NCLAT Directs GST Department to Decide on Disposal of Seized Cigarette Stock in Liquidation Case [Read Order]
The tribunal held that while the law clearly separates ownership from possession, the cost of storing such property often falls unfairly on debt-ridden companies
![NCLAT Directs GST Department to Decide on Disposal of Seized Cigarette Stock in Liquidation Case [Read Order]](https://images.taxscan.in/h-upload/2025/07/30/2070763-cigarette-stock-liquidation-case.webp "NCLAT Directs GST Department to Decide on Disposal of Seized Cigarette Stock in Liquidation Case [Read Order]")
The National Company Law Appellate Tribunal (NCLAT), Principal Bench, recently directed the Central GST & Central Excise Department to promptly decide on a representation made by the liquidator of a company seeking relief regarding seized goods lying in a rented warehouse. The appeal was filed by Umesh Garg, the liquidator of Indo International Tobacco Ltd., challenging an...
The National Company Law Appellate Tribunal (NCLAT), Principal Bench, recently directed the Central GST & Central Excise Department to promptly decide on a representation made by the liquidator of a company seeking relief regarding seized goods lying in a rented warehouse.
The appeal was filed by Umesh Garg, the liquidator of Indo International Tobacco Ltd., challenging an order dated 03.04.2025 passed by the National Company Law Tribunal (NCLT), New Delhi. The NCLT had disposed of the application with liberty to approach the GSTDepartment, but without granting the substantive relief sought.
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The liquidator approached the NCLT under Section 60(5) of the Insolvency and Bankruptcy Code, 2016, seeking specific directions against the GST authorities at Gautam Budh Nagar. The grievance stemmed from a large stock of confiscated and seized cigarettes and smoking mixtures, goods owned by the GST Department but lying in a warehouse rented by the corporate debtor.
The warehouse, located in Greater Noida, continues to incur storage charges and the liquidator emphasized that the corporate debtor, which is undergoing liquidation, has no ownership interest in the seized stock. It is burdened with rental costs, adversely affecting the value recoverable for stakeholders in the liquidation process.
The liquidator had asked for one of two things, either the GST department should lift the seized goods within two weeks, or that the liquidator should be permitted to destroy or dispose of the goods, given they are unfit for consumption and have no realizable value.
The NCLT, however, refrained from issuing any binding direction. It disposed of the application with a general liberty to approach the GST Department for further consideration.
Appearing before the NCLAT, Senior Advocate, representing the liquidator, argued that this was not a dispute over title but a practical problem arising from conflicting legal mandates. While the goods belonged to the GST Department, their continued presence in the rented premises was financially draining the liquidation estate, something the IBC process aims to avoid. He argued that earlier representations had already been made to the GST department, but without any concrete action.
The Bench comprising Justice Ashok Bhushan (Chairperson) and Technical Member Barun Mitra took a balanced view of the situation. The Tribunal did not interfere with the NCLT’s liberty order but acknowledged the urgency and financial burden being placed on the liquidator.
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It ruled that the liquidator is free to file a fresh and detailed representation to the concerned GST department, attaching a copy of the NCLT’s April order, and that such representation must be considered within three months of receipt.
The NCLAT added that since the issue is administrative and does not involve any legal bar on disposal, the concerned GST officer is expected to act promptly and fairly, ensuring that the liquidation process is not stalled or derailed by avoidable bureaucratic delay.
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