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Where proceedings under IBC 2016 are pending before both NCLT & NCLAT, dealer deserves opportunity to pitch claim in respect of VAT paid by it: HC

2019-TIOL-1740-HC-KAR-VAT

IN THE HIGH COURT OF KARNATAKA

AT BENGALURU

Writ Petition No.1016/2019 (T-Res)

MAXWORTH REALTY INDIA LTD
A PRIVATE LTD COMPANY HAVING ITS REGISTERED OFFICE
AT KMP HOUSE, #12/2, YAMUNA BAI ROAD
MADHAVANAGAR, BENGALURU-560001

Vs

1) JOINT COMMISSIONER OF COMMERCIAL TAXES (APPEALS)-I
No.18, BMTC BUIDLING, 4TH FLOOR, YESHWANTHPUR
BENGALURU-560022

2) DEPUTY COMMISSIONER OF COMMERCIAL TAXES
(AUDIT)-1.8, DGSTO-0 YESHWANTHPUR
BENGALOORU – 560022

S Sujatha, J

Dated: July 04, 2019

Appellant Rep by: Sri M Vinaya Keerthy, Adv.
Respondent Rep by: 
Sri T K Vedamurthy, AGA

KVAT – Writ – Section 39(1)

Keywords – reasonable opportunity – suspension of Board – disputed payment – pending proceedings

THE assessee company is engaged into the business of purchase and development of lands and as part of their business, they have taken up more than 35 projects in and around the Bengaluru. It was the contention of assessee that when the company was under the moratorium and the Board was suspended, the Dy CCT initiated proceedings u/s 39[1] of KVAT Act, 2003 relating to the A.Y 2012-13 and passed the reassessment order without providing reasonable opportunity to the assessee.

On Writ, the HC held that,

Whether when proceedings were pending before the NCLT as well as NCLAT under the provisions of IBC, 2016, the dealer deserves an opportunity to put-forth its claim inasmuch as the tax amount paid under VAT Act – YES: HC

++ it is discernable that the proceedings were pending before the NCLT as well as the National Company Law Appellate Tribunal under the provisions of Insolvency and Bankruptcy Code, 2016 . The assessment order passed and the books of accounts said to have been furnished by the Accounts Officer representing the IRP in the Insolvency proceedings though may not be unjustifiable but the principles of natural justice warrants an opportunity to the assessee to put-forth its claim inasmuch as the tax amount paid under the KVAT Act disputed by the prescribed authority. Accordingly, the order is set aside and the matter is restored to the file of the prescribed authority to redo the assessment.

Case remanded

JUDGEMENT

Per: S Sujatha:

Learned Additional Government Advocate accepts notice for the respondents.

2. The petitioner has challenged the assessment order passed by the respondent No.2 dated 07.04.2018 relating to the assessment period April 2012 to March 2013.

3. The petitioner is a Private Limited Company registered under the Companies Act, 1956 and they are into the business of purchase and development of lands and as part of their business, they have taken up more than 35 projects in and around the Bengaluru, as contended.

4. It is the contention of the petitioner that when the company was under the moratorium and the Board was suspended, the respondent No.2 initiated proceedings under Section 39[1] of the Karnataka Value Added Tax Act, 2003 [‘KVAT Act’ for short] relating to the assessment period 2012-13 and passed the reassessment order without providing reasonable opportunity to the petitioner.

5. Learned counsel Sri.M.Vinaya Keerthy appearing for the petitioner would submit that the order of moratorium passed under the provisions of Insolvency and Bankruptcy Code, 2016 was set aside by the National Company Law Appellate Tribunal vide order dated 18.07.2018. Civil Appeal filed by the creditor before the Hon’ble Supreme Court came to be dismissed vide order dated 12.11.2018. Learned counsel argued that during the proceedings before the National Company Law Tribunal and during the operation of the order of moratorium, the petitioner was not in a position to place the books of accounts and to object to the proposition notice. However, the officer of the company referred to in the order of reassessment, was representing the Interim Resolution Professional (IRP) in the proceedings before the NCALT. Hence, submits that the order impugned deserves to be set aside, providing an opportunity to the petitioner to file objections to the proposition notice and to put-forth its claim.

6. Learned Additional Government Advocate would submit that the pendency of the proceedings before the NCLT would not be a bar to the Revenue to proceed with the assessment. Indeed, proposition notice was issued and the re-assessment proceedings are concluded in accordance with law. Hence, the writ petition deserves to be dismissed.

7. Considering the rival submissions of the learned counsel appearing for the parties and perusing the material on record, it is discernable that the proceedings were pending before the NCLT as well as the National Company Law Appellate Tribunal under the provisions of Insolvency and Bankruptcy Code, 2016 . The assessment order passed and the books of accounts said to have been furnished by the Accounts Officer representing the IRP in the Insolvency proceedings though may not be unjustifiable but the principles of natural justice warrants an opportunity to the petitioner to put-forth its claim inasmuch as the tax amount paid under the KVAT Act disputed by the prescribed authority.

8. Accordingly, the order impugned at Annexure-C is set aside and the matter is restored to the file of the prescribed authority to redo the assessment. The petitioner shall file objections to the proposition notice within a period of two weeks from today and shall appear before the prescribed authority on 17.07.2019 without expecting any notice. The prescribed authority shall consider the objections filed by the petitioner, if any, and conclude the assessment in an expedite manner in accordance with law within a period of two weeks thereafter.

In terms of the aforesaid observations and directions, writ petition stands disposed of.

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