Tribunal Rules Supply of Goods Proven via TDS Deduction, GST Credit Claims, and Ledger Entries; PIN Code Mismatch Insufficient to Deny Debt and Default
In a significant ruling delivered on October 14, 2026, the National Company Law Appellate Tribunal (NCLAT), Principal Bench, New Delhi, dismissed the appeal filed by Girraj Bansal, erstwhile Director of Shri Paramsukh Edible Foods Pvt Ltd, against the admission of a Section 9 application under the Insolvency and Bankruptcy Code, 2016 (IBC). The appeal challenged the order of the National Company Law Tribunal (NCLT), Indore, which had admitted the operational creditor's insolvency petition against the corporate debtor.
The dispute arose from eight invoices dated between August 5, 2021, and August 31, 2021, amounting to an operational debt of Rs. 1.42 crore along with interest. The appellant contended that the goods mentioned in these invoices were never supplied, citing discrepancies in the e-way bills and invoices, specifically a wrong PIN Code in the corporate debtor's address, which allegedly indicated non-supply of goods and thereby negated any debt or default.
However, the NCLAT bench, comprising Justice Sharad Kumar Sharma (Judicial Member) and Indevar Pandey (Technical Member), found the appellant's arguments untenable. The tribunal noted that the invoices carried the registered address of the corporate debtor, and the only discrepancy was in the PIN Code. Importantly, the appellant failed to raise any contemporaneous protest or query regarding non-supply or non-receipt of goods, which would ordinarily be expected if supply had not taken place.
Crucial evidence establishing the supply included the corporate debtor's deduction of Tax Deducted at Source (TDS) under Section 194Q of the Income Tax Act on the purchases from the operational creditor, and the claim of input tax credit (ITC) on Goods and Services Tax (GST) returns corresponding to the disputed invoices. The ledger account in the corporate debtor's books reflected an outstanding amount of Rs. 1.29 crore as of the date of filing the application, which was above the statutory threshold under Section 4 of the IBC.
The tribunal observed that the deduction of TDS and the availing of input tax credit on the invoices clearly indicated actual receipt and acceptance of goods, thereby confirming the existence of an operational debt. The mere difference in the PIN Code was held to be an immaterial clerical error and insufficient to infer non-supply of goods. Further, the lack of any dispute or communication from the corporate debtor disputing supply or demanding reconciliation prior to the insolvency proceedings weighed heavily against the appellant's claim.
Consequently, the NCLAT upheld the admission of the Section 9 application by the NCLT, rejecting the appellant's appeal and affirming that the operational creditor had successfully established the existence of debt and default warranting insolvency proceedings. The tribunal also affirmed that the amount in dispute was above the threshold limit prescribed under the IBC, further validating the admission of the insolvency application.
This judgment reiterates the importance of documentary evidence such as TDS deductions, GST input credit claims, and ledger entries in establishing operational debt under the IBC. It also clarifies that minor clerical discrepancies in invoicing, such as an incorrect PIN Code, cannot be used as a ground to dispute supply or deny the existence of debt, especially in the absence of any prior protest or dispute raised by the corporate debtor.
Bottom Line:
Insolvency and Bankruptcy Code, 2016 Section 9 application by Operational Creditor was rightly admitted where supply of goods stood established from invoices, ledger entries, deduction of TDS under Section 194Q of Income Tax Act and claim of input tax credit on GST by Corporate Debtor - Mere discrepancy in PIN Code in invoices/e-way bills, without any contemporaneous protest regarding non-supply, does not constitute a valid pre-existing dispute nor negate debt and default.
Statutory provision(s):
Insolvency and Bankruptcy Code, 2016 Sections 4, 8, 9; Income Tax Act Section 194Q; Goods and Services Tax provisions relating to input tax credit
