Benjamin Franklin, one of the most key and influential founding fathers of the United States of America, had said there are only two things certain in the life: death and taxes.

However, it seems even death cannot absolve you from the tax liability and you can be brought back to life – just to pay your tax dues.

This is what has happened with an Indian company Delight Broadcasting Private Ltd., which was put to rest, but is being revived so that it can’t escape from paying its tax dues.

India’s National Company Law Tribunal (NCLT) in an order on 13 February directed the Registrar of Companies (RoC), Chennai, to restore the company following an application by the Income Tax Department.

The order was passed by retired Justice and NCLT President Ramalingam Sudhakar and NCLT Technical Member Sameer Kakar.

The Matter

The name of Delight Broadcasting, which was incorporated in 2013, was struck off from the RoC as the Chennai-based company didn’t file its statutory returns since incorporation.

The RoC -- which functions under the Ministry of Corporate Affairs and looks after the registration of companies and limited liability partnerships (LLPs), as well as ensures that these firms fulfil with statutory requirements -- took the action in 2018 as per the laid out procedures and published the details in the Gazette of India.

The Protest

The Income Tax Department later filed an appeal against the RoC’s decision to struck off Delight Broadcasting’s name. It said the income tax scrutiny proceedings against the company for assessment year 2015-2016 is still pending.

The department also said Delight Broadcasting has committed serious violations of the provisions of the Income Tax Act 1961 and in order to continue the proceedings against the struck off company, its restoration in the ROC is warranted.

Advocate P. Rajkumar Jhabakh, who appeared on behalf of the Income Tax Department, said the non-restoration of Delight Broadcasting name in the RoC will result in serious losses to the exchequer and no demand would be leviable on it and this will enable the defaulting company to go scot-free.

The Request & Response

The Income Tax Department requested the NCLT to direct the RoC for the restoration of Delight Broadcasting’s name so that the tax authorities can conduct assessment and impose penalty on the company under the IT Act and take other appropriate proceedings.

The RoC said the appeal was filed by a statutory authority to protect the interest of revenue to the government and as per the tax department, Delight Broadcasting is liable to pay taxes, which can only be ascertained after the revival of the company.

The RoC, represented by Advocate Avinash Krishnan Ravi, urged the NCLT to direct the tax department to submit a report to it furnishing the details of tax assessed and recovered from Delight Broadcasting after the revival of the company.

The Verdict

The NCLT ordered the RoC to restore the original status of Delight Broadcasting as if the name of the company has not been struck off, with resultant and consequential actions like changing status of the company from "strike off" to "active."

The tribunal also permitted the tax department to deliver a certified copy of the order to the RoC, Chennai within 30 days of the receipt of this order. On such delivery, the RoC should publish the required details in the official gazette, it said.

The NCLT said its order will not come in the way of RoC to take appropriate actions in accordance with law, other violations/offenses, if any, committed by Delight Broadcasting prior to or during the "striking off" period of the company.

The tribunal also directed the tax department to submit a report to the RoC, furnishing details of the tax assessed and recovered from Delight Broadcasting after its revival.

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