Author: inavatiq

Case Details: Yusuf Malubhaiwala vs. Anuj Maheshwari - [2025] 181 taxmann.com 453 (NCLAT-New Delhi)

Judiciary and Counsel Details

• Justice Ashok Bhushan, Chairperson & Barun Mitra, Technical Member
• Abhijeet Sinha, Vijayesh Atre, Ms Heena Kochar & Ms Aarya Chhangani, Advs. for the Appellant.
• Ms Soumya Dharwa, Malak Bhatt, Rushabh Shah, Ms Neeha Nagpal, Ms Nitya Prabhakar, Advs. & Krishnendu Dutta, Sr. Adv. for the Respondent.

Facts of the Case

In the instant case, the operational creditor was a sole proprietorship concern of one ‘A’ who owns two concerns, namely ‘Haji’ and ‘Maaz’, under a common GST registration number. The operational Creditor had entered into a business transaction with the corporate debtor in the trading and supply of iron and steel materials.

The corporate Debtor had failed to clear the outstanding amount despite repeated requests, following which the operational creditor issued a Demand Notice under Section 8 of the IBC. As no payment was forthcoming, the operational creditor filed two separate applications under Section 9 of the IBC.

The NCLT vide the impugned order admitted the said application. The corporate debtor challenged the said order vide an instant appeal, contending that there was a serious pre-existing dispute. Thereafter, an appeal was made before the NCLAT.

It was noted that the police complaint alleging threats by the Operational Creditor, citing inconsistent amounts, was unrelated to the claimed debt and did not specifically dispute either the invoices or the supplies made.

Further, when a police complaint was not directly related to commercial dealings between the parties but was filed primarily as a safeguard against coercion, threats, intimidation, and illegal recovery, it could not be construed as a pre-existing dispute between the parties.

NCLAT Held

The NCLAT held that the civil suit was filed after the Section 9 application and did not qualify as a pre-existing dispute. Thus, disputes were not genuine, real or pre-existing, and therefore, the instant appeal against the NCLT’s impugned order was to be dismissed.

List of Cases Reviewed

• NCLT’s Order dated 12.06.2025 in C.P. (IB) No. 29/9/MP/2020 (Para 32) affirmed
• Mobilox Innovations Pvt. Ltd. v. Kirusa Software Pvt. Ltd. (2018) 1 SCC 353 (Para 23)
• Neeta Saha v. Ram Niwas Gupta [2020] 117 taxmann.com 706/160 SCL 454 (NCLAT)/CA(AT)(Ins) No. 321 of 2021
• Mateshwari Minerals v. Jet Granito Pvt. Ltd. [2021] 127 taxmann.com 795/166 SCL 207 (NCLAT)/CA(AT)(Ins) No. 776 of 2020 (Para 30) followed

List of Cases Referred to

• Mobilox Innovations Pvt. Ltd. v. Kirusa Software Pvt. Ltd. [2017] 85 taxmann.com 292/144 SCL 37 (SC) (para 6)
• Aroon Kumar Aggarwal v. ABC Consultants Pvt. Ltd. [CA (AT) (Ins.) No. 409 of 2020, dated 1-12-2022] (para 8)
• G.T. Polymers v. Keshava Medi Devices Pvt. Ltd. [2020] 118 taxmann.com 74 (NCL-AT) (para 8)
• Ms Poonam Gupta v. Smt. Suman Chadha [2020] 114 taxmann.com 135 (NCL-AT) (para 16)
• Jaginder Singh Lather v. AU Small Finance Bank [2018] 99 taxmann.com 207 (NCL-AT) (para 17)
• Neeta Saha v. Ram Niwas Gupta [2020] 117 taxmann.com 706/160 SCL 454 (NCL-AT) (para 30)
• Mateshwari Minerals v. Jet Granito Pvt. Ltd. [2021] 127 taxmann.com 795/166 SCL 207 (NCL-AT) (para 30).

The post Civil Suit Post Section 9 Can’t Override Section 9 on Pre-Existing Dispute | NCLAT appeared first on Taxmann Blog.

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Order No. 03/2025, Dated 26-12-2025

1. Background

The Government of India has issued an Office Order allocating benches to the appointed Members of the GST Appellate Tribunal (GSTAT). The allocation has been made with the approval of the competent authority and specifies the bench-wise posting and place of duty of each appointed Member.

This step marks a significant milestone in the operationalisation of the GST appellate framework across the country.

2. Categories of Members Covered

The Office Order covers bench allocation for the following categories of GSTAT Members:

• Judicial Members
• Technical Members (Centre)
• Technical Members (State)

Each Member has been assigned to a specific bench and location, ensuring the prescribed composition of the Tribunal.

3. Bench-wise Allocation

• The Office Order provides detailed bench-wise postings of all appointed Members
• It specifies:

1. 1. The location of the bench
   2. The category of Member (Judicial/Technical – Centre/Technical – State)

• The allocation is intended to ensure balanced staffing and functional readiness of GSTAT benches nationwide

4. Joining Date and Assumption of Charge

• All appointed Members have been directed to assume charge on 21 January 2026
• Members are required to report to their respective benches on the specified date
• This enables the Tribunal to commence or scale up appellate proceedings in a coordinated manner

5. Administrative Significance

The allocation of benches is a crucial administrative step towards:

• Making the GST Appellate Tribunal fully functional
• Strengthening the GST dispute resolution mechanism
• Providing taxpayers and tax authorities with an effective appellate forum
• Reducing pendency of GST appeals and improving certainty in tax administration

6. Implications for Stakeholders

6.1 For Taxpayers and Practitioners

• Greater clarity on bench locations and availability of appellate forums
• Anticipated commencement or acceleration of GST appeal hearings
• Improved access to justice in GST matters across regions

6.2 For Tax Authorities

• Deployment of Technical Members (Centre and State) to designated benches
• Readiness for coordinated handling of appellate litigation

7. Next Steps

Following the assumption of charge by Members on 21.01.2026, further actions may include:

• Notification of bench-wise territorial jurisdiction
• Issuance of procedural rules, cause lists, and hearing schedules
• Commencement of regular sittings of GSTAT benches

8. Key Takeaway

The Government has formally allocated benches and places of posting to all appointed Judicial and Technical Members of the GST Appellate Tribunal, directing them to assume charge on 21 January 2026—paving the way for effective functioning of GSTAT across India.

Click Here To Read The Full Update

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Case Details: Zankarsinh Kishorsinh Solanki vs. Kanhaiyalal Salawat - [2025] 181 taxmann.com 101 (NCLT-Ahd.)

Judiciary and Counsel Details

• Shammi Khan, Judicial Member & Sanjeev Sharma, Technical Member
• Ms Natasha Shah, Adv. for the Applicant.
• Ms Nalini Lodha & Sunil Kumar, Advs. for the Respondent.

Facts of the Case

In the instant case, the applicant was a personal guarantor of the corporate debtor. Bankruptcy proceedings were initiated against the applicant. The applicant filed the present application seeking permission to travel to the USA for maintaining his Green Card status, as required under US immigration rules.

The applicant undertook to cooperate with the proceedings through virtual means, appoint a local representative, namely his father, and comply with all conditions imposed by the Tribunal. It was noted that the applicant’s family, comprising his spouse and minor children, resides in Boston, USA. The applicant was the primary Green Card holder for his children, who were minors, and failure to comply with the immigration requirements would jeopardise the education, future prospects and careers of the two minor children.

It was further noted that the applicant did not have any foreign assets, except for a disclosed investment which had no realisable value.

NCLT Held

The NCLT observed that, considering the dependency of the minor children’s immigration status on the applicant, as well as their education and future career prospects, a lenient view was warranted. Accordingly, permission was granted to the applicant to travel to the USA, subject to certain conditions to safeguard the interests of creditors.

List of Cases Referred to

• Venturi Ramkoteshwar v. D. Surya Ramakrishna Saibaba [MANU/NC/4268/2024] (para 9.10)
• M.S. Raghavan v. Inspector of Police 2022 SCC OnLine Mad 765 (para 9.11)
• Alchemist Asset Reconstructions Company Ltd. v. Nita Puri 2025 SCC OnLine NCLT 2010 (para 9.11).

The post NCLT Allows Personal Guarantor to Travel Abroad for Children appeared first on Taxmann Blog.

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1. Introduction

The Accounting Standards Board (ASB) of the Institute of Chartered Accountants of India (ICAI) has issued a set of Frequently Asked Questions (FAQs) to provide clarity on the key accounting implications arising from the implementation of the New Labour Codes. These FAQs address important questions relating to the recognition, measurement, presentation and disclosure of employee benefit obligations, particularly gratuity and leave encashment, under Ind AS and Indian Generally Accepted Accounting Principle (GAAP).

2. Impact of New Labour Codes on Gratuity

The “New Labour Codes” have subsumed the Payment of Gratuity Act, 1972 and introduced certain important changes in the computation and eligibility of gratuity. Under the revised framework, gratuity is required to be calculated based on the employee’s last drawn wages, with wages constituting a minimum of 50% of the total remuneration.

While the general requirement of completion of five years of continuous service for entitlement to gratuity continues to apply to permanent employees, a significant change has been introduced for fixed-term employees, including contractual employees. Such employees will now be eligible for gratuity upon completion of one year of service. Thus, the government has expanded the social security coverage to a broader category of employees.

3. Accounting Implications on Issuance of New Labour Codes

The issuance of the “New Labour Codes” represents a major regulatory development with direct implications on accounting for employee benefit obligations. Changes in wage definitions and eligibility criteria for benefits such as gratuity and leave encashment are expected to increase employee related liabilities for many entities. Given the effective date of the codes and the absence of detailed Rules, entities are required to carefully assess the timing of recognition, measurement and presentation of the additional obligations under Ind AS and Indian GAAP, along with the related tax implications. Thus, the FAQ issued by ASB of ICAI would be pivotal to understand the accounting implications of codes. The FAQ covers the following topics:

4. Topics Covered under FAQ

The issuance of the New Labour Codes has given rise to several important accounting considerations in relation to employee benefit obligations, particularly gratuity and leave encashment. A primary issue is the manner in which an entity should account for the increase in gratuity liability arising from the revised wage definition and expanded employee coverage under the codes. Specifically, entities are required to assess whether the resulting increase in obligation should be treated as a change in actuarial assumptions, giving rise to actuarial gains or losses, or as a plan amendment that results in past service cost under the applicable accounting framework.

Further complexity arises from the timing of recognition of the additional liability. Although the codes are effective from 21st November 2025, the supporting Rules are yet to be notified. Based on legal evaluation, the revised wage definition is considered to be immediately applicable, requiring gratuity to be paid in accordance with the New Labour Codes to employees whose last working day falls on or after 21st November 2025. In this context, listed entities with a 31st March financial year-end need to evaluate whether the additional gratuity obligation should be recognised in the interim financial results for the period ending 31 December 2025 or whether recognition can be deferred until the financial year ending 31 March 2026.

In addition, questions arise regarding the presentation of the incremental expense resulting from the increase in gratuity and/or leave encashment obligations. Entities need to evaluate whether such additional expense can be presented as an exceptional item in the Statement of Profit and Loss or whether it should be included within employee benefit expenses in accordance with the relevant accounting standards.

Furthermore, the increase in gratuity and leave encashment obligations under the New Labour Codes has tax implications that require careful assessment. Entities must evaluate the impact on current tax outflows as well as the recognition and measurement of deferred tax assets or liabilities arising from the timing differences associated with the revised employee benefit obligations

Click Here To Read The Full Story

The post ICAI ASB Issues FAQ on Accounting Impact of New Labour Codes appeared first on Taxmann Blog.

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Shubhangi Shukla – [2025] 181 taxmann.com 818 (Article)

1. Introduction

The Insolvency and Bankruptcy Code, 2016 (“IBC”) was enacted with the objective of providing a consolidated, time-bound and creditor-driven framework for insolvency resolution and liquidation of corporate persons. One of the most contentious and evolving issues under the Code has been the treatment and priority accorded to Government dues, particularly State tax claims, during corporate insolvency resolution and liquidation proceedings. The question assumes greater significance where such dues are backed by statutory provisions creating a charge over the assets of the corporate debtor.

2. Central Sales Tax (CST) and Value Added Tax (VAT)

Central Sales Tax (CST) and Value Added Tax (VAT) dues payable to State Governments often arise prior to the commencement of insolvency proceedings and are frequently secured by statutory first charge provisions under State taxation laws. Section 48 of the Gujarat Value Added Tax Act, 2003 (“GVAT Act”) is one such provision, which declares that tax dues shall constitute a first charge on the property of the dealer.

Section 48 of the GVAT Act:

“Notwithstanding anything to the contrary contained in any law for the time being in force, any amount payable by a dealer or any other person or account of tax, interest or penalty for which he is liable to pay to the Government shall be a first change on the property of such dealer, or as the case may be, such person.”

3. Concept of Secured Creditor Under the IBC

A secured creditor is defined under section 3(30) of IBC as a creditor in favor of whom security interest is created. Section 3(31) of the Code defines “security interest” to include a right, title, interest or claim to property created in favour of, or provided for, a secured creditor and expressly includes statutory charges within its ambit. Section 3(30) defines a “secured creditor” as a creditor in whose favour such security interest is created.

4. Liquidation Waterfall Under Section 53 of the IBC

Section 53 of the IBC prescribes a order of priority for distribution of proceeds during liquidation. The waterfall mechanism reflects the legislative intent to balance competing stakeholder interests while ensuring predictability and certainty in insolvency outcomes.

Under Section 53(1)(b), two categories rank pari passu:

(i) workmen’s dues for the period of twenty-four months preceding the liquidation commencement date, and

(ii) debts owed to secured creditors who have relinquished their security interest in the manner set out in Section 52.

Government dues are separately placed under Section 53(1)(e), ranking below unsecured financial creditors.

The interpretative challenge lies in determining whether State tax dues secured by a statutory charge fall within Section 53(1)(b)(ii) as secured debts or are relegated to Section 53(1)(e) as Government dues.

Click Here To Read The Full Article

The post [Opinion] From Operational Debt To Secured Claim | State CST Dues Under IBC appeared first on Taxmann Blog.

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Indian Accounting Standards (Ind AS) are largely aligned with the IFRS Standards issued by the International Accounting Standards Board (IASB). Since IFRS Standards are periodically issued or revised by the IASB, the Accounting Standards Board (ASB) of the Institute of Chartered Accountants of India (ICAI) reviews such changes to consider corresponding amendments in Ind AS, ensuring continued convergence.

In line with this process, the ASB has issued an exposure draft for public comments on the “Amendments to Ind AS 21 – Translation to a Hyperinflationary Presentation Currency”. Stakeholders are invited to submit their comments on the draft by 25th January 2026.

This initiative is part of ICAI’s continuous efforts to ensure that Ind AS remains consistent with global accounting standards and addresses relevant reporting issues in practice.

Click Here To Read The Full Story

The post ICAI ASB Issues Exposure Draft on Ind AS 21 Amendment appeared first on Taxmann Blog.

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Case Details: Kelvion India (P.) Ltd. vs. Union of India - [2025] 181 taxmann.com 723 (Bombay)

Judiciary and Counsel Details

• M.S. Sonak & Advait M. Sethna, JJ.
• Rahul Thakar, C. B. Thakar & Yash Dethe, Advs. for the Petitioner.
• Karan Adik & Megha Bajoria, Advs. for the Respondent.

Facts of the Case

The petitioner, a manufacturer-exporter, imported raw materials under advance authorisation with exemption from customs duty and IGST and exported finished goods on payment of IGST during June 2019 to December 2019 and July 2020 to September 2020, claiming IGST refunds. The Directorate of Revenue Intelligence (DRI) alleged violation of Rule 96(10) of the CGST Rules due to use of advance authorisation, pursuant to which the petitioner repaid the refunded IGST along with interest. Claiming that excess tax had been paid, the petitioner filed a refund application, which was rejected by the adjudicating authority and the rejection was upheld in appeal, leading to the writ petition.

High Court Held

The High Court held that Rule 96(10) of the CGST Rules had been omitted without any saving clause, as already held in Hikal Ltd. v. Union of India. Since the authorities had proceeded on the basis of an omitted provision and without the benefit of the said decision, the impugned orders could not be sustained. Without examining the merits, the Court set aside the impugned orders and remanded the matter to the adjudicating authority to decide the refund application afresh after considering the legal position, thereby deciding the matter in favour of the assessee by way of remand.

List of Cases Reviewed

• Hikal Ltd. v. UOI [2025] 178 taxmann.com 333 (Bombay) (Para 16) followed

List of Cases Referred to

• Hikal Ltd. v. UOI [2025] 178 taxmann.com 333 (Bombay) (para 11).

The post HC Remands IGST Refund Case Involving Omitted Rule 96(10) appeared first on Taxmann Blog.

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Case Details: Sh. Samarendra Das vs. Win Medicare (P.) Ltd. [2025] 181 taxmann.com 184 (Delhi)

Judiciary and Counsel Details

• Tara Vitasta Ganju, J.
• Gautam Kumar Laha, Adv. for the Petitioner.
• Ms Pooja Sood, Aniket Singh, Jitesh Pandey, Hrishabh Tiwari & Naman Arora, Advs. for the Respondent.

Facts of the Case

In the instant case, the petitioner was employed as a sales executive/professional sales representative with the respondent company. The petitioner filed a claim petition before the Labour Court, which was dismissed on the ground that the petitioner was not a workman within the meaning of section 2(s) of the Industrial Disputes Act, 1947.

It was noted that the petitioner was not engaged in clerical or menial work but was a qualified graduate with a specialisation and had received specialised training for his field of work. There was, therefore, no doubt that the work performed by the petitioner involved specialised skills acquired through training imparted by the respondent company. In any event, this aspect had not been denied by the petitioner.

High Court Held

The High Court held that there was no infirmity in the impugned order warranting interference in the exercise of its supervisory jurisdiction.

List of Cases Referred to

• H.R. Adyanthaya v. Sandoz (India) Ltd. 1994 taxmann.com 2463 (SC) (para 5)
• Petcare, Division of Tetragon Chemie Pvt. Ltd. v. M.P. Medical and Sales Representatives Association Bhopal 2006 SCC OnLine MP 23 (para 9)
• Bharat Bhawan Trust v. Bharat Bhawan Artists’ Association 2001 taxmann.com 4991 (SC) (para 12.1)
• T.P. Srivastava v. National Tobacco Co. of India Limited (1992) 1 SCC 281 (para 12.1)
• Syed Yakoob v. K.S. Radhakrishnan 1963 SCC OnLine SC 24 (para 15).

The post Medical Sales Representative Not a ‘Workman’ Under ID Act | HC appeared first on Taxmann Blog.

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Case Details: Mohd. Farhan vs. State of Chhattisgarh - [2025] 181 taxmann.com 608 (Chhattisgarh)

Judiciary and Counsel Details

• Ramesh Sinha, CJ.
• Palash Soni, Prashant Dansena & Vikalp Sharma, Advs. for the Applicant.
• U.K.S. Chandel, Dy.A.G. for the Respondent.

Facts of the Case

The applicant was a freelance accountant against whom proceedings were initiated following a search on allegations that he was involved in creating bogus firms and facilitating fake e-way bills. Certain documents and digital records were seized, and the Department issued summons during the search. The applicant sought anticipatory bail due to the possibility of arrest, but the request was turned down. It was contended that he was merely discharging his professional duties as a freelance accountant, that the allegations were based primarily on documentary and digital evidence already seized. The matter was placed before the High Court.

High Court Held

The High Court held that the allegations against the applicant were based on documentary and digital evidence already in the custody of the investigating agency. It was held that the maximum punishment prescribed for the alleged offence under Section 132 of the CGST Act was five years. The offence did not fall within the category of heinous or violent crimes warranting pre-trial incarceration. The Court observed that the limited statutory severity of punishment, coupled with the nature of allegations and the fact that custodial interrogation was not indispensable. It was held that the investigation was likely to take time. Accordingly, the Court granted anticipatory bail to the applicant under Section 69 of the CGST Act.

The post HC Grants Anticipatory Bail to Accountant in Fake E-Way Bill Case appeared first on Taxmann Blog.

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Circular No. CO.DPSS.RLPD.No.S1039/04-07-001/2025-2026, Dated 24.12.2025

1. Regulatory Background

The Reserve Bank of India (RBI) has issued a circular in partial modification of its earlier directions relating to the introduction of Continuous Clearing and Settlement on Realisation (CCSR) under the Cheque Truncation System (CTS).

The modifications are aimed at providing banks with additional time to stabilise and streamline operational processes before the next phase of implementation.

2. Postponement of Phase 2

RBI has announced that:

• Phase 2 of the Continuous Clearing and Settlement on Realisation project has been postponed
• The postponement is until further notice

Regulatory Rationale

The deferment has been granted to:

• Allow banks to fine-tune internal workflows
• Address operational, technological, and reconciliation challenges
• Ensure smoother and more robust implementation of subsequent phases

3. Revised CTS Session Timings

The circular also revises the daily session timings under the Cheque Truncation System.

• Presentation Session – Revised timing: 09:00 AM to 03:00 PM
• Confirmation Session – Revised timing: 09:00 AM to 07:00 PM

These revised windows are intended to provide greater operational flexibility and improve processing efficiency across banks and clearing participants.

4. Applicability

• The revised timelines and session timings apply to all banks and participants operating under CTS
• Existing operational procedures will continue, subject to the updated session timings
• Phase 2–related requirements will remain on hold until RBI issues further instructions

5. Regulatory Intent

The RBI’s decision seeks to:

• Ensure operational readiness before scaling up continuous clearing
• Minimise settlement risks and processing disruptions
• Provide adequate transition time to regulated entities
• Maintain the integrity and efficiency of cheque-based payment systems

6. Implications for Banks

Banks should:

• Update internal CTS operating manuals and system configurations to reflect revised session timings
• Re-align staffing, reconciliation, and back-office processes
• Pause Phase 2–specific implementation activities until further RBI communication
• Monitor RBI circulars for future rollout timelines

7. Key Takeaway

RBI has deferred Phase 2 of Continuous Clearing and Settlement on Realisation under CTS and revised session timings—with the presentation window now from 09:00 AM to 03:00 PM and the confirmation window from 09:00 AM to 07:00 PM—to support smoother operational readiness across banks.

Click Here To Read The Full Circular

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