Insolvency & Bankruptcy Code : Section 14 Does Not Bar Finalisation Of Assessment, Adjudication Proceedings: Kerala High Court
The Kerala High Court recently laid down that assessment orders could not be set aside on the ground of the Official Liquidator not having been heard while finalizing the assessment, since Section 14 of IBC does not bar finalisation of the assessment and adjudication proceedings in respect of the taxes. "On the resolution once the reference has been admitted, there is moratorium for recovery...
The Kerala High Court recently laid down that assessment orders could not be set aside on the ground of the Official Liquidator not having been heard while finalizing the assessment, since Section 14 of IBC does not bar finalisation of the assessment and adjudication proceedings in respect of the taxes.
"On the resolution once the reference has been admitted, there is moratorium for recovery of the tax dues but, there is no bar for finalisation of the assessment and adjudication," Justice Dinesh Kumar Singh observed.
The petitioner is a dealer of BMW cars in the State. Federal Bank had filed an application under Section 7(4) of the Insolvency and Bankruptcy Code, 2016 ('IBC') for initiation of corporate insolvency resolution process against the petitioner before the National Company Law Tribunal, Cochin, which was admitted by the adjudicating authority. An Interim Resolution Professional (IRP) was also appointed to maintain the affairs of the petitioner.
Pursuant to the Committee of Creditors rejecting the resolution plans, an order of liquidation was passed by the NCLT. Once the Official Liquidator was appointed, the moratorium under Section 33 (5) of the IBC commenced.
The petitioner contended that the assesment orders on the basis of which the five claims were submitted, had been issued after the commencement of the moratorium under Section 14 of the IBC. It was added that the petitioner was not afforded an opportunity to present the case and contest the matter,
The respondents on the other hand averred that notice had been issued to the petitioner, on the basis of which reply was filed on behalf of the petitioner, and the authorized representative was also heard. It was further submitted that the assessment had been completed in accordance with law, and that there was no bar in respect of conclusion of the ongoing assessment proceedings and adjudication under Section 14 of the IBC.
The respondents thus argued that the assessment orders could not be set aside on the ground that the Official Liquidator had not been heard while finalising the assessment.
Perusing Section 14 of IBC which does not impose a bar on finalisation of tax assessment and adjudication proceedings, the Court noted that the assessment orders had been finalized after issuing notice to the petitioners, to which reply was also filed.
"Therefore, I do not find any substance in the submissions of the Learned Counsel for the petitioner that: since the Official Liquidator was not heard, the order has become bad. It is the petitioner who was issued notice. The representative of the petitioner remained present during the hearing. His reply was also filed in the show cause notice and thereafter the orders in Exhibits P-7 to P-10 has been passed," the Court observed.
The plea was thus dismissed.
Counsel for the Petitioner: Advocates Anil D. Nair, Telma Raju, P.K. Biju, and Anjana A.
Counsel for the Respondents: Advocate P.R. Sreejith
Citation: 2023 LiveLaw (Ker) 656
Case Title: Platino Classic Motors India Pvt. Ltd. v. Deputy Commissioner of Central Tax and Central Excise & Ors.
Case Number: W.P.(C) No. 7997 OF 2023