2024 (9) TMI 1394 - HC - GST

Challenge to orders related to audit and intimation liability issued against the petitioner - Section 65 of the CGST Act, 2017 - HELD THAT - In the instant case, it is a matter of record and an undisputed fact that the claim of the respondents are in relation to the petitioner-Company for the financial years 2018-19 and 2019-20 and the impugned order dated 29.04.2024 in relation to the financial year 2018-19 and the impugned proceedings in relation to financial year 2019-20 are clearly without jurisdiction or authority of law in the light of the undisputed fact that the Resolution Plan has already been approved by the NCLT and the judgments referred to supra. Under these circumstances, the impugned order and the proceedings deserve to be quashed. Petition allowed.

Summary

Issues:
1. Quashing of orders related to audit and intimation liability issued against the petitioner.
2. Extent of jurisdiction of authorities post-approval of Resolution Plan by NCLT.

Analysis:
The High Court of Karnataka heard a petition seeking to quash an order and notice related to audit and intimation liability issued against the petitioner. The petitioner had undergone Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code. The NCLT had approved a Resolution Plan submitted by NARCL. Despite this, the respondent authorities continued audit proceedings and issued orders for multiple financial years, including after the approval of the Resolution Plan. The petitioner argued that post-approval of the Resolution Plan, all prior claims and proceedings should stand extinguished. The court referred to the Supreme Court's judgment in a similar case and held that claims not part of the Resolution Plan should be extinguished. The court also cited a previous judgment where proceedings were kept in abeyance during a moratorium period. The court concluded that the orders and proceedings against the petitioner were without jurisdiction post-approval of the Resolution Plan.

The court noted that the claims against the petitioner for the financial years in question were invalid post-approval of the Resolution Plan by the NCLT. The court relied on legal precedents to establish that once a Resolution Plan is approved, claims not included in the plan should be extinguished. The court emphasized that the orders and proceedings against the petitioner lacked jurisdiction and authority of law after the approval of the Resolution Plan. Therefore, the court allowed the writ petition and quashed the impugned order, notice for intimation, and all related proceedings.