Allahabad High Court Protects Insolvent Companies from GST Proceedings
New Delhi, Aug 7 (KNN) In a significant ruling, the Allahabad High Court has determined that proceedings under Section 73 of the Goods and Service Tax (GST) Act, 2017 cannot be initiated against a company undergoing the Corporate Insolvency Resolution Process (CIRP) as per the Insolvency and Bankruptcy Code, 2016.
The court's decision highlights the intersection of tax law and insolvency proceedings, providing clarity on the limitations of tax authorities during a company's insolvency process.
According to court observations, a show cause notice under Section 73 was issued to the petitioner on April 10, 2024. The petitioner promptly replied on April 12, 2024, informing the authority of its ongoing CIRP and requesting time to consult with the Interim Resolution Professional.
However, the authority proceeded to pass an order without granting further opportunity for hearing.
The court noted that while the insolvency process was set aside by the National Company Law Appellate Tribunal (NCLAT), Chennai on April 15, 2024, this information could not be communicated to the assessing authority in time.
