Mr. Masur Jagannath Rao Vindo Bhongale vs. The Assistant Commissioner Of Commercial Taxes (Audit)- 3.4
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Adjudication orders under the KGST/CGST Act were passed against the petitioners for tax periods 2017-18 and 2020-21. These orders were issued after the company, for which the petitioners were allegedly liable, had been dissolved by the National Company Law Tribunal through a voluntary liquidation order under Section 59(7) of the IBC.
Held
The High Court held that with the company's dissolution, no proceedings could be initiated against it. Any liability could only be pursued against the concerned directors as envisaged under Section 93 of the KGST/CGST Act, and one impugned order also lacked reference to a Show Cause Notice. The Adjudication Orders were quashed.
Key Issues
Whether adjudication proceedings under the GST Act can be validly continued against a company after its dissolution by the NCLT, and what is the appropriate recourse for tax authorities in such circumstances.
Sections Cited
Section 73, Section 93 (of KGST/CGST Act), Section 59(7) (of Insolvency and Bankruptcy Code, 2016)
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Heard together (2 matters)
Read from the judgment's own cause title. This page is filed under one of them.
Cause title — parties, addresses and appearances
ORAL ORDER
The petitioners are aggrieved by the Adjudication Orders under Section 73 of the Karnataka Goods and Services Tax Act, 2017 and Central Goods and Services Tax Act, 2017 [for short, the 'KGST/CGST Act'], and these orders are for tax periods 2017-18 and 2020-21 respectively. A voluntary liquidation petition is filed with the National Company Law Tribunal under Section 59(7) of the Insolvency and Bankruptcy Code, 2016 in CP(IB) No.08/BB/2023 and that this petition is allowed on 24.08.2023 dissolving the company.
Sri Hemanth R Rao submits that with this order and the company being dissolved, no proceedings could have been initiated against the HC-KAR NC: 2026:KHC:32833 petitioners and if there was any liability, it could have been only against the concerned directors. The learned counsel emphasizes that, as could be seen from the Adjudication Order dated 25.02.2025 impugned in W.P.No.10066/2026, the Official Liquidator has written to the Adjudicating Authority informing that the liabilities of the company are discharged and no more claims can be made against the company.
Sri K. Hema Kumar, the learned Additional Government Advocate, who accepts notice for the respondents, is heard in the light of these circumstances. The learned Additional Government Advocate cannot dispute that with the dissolution of the company, proceedings, if there was any liability, could have been initiated only as against the directors because of the liability as envisaged under Section 93 of the KGST/CGST Act. HC-KAR NC: 2026:KHC:32833
Crucially, one of the impugned Adjudication Orders does not even refer to the Show Cause Notice as contemplated under the KGST/CGST Act, and if the order itself does not refer to the Show Cause Notice, it would not justify the continuation of the proceedings against the petitioners. In the light of these circumstances, the following.
ORDER
The petitions are allowed. The impugned Adjudication Order dated 30.12.2023 [Annexure-A] in W.P. No. 9979/2026 and the impugned Adjudication Order dated 25.02.2025 [Annexure-A] in W.P.No.10066/2026 are quashed but without prejudice to the authorities to commence proceedings as permissible in law. (B M SHYAM PRASAD) JUDGE NV
Reproduced from the public record of the Karnataka High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.