Proceedings Cannot be Initiated Against a Company if Resolution Plan Approved u/s 31 by AA: Kerala HC Quashes Order [Read Order]
The Court quashed a service tax order and ruled that no proceedings can be initiated against a company once a resolution plan is approved under Section 31 of the Insolvency and Bankruptcy Code, 2016
![Proceedings Cannot be Initiated Against a Company if Resolution Plan Approved u/s 31 by AA: Kerala HC Quashes Order [Read Order]](https://images.taxscan.in/h-upload/2025/07/09/2061897-proceedings-cannot-be-initiated-against-a-company-initiated-against-a-company-taxscan.webp "Proceedings Cannot be Initiated Against a Company if Resolution Plan Approved u/s 31 by AA: Kerala HC Quashes Order [Read Order]")
The Kerala High Court has set aside a service tax show cause notice and subsequent Order-in-Original holding that proceedings cannot be initiated or continued against a company after a resolution plan is approved under Section 31 of the Insolvency and Bankruptcy Code, 2016 (IBC). M/s. Heera Construction Company Pvt. Ltd., (petitioner) represented by its Managing Director, filed a...
The Kerala High Court has set aside a service tax show cause notice and subsequent Order-in-Original holding that proceedings cannot be initiated or continued against a company after a resolution plan is approved under Section 31 of the Insolvency and Bankruptcy Code, 2016 (IBC).
M/s. Heera Construction Company Pvt. Ltd., (petitioner) represented by its Managing Director, filed a writ petition challenging the show cause notice and the Order-in-Original dated issued by the Commissioner of Central GST and Central Excise. The notices pertained to service tax demands for the financial years 2014-2015, 2015-2016, and 2016-2017.
The company, under Corporate Insolvency Resolution Process (CIRP) since 27.03.2019 as per the National Company Law Tribunal (NCLT) order. The company had its resolution plan approved by the Committee of Creditors and by the NCLT on 31.03.2023.
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The show cause notice was issued to the petitioner on 10.10.2019 but there was no further proceedings based on the notice. However, a notice was issued to the petitioner as part of the adjudication proceedings of earlier show cause notice.
The petitioner submitted a reply highlighting the pendency of proceedings under the Insolvency and Bankruptcy code. The petitioner also highlighted the statutory prohibitions under the act. However the adjudicating authority passed a demand order. The petitioner approached the High court.
The bench comprising Justice Ziyad Rahman A.A. observed that the approval of the resolution plan on 31.03.2023 extinguished all claims not included in the plan, as per the Ghanashyam Mishra ruling.
The court observed that although the show cause notice was issued on 10.10.2019, the Order-in-Original was passed on 19.07.2024, after the resolution plan’s approval. The court also observed that the resolution plan’s approval rendered the proceedings legally unsustainable.
The court quashed both the show cause notice and the Order-in-Original highlighting that no proceedings can be initiated or continued against a company for claims not part of an approved resolution plan. The writ petition was disposed of with no costs, and the connected miscellaneous petitions were closed.
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