Yes. In Devarajan Raman (Liquidator of Kotak Urja Pvt. Ltd.) v. Principal Commissioner of Income Tax, the National Company Law Appellate Tribunal (NCLAT) held on 24 May 2024 that the Income Tax Department could not adjust a company’s refund against tax demands during the period after the corporate insolvency resolution process (CIRP) timeline expired but before the liquidation order. The adjustment of ₹90,42,174 violated the Insolvency and Bankruptcy Code (IBC) Section 14 moratorium, and NCLAT set aside the NCLT order that had dismissed the liquidator’s application.
What NCLAT decided in the Kotak Urja appeal
The appeal concerned a specific kind of recovery: the Income Tax Department had applied a tax refund owed to Kotak Urja Pvt. Ltd. against outstanding tax demands. NCLAT held that Section 14’s moratorium barred that adjustment on the relevant date, even though the CIRP timeline had expired and the Committee of Creditors had already resolved to liquidate the company. The liquidation order had not yet been passed.
The decision was issued by NCLAT’s Principal Bench, New Delhi, on 24 May 2024 in Company Appeal (AT) (Insolvency) No. 977 of 2023. Devarajan Raman, Kotak Urja’s liquidator, appealed an NCLT Mumbai Bench-IV order dated 16 June 2023. NCLAT allowed the appeal and set the NCLT order aside. NCLAT judgment, 24 May 2024
How the dispute arose
The timing mattered because the adjustment fell between the end of the CIRP timeline and the formal liquidation order. The sequence described in the case was:
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- 18 November 2019: Kotak Urja entered CIRP.
- 20 January 2020: The Income Tax Department filed a claim for ₹11.59 crore, which the resolution professional admitted.
- 4 January 2021: The Committee of Creditors resolved to liquidate the company.
- 10 February 2021: The Department adjusted ₹90,42,174 in tax refund against outstanding demands.
- 18 May 2021: The resolution professional applied for liquidation; the NCLT liquidation order followed later.
The disputed set-off therefore occurred after the creditors’ liquidation resolution but before the liquidation order. It was not an adjustment made after liquidation had formally begun. NCLAT judgment, 24 May 2024
Why the moratorium applied during the intervening period
Section 14 of the IBC imposes a moratorium during CIRP, restricting specified proceedings and recovery actions against the corporate debtor. In Kotak Urja, NCLAT treated the moratorium as continuing to constrain the Department’s recovery by adjustment while the matter remained in the interval before the liquidation order. The fact that the Committee of Creditors had voted to liquidate did not itself make the refund available for unilateral set-off.
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The practical point is about the legal status of the insolvency process on the date of the transaction: a creditors’ decision to liquidate is not the same event as the NCLT’s liquidation order. NCLAT found that the tax adjustment in this case breached the moratorium that remained in force in the interim.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.What the ruling does—and does not—establish
Kotak Urja is a case-specific ruling about a refund set-off during the period after the CIRP timeline expired and before a liquidation order was passed. It should not be read as deciding every tax dispute involving a company in insolvency, or every set-off at every stage of CIRP or liquidation.
For a different dispute, the legally important questions include:
- When did the adjustment happen? Distinguish a transaction during CIRP, the interval before a liquidation order, and a transaction after liquidation begins.
- What was done? Kotak Urja involved adjustment of an accrued refund against tax demands, rather than simply an assessment of tax.
- What was the insolvency status? Check whether a resolution plan had been approved, whether liquidation had formally commenced, and whether the authority’s claim was submitted and treated in the process.
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 later reference is relevant context, but it does not by itself establish whether the NCLAT ruling has since been stayed, appealed, or distinguished by a higher court. NCLT order, 9 April 2025
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