Moratorium under Insolvency and Bankruptcy Code prevents enforcement without adjudication of its effect; matter remitted for fresh hearing.

Proceedings under CGST/IGST assessing demand, interest and penalty were found procedurally infirm because the adjudicating order failed to address the petitioner's statutory plea invoking the moratorium under the Insolvency and Bankruptcy Code; that central defence was raised in response to the show cause notice but not decided, resulting in denial of an effective opportunity and non-application of mind. The impugned confirmation of demand, interest and penalty is set aside and the matter is remitted for fresh consideration; the taxpayer may file written submissions and be heard and the authority must decide moratorium and maintainability issues expeditiously.

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Issues: Whether the impugned order confirming demand, interest and penalty under the CGST/IGST provisions is maintainable in view of the moratorium arising under the Insolvency and Bankruptcy Code, 2016; and whether failure to deal with the moratorium contention in the adjudicating order amounts to denial of opportunity and non-application of mind.

Analysis: The proceedings involve demand under Section 74(1) and interest/penalty under Section 50 of the Central Goods and Services Tax Act, 2017 read with Section 20 of the Integrated Goods and Services Tax Act, 2017, initiated after a Show Cause Notice issued under Section 70 of the Central Goods and Services Tax Act, 2017. The petitioner invoked statutory protection arising from an approved moratorium pursuant to proceedings under Section 227 and Section 239(2) of the Insolvency and Bankruptcy Code, 2016, and specifically raised maintainability of the Show Cause Notice in its written response. The adjudicating authority's order did not address the petitioner's statutory plea regarding the effect of the moratorium and thus did not consider a central defence pleaded in response to the Show Cause Notice. The omission to adjudicate that contention led to procedural infirmity by denying the petitioner an effective opportunity to have that defence decided before confirming the demand, interest and penalty. In these circumstances, remanding the matter for fresh consideration with an opportunity to be heard is appropriate to enable the authority to deal with the moratorium issue and other contentions raised by the petitioner.

Conclusion: The impugned order confirming demand, interest and penalty is set aside and the matter is remitted for fresh decision. The petitioner is permitted to place written submissions and documents before the authority and shall be granted an opportunity of hearing; the authority must consider and decide the moratorium and maintainability issues along with other contentions expeditiously.

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