The Mumbai bench of the National Company Law Tribunal (NCLT) has directed the income tax department to refund ₹11.89 crore to insolvent travel firm Cox & Kings.
“We direct the income tax department to refund the amount of ₹11.89 crore adjusted by them towards outstanding dues of the corporate debtor (Cox & Kings) within four weeks from the date of receipt of the order,” said a bench led by Justice Lakshmi Gurung in an order issued on 1 November but uploaded on the official website on Tuesday.
The order comes in response to a plea filed by the liquidator of the company.
Essentially, in January 2022 the liquidator filed an application before the tribunal seeking a refund from the tax department on behalf of the beleaguered travel company.
Following this, the tribunal directed the liquidator to issue a notice to the income tax department, seeking a tax refund of ₹11 crore.
Nausher Kohli, counsel representing the liquidator recently informed the tribunal that according to an intimation order of the Income Tax department dated 31 March 2021 under Section 143(1) of the Income Tax Act for assessment year 2020-21, the refund due to the company was mentioned as ₹11.89 crore.
The tax department, however, instead of issuing the refund to Cox & Kings, adjusted the sum against outstanding dues. The 1 November order of the tribunal said that Cox & Kings was admitted for insolvency proceedings on 21 October 2019, following which a moratorium was imposed.
The Income Tax department’s order for refund was passed on 31 March 2021 and the adjustment of refund against dues was made during the moratorium, the NCLT order said.
“This amounts to violation of moratorium under Section 14 of IBC, especially since the department has already filed its claim in Form-B on 22 January 2020 for an amount of ₹41.4 crore.
Therefore, we direct the income tax department to refund the said amount,” the tribunal said in its four-page order.
The debt-laden firm owes about ₹7,422 crore to its financial and operational creditors. In October 2019, NCLT granted Rattan India Finance’s request for an insolvency petition against Cox & Kings for defaulting on a loan of ₹30 crore.
The committee of creditors with an 85% majority voted to liquidate the company in March 2021 after the company failed to find any potential buyer.
Then in December 2021, the NCLT ordered liquidation of the bankrupt firm, appointing Ashutosh Agarwala as the official liquidator of the company.