The National Company Law Appellate Tribunal upheld the admission of a Section 9 application under the Insolvency and Bankruptcy Code, 2016, rejecting the appellant’s contention that a minor PIN code variance in invoices and e-way bills negated the existence of supply and consequent debt. The Tribunal emphasized that substantive evidence such as TDS deductions under Section 194(Q) of the Income Tax Act and the corporate debtor’s claim of GST input tax credit established the supply chain, rendering the address discrepancy immaterial.
Background & Facts
The Dispute
The appellant, Girraj Bansal (erstwhile director of the corporate debtor Shri Paramsukh Edible Foods Pvt Ltd), challenged the admission of a Section 9 application filed by the operational creditor Rakesh Kumar Goyal (proprietor of Mohini Food) before the NCLT, Indore. The appellant contended that the eight invoices raised between 5 August 2021 and 31 August 2021 for mustard seeds supply did not evidence actual supply because the invoices and e-way bills bore an incorrect PIN code, thereby negating any debt or default triggering Section 9 of the IBC.
Key Facts
- The underlying transactions occurred between 05.08.2021 and 31.08.2021, involving eight invoices for mustard seeds supplied to the corporate debtor.
- The total default amount claimed was Rs. 1,42,46,178/-, with interest alleged at 12% per annum amounting to Rs. 28,58,480/-.
- The Section 8 notice, issued on 10.05.2023, fixed the date of default as 20.08.2021 (derived from the date of the first invoice).
- The Section 9 application was preferred on 20.07.2023 and registered as CP (IB) No. 86/2023 before the NCLT, Indore.
- During proceedings, the NCLT directed the corporate debtor on 25.04.2025 to explain TDS deductions and GST input tax credit related to the transactions.
- The appellant’s affidavit disclosed that the corporate debtor had deducted TDS under Section 194(Q) of the Income Tax Act (effective 01.07.2021, Circular No.13 of 2021) and had claimed input tax credit on GST paid on the invoices.
- Ledger accounts of the corporate debtor showed an outstanding amount of Rs. 1,29,33,407/- as on the date of the application, exceeding the threshold limit under Section 4 of the IBC.
- Books of accounts of the corporate debtor recorded total purchases of Rs. 8,60,22,119.94/-, with payments of Rs. 7,60,88,711/-, leaving an outstanding difference of Rs. 99,33,408.25/-.
- The appellant admitted: (a) he had no other registered or unregistered office/godown besides the registered office; (b) the only difference in the address appearing in documents was the PIN code; (c) he never raised any query with the respondent regarding non-supply or non-receipt of goods.
- E-way bills on record reflected the appellant’s address except for the PIN code.
Procedural History
- 20.07.2023: Section 9 application filed by operational creditor before NCLT, Indore (CP IB No. 86/2023).
- 10.05.2023: Section 8 notice issued.
- 25.04.2025: NCLT (Indore) directed corporate debtor to furnish details on TDS deduction and GST input tax credit.
- 20.06.2025: Corporate debtor filed affidavit admitting TDS deduction and GST input tax credit.
- 11.09.2025: NCLT, Indore passed impugned order admitting the Section 9 application.
- 14.10.2026: National Company Law Appellate Tribunal delivered the judgment under review.
Relief Sought
The appellant sought to set aside the NCLT order dated 11.09.2025, arguing that no supply existed and thus no debt or default could be inferred, praying for dismissal of the Section 9 application and consequent relief.
The Legal Issue
The central question was whether a mismatch in the PIN code of the address appearing in invoices and e-way bills, standing alone, could rebut the presumption of supply and consequent debt and default for the purpose of admitting an application under Section 9 of the Insolvency and Bankruptcy Code, 2016, when substantive evidence such as TDS deductions and GST input tax credit indicated actual supply.
Arguments Presented
For the Appellant
The appellant contended that the invoices and e-way bills contained an incorrect PIN code, which meant the address was wrong and therefore no supply could be presumed. He argued that absent a written agreement or purchase order, there was no legal basis to infer a debt, and that the GST returns for August 2021 did not segregate the supply, further weakening the creditor’s case. The appellant also emphasized that he had never raised any query with the respondent regarding non-supply, which, if true, would negative the inference of supply.
For the Respondent
The operational creditor relied on the corporate debtor’s own records showing TDS deductions under Section 194(Q) of the Income Tax Act and the claim of GST input tax credit on the invoices as proof that the goods were indeed supplied and received. He submitted that the ledger account reflected an outstanding amount above the threshold limit under Section 4 of the IBC, and that a minor PIN code variance could not overturn the presumption of supply arising from the invoices, TDS entries, and GST credit. The creditor further argued that the burden lay on the appellant to prove non-supply, which he failed to discharge.
The Court's Analysis
The Tribunal began by noting that the existence of supply is a question of fact to be ascertained from the totality of circumstances. It held that the mere discrepancy in the PIN code, without more, could not displace the presumption of supply raised by the invoices themselves. The Tribunal emphasized that the appellant’s own admission that he had no other place of business and that the only variance was the PIN code weakened his contention. Crucially, the Tribunal pointed to the corporate debtor’s deduction of TDS under Section 194(Q) of the Income Tax Act and the consequent deposit of such tax, which could only occur if a purchase transaction had taken place. Similarly, the corporate debtor’s claim of GST input tax credit on the invoices demonstrated that the tax authority recognized the transaction as a legitimate supply. The Tribunal observed:
"Because of the fact that the supply of the goods is accepted by the Appellant, its receipt, once these aspects are established, and because of the fact that the Appellant's defence had been exclusively that there was no supply, ruled out from the documents on record, and it has been ruled out too with regard to as to what effect the address would have because of non-reference of the PIN Code."
This passage underscored that once the supply chain is substantiated by fiscal documents, the address error becomes irrelevant. The Tribunal further noted that the ledger account showing an outstanding amount of Rs. 1,29,33,407/- (exceeding the Section 4 threshold) reinforced the conclusion of debt and default. It held that the appellant had not discharged the burden to prove non-supply, and thus the NCLT’s admission of the Section 9 application was legally sustainable. The Tribunal declined to interfere with the impugned order, observing that the appeal lacked merit and that all pending interlocutory applications should be closed.
The Verdict
The appeal was dismissed; the NCLT order dated 11.09.2025 admitting the Section 9 application was upheld. The Tribunal confirmed that the debt of Rs. 1,42,46,178/- with interest at 12% per annum (Rs. 28,58,480/-) and the ledger outstanding amount of Rs. 1,29,33,407/- satisfied the threshold requirement under Section 4 of the IBC. Consequently, no interference was warranted in the exercise of appellate jurisdiction, and all pending interlocutory applications were closed.
What This Means For Similar Cases
Minor Address Discrepancies Do Not Rebut Supply Presumption
Practitioners must recognize that trivial variances such as an incorrect PIN code in invoices or e-way bills are insufficient to negate the presumption of supply when corroborated by financial records. The burden remains on the party contesting supply to produce concrete evidence of non-receipt or non-existence of the transaction.
TDS and GST Input Credit as Objective Proof of Supply
The judgment elevates TDS deductions under Section 194(Q) of the Income Tax Act and the claim of GST input tax credit as reliable indicia of a supply chain. Creditors should prioritize obtaining and presenting such statutory compliance documents to substantiate debt claims under Section 9 IBC, thereby reducing reliance on contractual documents alone.
Burden of Proof Lies on the Objector
The Tribunal clarified that the appellant challenging a Section 9 application must affirmatively demonstrate that no supply occurred. Mere speculation or reliance on peripheral defects in documentation will not suffice; objective proof such as denial of receipt, lack of consideration, or absence of accounting entries is required to defeat the presumption.
