2021 (12) TMI 1321 - HC - Income Tax

Demand of Outstanding dues including taxes - respondent-Company has gone in liquidation - Company in question was in liquidation and was not in a position to pay its outstanding dues including its taxes - HELD THAT - As per order passed in MOSER BEAR INDIA LTD. 2020 (7) TMI 760 - SC ORDER held Official Liquidator has filed a report that the Respondent-Company (Moser Bear India Ltd.) is not financially viable and is under liquidation in proceedings pending before the National Company Law Tribunal. Even if the Appellant-Revenue were to succeed, the Official Liquidator is not in a position to pay the tax amount involved in these appeals. Indisputedly, the respondent-Company has gone in liquidation. The company in liquidation is not in a position to pay its outstanding dues including taxes. Moreover, the tax effect in the concerned appeals is just over ₹ 2,00,00,000/- (Rupees Two Crore Only). Taking overall view of the matter, we deem it appropriate to dispose of these appeals, leaving the question of law open to be decided in appropriate case. Revenue is directed to obtain instruction as to whether the Revenue would like to pursue the appeals filed by it. To await instruction, list on 16th March, 2022.

Summary

Issues Involved:
1. Disposal of appeals by the Apex Court leaving the question of law open due to the company being in liquidation and unable to pay outstanding dues, including taxes.
2. Direction to the Revenue to decide whether to pursue the appeals filed.

Analysis:

1. The judgment pertains to the disposal of appeals by the Apex Court in a case where the respondent company was in liquidation and unable to pay its outstanding dues, including taxes. The Official Liquidator reported that the company was not financially viable and was under liquidation proceedings before the National Company Law Tribunal. The tax amount involved in the appeals was just over Rupees Two Crore. The Apex Court, considering the company's liquidation status and inability to pay, decided to dispose of the appeals while leaving the question of law open for determination in a suitable case. The court emphasized the company's financial situation and the impracticality of expecting payment from a company in liquidation.

2. Following the disposal of the appeals, the learned counsel for the Revenue was directed to ascertain whether the Revenue intended to pursue the appeals further. The court scheduled a future listing date of 16th March, 2022, to await instructions from the Revenue regarding the course of action to be taken regarding the appeals. This direction was given to ensure that the Revenue had the opportunity to decide on the continuation of the appeals in light of the circumstances surrounding the respondent company's liquidation and financial constraints.

This judgment highlights the practical considerations taken into account by the court when dealing with cases involving companies in liquidation and their inability to meet financial obligations, emphasizing the need for a pragmatic approach in such situations.