HC suspends the GST proceedings until the resolution of the NCLT case and the removal of the moratorium
Fact and issue of the case
In this petition, petitioner has sought for the following reliefs:
Quashing the Notice bearing dated 20.05.2021 issued by the Respondent under Rule 101(4) of the K GST Rules and C GST Rules read with Section 65 of the K GST Act and C GST Act (Annexure-B) for the period July 2017 to March 2018;
Quashing the Revised Intimation Notice bearing dated 29.06.2021 issued by the Respondent under Rule 101(4) of the K GST Rules and C GST Rules read with Section 65 of the K GST Act and C GST Act (Annexure-F) for the period July 2017 to March 2018;
Quashing the Audit Enquiry dated 22.07.2021 issued by the Respondent (Annexure-K) for the period July 2017 to March 2018;
Quashing the Audit Report bearing dated 22.06.2021 issued by the Respondent under Section 65(6) of the K GST Act and C GST Act (Annexure-L) for the period July 2017 to March 2018;
Quashing the intimation issued in Form GST DRC-01A bearing Case ID No.ASSMT/01/ 2021-22 dated 01.09.2021 issued by the Respondent under Section 74(5) of the K GST Act and the C GST Act (Annexure-N);
Quashing the notice dated 22.10.2021, in GST Form ADT – 01, issued under Section 65 of the K GST Act and C GST Act, for the financial year 2018-2019 (Annexure-Q);
Quashing the notice dated 22.10.2021, in GST Form ADT – 01, issued under Section 65 of the K GST Act and C GST Act, for the financial year 2019-2020 (Annexure-R);
Quashing the Show Cause Notice dated 15.11.2021, issued by the Respondent under Section 74 read with Section 65 read with Section 50 and Section 122 of the K GST Act and C GST Act and Section 6 of the I GST Act, 2017 (Annexure-T); and
Pass such other or further order as this Hon’ble Court may deem fit in the facts and circumstances of the case, in the interests of justice and equity.
Heard Sri T. Suryanarayana, learned Senior Counsel for the petitioner and Sri Hema Kumar, learned AGA for the respondent and perused the material on record.
In addition to reiterating the various contentions urged in the petition and referring to the documents produced by the petitioner, learned Senior counsel for the petitioner invited my attention to the material on record including the amended petition and subsequent documents in order to point out that despite the petitioner replying to the notices issued by the respondent and specifically intimating the respondent that no proceedings against the petitioner can be continued in view of the moratorium declared by the National Company Law Tribunal (for short NCLT) Bengaluru Bench, Bengaluru against the petitioner on 26.10.2018 thereby initiating corporate insolvency resolution process against the petitioner, all suits, proceedings, etc. initiated against the petitioner cannot be continued till the moratorium is lifted in accordance with the Insolvency and Bankruptcy Code, 2016 (for short the ‘IBC(), the respondent is illegally and arbitrarily attempting to continue the proceedings against the petitioner which are without jurisdiction or authority of law and contrary to Section 14 of the IBC and as such, the petitioner is before this court by way of the present petition.
Observation of the court
It is also relevant to state that in P. Mohan Raj’s case supra, a three Judge Bench of the Apex Court has categorically held that the moratorium provision contained in Section 14 of the IBC would include proceedings under Section 138 of the Negotiable Instruments Act also and by token of the same reasoning, proceedings initiated by the respondent under the GST Act would also attract the embargo contained in Section 14 of the IBC.
The aforesaid undisputed facts and circumstances and the decisions of the Apex Court, Delhi High Court and Madras High Court, albeit under the Income Tax Act and the Negotiable Instruments Act are clearly applicable to the instant proceedings and under the GST Act also; under these circumstances, as held b y the Madras High Court, I am of the considered opinion that in view of the specific embargo/bar contained in Section 14 of the IBC, the instant proceedings initiated by the respondent pursuant to the impugned notices deserve to be stayed/suspended/kept in abeyance till conclusion of the proceedings before the NCLT and appeal(s) to be filed, if any, and only after lifting of the moratorium and completion of the corporation insolvency resolution process.
Insofar as the contention urged by the respondent – state with regard to proceedings to be initiated later b y the respondent against the petitioner as being barred b y limitation is concerned, the said contention cannot be accepted in view of the non-obstante clause contained in Section 60 (6) of the IBC which excludes the entire period during which the moratorium is in force; so also Section 75 (1) of the GS T Act also excludes the entire period from 29.09.2021 onwards when this court passed an order of stay up to the date of completion of the CIRP and lifting of the moratorium and as such, even this contention urged by the respondent cannot be accepted.
In the result, I pass the following:
In the result, appeal of the assessee is allowed and ruled in favour of the assessee
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