NCLT Indore Holds CGST Superintendent Guilty of Contempt For Not Refunding Tax Collected During Moratorium

The National Company Law Tribunal (NCLT) at Indore has held a senior GST officer guilty of civil contempt for refusing to return tax due collected from a insolvency bound company during moratorium.

The tribunal found that a Superintendent of Central GST and Central Excise, Pithampur willfully disobeyed its order to refund Rs 26.26 lakh that was recovered from Bhagwan Motors Pvt Ltd while the company was under insolvency.

Once insolvency proceedings begin, the Insolvency and Bankruptcy Code (IBC) places a moratorium that prevents any authority, including tax departments, from recovering dues.

A bench of Judicial Member Brajendra Mani Tripathi and Technical Member Man Mohan Gupta said the officer's conduct showed a clear disregard for the authority of the court.

Expressing strong displeasure, the tribunal observed,

“We are pained to observe that the Respondent/Contemnor is a responsible Government Officer who must respect the law and the order of the Adjudicating Authority, more than any common man. Still, we have found that the Respondent/Contemnor has not only disregarded the order of the court but also didn't appear in this contempt petition even after given sufficient opportunities.”

The case arose from the insolvency of Bhagwan Motors Pvt Ltd, which entered the insolvency process on June 21, 2019. Despite the statutory moratorium, the GST department recovered tax dues from the company's bank accounts.

In an order passed on September 1, 2023, the NCLT directed the Superintendent to refund the recovered amount to the company's liquidator, Amit Chopra, so that it could be distributed among creditors according to the priority system laid down in the IBC.

However, the refund never came. The liquidator informed the tribunal that repeated letters, emails and even personal visits were ignored. The officer also failed to appear before the tribunal despite being given several chances.

During contempt proceedings, the liquidator argued that the refusal to return the money was blocking the liquidation process and allowing the tax department to gain an unfair advantage over other creditors.

Agreeing, the tribunal said the IBC was designed to ensure an orderly and fair distribution of a company's assets.

“This legislative framework intends to prevent government dues from overriding the orderly and equitable distribution of the corporate debtor's assets. Therefore, the wilful delay or non-compliance by the CGST Department in refunding amounts as directed by this Adjudicating Authority undermines the legislative intent of the IBC, 2016 and impedes the liquidation process.”, it said.

Calling the officer's actions a blatant disregard of the tribunal's authority, it said, 

“Such conduct amounts to a blatant disregard of this Adjudicating Authority's order and calls for strict contempt proceedings against the Respondent to uphold the rule of law and ensure effective enforcement of the Adjudicating Authority's directions.”

Holding the Superintendent guilty, the court has given the officer one final opportunity to be heard on the question of sentence. He is directed to appear before the tribunal on February 10, 2026.

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