Karnataka High Court
M/S Avasarala Technologies Ltd vs Deputy Commissioner Of Commercial ... on 19 November, 2025
Author: S.R.Krishna Kumar
Bench: S.R.Krishna Kumar
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NC: 2025:KHC:47966
WP No. 21926 of 2025
HC-KAR
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 19TH DAY OF NOVEMBER, 2025
BEFORE
THE HON'BLE MR. JUSTICE S.R.KRISHNA KUMAR
WRIT PETITION NO. 21926 OF 2025 (T-RES)
BETWEEN:
M/S AVASARALA TECHNOLOGIES LTD
(REGISTERED VIDE GST
REGN NO: 29ABCA2381E5ZT, DATED 15.05.2018)
KIADB INDUSTRIAL AREA, 61A,
HOSUR ROAD, BOMMASANDRA,
BANGALORE - 560 099.
(REPRESENTED BY ITS DIRECTOR
MR THAVUTHKHANPET THANIGAL MAIN
S/O JANAKIRAMACHARI,
AGED ABOUT 76 YEARS)
...PETITIONER
(BY SRI. B. G. CHIDANANDA URS.,ADVOCATE)
AND:
1. DEPUTY COMMISSIONER OF COMMERCIAL TAXES
(AUDIT)-4.1, NO 601, 6TH FLOOR,
BMTC DEPOT, TTMC BUILDING,
Digitally NEAR SONY SIGNA,
signed by
MADHURI S KORAMANGALA,
BENGALURU - 560 095.
Location:
High Court of
2. THE JOINT COMMISSIONER OF COMMERCIAL TAXES
Karnataka
(APPEALS)-8, KORAMANGALA,
BENGALURU - 560 095.
3. THE BRANCH MANAGER
KARUR VYSYA BANK, NO 54,
NAGASANDRA CIRCLE, SOUTH END ROAD,
BASAVANAGUDI,
BENGALURU - 560 004.
...RESPONDENTS
(BY SRI. JYOTHI.M.MARADI, HCGP)
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NC: 2025:KHC:47966
WP No. 21926 of 2025
HC-KAR
THIS W.P IS FILED UNDER ARTICLES 226 AND 227 OF THE
CONSTITUTION OF INDIA PRAYING TO QUASH THE SHOW CAUSE
NOTICE NO.ADCOM/ENF/SZ/ACCT-16/ADJ/2024-25 DATED 16.08.2024 IS
HEREWITH ENCLOSED AS ANNEXURE -B AS BEING VOID AB INITO,
BEING PROCEEDINGS INITIATED DURING MORATORIUM PERIOD AND
ALL THE FURTHER PROCEEDINGS INITIATED AGAINST THE SHOW
CAUSE NOTICE.
THIS PETITION, COMING ON FOR ORDERS, THIS DAY, ORDER
WAS MADE THEREIN AS UNDER:
CORAM: HON'BLE MR. JUSTICE S.R.KRISHNA KUMAR
ORAL ORDER
In this petition, petitioner seeks for the following reliefs:-
" A) To issue a writ of Certiorari, or such other writ, order or direction as this Hon'ble Court may deem fit and quash the show cause notice No.Adcom/Enf/SZ/ACCT-
16/Adj/2024-25 dated 16.08.2024 is herewith enclosed as Annexure "B" as being void ab inito, being proceedings initiated during moratorium period and all the further proceedings initiated against the show notice.
B) To issue a writ of Certiorari, or such other writ, order or direction as this Hon'ble Court may deem fit and quash the Orders of the Adjudicating Authority in for the Financial Year 2020-21 in No.DCCT (Audit) 4.1/GST- ADJ/2024-25 dated 19.02.2025 which order is herewith enclosed as Annexure "D", summary of the order was also uploaded in FORM GST DRC-07 vide Reference No.ZD2902250793454 dated 20.02.2025 which is herewith enclosed as Annexure "D-1", Financial Year 2022-23 No.DCCT(Audit)4.1/GST-ADJ/2024-25 dated 27.02.2025 -3- NC: 2025:KHC:47966 WP No. 21926 of 2025 HC-KAR which order is herewith enclosed as Annexure "E", summary of the order was also uploaded in FORM GST DRC-07 vide Reference No.ZD2902251102065 dated 27.02.2025 which is herewith enclosed as Annexure "E-1", Financial Year 2023-24 in No.DCCT(Audit)4.1/GST- ADJ/2024-25 dated 27.02.2025 which order is herewith enclosed as Annexure "F", summary of the order was also uploaded in FORM GST DRC-07 vide Reference No.ZD2902251102840 dated 27.02.2025 which is herewith enclosed as Annexure "F-1"
C). To issue a writ of Certiorari, or such other writ, order or direction as this Hon'ble Court may deem fit to quash the order passed in Appeal by the Joint Commissioner of Commercial Taxes (Appeals)-8, in GST.AP.No.158/24-25 vide Order No.ZD2907250374254 dated 10.07.2025 for the Financial Year 2020-21, which is herewith enclosed as Annexure "H". Petitioner was also served with the order of the First Appellate Authority for the Financial Year 2022-23 in GST.AP.No.159/24-25 vide Order No.ZD2907250373933 dated 10.07.2025 which is herewith enclosed as Annexure "H-1". Petitioner was further served with the order of the First Appellate Authority for the Financial Year 2023-24 in GST.AP.No.160/24-25 vide Order No.ZD2907250373751 dated 10.07.2025 which is herewith enclosed as Annexure "H-2".
D) To issue such other writ or direction as it deems it fit to direct the reversal/refund the suo moto debits of the amounts made on 29.5.2025 vide the Electronic Credit -4- NC: 2025:KHC:47966 WP No. 21926 of 2025 HC-KAR Ledger, Electronic Cash Ledger for the Financial Years 2020-21, 2022-23 and 2023-24 which Ledger extracts are enclosed as Annexure "J", "J-1".
E) To issue a writ of Certiorari, or such other writ, order or direction as this Hon'ble Court may deem fit to quash the garnishee notice issued to the Bank in No.DGSTO-4/DCCT(A)-4.1/2025-26 dated 10.07.2025 for the Financial Year 2020-21 which is herewith enclosed as Annexure "J-2", in No.DGSTO-4/DCCT(A)-4.1/2025-26 dated 10.07.2025 for the Financial Year 2022-23 enclosed as Annexure J-3, in No.DGSTO-4/DCCT(A)-4.1/2025-26 dated 10.07.2025 for the Financial Year 2023-24 enclosed as Annexure "J-4"
F) To issue such other writ or direction as it deems it fit to grant in the facts and circumstances of the case to meet the ends of justice and equity."
2. A perusal of the material on record will indicate that vide order dated 04.07.2023, the NCLT declared / imposed moratorium upon the petitioner-company under Section 14 of the Insolvency and Bankruptcy Code, 2016 (for short 'the IBC'). Subsequently, on 16.08.2023, the respondents-revenue issued show cause notice, to which the petitioner submitted reply and the proceedings culminated in orders dated 17.01.2025 and 27.02.2025, aggrieved by which, the petitioner filed appeals before the appellate authority, -5- NC: 2025:KHC:47966 WP No. 21926 of 2025 HC-KAR during the pendency of which, the respondents appropriated various sums of money from Electronic Credit Ledger (ECL) of the petitioner on the ground that the petitioner had not made payment and also not deposited the mandatory pre-deposit before the respondents-revenue. It is only after the respondents debiting appropriate sums from the ECL of the petitioner that the NCLT passed an order dated 23.06.2025 lifting / raising moratorium terminating CIRP proceedings.
3. It is the grievance of the petitioner that on 07.07.2025, the appellate authority dismissed the appeals only on the ground that the mandatory pre-deposit had not been made by the petitioner in terms of Section 107(6) of the KGST/CGST Act and recovered the balance amount of tax on 10.07.2025, aggrieved by which, the petitioner is before this Court by way of the present petition.
4. Per contra, learned HCGP for the respondents-revenue submits that there is no merit in the petition and that the same is liable to be dismissed.
5. A perusal of the impugned order at Annexures-H, H1 and H2 passed by the 1st appellate court will indicate that the appeals -6- NC: 2025:KHC:47966 WP No. 21926 of 2025 HC-KAR have been dismissed on the sole / simple ground summarily holding that the pre-deposit had not been made by the petitioner.
6. The question as to whether the respondents-revenue would be entitled to recover / appropriate any money from the petitioner either by any mode including the same by debiting from the ECL of the petitioner is no longer res-integra in the light of the principles laid down by the Apex Court in the case of Shekhar Resorts Ltd. Vs. Union of India - 2023 SCC OnLine SC 11, which held as under:
"Feeling aggrieved and dissatisfied with the impugned judgment and order dated 24-6-2021 [Shekhar Resorts Ltd. v. Union of India, 2021 SCC OnLine All 1074] passed by the High Court of Judicature at Allahabad in Writ Tax No. 328 of 2021 by which the High Court has dismissed the said writ petition preferred by the appellant herein seeking direction to the respondents for consideration of the case of the petitioner under the scheme Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (hereinafter referred to as "the 2019 Scheme"), the original writ petitioner has preferred the present appeal.
2. The facts leading to the present appeal in a nutshell are as under.
3. That the appellant company registered with the Service Tax Department was a company engaged in -7- NC: 2025:KHC:47966 WP No. 21926 of 2025 HC-KAR providing hospitality services. The Service Tax Department conducted investigations as to the evasion of service tax by the appellant and issued show-cause notices demanding payment of service tax under various categories such as accommodation in hotels, inn, guest house, restaurant services, mandap keeper services, etc.
4. Proceedings under the Insolvency and Bankruptcy Code (Amendment) Act, 2021 (hereinafter referred to as "IBC") were initiated against the appellant Company. The NCLT, Delhi vide order dated 11-9-2018 admitted the application filed by the financial creditors of the appellant under Section 7 IBC. Thus, on and from 11-9-2018 the corporate insolvency resolution process against the appellant commenced and the appellant was subjected to moratorium under Section 14 IBC on and from 11-9-2018.
5. The Committee of Creditors constituted as per the provisions of the IBC, in its 15th meeting, unanimously approved the resolution plan submitted by NCJ Infrastructure Private Limited on 4-6-2019. That thereafter the 2019 Scheme came to be introduced on 1-9-2019 under Section 125 of the Finance (No. 2) Act, 2019 for availing the benefit of "Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019". The appellant acting through its resolution professional submitted an application within the period prescribed under the 2019 Scheme. The applicant company was issued Form 1 on 27-12-2019. At this stage, it is required to be noted that the last date for making the application under the 2019 Scheme was 31-12-2019. Thus, Form 1 was issued within the prescribed time-limit and the -8- NC: 2025:KHC:47966 WP No. 21926 of 2025 HC-KAR tax dues were computed by the appellant as per the 2019 Scheme. That thereafter Form 3 was issued by the Designated Committee on 25-2-2020 determining the amount due and payable under the Scheme by the appellant.
6. It appears that as per the said statement for payment of tax dues, the appellant was required to pay Rs 1,24,28,500. Under the Scheme the appellant assessee was required to make the payment as per Form 3 within a time period of 30 days. However, in view of the COVID-19 Pandemic, the time to make the payment was extended by the Government up to 30-6-2020.
7. That NCLT approved the Resolution Plan of the successful resolution applicant -- NCJ Infrastructure Private Limited vide order dated 24-7-2020. Thus, on approval of the Resolution Plan by the NCLT the moratorium period came to an end, with the closure of the insolvency proceedings on 24-7-2020. Subsequent to the acceptance of the Resolution Plan by the NCLT, the appellant wrote to the successful resolution applicant and the Commissioner, CGST and Central Excise, Agra intimating them that the resolution process under the IBC had come to an end and that the appellant is ready and willing to make full amount of Rs 1,24,28,500 as ascertained by the Designated Committee in Form 3.
8. Vide communication dated 9-10-2020 to the Assistant Commissioner, the appellant explained that the settlement amount under the 2019 Scheme could not be paid by the appellant before 30-6-2020 due to the legal moratorium -9- NC: 2025:KHC:47966 WP No. 21926 of 2025 HC-KAR imposed upon the company and sought permission to pay the due amount. The Joint Commissioner, Agra vide letter dated 19-10-2020 intimated the appellant that the last date for payment under the Scheme was 30-6-2020, which could not be extended. Consequently, the request of the appellant was rejected.
9. Since the appellant could not obtain permission for payment of the dues post the lifting of the moratorium, the appellant approached the High Court by way of Writ Tax No. 328 of 2021. By the impugned judgment and order [Shekhar Resorts Ltd. v. Union of India, 2021 SCC OnLine All 1074] the High Court has dismissed the said writ petition on the grounds that (i) the High Court shall not issue a direction contrary to the Scheme; (ii) the relief sought cannot be granted as the Designated Committee under the Scheme is not existing.
10. Feeling aggrieved and dissatisfied with the impugned judgment and order [Shekhar Resorts Ltd. v. Union of India, 2021 SCC OnLine All 1074] passed by the High Court, the original writ petitioner -- appellant has preferred the present appeal.
11. Ms Charanya Lakshmikumaran, learned counsel appearing on behalf of the appellant has vehemently submitted that in the facts and circumstances of the case the Hon'ble High Court has seriously erred in dismissing the writ petition and not directing the authority to accept the amount due and payable under the 2019 Scheme. 11.1. It is submitted that the Hon'ble High Court has erred in holding that the Designated Committee does not
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NC: 2025:KHC:47966 WP No. 21926 of 2025 HC-KAR exist. It is submitted that the Designated Committee under the Scheme was formed as per Rule 5 of the 2019 Scheme. The Designated Committee consists of either the Principal Commissioners, Commissioners, Additional Commissioners, Joint Commissioners or Deputy Commissioners of the Central Excise and Service Tax depending on the tax amount involved in the matter. It is submitted that in the present case, the Designated Committee comprised of the Joint Commissioner and the Commissioner who are officers associated with the offices of Respondents 3 and 4. That the Designated Officers continue to act as the Designated Committee under the Scheme till the completion of the proceedings under the Scheme.
11.2. It is submitted that the Designated Committee under the Scheme is being constituted on a need basis to comply with the orders of the courts across the country. That in many cases the Designated Committee rejected the applications under the 2019 Scheme erroneously and the different courts set aside the decisions of the Designated Committee after 30-6-2020 and directed the Designated Committee to consider the case of the respective applicants under the 2019 Scheme. It is submitted that to reconsider the cases pursuant to the orders passed by the courts/High Courts, the CBEC issued the instructions dated 17-3-2021 allowing for manual processing of declarations under the Scheme by the respective Designated Committees. It is submitted that therefore even after 30-6-2020 the respective Designated Committees carried out their functions under
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NC: 2025:KHC:47966 WP No. 21926 of 2025 HC-KAR the Scheme, however by manual processing. It is submitted that therefore the reasoning given by the Hon'ble High Court that the Designated Committees are not in existence after 30-6-2020 and therefore the appellant is not entitled to any relief, may not be accepted, as even after 30-6-2020 and even as per the instructions issued by the CBEC, the respective Designated Committees continued to function and process the declarations manually. 11.3. It is further submitted by the learned counsel appearing on behalf of the appellant that in the instant case the Hon'ble High Court has not properly appreciated the cause for which the appellant could not deposit the amount under the 2019 Scheme on or before 30-6-2020. It is submitted that at the relevant time and more particularly at the time when Form 3 was issued and even during the period under the 2019 Scheme, the appellant was subjected to the rigor of the provisions of the IBC by virtue of the moratorium period which ended on 24-7-2020 when the NCLT approved the Resolution Plan. It is submitted that in the instant case, the appellant bona fide could not deposit the settlement due, on or before 30-6-2020 on account of operation of law. It is next submitted that during the moratorium period, no payment could have been made as per the provisions of the IBC. It is contended that if any payment would have been made during the mortarium period the same would have been in breach of the provisions of the IBC.
11.4. It is submitted that as per the Resolution Plan accepted during the insolvency proceedings, the resolution
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NC: 2025:KHC:47966 WP No. 21926 of 2025 HC-KAR applicant was required to deposit all statutory dues (including service tax dues) within 6 months from the effective date into an escrow account. That as per the Resolution Plan, payment to escrow account shall be treated as effective payment to the relevant operational creditors. It is further contended that in this case, effective date is 24-7-2020, the date on which the Resolution Plan was approved by the NCLT. So, service tax dues along with other statutory dues were deposited in an escrow account on 8-1-2021 before the expiry of the period of six months. It is argued that this Hon'ble Court in CIT v. Monnet Ispat & Energy Ltd. [CIT v. Monnet Ispat & Energy Ltd., (2018) 18 SCC 786 : (2019) 3 SCC (Civ) 252] , has held that once a moratorium has been enforced, any existing proceeding against the debtor shall stand prohibited. In this regard, it is submitted that the IBC shall have precedence over any inconsistent statutes.
11.5. It is vehemently submitted that in any case, no person can be left remediless due to operation of law. That in the present case, the moratorium period under the IBC was extended from 11-9-2018 to 24-7-2020 due to the COVID-19 Pandemic and non-functioning of the NCLT. It is contended that even otherwise, the appellant could not have made any payment during the mortarium period by operation of law and inability to make the payment was owing to the moratorium imposed under the provisions of the IBC. It is urged that therefore, the appellant may not be left remediless when the application under the 2019 Scheme was submitted and processed within time. In
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NC: 2025:KHC:47966 WP No. 21926 of 2025 HC-KAR support of her above submissions and the relief prayed, the learned counsel appearing on behalf of the appellant has heavily relied upon the decisions of this Court in Sunil Vasudeva v. Sundar Gupta [Sunil Vasudeva v. Sundar Gupta, (2019) 17 SCC 385] , para 31, United Air Travel Services v. Union of India [United Air Travel Services v. Union of India, (2018) 8 SCC 141] , para 13 and Union of India v. Ashish Agarwal [Union of India v. Ashish Agarwal, (2023) 1 SCC 617] , paras 22 to
24. 11.6. It is reiterated and submitted that the appellant could not make the payment due to legal disability and no one can be expected to do the impossible. Reliance is placed on the decisions of this Court in Gyanichand v. State of A.P. [Gyanichand v. State of A.P., (2016) 15 SCC 164] , para 11 and Calcutta Iron Merchant's Assn. v. CCT [Calcutta Iron Merchant's Assn. v. CCT, (1997) 8 SCC 42] , para 5.
11.7. It is submitted that the appellant cannot be prejudiced and/or made to suffer for no fault of the appellant. Reliance is placed on the decision of this Court in Anmol Kumar Tiwari v. State of Jharkhand [Anmol Kumar Tiwari v. State of Jharkhand, (2021) 5 SCC 424 : (2021) 2 SCC (L&S) 45] .
12. Making the above submissions it is prayed to allow the present appeal and direct the respondents to appropriate the payment of Rs 1,24,28,500 towards settlement dues under the 2019 Scheme and that discharge certificate be issued to the appellant accordingly.
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NC: 2025:KHC:47966 WP No. 21926 of 2025 HC-KAR
13. While opposing the present appeal, Shri Vikramjit Banerjee, learned ASG appearing on behalf of the Union of India has vehemently submitted that in the facts and circumstances of the case no error has been committed by the Hon'ble High Court in dismissing the writ petition and refusing to direct the respondents to accept the payment towards the settlement dues under the 2019 Scheme. 13.1. It is submitted that admittedly the Scheme was valid up to 30-6-2020 and the last date for payment of settlement amount under the 2019 Scheme was 30-6-2020. That thereafter the Scheme was closed and even the Designated Committees were also dissolved and therefore as rightly observed by the Hon'ble High Court, the Hon'ble High Court has no jurisdiction to extend the Scheme. It is submitted that if the Scheme is extended it would create many complications.
13.2. It is further submitted that in the present case, admittedly, no payment was made of settlement amount under the Scheme prior to 30-6-2020 and therefore, the prayer of the original petitioner to extend the time-limit to make the payment of settlement amount under the 2019 Scheme was rightly rejected by the Commissioner and the same has rightly not been interfered with by the Hon'ble High Court.
14. Making the above submissions it is prayed to dismiss the present appeal.
15. We have heard the learned counsel appearing for the respective parties at length.
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NC: 2025:KHC:47966 WP No. 21926 of 2025 HC-KAR
16. At the outset, it is required to be noted and it is not in dispute that the appellant is entitled to the benefit of the settlement under the 2019 Scheme. The 2019 Scheme came to be introduced on 1-9-2019 and the last date for making the application under the Scheme was 30-12-2019 and in fact, the appellant submitted the application in Form 1 on 27-12-2019 i.e. before the last date specified for making an application. Under the Scheme, after Form 1 is processed the Designated Committee was to scrutinise the same and issue the final Form 3 determining the settlement amount which the applicant was required to deposit within a period of one month from the date of receipt of the final determination -- Form 3.
17. That the appellant was issued Form 3 on 25-2-2020 and was required to pay the settlement dues on or before 25-3-2020. However, in view of the COVID-19 Pandemic the Government extended the time up to 30-6-2020. Therefore, the appellant was required to deposit the settlement dues on or before 30-6-2020. However, even before the 2019 Scheme came to be introduced, the appellant was subjected to proceedings under the IBC which commenced on 11-9-2018 when the NCLT admitted the application under Section 7 IBC. Thus, the moratorium under the IBC commenced on 11-9-2018. The CoC approved the Resolution Plan on 4-6-2019, and the same came to be approved by the NCLT by order dated 24-7-2020. Therefore, the moratorium under the IBC continued up to 24-7-2020.
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NC: 2025:KHC:47966 WP No. 21926 of 2025 HC-KAR
18. Under the provisions of the IBC no payment could have been made during the period of moratorium. Therefore, the appellant was statutorily restrained/debarred from making any payment. There was statutory disability on the part of the appellant in making the payment during the moratorium. If the appellant had made any payment during the period of moratorium, the appellant would have committed breach of the provisions of the IBC. Therefore, it was impossible for the appellant to make any payment during the period of moratorium. Immediately on the moratorium coming to an end, the appellant, resolution professional/the successful resolution applicant approached the authority requesting them to accept the settlement amount under the 2019 Scheme as per Form 3. Such request has been rejected by the Commissioner and the rejection has been confirmed by the High Court.
19. Therefore, the short question which is posed for consideration before this Court is, whether, when it was impossible for the appellant to deposit the settlement amount in view of the bar and/or the restrictions under the IBC, the appellant can be punished for no fault of the appellant? In a given case can the appellant be made to suffer for no fault of its own, and be rendered remediless and denied the benefit/relief though it was impossible for the appellant to carry out certain acts, namely, to deposit the settlement amount during the moratorium.
20. As per the settled position of law, no party shall be left remediless and whatever the grievance the parties had raised before the court of law, has to be examined on its
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NC: 2025:KHC:47966 WP No. 21926 of 2025 HC-KAR own merits [Sunil Vasudeva [Sunil Vasudeva v. Sundar Gupta, (2019) 17 SCC 385] , SCC para 31].
21. As observed and held by this Court in Calcutta Iron Merchants' Assn. [Calcutta Iron Merchant's Assn. v. CCT, (1997) 8 SCC 42] , no law would compel a person to do the impossible [Calcutta Iron Merchant's Assn. [Calcutta Iron Merchant's Assn. v. CCT, (1997) 8 SCC 42] , SCC para 5].
22. In Gyanichand [Gyanichand v. State of A.P., (2016) 15 SCC 164] it was observed by this Court that it would not be fair on the part of the Court to give a direction to do something which is impossible and if a person has been directed to do something which is impossible, and if he fails to do so, he cannot be held guilty.
23. Applying the law laid down by this Court in the aforesaid decisions to the facts of the case on hand, the appellant cannot be punished for not doing something which was impossible for it to do. There was a legal impediment in the way of the appellant to make any payment during the moratorium. Even if the appellant wanted to deposit settlement amount within the stipulated period, it could not do so in view of the bar under the IBC as, during the moratorium, no payment could have been made. In that view of the matter, the appellant cannot be rendered remediless and should not be made to suffer due to a legal impediment which was the reason for it and/or not doing the act within the prescribed time.
24. Now so far as the observations made by the High Court to the effect that the High Court cannot, in exercise of powers under Article 226 of the Constitution of India extend
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NC: 2025:KHC:47966 WP No. 21926 of 2025 HC-KAR the period under the 2019 Scheme, to some extent the High Court is right. The High Court while exercising the powers under Article 226 of the Constitution of India cannot extend the Scheme. However, in the present case it is not a case of extension of the Scheme by the High Court; it is a case of taking remedial measures. It is not a case where the appellant did not make any application within the stipulated time under the Scheme. This is not a case where Form 3 determining the settlement amount was not issued during the validity of the Scheme. It is not a case where the appellant deliberately did not deposit the settlement amount and/or there was any negligence on the part of the appellant in not depositing the settlement amount within the stipulated time. As observed hereinabove it is a case where the appellant was unable to make the payment due to the legal impediment and the bar to make the payment during the period of moratorium in view of the provisions of the IBC.
25. In a given case it may happen that a person who has applied under the Scheme and who was supposed to make payment on or before 30-6-2020, became seriously ill on 29-6-2020 and there was nobody to look after his affairs and therefore he could not deposit the amount; such inability was beyond his control and thereafter, immediately on getting out of sickness he tried to deposit the amount and/or approached the Court -- can the Court close its eyes and say that though there may be valid reasons and/or causes for that person's inability to make the payment, still no relief can be granted to him? There may be extraordinary cases which are required to be considered on facts of each
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NC: 2025:KHC:47966 WP No. 21926 of 2025 HC-KAR case. The Courts are meant to do justice and cannot compel a person to do something which was impossible for him to do.
26. Now so far as the other ground given by the High Court, that the Designated Committees are not in existence, is concerned, it is required to be noted that the CBEC has issued a circular that in a case where the High Court/courts have passed an order setting aside the rejection of the claim under the Scheme after 30-6-2020, the applications can be processed manually. In many cases the High Courts have remanded the matter to the Designated Committees which consist of the officers of the Department and the applications thereafter are processed manually.
27. In view of the above, and under the circumstances and for the reasons stated above, as the appellant was not in a position to deposit the settlement amount at the relevant time, more particularly on or before 30-6-2020 due to legal impediment and the bar to make the payment of settlement amount in view of the mortarium under the IBC, and as it is found that the appellant was otherwise entitled to the benefit under the Scheme as Form 1 submitted by the appellant has been accepted, Form 3 determining the settlement amount has been issued, the High Court has erred in refusing to grant any relief to the appellant as prayed.
28. In view of the above and for the reasons stated above, the present appeal is allowed. The impugned judgment and order [Shekhar Resorts Ltd. v. Union of India, 2021 SCC OnLine All 1074] passed by the High Court is
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NC: 2025:KHC:47966 WP No. 21926 of 2025 HC-KAR hereby quashed and set aside. It is directed that the payment of Rs 1,24,28,500 already deposited by the appellant be appropriated towards settlement dues under "the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019" and the appellant be issued discharge certificate. Present appeal is allowed accordingly.
29. However, in the facts and circumstances of the case there shall be no order as to costs."
7. As can be seen from the aforesaid judgment, once the moratorium has been declared / imposed by the NCLT, the respondents - revenue would not be entitled to appropriate or debit or recover any amount from the petitioner and consequently, in view of the undisputed fact that the moratorium has been imposed as long back as on 23.07.2025, the same remained in force only up to 23.06.2026, the respondents-revenue clearly are not entitled to recover / appropriate or debit the amount from the account of the petitioner, which deserves to be refunded back to the petitioner by retaining 10% of the same for the purpose of mandatory pre-
deposit towards the appeals filed by the petitioner.
8. Insofar as the contention urged by the learned HCGP that the petitioner did not inform the respondents-revenue about the declaration of moratorium by the NCLT is concerned, it is needless
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NC: 2025:KHC:47966 WP No. 21926 of 2025 HC-KAR to state that as held by the Apex Court in the aforesaid judgment, by operation of law, it becomes statutorily impermissible for the respondents-revenue to recover any demand / dues and as such, this contention cannot be accepted.
9. In the result, I pass the following:-
ORDER
(i) Petition is hereby allowed.
(ii) The impugned proceedings at Annexures - H, H1 and H2 all dated 07.07.2025 passed by the 2nd respondent are hereby set aside; so also, the impugned notices at Annexures-J2, J3 and J4 all dated 10.07.2025 issued by the 1st respondent are hereby quashed.
(iii) Respondents-revenue are directed to reverse / refund the suo-moto debits of the amounts made on 29.05.2025 vide the Electronic Credit Ledger and Electronic Cash Ledge for the financial years 2020-21, 2022-23 and 2023-24 in terms of Annexures-J and J1.
(iv) The respondents-revenue are directed to refund the entire amount paid by the petitioner by excluding 10% towards
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NC: 2025:KHC:47966 WP No. 21926 of 2025 HC-KAR mandatory pre-deposit within a period of six weeks from the date of receipt of a copy of this order.
(v) The matter is remitted back to the 2nd respondent -
appellate authority for reconsideration afresh in accordance with law.
(vi) Petitioner shall appear before the 2nd respondent-
appellate authority on 15.12.2025 without awaiting further notice.
(vii) Liberty is reserved in favour of the petitioner to submit replies, documents etc., which shall be considered by the 2nd respondent who shall provide sufficient and reasonable opportunity to the petitioner and hear them and proceed further in accordance with law.
(viii) In the event, the Petitioner does not appear before the 2nd respondent on 15.12.2025 as stated supra, the present order shall stand automatically recalled without further orders.
Sd/-
(S.R.KRISHNA KUMAR) JUDGE Srl.