Moratorium protection under insolvency law bars coercive tax search, seizure and summons against a corporate debtor during CIRP.

During a CIRP moratorium, tax authorities may assess liability, but they cannot use coercive search, seizure or summons that goes beyond a permissible assessment exercise. The text states that the GST authority searched the corporate debtor's premises, seized records and summoned the resolution professional while moratorium protection was in force, and that these acts were treated as inconsistent with the statutory bar under the Insolvency and Bankruptcy Code. It further notes that the seized records were ordered to be returned, the summons was set aside, and compensatory costs were awarded with liberty to recover them from responsible officials.

---

---

Issues: Whether the search and seizure of records of the corporate debtor and issuance of summons to the resolution professional were violative of the moratorium under the Insolvency and Bankruptcy Code, 2016.

Analysis: The dispute arose during the corporate insolvency resolution process, when the goods and services tax authority searched the corporate debtor's premises, seized records and issued summons while moratorium under section 14 was in force. The Court distinguished between steps taken merely to determine tax liability and coercive action for recovery, and held that the impugned acts were not confined to a permissible assessment exercise. It relied on the statutory moratorium, the nature of summons under the GST law, and the administrative circular cautioning against coercive action against corporate debtors under CIRP.

Conclusion: The search, seizure and summons were held to be in breach of the moratorium and therefore not permissible.

Final Conclusion: The GST authority was directed to return the seized records, the summons was set aside, and compensatory costs were awarded, with liberty to recover the amount from the responsible officials.

Ratio Decidendi: During moratorium, tax authorities may take steps to determine liability, but they cannot resort to coercive search, seizure or summons that amounts to initiation of proceedings contrary to the statutory protection under section 14 of the Insolvency and Bankruptcy Code, 2016.

---