Case Note & Summary
The present writ petitions were filed by M/S. Olive Lifesciences Private Limited, a company incorporated under the Companies Act, 1956, engaged in manufacturing consumer products. The petitions challenged ex-parte assessment orders and demand notices issued by revenue authorities under the Central Sales Tax Act and orders pertaining to excise duty, all arising after the company had initiated corporate insolvency resolution process (CIRP) under Section 10 of the Insolvency and Bankruptcy Code, 2016. The company filed an application for CIRP before the National Company Law Tribunal (NCLT) due to financial difficulties, and the tribunal admitted the petition on 22.09.2017, declaring a moratorium under Sections 13 and 14 of the Code. The moratorium prohibited institution or continuation of suits and proceedings against the corporate debtor. A resolution professional was appointed, and a public announcement was made, with notice served to revenue authorities on 16.02.2018 seeking claims. However, on 16.03.2018, the Central Tax authorities issued a show cause notice proposing recovery of excise duty demands for the period March 2014 to June 2017, amounting to ₹11.06 crores. Subsequently, the resolution plan was approved by the Committee of Creditors on 09.06.2018 and by the NCLT on 09.07.2019, becoming binding on all stakeholders. Despite the moratorium and the approved plan, the State Tax authorities issued an ex-parte assessment order on 14.09.2020, confirming a tax demand of ₹88,61,606, and the Central Tax authorities passed an order in original on 15.06.2021, confirming the earlier demand with penalty and interest. The petitioner contended that all proceedings initiated after the moratorium were void, and any claims not included in the resolution plan stood extinguished. The revenue argued that determination of duty could proceed after the moratorium ceased upon plan approval, and that show cause notices did not constitute proceedings. The court heard submissions and reserved judgment, pronouncing its decision on 19.09.2025. The provided text, however, is incomplete and does not include the court's analysis or final order.
Issue of Consideration
Whether revenue authorities can issue show cause notices and pass ex-parte assessment orders after declaration of moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016, and whether such claims stand extinguished upon approval of resolution plan under Section 31 of the Code
Law Points
- Section 14 of IBC imposes moratorium barring proceedings against corporate debtor
- Section 31 renders approved resolution plan binding and extinguishes claims not part of it
Case Details
2020 LawText (KAR) (09) 43
Writ Petition No.15951 of 2021 C/W Writ Petition No.15459 of 2021
Smt. Vinitha M., Smt. Pratibha R., Sri K. Hema Kumar, Sri Jeevan J. Neeralgi
M/S. Olive Lifesciences Private Limited
Union of India Through Secretary, Ministry of Finance; The Commissioner of State Tax, Bengaluru; The Dy./Asst. Commissioner of State Taxes, Bengaluru; The Commissioner of Central Tax, North-West GST Commissionerate; The Superintendent of Central Excise, Bengaluru
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Nature of Litigation
Writ petitions under Article 226 of the Constitution challenging ex-parte assessment orders and demand notices issued by revenue authorities under the Central Sales Tax Act and Central Excise Act, arising after the petitioner company had entered corporate insolvency resolution process and moratorium was declared under the Insolvency and Bankruptcy Code, 2016.
Remedy Sought
The petitioner sought quashing of the CAS order and demand notice dated 14.09.2020 in Writ Petition No.15951 of 2021, and quashing of the show cause notice dated 16.03.2018, the order in original dated 15.06.2021, and the letter dated 22.07.2021 in Writ Petition No.15459 of 2021.
Filing Reason
The petitioner contended that after declaration of moratorium under Section 14 of the IBC on 22.09.2017, the revenue authorities initiated proceedings and issued demands, which were barred by the moratorium and stood extinguished upon approval of the resolution plan on 09.07.2019, rendering the ex-parte orders illegal.
Previous Decisions
The NCLT admitted the company's application for CIRP on 22.09.2017 and declared moratorium. The resolution plan was approved by the Committee of Creditors on 09.06.2018 and by the NCLT on 09.07.2019. The impugned ex-parte assessment orders were passed on 14.09.2020 and 15.06.2021.
Issues
Whether the impugned show cause notices and ex-parte assessment orders passed by the revenue authorities after the declaration of moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 are valid
Whether claims of Central and State Governments not included in the approved resolution plan stand extinguished and cannot be recovered post approval
Submissions/Arguments
Petitioner argued that the moratorium under Section 14 of the IBC prohibits institution or continuation of any proceedings against the corporate debtor, and all proceedings after 22.09.2017 are void; once resolution plan is approved, all claims including government dues not part of the plan stand extinguished, and no recovery can be pursued; reliance placed on Supreme Court judgments.
Revenue contended that approval of resolution plan does not prohibit determination of duty, and show cause notice is not a proceeding; the order in original was passed after the moratorium ceased to have effect upon plan approval on 09.07.2019; dues are for periods prior to CIRP and can be determined and recovered.
Judgment Excerpts
The resolution plan so approved provided for financial settlement of dues of financial creditors, operational creditors and statutory/Government dues up to the date of commencement of CIRP.
The resolution professional also serves a notice dated 16-02-2018 upon the revenue authorities seeking statement of their claims due from the petitioner Company.
The resolution plan comes to be approved by the National Company Law Tribunal and thus became binding on all the stakeholders.
All dues are identified and would be settled, as per the resolution plan approved by the Committee of Creditors and the Tribunal. Remaining dues of creditors including Central or the State Governments which remain unpaid would stand extinguished and no proceedings in respect of such claims can be entertained.
Procedural History
Petitioner company filed application under Section 10 of the IBC before NCLT due to financial difficulties; NCLT admitted the petition on 22.09.2017 and declared moratorium under Sections 13 and 14. Resolution professional was appointed and made public announcement; on 16.02.2018, notice was served to revenue authorities seeking claims. On 16.03.2018, Central Tax authority issued show cause notice proposing demand of ₹11.06 crores for excise duty. Resolution plan was submitted by resolution applicant, approved by CoC on 09.06.2018, and by NCLT on 09.07.2019. Meanwhile, State Tax authority issued ex-parte assessment order on 14.09.2020 confirming tax demand of ₹88,61,606. Central Tax authority passed order in original on 15.06.2021 confirming earlier demand. Petitioner filed writ petitions challenging these proceedings and orders.
Acts & Sections
- Insolvency and Bankruptcy Code, 2016: 10, 13, 14, 30, 31
- Central Sales Tax Act, 1956:
- Companies Act, 1956:
- Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016: Regulation 6
