Transafe Services Ltd Vs Superintendent of Central GST and Central Excise (Madras High Court)
Summary: The Madras High Court disposed of W.P. No. 14266 of 2026 at the admission stage, concerning a consolidated Order-in-Original dated 26.12.2025 under Section 74 of the CGST/TNGST Act, 2017 for the financial years 2018-19 and 2019-20. The petitioner, M/s. Transafe Services Ltd, had been taken over by M/s. Om Logistics Ltd through the Corporate Insolvency Resolution Process and challenged the tax order passed by the Superintendent of Central GST and Central Excise.
The impugned order confirmed the proposal contained in Show Cause Notice No.20/2024 dated 02.12.2022 for the tax period April 2018 to March 2020. The petitioner had submitted its reply on 20.02.2025. The material insolvency fact recorded by the Court was that Corporate Insolvency Resolution Proceedings had been initiated against the petitioner before the NCLT, Kolkata on 21.11.2019 and that a moratorium was in force from that date. Subsequently, the resolution plan filed by the resolution applicant was sanctioned and the petitioner company was taken over by the management of the resolution applicant, M/s. Om Logistics Ltd.
The Court referred to the Supreme Court decisions in Committee of Creditors of Essar Steel India Limited Vs Satish Kumar Gupta and others and Ghanashyam Mishra and Sons Private Limited Vs Edelweiss Asset Reconstruction Company Limited and Others. On the basis of the principle relied upon in those decisions, the Court observed that, prima facie, tax liability for the period prior to initiation of the corporate insolvency resolution proceedings could not be fastened on the petitioner.
The Court specifically treated 21.11.2019, the date of the NCLT order initiating the insolvency process, as the dividing point. It held that tax liability for the period prior to that order could not be fastened on the petitioner. The Court further found that the impact of the Supreme Court decisions had not been fully considered while passing the impugned order. It therefore remitted the matter to the respondent for passing a fresh order.
At the same time, the Court did not grant an unrestricted relief in respect of the entire period covered by the demand. It directed the petitioner to discharge the tax liability confirmed by the impugned order for the period after initiation of the Corporate Insolvency Resolution Proceedings under the Insolvency and Bankruptcy Code, 2016 within 30 days from receipt of a copy of the order. Thereafter, subject to compliance with the other stipulations, the respondent was directed to pass fresh orders on merits and in accordance with law after examining the issue afresh.
The writ petition was accordingly disposed of with the above observations, without costs, and the connected writ miscellaneous petitions were closed. The order therefore distinguishes between the period preceding initiation of CIRP, for which the Court held the liability could not be fastened on the petitioner, and the period following initiation, for which the petitioner was directed to discharge the confirmed tax liability pending fresh adjudication.
Cases Discussed
- Committee of Creditors of Essar Steel India Limited Vs Satish Kumar Gupta and others — (2020) 8 SCC 531.
- Ghanashyam Mishra and Sons Private Limited Vs Edelweiss Asset Reconstruction Company Limited and Others.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
Mrs. P. Selvi, Government Advocate takes notice on behalf of the Respondent.
2. This Writ Petition is being disposed of at the stage of admission itself with the consent of the learned counsel for the Petitioner and the learned Government Advocate for the Respondent.
3. The petitioner is before this Court against the impugned order in Original SI.No.33/2025 dated 26.12.2025 in Reference No. ZD331225397442D. By the impugned order the proposal in the Show Cause Notice No.20/2024 dated 02.12.2022 in Ref No. ZD331224001015B has been confirmed for the tax period between April 2018 to March 2020. The petitioner has replied to the aforesaid notice vide his reply dated 20.02.2025.
4. The facts on record reveal that a Corporate Insolvency Resolution Proceeding had been initiated against the petitioner on 21.11.2019 before the NCLT Kolkata and a Moratorium was in force with effect from the said date. Eventually, the resolution plan filed by the resolution applicant was sanctioned pursuant to the petitioner company being taken over by the Management of Resolution Applicant ( M/s Om Logistis Ltd). Prima facie the petitioner cannot be imposed with the tax liability for the period prior to initiation of the Corporate insolvency resolution proceedings before the NCLT in the case of Committee of Creditors of Essar Steel India Limited Vs Sathish Kumar Gupta and others, (2020) 8 SCC 531 and in view of the decision of Ghanashyam Mishra and Sons Private Limited Vs Edelweiss Asset Reconstruction Company Limited and Others. In other words for the period prior to order of the NCLT dated 21.11.2019 cannot be fastened on the petitioner. Since the impact decision of the Supreme Court has not been fully considered while passing the impugned order, I am inclined to remit the case back to the respondent to pass a fresh order.
5. The petitioner shall however discharge the tax liability for the tax period confirmed vide the impugned order for the period after the initiation of the Corporate insolvency resolution proceedings against the petitioner’s company under the provisions of Insolvency and Bankruptcy Code, 2016 within a period of 30 days from the date of receipt of a copy of this order. Thereafter, subject to the petitioner complying with the other stipulations, the respondent shall proceed to pass a fresh orders on merits and in accordance with law after examining the issue a fresh.
6. This Writ Petition stands disposed of with the above observations. No costs. Connected Writ Miscellaneous Petitions are closed.
