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Naftogaz India MD gets 22-month jail for TDS default
A Delhi court sentenced Mahdoom Bava, managing director of Naftogaz India Pvt Ltd, to one year and 10 months' rigorous imprisonment for failing to deposit Rs 17.69 crore in tax deducted at…
A Delhi court sentenced Mahdoom Bava, managing director of Naftogaz India Pvt Ltd, to one year and 10 months' rigorous imprisonment for failing to deposit Rs 17.69 crore in tax deducted at source (TDS) with the government in FY 2009-10. Additional chief judicial magistrate Renu Chaudhary also imposed a Rs 10 lakh fine on Bava and an equal fine on the company.
The court ruled that the offence is complete upon failure to deposit TDS within the prescribed period, and that the company's subsequent liquidation does not erase the completed offence. It also held that winding up cannot absolve a director whose guilt under section 278B has been established.
Bava will face an additional three months in jail if he fails to pay the fine. The court suspended his sentence for 30 days and granted him bail, with the next hearing listed for 25 September 2026.
Indian Opinion Analysis
This is the first time a TDS default has resulted in a jail term for a company director under the Income Tax Act, 1961, which has long carried criminal penalties for wilful non-deduction or non-payment. The prosecution was launched after a survey found Naftogaz held Rs 44 crore in fixed deposits while owing Rs 21.22 crore in TDS. The ruling establishes that liquidation proceedings do not shield directors from criminal liability, a signal to promoters of stressed companies that tax defaults will be pursued personally. The trial court's next date is 25 September 2026.
This case is a significant deterrent for corporate directors, as it demonstrates that tax authorities are now willing to pursue criminal prosecution aggressively, even for defaults dating back over a decade.
Source: livemint.com
This story was synthesised by AI from the source linked above.
