Order Under S. 73 GST Can't Be Passed Against Company In Corporate Insolvency Resolution Process: Allahabad High Court

Section 73 of the Goods and Service Tax Act, 2017 empowers a proper officer to initiate proceedings if he is satisfied that any tax has not been paid or short paid or erroneously refunded, or where input tax credit has been wrongly availed or utilised for any reason, other than the reason of fraud or any willful-misstatement or suppression of facts to evade tax by any assesee.

Petitioner approached the High Court against the order passed by the respondent authority under Section 73 of the GST Act.

The Court observed that show cause notice under Section 73 was issued to the petitioner on 10.04.2024. Petitioner, in its reply dated 12.04.2024, informed the authority that petitioner was under CIRP and requested authority for time for seeking instructions from the Interim Resolution Professional.

While no further opportunity of hearing was granted to the petitioner, the Court observed that the insolvency process was set aside by the National Company Law Appellate Tribunal, Chennai on 15.04.2024.

Observing that the order of the NCLAT could not be communicated to the assessing authority in time, the bench comprising of Justice Saumitra Dayal Singh and Justice Donadi Ramesh held that

“Clearly once the petitioner was undergoing resolution before the Interim Resolution Professional and the fact of IRP appointment was communicated to the adjudicating authority, it may not have passed the impugned order during pendency of that CIRP. The umbrella of the Insolvency and Bankruptcy Code was lifted only on 15.04.2024.”

Accordingly, the Court set aside the order passed under Section 73 and directed the petitioner to file a fresh reply to the show cause notice.

Case Title: M/S Bgr Energy Systems Ltd v. State of U.P. and Another [WRIT TAX No. - 1026 of 2024]

Counsel for Petitioner: Shubham Agrawal

Click Here To Read/Download Order