The National Company Law Tribunal (NCLT) dismissed Ernst & Young LLP's insolvency petition for ₹3.11 crore, questioning the validity of a claimed 1% success fee for securing GST relief. NCLT has directed the ICAI to review the fee structure and its implications.
NCLT Questions Ernst & Young's 1% Success Fee in GST Cases
The National Company Law Tribunal (NCLT) in Chennai has raised concerns regarding a 1% success fee claimed by Ernst & Young LLP for securing relief in Goods and Services Tax (GST) proceedings. This observation was made during the dismissal of EY’s bankruptcy petition seeking approximately ₹3.11 crore from Mobase Electronics India Private Limited.
The bench comprising Judicial Member Jyoti Kumar Tripathi and Technical Member Ravichandran Ramasamy clarified that it was not making an accusation of professional misconduct against EY but felt the need for a review of such fees. The tribunal has referred the matter to the Institute of Chartered Accountants of India (ICAI) for examination.
This ruling highlights the scrutiny of professional fee structures in insolvency cases, particularly in terms of legality and ethical standards. The NCLT's intervention signals a call for greater transparency and accountability in the fees charged by financial advisory firms involved in such proceedings.
Practitioners should take note of this development as it may affect future engagements involving fee structures in insolvency and GST cases amidst increased regulatory scrutiny.
Citations
- EY v. Mobase Electronics (2026) NCLT
