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TMI Blog2021 (12) TMI 1408X X X X Extracts X X X X X X X X Extracts X X X X ..... the KGST Act and CGST Act (Annexure-L) for the period July 2017 to March 2018; (v) Quashing the intimation issued in Form GST DRC- 01A bearing Case ID No. ASSMT/OV 2021-22 dated 01.09.2021 issued by the Respondent under Section 74(5) of the KGST Act and the CGST Act (Annexure-N); (vi) Quashing the notice dated 22.10.2021, in GST Form ADT - 01, issued under Section 65 of the KGST Act and CGST Act, for the financial year 2018-2019 (Annexure-Q); (vii) Quashing the notice dated 22.10.2021, in GST Form ADT - 01, issued under Section 65 of the KGST Act and CGST Act, for the financial year 2019-2020 (Annexure-R); (viii) 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 KGST Act and CGST Act and Section 6 of the IGST Act, 2017 (Annexure-T); and (ix) 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. 2. 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. 3. In additio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the respondent later after lifting of the moratorium would be barred by limitation resulting in irretrievable loss and hardship to the respondent and on this ground also, the petition is liable to be dismissed. 5. By way of reply, the learned Senior Counsel for the petitioner submits that having regard to the specific words 'proceedings' employed in Section 14 of the IBC in relation to any court, tribunal, arbitration panel or other authority, the impugned proceedings initiated against the petitioner by the respondent - department are also to be suspended/stayed/kept in abeyance till completion of the Corporate Insolvency Resolution Process (CIRP) and lifting of the moratorium. It is also submitted that the apprehension of the respondent - State that proceedings to be initiated by the respondent after completion of the CIRP and lifting of the moratorium would be barred by limitation is unfounded 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 Goods and Services Tax Act, 2017 (for short the 'GST Act') also excludes the entire period fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ues arising for the use or continuation of the license, permit, registration, quota, concession, clearances or a similar grant or right during the moratorium period;] (2) The supply of essential goods or services to the corporate debtor as may be specified shall not be terminated or suspended or interrupted during moratorium period. (2A) Where the interim resolution professional or resolution professional, as the case may be, considers the supply of goods or services critical to protect and preserve the value of the corporate debtor and manage the operations of such corporate debtor as a going concern, then the supply of such goods or services shall not be terminated, suspended or interrupted during the period of moratorium, except where such corporate debtor has not paid dues arising from such supply during the moratorium period or in such circumstances as may be specified. (3) The provisions of sub-section (1) shall not apply to- (a) such transactions, agreements or other arrangements as may be notified by the Central Government in consultation with any financial sector regulator or any other authority; (b) a surety in a contract of guarantee to a corporate debtor. (4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therewith has been explained in the recent decision dated 31st Aug., 2017 of the Supreme Court in Civil Appeal Nos. 3337-8338/2017 (M/s. Innoventive Industries Ltd. v. ICICI Bank). 2. In the instant case, the National Company Law Tribunal (NCLT) [which by virtue of Section 5 (1) of the Code is the Adjudicating Authority] has by its order dated 18th July 2017 admitted the petition under Section 7 of the Code filed by the SBI against the Respondent Assessee and prohibited, inter alia, "the institution of suits or continuation of pending suits or proceedings" against the Respondent This would include the present appeal by the I.T. Department ('Department') against the order of the Income Tax Appellate Tribunal in respect of the tax liability of the Respondent-Assessee. 3. Mr. Asheesh Jain, learned Senior Standing counsel for the Revenue, points out that unlike some of the earlier insolvency statutes the Code does not envisage permission being sought from the NCLT for continuation of the pending proceedings against the Respondent in other fora. In the order dated 18th July 2017 it is clear that the moratorium continues till the completion of the corporate insolvency resolu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lude the appeal filed before the Delhi High Court by the Income Tax Department against the order of the Income Tax Appellate Tribunal (ITAT) in respect of the tax liability of the respondent-assessee therein. Learned counsel for the petitioner-Companies also relied on a decision of the Supreme Court (Pr. Commissioner of Income Tax Vs. Monnet Ispat and Energy Limited), in which the said order of the Delhi High Court was confirmed by the Apex Court and in that case, the Supreme Court, while dealing with Section 238 of the IBC, held that IBC will over-ride anything inconsistent contained in any other enactment including the Income Tax Act, and it was further observed by the Apex Court, while referring to the case of Dena Bank Vs. Bhikhabhai Prabhudas Parekh and Co., reported in 2000 (5) SCC 694 that the Income Tax dues, being in the nature of Crown Debts, do not take precedence even over secured creditors, who are private persons. 7. In his arguments, learned counsel for the petitioners also submitted that by virtue of Section 238 of the IBC, the provisions of the IBC shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Moratorium, the case of the petitioners is governed by Sections 14 and 238 of the IBC, which read as follows: "Section 14: Moratorium:- (1) Subject to provisions of sub-sections (2) and (3), on the insolvency commencement date, the Adjudicating Authority shall by order declare moratorium for prohibiting all of the following, namely:- (a) the institution of suits or continuation of pending suits or proceedings against the corporate debtor including execution of any judgement, decree or order in any Court of law, tribunal, arbitration panel or other authority; (b) transferring, encumbering, alienating or disposing of by the corporate debtor any of its assets or any legal right or beneficial interest therein; (c) any action to foreclose, recover or enforce any security interest created by the corporate debtor in respect of its property including any action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (54 of 2002); (d) the recovery of any property by an owner or lessor where such property is occupied by or in the possession of the corporate debtor. (2) The supply of essential goods or services to the corpo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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. 11. 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 by 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. 12. Insofar as the contention urged by the respondent - state with regard to proceedings to be initiated later by the respondent against the petitioner as being barred by limitation is concerned, the said contention cannot be accepted ..... X X X X Extracts X X X X X X X X Extracts X X X X
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