Recovery of tax from buyer/third party who holds money of Corporate Debtor, in case tax not deposited by Corporate Debtor, does not constitute a violation of the moratorium under Section 14 of the IBC and cannot be treated as a Preferential Transaction within the meaning of Section 43 of the Code – Commercial Tax Department Vs. Mr. Mangesh Vitthal Kekre RP of Bhagwan Motors Pvt. Ltd. and Ors. – NCLAT New Delhi
Hon’ble NCLAT held that:
(i) The condition precedent for attracting Section 43(1) is whether the Corporate Debtor has at any relevant time given a preference in transaction. The present is a case where no transaction was made by the Corporate Debtor which was questioned in Application filed by the RP.
(ii) There was no applicability of Section 14, the transaction in question under which the party deposited the amount before the Commercial Tax Department in response of statutory Notice cannot be said to be in violation of Section 14 of the IBC.