Gensol employees face threat of double tax liability
That leaves about 2,200 former employees of the group in a situation where they might have to pay the taxes again, this time to the Income Tax department, as Indian law holds the employee liable for paying tax even where the employer is at fault, despite multiple court orders to the contrary.
The group companies have not paid any salaries since March 2025, the former executives said on the condition of anonymity as they did not want to be publicly associated with the beleaguered group.
Gensol Engineering and BluSmart Mobility went bankrupt amidst charges of promoters siphoning crores of rupees and misleading investors, and are separately undergoing corporate insolvency under the Insolvency and Bankruptcy Code, 2016.
'They have not paid TDS since April 2024. I haven't filed my tax return yet. I don't know what to do," said one of the executives who quit months before the company went down.
This executive added that employees have not received their Form 16 for the previous fiscal, which puts them in a spot over filing returns even as the 15 September deadline approaches. Form 16 is a certificate of TDS provided by the employer that helps employees reconcile tax deductions, and is an essential document for filing tax returns.
A second former executive who is directly aware of the company's HR practices said that Gensol habitually deposited TDS lumpsum at the end of the year rather than making monthly deposits.
'They would always pay TDS late with penalties. Anmol (promoter Anmol Singh Jaggi) said that this was the company's usual practice," this person said. 'In a meeting with CXOs in March, he said he will pay TDS by 15 April. That never happened."
The second executive added that there was no employee dashboard and 'the payrolls were made by hand".
Queries sent to the promoters Anmol Singh Jaggi and Puneet Singh Jaggi on Monday remained unanswered as of press time Tuesday.
Meanwhile, Keshav Khaneja, Gensol Engineering's interim resolution professional, said that he does not have access to employee salaries or TDS data as everyone has left the firm. He is trying to piece together the information on pending employee dues, he said.
Law vs courts
Legal experts say that under the Income Tax Act, 1961, the liability lies on the employee even if the employer fails to deposit TDS with the tax department. This is despite the Delhi, Karnataka and Gujarat High Courts ruling separately that the employee was not liable.
The case brings flashbacks of the infamous bankruptcy of Kingfisher Airlines from over a decade ago when thousands of employees were left without pay and their TDS was similarly not deposited with the tax department. The employees subsequently received tax notices, prompting many to move court.
Eventually, the Delhi, Karnataka and Gujarat High Courts separately ruled that employees were not liable and authorities must recover the dues from the airline.
More recently, several thousand employees of beleaguered edtech platform Byju's also found themselves in a similar conundrum. The Bombay High Court provided relief last September with a ruling that employees were not liable for unpaid TDS when the employer is undergoing corporate insolvency.
'Unfortunately, this relief is flowing from judicial pronouncements and not from the statute itself," said Amit Singhania, founder of Areete Law Offices. 'Therefore, again the employees may have to knock the door of the Court, to get relief from tax demand arising from non-payment of TDS."
The background
The Gensol Group employed about 2,200 people across its various companies including flagship Gensol Engineering, ride-sharing platform BluSmart Mobility and several other unlisted subsidiaries including Gensol Electric Vehicles, Gensol EV Leasing, and Matrix Gas and Renewables.
When the company went kaput overnight earlier this year, many jumped at the first offer that came their way, the former executives said, while most hung on to the hope of a resolution and the recovery of their unpaid dues.
The Securities and Exchange Board of India (Sebi) filed its interim order against Gensol Engineering Ltd and its promoters on 15 April. The regulator accused the promoters of siphoning crores of rupees from the company for personal expenses, and said that there was a complete breakdown of internal controls and corporate governance norms at the Mumbai-listed company.
'The promoters were running a listed public company as if it were a proprietary firm. The Company's funds were routed to related parties and used for unconnected expenses, as if the Company's funds were promoters' piggybank," Sebi wrote in its interim order.
The diverted funds would ultimately have to be written off from the company's books, resulting in losses to the investors, Sebi said.
Sebi's final order in the case is still pending.
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