Tarun Kapoor vs. Union Of INDIA And Others

Facts

The petitioner, Tarun Kapoor, filed a writ petition challenging a notice dated 12.09.2025 issued by respondent No.3 (DETC(ST), Gurugram(North)). The petitioner contended that an interim moratorium was in effect under Section 96 of the Insolvency and Bankruptcy Code, 2016 (IBC), due to proceedings before the National Company Law Tribunal (NCLT). The respondents, Union of India and others, initially sought time to respond. Subsequently, the respondents, through their counsel, informed the Court that the writ petition had become infructuous. This was based on an order dated 03.02.2026 passed by the respondent authority, which withdrew the DRC-13 notice and stated that no recovery would be made under it. The authority acknowledged that the taxpayer had intimated them about the NCLT proceedings and the moratorium only after the issuance of the DRC-13.

Held

The Court noted that the petitioner had filed the writ petition challenging a notice dated 12.09.2025 issued by respondent No.3. The petitioner's primary contention was that an interim moratorium under Section 96 of the Insolvency and Bankruptcy Code, 2016, was in effect due to NCLT proceedings, rendering the recovery notice invalid. The respondents, after initially seeking time, submitted that the writ petition had become infructuous. This was based on an order dated 03.02.2026 passed by the respondent authority. In this order, the authority acknowledged that the taxpayer had informed them about the NCLT proceedings and the moratorium only after the issuance of the DRC-13. The authority explicitly stated that the DRC-13 notices were vacated during the period of the interim moratorium and no recovery would be made. The Court took this order on record. The petitioner's counsel agreed that in view of this subsequent order, the writ petition was indeed rendered infructuous. Therefore, the Court disposed of the writ petition as infructuous. The ratio decidendi is that when a subsequent order by the tax authority renders the challenge in a writ petition infructuous, the petition is disposed of on that basis. No specific issue regarding the applicability of Section 96 of the IBC was finally decided on merits, as the matter was resolved by the subsequent administrative action.

Key Issues

1. Whether the notice dated 12.09.2025 issued by respondent No.3, demanding GST, is liable to be quashed in light of the interim moratorium under Section 96 of the Insolvency and Bankruptcy Code, 2016, which was in effect due to proceedings before the National Company Law Tribunal (NCLT)? Petitioner's arguments: The petitioner argued that the notice was invalid because an interim moratorium had commenced under Section 96 of the IBC, 2016, following an application filed by M/s Volkswagon Finance Private Limited against M/s Tarun Kapoor before the NCLT. This moratorium, according to the petitioner, prohibited any recovery proceedings. Revenue/State's arguments: The revenue/State, through its counsel, submitted that the writ petition had become infructuous. They stated that an order dated 03.02.2026 had been passed, withdrawing the impugned notice (DRC-13) and confirming that no recovery would be made. The authority acknowledged that they were not initially informed about the NCLT proceedings and the moratorium, and only became aware of it after the taxpayer's reply and the issuance of the DRC-13. They further confirmed that further action would be initiated in accordance with law.