Madras High Court (HC) presided over by Justice Abdul Quddhosh stayed the Goods and Service Tax (GST) proceedings during the pendency of proceedings under the Insolvency and Bankruptcy Code (IBC), 2016. The court quashed the assessment orders on grounds that natural justice principles are violated.
The challenged Assessment Order was imposed incorrectly since the National Company Law Appellate Tribunal (NCLAT), by its order, passed a moratorium order that is comparable to a moratorium order passed under Section 14 of the Insolvency and Bankruptcy Code 2016.
Additionally, the petitioner Tvl. ITNL-KMB (J.V.) specifically alluded to the NCLAT moratorium order mentioned above in its responses. However, they claim that the disputed Assessment Order does not take this into account.
Despite making a particular request in the aforementioned reply, the petitioner was not given a personal hearing, which is against Section 75(4) of the 2017 Tamil Nadu Goods and Services Tax Act. Also the orders have passed without complying natural justice principles.
The counsel for the petitioner submitted that the Assessment Proceedings ought not to have been proceeded with by the respondent in view of the order passed by the National Company Law Appellate Tribunal, which has passed a moratorium order.
The Government pleader submitted that the petitioner has an alternative efficacious statutory appellate remedy, if aggrieved by the impugned Assessment Order and therefore, the writ petition is not maintainable.
Further submitted that the order passed by the NCLAT, which the petitioner relies upon is not akin to a moratorium order passed under Section 14 of the IBC, 2016, since no proceedings are pending under the IBC, 2016.
Additionally, the order of the NCLAT was not under the IBC, 2016, but was passed based on an application filed by the Union of India under Section 241 read with Section 242 of the Companies Act, 2013. Therefore, the order passed by the NCLAT cannot be equated with a moratorium order.
The bench finally concluded to quash the assessment proceedings and directed to start fresh proceedings. Also as the orders are quashed, the consequential recovery notice is also quashed.
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