# In the matter of  Bharati Defence & Infrastructure Ltd.

> NCLT judgment dated 2024-04-10. Citation: TCN-2024-NCLT-01758. This application, IA 354/2023, was filed by the Liquidator of M/s Bharati Defence and…

- **Court:** NCLT
- **Order date:** 10 Apr 2024
- **Citation:** TCN-2024-NCLT-01758
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/bharati-defence-infrastructure-ltd-75497c25

## Summary

### Background

This application, IA 354/2023, was filed by the Liquidator of M/s Bharati Defence and Infrastructure Limited, which is undergoing liquidation proceedings under the Insolvency and Bankruptcy Code, 2016. The Liquidator sought directions from the NCLT to compel the Dy. Commissioner of State Tax, Mumbai North-West, to refund a GST amount of INR 26,669,392/- without any adjustments or set-offs, into the liquidation account of the Corporate Debtor. This GST refund was related to a cancelled Letter of Intent (LoI) issued to HR Commercials Private Limited for Parcel 8 Assets of the Corporate Debtor, and the subsequent refund of the sale consideration to HR Commercials as per a previous order of the Tribunal.

## Facts

The Corporate Debtor, M/s Bharati Defence and Infrastructure Limited, is undergoing liquidation. The Liquidator filed IA 354/2023 seeking a refund of INR 26,669,392/-, representing GST paid on a cancelled auction sale of Parcel 8 assets. The Letter of Intent (LoI) to HR Commercials Private Limited was cancelled, and the sale consideration was refunded. The Respondent, Dy. Commissioner of State Tax, refused to refund the GST, attempting to adjust it against outstanding tax liabilities, including interest and penalties, for the period from July 2017 to March 2018. The Liquidator had already paid INR 39,01,610/- towards the principal GST liability. The Respondent deducted Rs. 49,36,000/- from the sanctioned refund on account of pending demand in form of interest and

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## Issues and analysis

### Issue 1: Whether the Dy. Commissioner of State Tax is justified in adjusting the GST refund amount against …

**Ratio:** The principle that interest and penalty are not payable on the claims of the creditors

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**Reasoning:** The NCLT reasoned that the Applicant was duty bound to remit the amount of tax collected

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**Interpretation:** This means that while pre-CIRP dues generally do not attract interest and

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**Application:** The NCLT found no infirmity in the appropriation of amounts arising on account

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## Parties

- **Judges:** Prabhat…; V.G. B…
- **Appellants:** V. Vijay Kumar…
- **Respondents:** M/s Bharati…; Dy. Commissioner…

## Timeline

- **2017-07-01 — Assessment Per…**: Start of the assessment period for…
- **2018-03-31 — Assessment Pe…**: End of the assessment period for which…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 60(5) — Adjudicating Authority for corporate persons](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-60)

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