary and Counsel Details

• Abdul Moin, J
• Manish Jauhari, Mohit Jauhari, K.C. Jauhari, Subodh Kumar Verma, U.P. Mishra & V.P. Mishra for the Petitioner.
• Mohd.Mansoor Ahmad and Shishir Jain for the Respondent.

Facts of the Case

In the instant case, the petitioner was working as a storekeeper in the respondent corporation. An amount was withdrawn from the corporation’s savings bank account maintained with the bank. In a preliminary enquiry, it emerged that the petitioner had stolen a cheque and thereafter had made signatures of two officers on the said cheque and upon the said cheque being presented before the bank, the amount was withdrawn.
The Respondent-corporation was of the view that the preliminary enquiry report should be utilised against the petitioner. The Disciplinary authority, relying on the preliminary enquiry report, passed an order of dismissal against the petitioner.
The petitioner submitted a detailed reply, pointing out incongruities in the inquiry report and the inquiry process. Still, the disciplinary authority, although indicating that the petitioner had submitted a reply, failed to consider the same and passed a dismissal order.
It was noted that when a reply has been submitted, the concerned authority is required to apply its mind to it. Further, since disciplinary authority had not considered grounds taken by the petitioner in his reply while passing the dismissal order, the impugned order of dismissal was legally invalid and merited to be quashed.

High Court Held

The High Court observed that since petitioner was only one part of entire episode which started with an unauthorized saving bank account being opened by an officer and which culminated with fraudulent withdrawal of money, there clearly had been discrimination in punishment meted out to individuals, who were involved in entire episode with two individuals being punished with withholding of one increment permanently and a penalty of censure. At the same time, no action had been taken against another officer.
The High Court held that, since the petitioner had died during the pendency of the instant petition, the punishment of withholding one increment permanently and one censure would be imposed on the petitioner, with effect from the date of the dismissal order.

List of Cases Reviewed

• Raj Kumar Mehrotra v. State of Bihar (2005) 12 SCC 256 (para 36)
• Oryx Fisheries Private Limited v. Union of India (2010) 13 SCC 427 (para 37)
• B.C. Chaturvedi v. Union Of India (1995) 6 SCC 749 (para 40) followed

List of Cases Referred to

• Mohd Yunus Khan v. Uttar Pradesh Rajkiya Nirman Nigam Ltd [Writ Petition No. 6544 (SS) of 2000, dated 4-9-2012] (para 14)
• Lucknow Kshetriya Gramin Bank v. Rajendra Singh (2013) 12 SCC 372 (para 15),
• Rajendra Yadav v. State of Madhya Pradesh [2013] 2 taxmann.com 1338 (SC) (para 15)
• Raj Kumar Mehrotra v. State of Bihar (2005) 12 SCC 256 (para 36)
• Oryx Fisheries Private Limited v. Union of India (2010) 13 SCC 427 (para 37)
• B.C. Chaturvedi v. Union Of India (1995) 6 SCC 749 (para 40).

The post Dismissal Invalid For Non Consideration Of Reply | HC appeared first on Taxmann Blog.

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Case Details: STCI Finance Ltd. vs. Keshav Khaneja - [2025] 180 taxmann.com 138 (NCLT - Ahd.)

Judiciary and Counsel Details

• Shammi Khan, Judicial Member
•  Sanjeev Sharma, Technical Member
• Manish Bhatt, Sr. Adv. & Anip Gandhi, Adv. for the Appellant.
• Rishi Singhal, Adv. for the Respondent.

Facts of the Case

In the instant case, the applicant-NBFC had extended a financial facility to the corporate debtor pursuant to a duly executed facility agreement. In consideration thereof, a hypothecation deed was executed, whereby 129 electric passenger vehicles were hypothecated and exclusively charged in favour of the applicant.

The corporate debtor committed repeated and wilful defaults in repayment of the loan facility, thereby triggering events of default under the facility agreement. Thereafter, the applicant declared the corporate debtor’s account NPA.

The applicant instituted a civil suit before the High Court seeking recovery of the outstanding amount. The High Court was pleased to grant interim relief, thereby appointing the Court receivers to assist the applicant in repossessing the hypothecated vehicles.

During the pendency of said suit, CIRP was initiated against the corporate debtor. The applicant filed an instant application seeking permission to sell hypothecated electric vehicles repossessed before the initiation of CIRP, and declaring that such vehicles were not assets of the corporate debtor and were outside the purview of the ongoing CIRP.

It was noted that the hypothecated electric vehicles repossessed by the applicant were assets of the corporate debtor under the IBC. Further, the moratorium under section 14 of the IBC applies to repossessed vehicles and prohibits the applicant from selling them.

NCLT Held

The NCLT held that the IBC overrides the provisions of the Motor Vehicles Act, 1988, with respect to the ownership of hypothecated vehicles in the possession of a financier. Further, reliefs sought by the applicant, including permission for sale, appropriation of proceeds, and reimbursement, were to be declined.

List of Cases Reviewed

• STCI Finance Ltd. v. Gensol Engineering Ltd. [C.S. (Comm.) 438 of 2025] (para 2.7)
• Tata Motors Finance Ltd. v. Jadoun International Pvt. Ltd. (2019) ibclaw.in 401 NCLAT (para 3.5)
• Swiss Ribbons (P.) Ltd. v. Union of India [2019] 101 taxmann.com 389/152 SCL 365 (SC) (para 3.6)
• Sundaresh Bhatt, Liquidator of ABG Shipyard v. CBDT and Customs [2022] 141 taxmann.com 471 (SC) (para 3.7)
• Mahindra and Mahindra Financial Services Ltd. v. State of U.P. [2022] 136 taxmann.com 363 (SC) (para 4.11)
• Neesa Leisure Ltd. v. Rajasthan State Industrial and Investment Corporation [Company Appeal (AT) (Ins.) No. 510 of 2022, dated 7-12-2022] (para 4.11)
• SMAS Auto Leasing India Pvt. Ltd. v. Gensol Engineering Ltd. [Company Appeal (AT) (Ins.) No. 1042 of 2025,dated 2-9-2025]. (para 4.11)
• Volkswagen Finance (P.) Ltd. v. Shree Balaji Printopack (P.) Ltd. [2021] 124 taxmann.com 614 (NCL-AT) (para 6.6)
• Indian Overseas Bank v. RCM Infrastructure Ltd. [2022] 138 taxmann.com 329 / 172 SCL 533 (SC) (para 6.9)
• Anand Rao Korada Resolution Professional v. Varsha Fabrics (P.) Ltd. [2019] 111 taxmann.com 474/[2020] 157 SCL 350 (SC) (para 6.10)
• Sincere Securities (P.) Ltd. v. Chandrakant Khemka [2025] 177 taxmann.com 161/189 SCL 788 (SC) (para 6.11)
• Encore Asset Reconstruction Company (P.) Ltd. v. Ms. Charu Sandeep Desai [2019] 107 taxmann.com 100/154 SCL 382 (NCL-AT) (para 6.12)
• SIDBI v. Sumit Sharma Erstwhile RP [CA/AT/INS/1359/2025] (para 6.16).

The post IBC Moratorium Bars Sale Of Repossessed Vehicles | NCLT appeared first on Taxmann Blog.

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[2026] 182 taxmann.com 608 (Article)

1. Introduction

The notification and impending implementation of the New Labour Codes, particularly the Code on Wages, 2019, marks a structural shift in India’s employee compensation framework. While the operational and HR implications are widely discussed, the financial reporting consequences under Ind AS 19 Employee Benefits are equally significant and, in many cases, immediate.

Recent quarterly financial statements of several large corporates have already reflected substantial exceptional items arising from employee benefit remeasurements. These adjustments are not policy choices but accounting consequences triggered by a change in the employer’s constructive and legal obligations.

2. Interplay Between Labour Codes and Ind AS 19

Ind AS 19 requires entities to recognize:

• A liability for defined benefit obligations (DBO)
• An expense when employee benefits are earned or when obligations are amended

The New Wage Code alters the definition of “wages”, which directly affects the base on which statutory benefits, such as:

• Gratuity
• Leave encashment
• Bonus-linked benefits are computed.

Once the Code becomes notified or when its implementation becomes virtually certain, the employer’s obligation under Ind AS 19 changes, triggering remeasurement.

3. Beyond HR: Why Labour Code Changes Are a Financial Reporting Issue

Under Ind AS 19, entities are required to recognise increased obligations even before any actual salary restructuring or cash outflow occurs, whenever past service benefits are enhanced or the benefit formula is amended to the employee’s advantage. Consequently, the implementation of the New Wage Code constitutes a financial reporting event in its own right, rather than merely a prospective payroll adjustment.

4. The 50% Wage Rule and Actuarial Mechanics

The 50% Rule – Core Trigger

Under the New Wage Code, exclusions such as HRA, allowances, and perquisites cannot exceed 50% of total remuneration. Consequently, the Basic + DA component must be at least 50% of CTC.

Since gratuity and leave encashment are calculated on Basic (or Basic + DA), this rule significantly increases the benefit base.

5. Impact on Defined Benefit Plans

Defined benefit obligations under Ind AS 19 are sensitive to:

• Salary levels
• Salary escalation rates
• Years of service

An increase in Basic wages leads to:

• Higher projected benefit obligations
• Immediate increase in Present Value of Defined Benefit Obligation (PVDBO).

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