GST Amnesty Relief Cannot Be Granted By Tribunal, Parties Must Approach Writ Courts: NCLT Mumbai

The National Company Law Tribunal (NCLT) at Mumbai has held that it has no jurisdiction to relax conditions or grant benefits under a statutory GST immunity or amnesty scheme. Such relief, it said, can be granted only by constitutional courts exercising writ jurisdiction.

A bench of Judicial Member Sushil Mahadeorao Kochey and Technical Member Prabhat Kumar said the tribunal's powers under the Insolvency and Bankruptcy Code cannot be stretched to override conditions prescribed under tax amnesty or immunity schemes framed by statutory authorities.

“As regards relaxation of conditions for taking benefit under immunity scheme, this Tribunal can not grant any relief and such relief can only be granted on equitable grounds by the writ courts. Accordingly, the Applicant shall be at liberty to approach the writ court for the purpose.” the bench observed.

The ruling was passed in the insolvency proceedings of Latakisan Infra Pvt Ltd. The company was admitted into insolvency on November 6, 2019. Its resolution plan was approved on January 7, 2025.

Mumbai District Central Co-operative Bank Ltd, a financial creditor of the company, moved the tribunal. The bank said failure to discharge GST liabilities during the CIRP period exposed the corporate debtor to interest and penalties. It also pointed out that the GST department had deactivated the company's GSTIN for non-filing of returns during insolvency.

During the CIRP period, Latakisan Infra had entered into a revenue sharing agreement dated December 21, 2018 with Royal Orchid Hotels Ltd. GST liabilities arose on the revenue shared between the parties. While some payments were made, GST dues of about Rs 3.15 crore remained unpaid. Returns were also not filed for the relevant period.

The bank said it had applied for reactivation of the GSTIN during the GST Amnesty Scheme, 2025. The scheme allowed waiver of interest and penalties if tax dues were paid by March 31, 2025. However, the GSTIN was not reactivated before the deadline. As a result, the company could not avail the scheme's benefits.

Rejecting the plea, the tribunal held that negligence of the resolution professional in filing tax returns during the CIRP period cannot be a ground to seek immunity. It held that dues arising during the insolvency period cannot be extinguished merely because a resolution plan has been approved. It also noted that there is no provision in law exempting a resolution professional from complying with tax obligations.

The tribunal reiterated that it cannot relax conditions under an immunity scheme. Such relief, it said, lies only before writ courts on equitable grounds. It therefore granted liberty to the resolution professional to approach the appropriate High Court.

At the same time, the tribunal permitted the bank to submit a representation to the GST department after depositing the principal tax amount within 30 days. It directed the department to reactivate the GST login credentials of Latakisan Infra. It also restrained the department from taking any coercive action until the representation is decided.