NCLT Indore Holds CGST Superintendent Guilty of Contempt for Recovering Tax During IBC Moratorium
Pranav B Prem
The National Company Law Tribunal (NCLT), Indore Bench, has held a Superintendent of Central GST and Central Excise, Pithampur, guilty of civil contempt for wilfully disobeying its order directing refund of tax amounts recovered from an insolvency-bound company during the moratorium period. The Tribunal found that the officer failed to refund ₹26.26 lakh collected from Bhagwan Motors Pvt. Ltd. while insolvency proceedings were in force, in clear violation of the Insolvency and Bankruptcy Code, 2016 (IBC).
A bench comprising Judicial Member Brajendra Mani Tripathi and Technical Member Man Mohan Gupta expressed serious displeasure over the conduct of the GST officer, observing that the moratorium imposed under Section 14 of the IBC bars any recovery action by statutory authorities once insolvency proceedings commence. The Tribunal noted that despite repeated directions and opportunities, the officer neither complied with the refund order nor appeared before the Tribunal.
The case arose out of the insolvency proceedings of Bhagwan Motors Pvt. Ltd., which was admitted into the Corporate Insolvency Resolution Process (CIRP) on June 21, 2019. During the subsistence of the moratorium, amounts payable to the corporate debtor were adjusted and deposited with the GST Department. In an order dated September 1, 2023, the NCLT had categorically directed the GST authorities to refund the recovered amount to the Resolution Professional, holding that such recovery during moratorium was impermissible under law.
Following the liquidation order passed on the same date appointing Amit Chopra as the liquidator, repeated communications were sent to the GST Department seeking compliance with the refund direction. These included formal letters, emails, telephonic follow-ups, and even personal visits. However, no refund was made, and the officer failed to appear before the Tribunal despite due service of notices. A review application filed by the officer was also dismissed for non-prosecution.
The Tribunal reiterated settled legal principles laid down by the Supreme Court in Sundaresh Bhatt, Liquidator of ABG Shipyard v. CBIC, and by the NCLAT in Commissioner of State Tax v. Ramchandra Dallaram Chaudhary, holding that while tax authorities may assess or determine statutory dues during moratorium, they are expressly barred from enforcing recovery. Any such recovery must be reversed and treated in accordance with the priority waterfall under Section 53 of the IBC.
Observing that government dues do not enjoy any preferential status under the IBC, the Tribunal held that the continued non-compliance by the CGST Department undermined the legislative intent of the insolvency framework and obstructed the liquidation process. The bench described the officer’s conduct as a “blatant disregard” of judicial authority and held that such actions strike at the very foundation of the rule of law.
Invoking its contempt jurisdiction under Section 425 of the Companies Act, 2013 read with the Contempt of Courts Act, 1971, the NCLT held that the essential ingredients of civil contempt—existence of a valid order and wilful disobedience—stood fully satisfied in the present case. The Tribunal accordingly found the CGST Superintendent guilty of contempt.
Before imposing punishment, the Tribunal granted the officer a final opportunity to be heard on the question of sentence. The contemnor has been directed to appear before the NCLT, Indore Bench, on February 10, 2026, failing which further action would follow to uphold the dignity of the Tribunal and ensure enforcement of its orders.
Appearance
For Applicant: PCA Ayushi Patidar
Cause Title: Amit Chopra, Liquidator of Bhagwan Motors Pvt. Ltd. v. The Superintendent CGST & CEX
Case No: IA No. 42 (MP) of 2024 in IA No. 130 (MP) of 2020 in CP (IB) No. 159 of 2018
Coram: Judicial Member Brajendra Mani Tripathi, Technical Member Man Mohan Gupta
