National Plywood Industries Ltd VS Union Of India

Heard Mr. M Kataki, learned counsel for the petitioner, and Mr. SC Keyal, learned ASGI appearing for the Union of India. The order dated 15.11.2019 of the Commissioner, GST, Dibrugarh, is assailed in this writ petition. By the said order, a requirement for payment of Rs. 1,82,67,651/- on the petitioner M/S National Plywood Industries Limited was confirmed, and further, a penalty of Rs. 1,82,67,581/- was imposed under Rule 173Q (1) of the Central Excise Rules, 1944. The said order dated 15.11.2019 has been challenged on the grounds that the petitioner has been held to be a corporate debtor as per the order dated 26.08.2019 of the National Company Law Tribunal, Guwahati, and accordingly, an order of moratorium had been passed under Section 13 of the Insolvency and Bankruptcy Code, 2016. Mr. SC Keyal, learned ASGI, refers to paragraph 3.2 of the order of the Commissioner dated 15.11.2019 which is relevant to the case.

Mr. M. Kataki, learned counsel for the petitioner, and Mr. S.C. Keyal, learned ASGI for the Union of India, were heard. The writ petition challenges the order dated 15.11.2019 issued by the Commissioner, GST, Dibrugarh, which mandated a payment of Rs.1,82,67,651/- from M/S National Plywood Industries Limited and imposed a penalty of Rs.1,82,67,581/- under Rule 173Q (1) of the Central Excise Rules, 1944. The petitioner contends this order, citing the National Company Law Tribunal, Guwahati’s decision on 26.08.2019, which classified the petitioner as a corporate debtor and initiated a moratorium under Section 13 of the Insolvency and Bankruptcy Code, 2016. Mr. S.C. Keyal refers to paragraph 3.2 of the Commissioner’s order, highlighting that the Tribunal’s decision declared a moratorium under Section 14 of the Insolvency and Bankruptcy Code-2016, prohibiting any proceedings against the corporate debtor, including the execution of judgments, decrees, or orders from any court, tribunal, arbitration panel, or authority, raising questions about the adjudication process.

Mr. M Kataki, representing the petitioner, and Mr. SC Keyal, learned ASGI for the Union of India, presented their cases. The writ petition challenges the order dated 15.11.2019 issued by the Commissioner of GST, Dibrugarh, which mandated the payment of Rs.1,82,67,651/- by M/S National Plywood Industries Limited and imposed an additional penalty of Rs.1,82,67,581/- under Rule 173Q (1) of the Central Excise Rules, 1944. The petitioner contends that this order is invalid because the National Company Law Tribunal (NCLT) Guwahati had declared the petitioner a corporate debtor as per its order dated 26.08.2019, which included a moratorium under Section 13 of the Insolvency and Bankruptcy Code, 2016. Mr. SC Keyal referenced paragraph 3.2 of the Commissioner’s order, which addresses the NCLT’s decision and clarifies that the adjudication of show cause notices does not equate to an execution order or a decree. The Commissioner determined that the adjudication process to establish the assessee’s liability was permissible and not barred by the moratorium. Mr. Keyal argued that the Commissioner had duly considered the petitioner’s objection regarding the moratorium in its decision.

In this case, Mr. M. Kataki, the learned counsel for the petitioner, and Mr. S.C. Keyal, the learned ASGI representing the Union of India, presented their arguments. The petitioner, M/S National Plywood Industries Limited, challenges the order dated 15.11.2019 issued by the Commissioner of GST, Dibrugarh. This order mandates a payment of Rs. 1,82,67,651 and imposes a penalty of Rs. 1,82,67,581 under Rule 173Q (1) of the Central Excise Rules, 1944. The petitioner contests this order on the grounds that they have been classified as a corporate debtor per the National Company Law Tribunal (NCLT), Guwahati’s order dated 26.08.2019, which led to a moratorium under Section 13 of the Insolvency and Bankruptcy Code, 2016. Mr. S.C. Keyal refers to paragraph 3.2 of the Commissioner’s order, which discusses the implications of the NCLT’s moratorium on the bankruptcy case of the assessee. The NCLT’s order restricts actions under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, and prohibits proceedings against the corporate debtor, including executing judgments, decrees, or orders in any legal or arbitral authority. The Commissioner, in his order, deliberated whether the adjudication of show-cause notices would equate to an execution order or be treated as a decree against the debtor. He concluded that adjudication refers to determining liability against any assessee served with show-cause notices and, therefore, does not fall under the moratorium’s prohibitions. Based on this interpretation, Mr. Keyal argues that the objection regarding the NCLT’s moratorium was addressed adequately by the Commissioner. Upon reviewing the Commissioner’s order, it is noted that the NCLT’s moratorium, declared under Section 14 of the Insolvency and Bankruptcy Code, 2016, precludes executing judgments or orders by any court or tribunal. However, the Commissioner raised the issue of whether issuing a show-cause notice by GST authorities constitutes executing an order or decree. He determined that adjudicating the assessee’s liability is not barred by the moratorium, thus deeming the further proceedings maintainable despite the NCLT’s order.

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