2023 (10) TMI 1385 - AT - Insolvency and Bankruptcy

Approval of Resolution Plan - Department of State Tax is a secured creditor or not - HELD THAT - The issues raised in the appeal are fully covered by the judgment of this Appellate Tribunal in DEPARTMENT OF STATE TAX, THROUGH THE DY. COMMISSIONER OF STATE TAX VERSUS ZICOM SAAS PVT. LTD. ANR. 2023 (2) TMI 1170 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI where in the appeal filed by Department of State Tax similar issues were decided and it was held that Department of State Tax is not a secured creditor. Appeal dismissed.

Summary

Issues involved: Appeal against the approval of the Resolution Plan by the Adjudicating Authority. Determination of whether the Department of Sales Tax is a secured creditor.

Issue 1: Approval of Resolution Plan
The Appellate Tribunal heard arguments from both parties regarding the appeal against the judgment and order of the Adjudicating Authority approving the Resolution Plan dated 28.11.2019. The Department of Sales Tax was aggrieved by this order and filed the appeal.

Issue 2: Status of Department of Sales Tax
In a previous judgment dated 07.02.2023, the Appellate Tribunal addressed similar issues raised by the Department of State Tax in a different case. It was held that the Department of State Tax is not considered a secured creditor. The Appellant did not contest this decision, acknowledging that the issues were previously settled by the Tribunal.

In the judgment dated 07.02.2023, specific legal provisions were analyzed to determine the priority of tax dues in insolvency proceedings. Reference was made to Section 48 of the Gujarat Values Added Tax Act and Section 37 of the Maharashtra Value Added Tax Act, 2002. The comparison between these provisions highlighted that Section 37 of the MVAT Act is subject to any provision in a Central Act, indicating that the Insolvency and Bankruptcy Code (IBC) Section 53, which provides a waterfall mechanism, takes precedence. The Tribunal concluded that the allocation of funds in the Resolution Plan, even if the Appellant was considered an Operational Creditor, did not violate Section 30 (2)(b). Therefore, the Tribunal found no grounds to interfere with the Impugned Order and dismissed the appeal based on the principles established in the earlier judgment.

This summary provides a detailed overview of the legal judgment, focusing on the issues related to the approval of the Resolution Plan and the determination of the Department of Sales Tax's status as a secured creditor, as discussed and decided by the National Company Law Appellate Tribunal in New Delhi.