Gauhati HC asks Govt to clarify Whether Moratorium of NCLT also covers Proceedings pending before GST Authorities [Read Order]

The Gauhati High Court has asked the Central government for fresh consideration by examining the aspect as to whether the order of moratorium of the National Company Law Tribunal (NCLT) also covers the proceeding pending before the GST authorities under the GST Act 2017.

An order for payment of Rs.1,82,67,651/- on the petitioner M/S National Plywood Industries Limited was issued and further a penalty of Rs.1,82,67,581/- was imposed under Rule 173Q (1) of the Central Excise Rules, 1944. The said order has been challenged here in a WRIT petition by stating that the petitioner is held to be a corporate debtor and accordingly an order of moratorium had been passed under Section 13 of the Insolvency and Bankruptcy Code, 2016.

The Commissioner had observed in this issue, “I find that the Hon’ble National Company Law Tribunal, Guwahati Bench had passed the order dated 26.08.2019 in respect of the bankruptcy case of the assessee wherein they are liable to certain debt to the financial creditor and their properties are also controlled for the debt including any action under Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. By the order dated 26.08.2019, the Hon’ble National Company Law Tribunal (NCLT) has declared a Moratorium under the insolvency & bankruptcy code-2016 in terms of Section 14 of the said code vide which proceedings against the corporate debtor including execution of any judgment, decree or order in any court of law, tribunal, arbitration panel or other authority was prohibited. Now, the question arises whether adjudication of Show cause notices would mean an execution order or be treated as decree against them. I find that adjudication means the determination of liability against any assessee to whom show-cause notices have been served and in the instant case also there is no bar of the tax authority to carry out the exercise of the adjudication process for determining the liability of the assessee towards the department.” Relying on the view by the Commissioner, it was submitted that the said objection raised by the petitioner as regards the order of moratorium passed by the National Company Law Tribunal(NCLT) had been taken care of by the Commissioner in its order.

Justice Achintya Malla Bujor Barua, while disposing the petition held, “it is discernible that the aspect as to whether a pending proceeding before GST authority is also a proceeding as provided in Section 14- (1) (a) has not been examined by the Commissioner of GST and consequently the implication thereof i.e. if it is a proceeding whether the order of moratorium would also cover the said proceeding, has also not been looked into. Accordingly, the order dated 15.11.2019 is hereby set aside and the matter is remanded back for fresh consideration by examining the aspect as to whether the order of moratorium of the National Company Law Tribunal (NCLT) also covers the proceeding pending before the GST authorities under the GST Act 2017.”