Ms Kohinoor Steel Private Limited Throughits Authorised Signatory Sri Prabir Ghosh vs. Union Of INDIA Through The Chief Commissioner Central Excise And Service Tax

Held

The High Court held that the writ petition could not be entertained due to the moratorium declared under Section 14 of the Insolvency & Bankruptcy Code, 2016. The Court noted that the company had been admitted into Corporate Insolvency Resolution Process by the NCLT, and the moratorium prohibits the continuation of pending proceedings against the corporate debtor. The petitioner's counsel fairly submitted that the writ petition cannot be pursued further at this stage due to the moratorium. The Court also noted that the respondent department had raised its claim before the Interim Resolution Professional. Therefore, the writ petition was disposed of on the ground that it could not be entertained under the prevailing moratorium. The specific issues regarding the legality of the excise duty levy based on presumed input-output ratios were not decided on merits due to the procedural bar.

Facts

The petitioner, M/s Kohinoor Steel Private Limited, filed a writ petition challenging show cause notices dated February 2, 2016, and November 18, 2016, and an Order in Original dated October 27, 2017, passed by the Commissioner (CGST & CX), Jamshedpur. These actions sought to levy excise duty, penalty, and interest on the consumption of coal in the petitioner's captive power plant for the period 2009-2010 to 2012-2013. The petitioner argued that the duty was being levied on presumption based on input-output ratios, which lacked legal justification. Subsequently, a supplementary affidavit revealed that the company had undergone insolvency proceedings before the National Company Law Tribunal (NCLT), Kolkata Bench, with an Interim Resolution Professional (IRP) appointed on November 20, 2019. The NCLT order declared a moratorium under Section 14 of the Insolvency & Bankruptcy Code, 2016.

Key Issues

1. Whether the show cause notices and the Order in Original imposing duty, penalty, and interest on the consumption of coal in the captive power plant, based on presumed input-output ratios, are legally sustainable under the Central Excise Act, 1944? 2. Whether the continuation of the writ petition is permissible in light of the moratorium declared under Section 14 of the Insolvency & Bankruptcy Code, 2016, following the admission of the company into Corporate Insolvency Resolution Process by the NCLT? Petitioner's Contention: The petitioner argued that the levy of duty on coal consumption was based on a presumption derived from input-output ratios, which is not permissible under the Act and lacks reasonable basis or legal justification. They sought to quash the show cause notices and the Order in Original. Respondents' Contention: The respondents (Union of India and Commissioner CGST & CX) initiated the proceedings to levy duty, penalty, and interest. The judgment records that the department has raised its claim before the Interim Resolution Professional.