Mr. Masur Jagannath Rao Vindo Bhongale vs. The Assistant Commissioner Of Commercial Taxes (Audit) - 3.4
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The petitioners challenged GST adjudication orders for tax periods 2017-18 and 2020-21, issued after the company they were associated with had been dissolved by the NCLT under Section 59(7) of the Insolvency and Bankruptcy Code, 2016. The Official Liquidator had also informed the authorities that the company's liabilities were discharged.
Held
The High Court quashed the impugned adjudication orders, holding that after a company's dissolution, proceedings for any liability could only be initiated against the directors under Section 93 of the KGST/CGST Act. The Court also noted that one of the impugned orders did not refer to a Show Cause Notice.
Key Issues
Whether GST adjudication proceedings can be continued or initiated against individuals or an erstwhile company after its dissolution by the NCLT, and against whom such liability can be enforced.
Sections Cited
Section 73, Section 93, Section 59(7)
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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.