9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2020 (5) TMI 39 - HC - VAT and Sales TaxValidity of Garnishee Order - CIRP proceedings are ongoing - failure to deposit taxes by Banks for the period from 2011-12 2012-13 - direction to Banks to pay into Government's treasury, on account of tax / penalty due under the JVAT Act - resolution plan approved - According to the petitioner, since no claim was made by the State Government as regards the aforesaid tax liability in the corporate insolvency resolution process - bar on realisation of the amount under Section 31 of the IB Code - scope of 'Operational creditor' and 'Operational Debt' - HELD THAT - In the present cases, the State Government shall fall within the definition of 'operational creditor', and the taxes payable by the petitioner shall fall within the definition of 'operational debt', as defined in the IB Code - As such, there can be no doubt that the case of the petitioner shall be governed by the provisions of the IB Code. There are force in the submissions of the learned Additional Advocate General that the tax amount, which had been sought to be realised from the petitioner Company, had already been realised by the petitioner Company from the customers which was to be deposited in the Government Exchequer, but that having not been done by the Company and the amount having been utilized for its business purposes, throughout after the years 2011-12 and onwards, shall certainly amount to criminal misappropriation of the Government money by the Company, and the State Government is entitled to realize the same with the penalty due thereon. It is also found that the re-assessment orders were passed on 17.08.2018 as contained in Annexure-3 to the writ applications, by which date the resolution plan was already approved by the NCLT on 17.04.2018, but the same was never brought to the knowledge of the Commercial Tax officials by the Company, even though the petitioner Company was given a hearing by the Assessing Authority, i.e., respondent No. 4 Assistant Commissioner of State Tax, Bokaro Circle, Bokaro, before passing the re-assessment orders - also, the notice under Section 13 of the IBC Code was never published in the State of Jharkhand, rather the notice was published only in the Business Standard of Kolkata Edition on 24.07.2017 as contained in Annexure-7 to the supplementary affidavit. There is no denial to the fact that such notice was never published in the State of Jharkhand. A conjoint reading of Section 13(1)(b) of the IB Code read with Regulation 6 aforesaid, clearly shows that the public announcement had to be made in the newspapers with wide circulation at the location of the registered office and principal office, of the petitioner Company. Admittedly, the registered office of the petitioner Company is at Ranchi, and its principal place of business is in the District of Bokaro, both of which are situated in the State of Jharkhand, but no public announcement of the corporate insolvency resolution process was made in the State of Jharkhand - since the resolution plan is approved by the NCLT, and not interfered with even by the Hon'ble Apex Court as pointed out above, we are not required to look into the legality or otherwise of the resolution process, but the fact remains that due to non publication of the public announcement of the corporate insolvency resolution process in the State of Jharkhand, the authorities of the Commercial Taxes Department had no occasion to have any knowledge about the corporate insolvency resolution process of the Company, and they were deprived of making their claim before the interim resolution professional - Since the State Government was not involved in the resolution process, the resolution plan cannot be said to be binding on the State Government under Section 31 of the IB Code. We are not inclined to entertain these writ applications, even though there is a resolution plan in favour of the petitioner Company, approved by the Adjudicating Authority, i.e., the NCLT, for the simple reason that it was never brought to the knowledge of the Commercial Tax authorities of the State of Jharkhand that the corporate insolvency resolution process had been initiated against the petitioner Company, and no public announcement of the corporate insolvency resolution process was made in the State of Jharkhand - Admittedly, the State Government was never involved in the corporate insolvency resolution process, and as such, the resolution plan cannot be said to be binding on it. Petition dismissed.
Issues Involved:
1. Validity of the garnishee order issued under Section 46 of the Jharkhand Value Added Tax Act, 2005. 2. Applicability of the Insolvency and Bankruptcy Code, 2016 (IB Code) to the tax liabilities of the petitioner company. 3. Impact of the approved resolution plan on the tax liabilities. 4. Jurisdiction and legality of the garnishee order post-approval of the resolution plan. 5. Alternative remedies and their impact on the writ applications. Detailed Analysis: 1. Validity of the Garnishee Order Issued under Section 46 of the Jharkhand Value Added Tax Act, 2005: The petitioner challenged the garnishee order dated 21.11.2019, issued by the Deputy Commissioner of Commercial Taxes, Bokaro Circle, Bokaro, directing the State Bank of India to pay ?37,41,41,602/- from the petitioner’s account for tax dues from 2011-12 and 2012-13. The petitioner also contested a subsequent letter dated 22.11.2019, which demanded ?75,57,000/- from the bank account. 2. Applicability of the Insolvency and Bankruptcy Code, 2016 (IB Code) to the Tax Liabilities of the Petitioner Company: The petitioner argued that the tax liabilities were barred under Section 31 of the IB Code since no claim was made by the State Government during the corporate insolvency resolution process. The petitioner cited various judgments, including *Innovative Industries Limited Vs. ICICI Bank & Anr.* and *Embassy Property Developments Pvt. Ltd. Vs. State of Karnataka & Ors.*, to support the contention that the IB Code overrides other laws, and the State Government's tax claim should be considered an "operational debt." 3. Impact of the Approved Resolution Plan on the Tax Liabilities: The petitioner contended that the approved resolution plan extinguished all tax liabilities, as per Section 31 of the IB Code. The petitioner emphasized that the State Government, being an "operational creditor," did not make any claims during the insolvency process, thus barring any subsequent claims post-approval of the resolution plan. 4. Jurisdiction and Legality of the Garnishee Order Post-Approval of the Resolution Plan: The court noted that the re-assessment orders were passed on 17.08.2018, after the resolution plan was approved on 17.04.2018. The petitioner did not inform the Commercial Tax officials about the resolution process. The court also found that the public announcement of the insolvency process was not made in the State of Jharkhand, depriving the State Government of the opportunity to make a claim. The court held that the tax liabilities could be treated as amounts already realized from customers on behalf of the State Government, not as direct debts of the petitioner company. 5. Alternative Remedies and Their Impact on the Writ Applications: The court noted that the petitioner had filed a revision petition before the Revisional Authority, indicating the availability of an alternative remedy. The court referred to *Harbanslal Sahnia & Anr. Vs. Indian Oil Corpn. Ltd. & Ors.*, stating that writ jurisdiction could be exercised despite alternative remedies in cases of fundamental rights enforcement, failure of natural justice, or wholly without jurisdiction orders. However, the court found that the petitioner did not fall within these categories. Conclusion: The court dismissed the writ applications, holding that the petitioner company did not approach with clean hands and failed to inform the Commercial Tax authorities about the insolvency process. The court emphasized that the resolution plan could not bind the State Government as it was not involved in the resolution process. The court also highlighted that the tax liabilities were amounts realized from customers, which could not be considered "operational debts" under the IB Code. The judgment of H.C. Mishra, J. was concurred by Deepak Roshan, J., who added that the amendment to Section 31(1) of the IB Code, effective from 16.08.2019, was prospective and did not apply to the petitioner’s resolution plan approved on 17.04.2018.
|
