The Tool Desk
Outbyte PC Repair FREEClear out junk files and repair common Windows errorsFree Scan →Outbyte Driver Updater FREEFix the driver behind crashes, sound loss and screen glitchesFind Drivers →Yes. In Mr. Devarajan Raman (Liquidator of M/s Kotak Urja Pvt. Ltd.) v. Principal Commissioner Income Tax and Ors., the NCLAT held that the Income Tax Department breached the Insolvency and Bankruptcy Code (IBC) Section 14 moratorium by adjusting a company’s tax refund against tax demands after the CIRP timeline had expired but before the liquidation order was passed. The disputed adjustment was ₹90,42,174. The ruling is specifically about that intervening period while the moratorium remained in force; it does not decide every tax collection or set-off question at every stage of insolvency.
What the NCLAT decided
On 24 May 2024, the National Company Law Appellate Tribunal (NCLAT), Principal Bench, New Delhi, allowed the liquidator’s appeal in Company Appeal (AT) (Insolvency) No. 977 of 2023. It set aside the NCLT Mumbai Bench-IV order that had dismissed the liquidator’s refund application. The NCLAT treated the Income Tax Department’s adjustment of ₹90,42,174 against outstanding tax demands as a violation of the Section 14 moratorium. Read the NCLAT judgment.
As an Amazon Associate I earn from qualifying purchases.
How the dispute arose
The relevant sequence was:
| Event | Date and detail |
|---|---|
| CIRP began | 18 November 2019, when Kotak Urja entered the Corporate Insolvency Resolution Process. |
| Tax claim filed | 20 January 2020; the Income Tax Department filed a claim for ₹11.59 crore, which the resolution professional admitted. |
| CoC resolved to liquidate | 4 January 2021. |
| Refund adjusted | 10 February 2021; the Department set off ₹90,42,174 against outstanding tax demands. |
| Liquidation application and order | The resolution professional applied for liquidation on 18 May 2021; the NCLT liquidation order followed later. |
The adjustment therefore happened after the Committee of Creditors had resolved to liquidate, but before the liquidation order. The NCLAT’s issue was not simply whether tax was owed; it was whether the Department could recover by setting off the refund at that time, when the Section 14 moratorium was still operative. The judgment chronology is also recited in a later NCLT order. NCLAT judgment; NCLT Hyderabad order dated 9 April 2025.
Free tools Windows power users keep installed
One-click scans. No signup required.
Why the timing matters
The ruling turns on the status of the insolvency process on the date of the adjustment. A CoC decision to liquidate and a later liquidation order are distinct events. In Kotak Urja, the Department’s set-off fell in the interval after the CIRP timeline had expired but before the NCLT made the liquidation order. The NCLAT held that the moratorium constrained recovery during that interval, so the adjustment could not stand.
#1 Best Overall
This is a narrower proposition than “tax authorities can never collect or adjust tax during insolvency.” To assess another dispute, identify the precise date and insolvency stage, determine whether Section 14 applied then, and distinguish a refund set-off from a tax assessment or a different form of recovery.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.What the decision does—and does not—establish
- It establishes: on the facts and timing in Kotak Urja, adjusting the tax refund against demands during the moratorium was impermissible; the liquidator’s appeal succeeded and the NCLT dismissal was set aside.
- It does not establish: a universal rule for every tax assessment, every kind of recovery, or every set-off after liquidation has commenced or a resolution plan has been approved.
- It does not resolve by itself: the result in a case where the refund arose, the demand was treated, or the insolvency stage differs materially. Those details and the governing order must be examined.
A later NCLT Hyderabad Bench-II order dated 9 April 2025 cited Kotak Urja for the proposition that adjustment of tax demands against refunds during CIRP or the intervening period until liquidation violates Section 14. That is a later tribunal reference, not a comprehensive account of any subsequent appeal, stay, or distinction of the NCLAT ruling. NCLT Hyderabad order.
Quick Recap
Product prices and availability are accurate as of the date/time indicated and are subject to change. Any price and availability information displayed on Amazon at the time of purchase will apply.
Quick wins for a faster PC:
Repair Windows errors before they cause bigger problemsFix Now →Scan for outdated or missing drivers - takes under a minuteDriver Scan →Clear out junk files and repair common Windows errorsFree Scan →
