1 week ago
Delhi Court Sentences Naftogaz India MD Over TDS Default
Naftogaz India took tax out of certain payments but did not send the money to the government on time.
The unpaid TDS for financial year 2009-10 was more than ₹17.68 crore.
The company later went into liquidation, which means its affairs and assets were being handled while it was closed down.
A Delhi court said liquidation did not cancel the earlier tax offence.
The court also found that the company’s managing director, Mahdoom Bava, was responsible under the Income Tax Act.
Bava was sentenced to 1 year and 10 months in prison and fined ₹10 lakh.
The company was given a separate ₹10 lakh fine, to be paid from its available assets.
Bava will face three more months in simple imprisonment if he does not pay his fine, although his sentence was suspended for 30 days and he was granted bail during that period.
Naftogaz India was convicted for failing to deposit more than ₹17.68 crore in TDS for financial year 2009-10.
The company’s cumulative TDS liability for the relevant period was reported at more than ₹21.21 crore.
Naftogaz India entered liquidation in 2012, but the court said liquidation did not erase the completed offence.
Managing Director Mahdoom Bava received 1 year and 10 months of rigorous imprisonment and a ₹10 lakh fine.
The company was fined ₹10 lakh, payable by its official liquidator from available assets or funds.
- Who
- Naftogaz India and its Managing Director Mahdoom Bava.
- What
- They were convicted over delayed TDS deposits; the company was fined and Bava received a prison sentence and fine.
- Where
- Tis Hazari Courts in Delhi; Naftogaz India was registered in Delhi and based in Noida.
- When
- The sentence was issued on August 19, 2026, and the judgment was published on August 24, 2026.
- Why
- The company allegedly failed to deposit TDS within the deadlines required by the Income Tax Act.
Company Circumstances and Defence
Court and Tax Authorities
Effect of liquidation
Company Circumstances and Defence
The company’s liquidation and reported lack of funds were presented as relevant circumstances for deciding the penalty.
Court and Tax Authorities
The court held that subsequent liquidation did not erase the completed offence or automatically absolve the director.
Corporate fine
Company Circumstances and Defence
The company’s lack of realisable assets raised questions about whether a fine could be recovered effectively.
Court and Tax Authorities
The court said the company must receive a penal consequence and ordered a ₹10 lakh fine, while barring personal coercive recovery from the official liquidator.
Ability to pay TDS
Company Circumstances and Defence
The company’s later liquidation was cited as a factor affecting its present ability to meet financial obligations.
Court and Tax Authorities
A finance ministry official said the company had sufficient resources, including fixed deposits worth ₹44 crore during financial year 2009-10, to meet its statutory obligation.
Key facts
- TDS default
- More than ₹17.68 crore relating to financial year 2009-10.
- Cumulative liability
- More than ₹21.21 crore during the relevant survey period.
- Return compliance
- TDS returns for financial years 2009-10 and 2010-11 were filed late; financial year 2011-12 returns had not been filed.
- Company status
- Naftogaz India entered liquidation in 2012.
- Company fine
- ₹10 lakh, payable by the official liquidator from company assets or funds, subject to competent company-court or NCLT directions.
- Managing director’s sentence
- Mahdoom Bava was sentenced to 1 year and 10 months of rigorous imprisonment and fined ₹10 lakh.
- Sentence suspension
- The court suspended Bava’s sentence for 30 days and granted bail; the matter was listed for September 25, 2026.
Quotes
Renu Chaudhary
Additional chief judicial magistrate at Delhi’s Tis Hazari Courts
“The plea that the company presently has no funds can be relevant to the quantum of fine, but it does not warrant an order that the company be sentenced without any fine at all. Such an approach would reduce a serious statutory conviction of a corporate offender to a declaration without penal consequence.”
thehindubusinessline.com
“The fact that the company has subsequently gone into liquidation does not erase the completed offence. Likewise, the winding up of the company cannot, by itself, absolve the Director whose guilt under Section 278B has been found established.”
livemint.com
thehindubusinessline.com
Sources
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