Once NCLAT has passed a moratorium order, the revenue agency cannot begin assessment processes
Fact and issue of the case
The learned counsel for the petitioner also drew the attention of the replies submitted by the petitioner to the respondent, which are dated 21.02.2022 and 15.03.2022 and would submit that despite a specific stand having been taken by the petitioner that in view of the moratorium order passed by the NCLAT, Assessment Proceedings cannot be proceeded with, the impugned Assessment Order has been passed ignoring the same.
While drawing the attention to the replies referred to supra, the learned counsel for the petitioner would also submit that a specific request was made by the petitioner for personal hearing which was also not granted as seen from the impugned Assessment Order.
She also drew the attention of this Court to Section 75(4) of the TNGST Act, 2017 and would submit that as per the said provisions, necessarily, the respondent ought to have granted personal hearing to the petitioner.
Relying upon the aforesaid decision, the learned counsel for the petitioner would submit that Assessment Proceedings ought not to have been proceeded with by the respondent in view of the order passed by the NCLAT, dated 15.10.2018, which has passed a moratorium order.
She would also submit that even if the matter is remanded back to the respondent for fresh consideration, the Assessment Proceedings will have to be kept in abeyance in view of the moratorium order granted by the NCLAT as seen from the decision of the Division Bench of the Calcutta High Court, referred to supra.
Observatiob of the court
According to the learned Additional Government Pleader appearing for the respondents, the moratorium order passed under Section 14 of the Insolvency and Bankruptcy Code, 2016 stands on a different footing altogether. He would also submit that even though the petitioner relies upon a Division Bench judgment of the Calcutta High Court for the purpose of her submission that the Assessment Proceedings will have to be kept in abeyance, such a stand was never taken by the petitioner in the replies submitted by them as they never questioned the jurisdiction of the Assessing Officer to proceed with the assessment.
He would also submit that the Calcutta High Court decision relied upon by the learned counsel for the petitioner has no bearing to the facts of the instant case, in view of the fact that there was no Corporate Insolvency Resolution Process (CIRP) pending against the petitioner, whereas in the said decision, CIRP proceedings were pending.
Admittedly, the contentions of the petitioner, which has been recorded by this Court in the earlier paragraphs were not considered by the respondent in the impugned Assessment Order. It is also not in dispute that the NCLAT had passed an order on 15.10.2018, which the petitioner claims is akin to a moratorium order passed under Section 14 of the Insolvency and Bankruptcy Code, 2016. It is for the respondent to consider the petitioner’s contention and decide the issue on merits.
This Court is not expressing any view on the merits of the matter.
Admittedly, no personal hearing was afforded to the petitioner in the impugned assessment proceedings despite a request having been made by the petitioner for the same in their replies.
Section 75(4) of the TNGST Act, 2017 as extracted supra also makes it clear that an opportunity of hearing will have to be granted to the assessee once a request has been made. Having not granted personal hearing to the petitioner in the impugned Assessment proceedings, despite a request having been made by the petitioner in their replies, this Court is of the considered view that principles of natural justice has been violated. The respondent has also not considered the petitioner’s contention that Assessment Proceedings cannot be proceeded with in view of the fact that the NCLAT has passed an order on 15.10.2018, which according to the petitioner is akin to a moratorium order passed under Section 14 of the Insolvency and Bankruptcy Code, 2016.
Since the aforementioned contentions have not been considered by the respondent in the impugned Assessment Order, this Court is of the considered view that on account of the violation of principles of natural justice due to the fact that no personal hearing was afforded to the petitioner and on account of the fact that the contentions of the petitioner as raised in this writ petition have not been considered by the respondent, despite the same having been raised in their replies sent to the respondent, the impugned order has to be necessarily quashed and the matter has to be remanded back to the respondent for fresh consideration on merits and accordance with law.
Insofar as the request for keeping the Assessment proceedings in abeyance is concerned, this Court is rejecting the said request as it is for the respondent to decide based upon the petitioner’s contention as to whether the assessment proceedings can be kept in abeyance or not. The respondent is directed to pass final orders, after adhering to the principles of natural justice and after affording a personal hearing to the petitioner, within a period of twelve weeks from the date of receipt of a copy of this order.
In view of the quashing of the impugned Assessment Order, the consequential recovery notice, which is the subject matter of challenge in W.P. No.2852 of 2023 is also quashed.
With the aforesaid directions, these writ petitions are disposed of. No costs. Consequently, connected miscellaneous petitions are closed.
Conclusion
In the result, appeal of the assessee is allowed and ruled in favour of the assessee
Read the full order from below
Tvl.-ITNL-KMB-J.V.-Vs-Deputy-Commissioner-of-ST-Madras-High-Court
