A.N. Buildwell PVT LTD vs. Pr. Commissioner CGST Gurugrm And Anr

Held

The Court held that the assessment order dated March 26, 2021, was liable to be set aside. The Court noted that the petitioner-company was not impleaded through its Official Liquidator in the assessment proceedings, and the authority was apparently unaware of the Official Liquidator's appointment on March 8, 2016, which predated the show cause notice. It is settled law that once an Official Liquidator is appointed, they have the right to defend the company and file replies to show cause notices. While in a best judgment assessment, an appeal is usually the recourse for non-cooperation after service, the Court found good reasons for the Official Liquidator's non-appearance. The Court reasoned that relegating the petitioner to an appeal would be futile, as an appellate authority would likely set aside the order and remand the case for a fresh decision after hearing the Official Liquidator. The Court also considered the fact that the petitioner-company was in liquidation, with creditors awaiting their dues. Therefore, the Court set aside the impugned assessment order and directed the respondent to pass a fresh order after giving the petitioner-company, through its Official Liquidator, an opportunity to present its case and a personal hearing. The Court also left it open for the respondent to examine the validity of service of notices on the Official Liquidator.

Facts

The petitioner, A.N. Buildwell Pvt. Ltd. (In Liquidation), through its Official Liquidator, challenged an ex parte assessment order passed by the respondents. The Official Liquidator was appointed by the Delhi High Court on March 8, 2016, to take possession of the company's assets and seal its premises. Subsequently, show cause notices were issued in and after March 2017. The petitioner contended that these notices were not served on the Official Liquidator, violating principles of natural justice. The petitioner's representation to withdraw the assessment order and pass a fresh one after hearing the Official Liquidator was rejected, stating no provision for withdrawal and suggesting an appeal. The impugned assessment order dated March 26, 2021, did not implead the Official Liquidator, indicating the authority was unaware of his appointment.

Key Issues

1. Whether the assessment order dated March 26, 2021, passed by the respondent authority is liable to be set aside on the ground that the show cause notice dated March 28, 2017, and subsequent notices were not served upon the Official Liquidator, who was appointed prior to the issuance of the notice, thereby violating the principles of natural justice and Section 457 of the Companies Act, 1956? Petitioner's Arguments: The petitioner argued that as per Section 457 of the Companies Act, 1956, the Official Liquidator had the right to represent the company. Furthermore, Section 446 of the Act mandates that any legal proceedings against the company require the leave of the Court. The non-service of the show cause notice on the Official Liquidator, who had taken possession of all company properties, rendered the assessment order and subsequent proceedings void for violating natural justice. They relied on the fact that the respondents did not rebut the averment of non-receipt of notices. Respondents' Arguments: The respondents argued that the assessment was a best judgment assessment, and therefore, an application for recall was not available. They contended that the petitioner's remedy was to file an appeal against the assessment order.