2022 (3) TMI 869 - HC - Insolvency and Bankruptcy

Court orders immediate GST registration for liquidator, citing unique circumstances and statutory obligations.

Shri Nirav Tarkas Liquidator of M/s Stratus Foods Private Limited Versus Office of The Chief Commissioner

The court allowed the petition challenging the rejection of the GST registration application by the respondent authority. The court directed the ... Rejection of application of the petitioner for grant of registration under the Goods and Services Tax Act, 2016 - Company under liquidation under the provisions of IBC - primary ground for rejection was non-furnishing of the required documents - rejection on a completely nongermane ground - HELD THAT:- It is the specific stand of the petitioner that the Notification No. 11/2020 dated 21.03.2020 as amended by Notification No. 39/2020 dated 05.05.2020 would not apply in case of the petitioner for he being a liquidator as they are applicable qua IRP and RP. It is to be remembered that under Regulation 32 of IBBI (Liquidation Process) Regulations, 2016, petitioner was under an obligation to make an attempt to sell the business of company-in-liquidation as a going concern or on slump sale basis and if the liquidator is unable to sell the business in either way of clause (e) or (f) of the Regulation 32, within 90 days from the liquidation commencement date, he is required to sell the assets of the company under liquidation by other methods. The petitioner is an appointee of National Company Law Tribunal and is not required to run from the post to pillar for the grant of registration under the GST Act. He already had approached the concerned officer and therefore, when he was denied the same on the ground of issue of limitation, he had preferred an appeal, however, the respondent authority when conveyed him to apply afresh, he has chosen to approach this Court - According to this Court, once an application was moved for obtaining the registration under GST before the respondent authority, the denial of registration under the GST is completely on an ill conceive ground. Not only the authority concerned had not distinguish between the IRP/RP and liquidator but, both have different functions and even otherwise, if all of them are considered as the persons authorized under the provisions of Insolvency and Bankruptcy Code, 2016, applying even the notifications 11/2020 and 39/2020 in case of the present petitioner, the authority could not have disregarded the prevalence of the pandemic due to COVID-19 virus. Wherever there is a requirement, Section 25 requires the proper officer to register such person in such a manner as may be prescribed, if he is otherwise liable to be registered. Thus, in case of any delay in obtaining the registration, Section 25(8) obligates the proper officer to proceed to register such person. He may impose a penalty in accordance with Section 122 of the GST Act, however, this non-grant of registration for fulfilling the official duty for the sell of business of the company-in-liquidation as a going concern/slump sale basis or on standalone basis deserves the indulgence with a specific direction to the highest authority under the GST Regime to stop having hyper technical approach and instead make it more user friendly. The liquidator could have approached the concerned authority well in time, however, if he has not done it because of the various details that he needed to gather and collate, he could not have been sent from the post to pillar - the respondent authority is directed to grant registration under the Goods and Services Tax Act, 2016 - petition allowed. Issues Involved:1. Legality of the rejection of GST registration application by the respondent authority.2. Applicability of Notification No. 11/2020 and Notification No. 39/2020 to the petitioner as a liquidator.3. The requirement for the petitioner to provide specific documents and information for GST registration.4. The impact of the COVID-19 pandemic on the procedural timelines for GST registration.5. The role and obligations of the liquidator under the Insolvency and Bankruptcy Code, 2016.Detailed Analysis:1. Legality of the rejection of GST registration application by the respondent authority:The petitioner challenged the respondent authority's action as illegal, arbitrary, and highhanded for rejecting his application for GST registration on a non-germane ground. The petitioner argued that he was performing statutory functions and required GST registration to fulfill his duties under the Insolvency and Bankruptcy Code, 2016. The respondent rejected the application, citing non-compliance with Notification No. 11/2020 and Notification No. 39/2020, which the petitioner contended did not apply to him as a liquidator.2. Applicability of Notification No. 11/2020 and Notification No. 39/2020 to the petitioner as a liquidator:The petitioner argued that these notifications pertained to Interim Resolution Professionals (IRP) and Resolution Professionals (RP) during the Corporate Insolvency Resolution period and did not obligate a liquidator to apply for registration within a specific timeframe. The court noted that the petitioner, as a liquidator, had different functions from those of an IRP or RP. The court found that the respondent authority failed to distinguish between the roles of IRP/RP and liquidator and erroneously applied the notifications to the petitioner.3. The requirement for the petitioner to provide specific documents and information for GST registration:The respondent authority argued that the petitioner did not furnish the complete order of the NCLT and other required documents, which led to the rejection of the application. The petitioner contended that he had provided the necessary documents, including the liquidation order. The court observed that the petitioner had made available the order of liquidation and that the respondent's insistence on additional documents was a technicality without substance. The court emphasized that the petitioner, as an officer of the court, should not have been made to run from post to pillar for registration.4. The impact of the COVID-19 pandemic on the procedural timelines for GST registration:The court acknowledged the impact of the COVID-19 pandemic, which paralyzed systems and affected procedural timelines. The court noted that the petitioner applied for GST registration during the extended liquidation period and that the pandemic should have been considered a valid reason for any delays. The court criticized the respondent authority for not considering the pandemic's impact and for adopting a hyper-technical approach.5. The role and obligations of the liquidator under the Insolvency and Bankruptcy Code, 2016:The petitioner, appointed as a liquidator by the NCLT, was under an obligation to liquidate the corporate debtor within a specified period. The court recognized that the petitioner needed GST registration to sell the company's assets and fulfill his statutory duties. The court highlighted that the proper officer has the discretion to register a person even if there is a delay and that the petitioner should have been granted registration to perform his official duties.Conclusion:The court allowed the petition, directing the respondent authority to grant GST registration to the petitioner within two weeks. The court also provided immunity to the petitioner for approaching the authority beyond the prescribed period, recognizing the unique circumstances and statutory obligations of the petitioner as a liquidator. The court emphasized the need for a user-friendly approach by the authorities, especially in cases involving government-appointed officials performing statutory duties.