NCLT Holds CGST Superintendent Guilty of Contempt on Account of Non‑Compliance with Refund Directions During Moratorium [Read Order]
The court noted that the respondent’s persistent non-compliance constituted wilful disobedience, amounting to civil contempt under Section 2(b) of the Contempt of Courts Act.
The National Company Law Tribunal (NCLT), Indore Bench, has held that a Central Goods andServices Tax (CGST) Superintendent was guilty of contempt as he did not comply with the refund directions during the moratorium
The case from the Corporate Insolvency Resolution Process (CIRP) of Bhagwan Motors Pvt. Ltd in June 2019. During the moratorium, the department recovered tax dues from the corporate debtor’s accounts, despite the statutory bar under Section 14 of the Insolvencyand Bankruptcy Code (IBC).
The resolution professional challenged the recovery. On 1 September 2023, the tribunal directed that the cgst authorities had to refund the amounts to the corporate debtor within two weeks. Amit chopra the applicant in the current case, was appointed as the liquidator on the same day.
The applicant argued that despite repeated communications, including letters, emails and personal visits, the authorities never complied with the refund orders. The liquidator clearly emphasised that the sum formed part of the liquidation assets and was necessary for distribution as per section 53 of the IBC
The liquidator initiated contempt proceedings under Section 425 of the Companies Act, 2013, read with the Contempt of Courts Act, 1971, to uphold judicial authority and ensure compliance.
The respondent, after being served duly by notices and email,s failed to appear before the tribunal. And the tribunal proceeded exparte against the superintendent. . A review application filed earlier by the department was dismissed for non-prosecution.
The Bench of Bajendra Mnai Tripathi (Judicial Member) and Man Mohan Gupta (technical Member) noted that recovery of dues during moratorium was impermissible under IBC, as clarified by CBIC Circular No.134/04/2020-GST and upheld in Sundaresh Bhatt v. CBIC (Supreme Court).
It was further observed that the government dues rank lower in priority under Section 53 of the IBC and cannot override claims of secured and operational creditors. It was also noted that the respondent’s persistent non-compliance constituted wilful disobedience, amounting to civil contempt under Section 2(b) of the Contempt of Courts Act.
The Tribunal cited precedents including Shailendra Singh v. Nisha Malpani (NCLAT, 2021) and Mahesh Kumar Panwar v. Mega Soft Infrastructure (NCLAT, 2019), affirming that contempt jurisdiction is integral to enforcing insolvency orders.
The NCLT held the Superintendent of CGST & CEX guilty of contempt for deliberate defiance of its orders. Before imposing punishment, the Tribunal directed the issuance of notice to the contemnor to be heard on the quantum of sentence, fixing the matter for 10 February 2026.
