# In the matter of Luthra Water Systems Pvt. Ltd.

> NCLT judgment dated 2024-01-17. Citation: TCN-2024-NCLT-03026. The case involves an application filed by TJUK Trade Networks Private Limited (Applicant)…

- **Court:** NCLT
- **Order date:** 17 Jan 2024
- **Citation:** TCN-2024-NCLT-03026
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/luthra-water-systems-pvt-ltd-65a8d9bb

## Summary

### Background

The case involves an application filed by TJUK Trade Networks Private Limited (Applicant) seeking directions against the Deputy Commissioner of State Tax (Respondent No. 2) and the Liquidator of Luthra Water Systems Pvt. Ltd. (Respondent No. 1). The Applicant seeks to direct Respondent No. 2 to file appropriate claims before Respondent No. 1 for the period of 2015-2018 and to discharge the Applicant from any proceedings. The Applicant also seeks to direct Respondent No. 1 to file the requisite tax returns before Respondent No. 2 for the same period and to prevent Respondent No. 2 from taking punitive measures against the Applicant regarding tax liability arising out of tax paid to the Corporate Debtor, Luthra Water Systems Private Limited. The dispute arises from the

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## Facts

TJUK Trade Networks Private Limited (Applicant) engaged in commercial transactions with Luthra Water Systems Private Limited (Corporate Debtor) from December 2015 to March 2018. The Applicant purchased goods from the Corporate Debtor, with invoices including VAT/GST. The Applicant paid the tax amount to the Corporate Debtor. However, the Corporate Debtor failed to deposit the collected tax with the Government Treasury. The Deputy Commissioner of State Tax (Respondent No. 2) initiated proceedings against the Applicant, alleging tax evasion. The Applicant submitted that it had paid the tax to the Corporate Debtor and that the Corporate Debtor's failure to deposit the tax resulted in a mismatch in records. The Liquidator of the Corporate Debtor (Respondent No. 1)

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## Issues and analysis

### Issue 1: Whether the Applicant, having paid VAT/GST to the Corporate Debtor, should be held liable for the …

**Ratio:** A bona fide dealer who has paid taxes to a vendor should not be penalized for the

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**Reasoning:** The court reasoned that it would be unjust to punish the Applicant for the default of the

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**Interpretation:** This issue involves interpreting the principles of fairness and equity in tax

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**Application:** The ratio and reasoning were applied to the specific facts of the case, where

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## Parties

- **Judges:** ANIL RAJ C…; Kuldip Kumar…
- **Appellants:** TJUK Trade…
- **Respondents:** Luthra Water…; Devendra…

## Timeline

- **2017-01-01 — CP (IB) 1178…**: Filing of CP (IB) 1178…
- **2015-12-01 — Commercial Tra…**: Applicant entered into commercial transactions with the Corporate Debtor from December…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 60(5) — Adjudicating Authority for corporate persons](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-60)

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