Section 14 of IBC doesn't create bar on assessment in respect of Tax, rules HC, Read Judgment

02 Dec 2023

The Kerala High Court opined that Section 14 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as “IBC”) does not create a bar for finalisation of the assessment and adjudication proceedings in respect of the taxes.

There is a bar for recovery of the tax dues, however, there is no bar for finalisation of the assessment and adjudication proceedings.

Brief Facts:

The present writ has been filed by the Petitioner questioning some exhibits.

The Petitioner is a dealer of BMW Cars. The Federal Bank of India filed an application under Section 7(4) of the IBC for initiation of corporate insolvency resolution process.

The application was admitted and an interim resolution professional was appointed. The resolution plans of the applicants were rejected by the CoC. Since, no plan came to be filed, liquidation was filed before the NCLT.

The NCLT allowed for liquidation and hence, liquidator was appointed.

The Petitioner received claim in Schedule II, Form C from the Respondent No.1 presenting five items of claims before the Official Liquidator.

Contentions of the Petitioner:

It was contended that the order based on which 5 claims were submitted were after the moratorium under Section 14. It was urged that the Petitioner was not given an opportunity of hearing.

Observations of the Court:

It was opined that Section 14 does not create a bar for finalisation of the assessment and adjudication proceedings in respect of the taxes.

There is a bar for recovery of the tax dues, however, there is no bar for finalisation of the assessment and adjudication proceedings.

The decision of the Court:

Based on the aforementioned reasons, the writ petitions was accordingly dismissed.

Case Title: Platino Classic Motors India Pvt. Ltd.,V. Deputy Commissioner Of Central Tax And Central Excise & Ors.

Case No.: WP(C) NO. 7997 OF 2023

Coram: Hon’ble Justice Dinesh Kumar Singh

Advocates for Petitioner: Adv. Sri. Anil D. Nair, Smt. Telma Raju, Sri. P. K. Biju, Smt. Anjana A.

Advocate for Respondent: Adv. Sri. P. R. Sreejith