Facts of the Case

Platino Classic Motors India Pvt. Ltd., a BMW car dealer in Kerala, entered insolvency after Federal Bank's application under Section 7(4) of the Insolvency and Bankruptcy Code, 2016 was admitted by the NCLT, Cochin on 08.03.2021, triggering the Section 14 IBC moratorium and appointment of an Interim Resolution Professional. With no resolution plan approved by the Committee of Creditors, the NCLT ordered liquidation on 30.09.2022 under Section 33 IBC, appointing the IRP as Liquidator; the Section 33(5) moratorium then commenced. On public notice, the Liquidator received a five-item claim from the Deputy Commissioner of Central Tax and Central Excise, based on two Central Excise/Service Tax Orders-in-Original (Exhibits P7 and P8, dated 25.02.2022 and 30.03.2021), a Section 64 CGST/SGST assessment order in FORM GST ASMT-16 dated 13.07.2022 (Exhibit P9), and a notice dated 30.09.2022 (Exhibit P10). The Liquidator challenged all four in this writ petition.

Issues Involved

  1. Whether Exhibits P7 to P10, passed after the Section 14 IBC moratorium began, were without jurisdiction.
  2. Whether non-participation of the Liquidator vitiated the orders for denial of hearing.
  3. Whether Section 14 IBC bars only recovery of dues, or also finalisation of pending assessment/adjudication.

Petitioner's Arguments

  • Exhibits P7 to P10 were issued after commencement of the Section 14 moratorium on 08.03.2021.
  • Proceedings could not lawfully be concluded without the Liquidator/corporate debtor being given a proper opportunity.
  • No opportunity was afforded to present its case and contest the proceedings culminating in Exhibits P7 to P10.
  • The orders were liable to be quashed as passed in violation of natural justice.

Respondent's Arguments

  • Notice was duly issued, a reply filed, and the authorised representative heard before the orders were passed; the plea of denial of hearing was factually incorrect.
  • Section 14 IBC restrains only recovery and enforcement action, not conclusion of ongoing assessment/adjudication.
  • The assessments were completed per law and could not be set aside merely because the Official Liquidator was not separately heard.

Court Order/Findings

  • Reading Section 14 IBC with settled law of the High Courts and Supreme Court, the Court held it does not bar finalisation of tax assessment and adjudication.
  • Once a CIRP reference is admitted, the moratorium bars only recovery of tax dues, not finalising the underlying assessment.
  • Exhibits P7 to P10 showed notice issued, reply filed, and orders passed after hearing, the petitioner's representative being present — the plea of no hearing had no substance.
  • It was the petitioner, not the Official Liquidator, who was entitled to and did receive notice and hearing; that sufficed.
  • The writ petition was dismissed, with a direction that the Liquidator consider the department's five claims per law.

Important Clarification

  • Section 14 IBC bars recovery of dues once CIRP is admitted; it does not freeze assessment/adjudication that merely quantifies liability.
  • Tax, Central Excise and GST authorities may lawfully conclude pending assessment or adjudication during the moratorium if notice, reply and hearing are afforded.
  • Non-participation of the Liquidator/IRP alone does not vitiate an order where the corporate debtor was duly heard.
  • Claims from such orders must still be lodged with, and examined by, the Liquidator in the liquidation process.

Sections Involved

  • Section 7(4), IBC, 2016 — admission of a financial creditor's CIRP application.
  • Section 14, IBC, 2016 — moratorium on suits, asset transfer and recovery during CIRP.
  • Section 33, IBC, 2016 — liquidation where no resolution plan is approved.
  • Section 33(5), IBC, 2016 — bars suits after the liquidation order without leave.
  • Section 64, CGST/SGST Act, 2017 — summary assessment (FORM GST ASMT-16).

Decision – In Favour of

Department. The writ petition was dismissed and Exhibits P7 to P10 upheld as validly passed during the moratorium, with the Liquidator directed to consider the department's five claims per law.

Related Case Laws

  • Sundaresh Bhatt, Liquidator of ABG Shipyard Ltd. v. CBIC, (2023) 15 SCC 781 — assessment permissible during moratorium; recovery must follow the IBC framework.
  • State Tax Officer v. Rainbow Papers Ltd., (2023) 9 SCC 545 — priority of statutory/tax dues in insolvency.
  • Alchemist ARC Ltd. v. Hotel Gaudavan Pvt. Ltd., (2018) 16 SCC 94 — scope of the Section 14 moratorium bar.

Case Details

  • Court: High Court of Kerala at Ernakulam
  • Case No.: W.P.(C) No.7997 of 2023
  • Coram: Justice Dinesh Kumar Singh
  • Date: 26.10.2023
  • Petitioner: Platino Classic Motors India Pvt. Ltd. (through Liquidator, Reuben George Joseph)
  • Respondents: Deputy Commissioner of Central Tax and Central Excise, Ernakulam & Ors.

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