Court stays respondent's actions under KGST & CGST Acts during IBC moratorium. Moratorium period not counted in limitation.

The court held that the proceedings initiated by the respondent under the KGST and CGST Acts against the petitioner during the moratorium period declared under the IBC are to be stayed until the completion of the Corporate Insolvency Resolution Process (CIRP) and lifting of the moratorium. The court clarified that the moratorium period is excluded from the limitation period, allowing the respondent to proceed with actions post-moratorium without being time-barred. The petition was disposed of with these directions, granting liberty to the respondent for future proceedings after the CIRP completion.

---

---

Issues Involved:
1. Validity of notices and orders issued by the respondent under KGST and CGST Rules and Acts during the moratorium period declared under the Insolvency and Bankruptcy Code (IBC).
2. Applicability of Section 14 of the IBC to the proceedings initiated by the respondent.
3. Impact of the moratorium on the limitation period for initiating proceedings under the GST Act.

Issue-Wise Detailed Analysis:

1. Validity of Notices and Orders Issued by the Respondent:

The petitioner sought to quash several notices and orders issued by the respondent under the KGST and CGST Rules and Acts for the period July 2017 to March 2018 and subsequent financial years. The petitioner argued that these proceedings could not continue due to the moratorium declared by the National Company Law Tribunal (NCLT) under the IBC, which prohibits any suits or proceedings against the corporate debtor during the moratorium period. The petitioner cited various judicial decisions to support this contention.

2. Applicability of Section 14 of the IBC:

Section 14 of the IBC imposes a moratorium prohibiting the institution or continuation of suits or proceedings against the corporate debtor. The petitioner argued that this moratorium should extend to the proceedings initiated by the respondent under the GST Act. The respondent contended that the moratorium only applied to recovery proceedings and not to assessment/adjudication proceedings. However, the court found that Section 14 of the IBC is an all-encompassing provision that includes proceedings initiated by the respondent. The court cited decisions from the Delhi High Court, Madras High Court, and the Supreme Court, which held that the moratorium under Section 14 of the IBC applies to various types of proceedings, including those under the Income Tax Act and the Negotiable Instruments Act.

3. Impact of the Moratorium on the Limitation Period:

The respondent argued that quashing the proceedings would lead to a time-barred situation for initiating future proceedings after the moratorium is lifted. The petitioner countered this by referring to Section 60(6) of the IBC, which excludes the period of moratorium from the limitation period. The court agreed with the petitioner, stating that both Section 60(6) of the IBC and Section 75(1) of the GST Act exclude the moratorium period from the limitation period, thereby allowing the respondent to initiate proceedings after the completion of the Corporate Insolvency Resolution Process (CIRP) without being time-barred.

Conclusion:

The court concluded that the proceedings initiated by the respondent against the petitioner during the moratorium period are to be stayed/suspended/kept in abeyance until the completion of the CIRP and lifting of the moratorium. The court also provided liberty to the respondent to continue or initiate proceedings against the petitioner after the moratorium is lifted and the CIRP is completed. The petition was disposed of with these directions.

---