Case Law Details
Platino Classic Motors India Pvt Ltd Vs Deputy Commissioner of Central Tax And Central Excise (Kerala High Court)
Introduction: The Kerala High Court, in the case of Platino Classic Motors India Pvt Ltd vs Deputy Commissioner of Central Tax and Central Excise, addressed an appeal challenging a judgment related to unpaid service tax and central excise dues. The appellant, a private limited company, faced insolvency resolution proceedings, leading to a moratorium. The dispute arose when the respondents claimed dues after the moratorium period, prompting the appellant to contest the proceedings.
Detailed Analysis: The National Company Law Tribunal initiated corporate insolvency resolution proceedings against the appellant on 08.03.2021, imposing a moratorium under Section 14 of the Insolvency and Bankruptcy Code. Subsequently, a liquidation order was passed on 30.09.2022, initiating a fresh moratorium. During this period, the 1st and 2nd respondents claimed unpaid service tax and central excise dues based on orders Exts.P7 and P8. Additionally, the 3rd respondent made a claim under the GST Act with orders Exts.P9 and P10. The appellant contested, arguing that the proceedings could not conclude without involving the Official Liquidator.
The learned Single Judge, however, rejected the contention, stating that the insolvency resolution process’s admission and moratorium did not bar tax recovery proceedings. The Writ Appeal ensued, with the court hearing the appellant’s counsel and the Senior Standing Counsel for the respondents.
The court, after considering the submissions, directed respondents 1, 2, and 3 to pass fresh orders, replacing Exts.P7 to P10, after hearing the Official Liquidator within two months. The court also set aside the previous orders/notices and instructed the respondents to issue a fresh notice to the Official Liquidator within three weeks.
Conclusion: The Kerala High Court’s directive provides a balanced approach, recognizing the moratorium’s impact on proceedings but emphasizing the necessity of involving the Official Liquidator. The decision ensures a fair opportunity for the Official Liquidator to participate in the assessment and adjudication proceedings, maintaining the principles of justice and due process in the context of insolvency resolution. This case sets a precedent for similar situations, underlining the importance of considering the role of the Official Liquidator in post-moratorium proceedings.
FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT
The petitioner in WP(C).No.7997 of 2023 is the appellant herein aggrieved by the judgment dated 26.10.2023 of the learned Single Judge in the Writ Petition.
2. The brief facts necessary for the disposal of this Writ Appeal are as follows:
The appellant is a private limited company. By an order dated 08.03.2021, the National Company Law Tribunal initiated corporate insolvency resolution proceedings against the appellant company under the Insolvency and Bankruptcy Code, 2016. As a consequence, the moratorium in terms of Section 14 of the Insolvency and Bankruptcy Code came into force with effect from 08.03.2021. Subsequently, an order of liquidation in terms of Section 33 of the Insolvency and Bankruptcy Code also came to be passed on 30.09.2022, and a fresh period of moratorium commenced with effect from that date. While claims were invited by the Liquidator, the 1st and 2nd respondents also preferred a claim for unpaid service tax and central excise dues on the basis of Exts.P7 and P8 orders. A claim was also made by the 3rd respondent on the strength of Exts.P9 and P10 assessment orders and demand notices under the GST Act. As the aforesaid orders (Exts.P7 to P10) were passed by the 1st, 2nd and 3rd respondents after the moratorium had commenced in terms of the provisions of the Insolvency and Bankruptcy Code, the appellant approached the writ court contending that the notice to the company in relation to the proceedings covered by Exts.P7 to P10 orders had been issued only in the name of the erstwhile Directors of the company and not the Official Liquidator, who had been appointed in the meantime, and hence the proceedings could not have been finalised without hearing the Official Liquidator. The said contention was not, however, accepted by the learned Single Judge, who was of the view that there was no bar for finalisation of assessment and adjudication proceedings merely upon the ground that a reference on the insolvency resolution process had been admitted and there was a consequent moratorium for recovery of tax.
3. We have heard Anil D. Nair, the learned counsel for the appellant, as also Sri. P. R. Sreejith, the learned Senior Standing counsel for the respondents.
4. On a consideration of the rival submissions and taking note of the submission of the learned standing counsel for the respondents that fresh orders can be passed in the matter by respondents 1, 2, and 3, after hearing the Official Liquidator within two months from today, we dispose this Writ Appeal with the following directions:
i. The respondents 1, 2, and 3 shall pass fresh orders in lieu of P7, P8, P9, and P10, respectively, after hearing the Official Liquidator appointed for the appellant company within a period of two months from the date of receipt of a copy of this judgment.
ii. To enable respondents 1, 2, and 3 to do so, we set aside P7, P8, P9, and P10 orders /notices, respectively.
iii. Respondents 1, 2, and 3 shall issue a fresh notice to the Official Liquidator appointed for the appellant company within three weeks from the date of receipt of a copy of this judgment so as to enable the said Liquidator to appear in the proceedings before them on the dates specified in the notice.
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