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2021 (7) TMI 462 - HC - CustomsRecovery of duty of Customs from the successful Resolution Applicant - Orders of finalization of bills of entry of the Superintendent - no appeal filed by assessee - resolution plan approved under the Code binds the Central Government and Local Authority or not - Whether in the facts and circumstances of the present case the Tribunal was justified in directing the Commissioner (Appeals) to ignore the orders of finalization of bills of entry of the Superintendent despite no appeal having been filed by assessee? HELD THAT - Once a resolution plan is approved, all the claimants in respect of a corporate debtor are dealt with under such plan as held by the Supreme Court in the case of Committee of Creditors of Essar Steel India Ltd. vs. Satisk Kumar Gupta Ors. 2019 (11) TMI 731 - SUPREME COURT where it was held that 2019 (11) TMI 731 - SUPREME COURT - but the judgment of the Jharkhand High Court in the case of Essar Steel Limited (Supra) is of no avail to the Department. Electrosteel 2020 (5) TMI 39 - JHARKHAND HIGH COURT is distinguishable on facts as it proceeded on its peculiar facts pertaining to the criminal misappropriation of the statutory dues and cannot be made applicable to the facts of present case - Further, in Electrosteel 2020 (5) TMI 39 - JHARKHAND HIGH COURT , the Registered office and principal place of business of the corporate debtor therein was in the State of Jharkhand. However, the public announcement was not published in any newspaper of Jharkhand but was published in the Business Standard, Kolkata Edition. In the facts of the present case, the public announcements were published by the IRP / RP in accordance with the Regulation 6 of the CIRP Regulations. The civil application succeeds and is hereby allowed
Issues Involved:
1. Substitution of the name of the respondent in the Tax Appeal. 2. Disposal of the Tax Appeal in light of the sanctioning of the Final Resolution Plan. 3. Determination of whether the Tax Appeal survives post-approval of the Final Resolution Plan. 4. Binding nature of the approved resolution plan on the Central Government and other stakeholders. 5. Classification and treatment of the Department's claim under the resolution plan. 6. Prospective vs. retrospective application of Section 31(1) of the Insolvency and Bankruptcy Code (IBC). 7. Comparison with the Electrosteel Steels Limited case. Issue-Wise Detailed Analysis: 1. Substitution of the Name of the Respondent: The petitioner requested the substitution of the name of the respondent in Tax Appeal No. 754 of 2007 to UltraTech Nathdwara Cement Limited. This substitution was necessitated due to the acquisition of the erstwhile corporate debtor, M/s. Binani Cement Limited, by UltraTech Cement Ltd. through an approved resolution plan dated 25th May 2018. The name change to UltraTech Nathdwara Cement Limited took effect from 13th December 2018. 2. Disposal of the Tax Appeal in Light of the Final Resolution Plan: The petitioner sought the disposal of the Tax Appeal No. 754 of 2007, arguing that it would not survive in light of the sanctioning of the Final Resolution Plan. The court noted that the Central Board of Indirect Taxes and Customs (CBIC) had prescribed a monetary limit of ?1 Crore for filing appeals with the High Court and the amount involved in this case was within that limit. Additionally, the case did not fall under any exceptions, making the appeal liable to be withdrawn. 3. Determination of Whether the Tax Appeal Survives Post-Approval of the Final Resolution Plan: The court examined whether the Tax Appeal No. 754 of 2007 would survive in light of the Final Resolution Plan dated 25th May 2018. The petitioner argued that once a resolution plan is approved, it is binding on all creditors and stakeholders, including the Central Government, by virtue of Section 31(1) of the IBC. The court agreed, noting that the Supreme Court had dismissed a similar challenge to the resolution plan, thereby making it binding and final. 4. Binding Nature of the Approved Resolution Plan on the Central Government and Other Stakeholders: The court emphasized that an approved resolution plan is binding on all stakeholders, including the Central Government, as per Section 31(1) of the IBC. This ensures that the successful resolution applicant can start running the business of the corporate debtor on a fresh slate. The court cited the Supreme Court's judgment in the case of Committee of Creditors of Essar Steel India Ltd. vs. Satisk Kumar Gupta & Ors., which reinforced this principle. 5. Classification and Treatment of the Department's Claim Under the Resolution Plan: The court analyzed whether the Department's claim could be classified as a contingent liability under the resolution plan. The petitioner argued that the Department's claim was contingent upon the outcome of pending litigation and was therefore covered under the approved resolution plan. The court agreed, noting that the final assessment of the bills of entry had already been paid by the corporate debtor, and any additional demand was contingent and not crystallized. 6. Prospective vs. Retrospective Application of Section 31(1) of the IBC: The Department contended that the amendment to Section 31(1) of the IBC, which made the resolution plan binding on the Central Government, was prospective and could not be applied to the approved plan. The court rejected this argument, stating that even before the amendment, a resolution plan was binding on the Central Government if it was a creditor. The amendment was clarificatory and retrospective in nature, making explicit what was already implicit. 7. Comparison with the Electrosteel Steels Limited Case: The Department relied on the judgment in the case of Electrosteel Steels Limited vs. State of Jharkhand to argue that the approved resolution plan could not bind the Department. The court distinguished the present case from Electrosteel, noting that the facts were different. In Electrosteel, the public announcement was not published in the relevant state, whereas in the present case, the public announcements were made in accordance with the regulations. The court concluded that the Department could not rely on Electrosteel to challenge the approved resolution plan. Conclusion: The court allowed the civil application, substituting the name of the respondent to UltraTech Nathdwara Cement Limited and disposed of the Tax Appeal No. 754 of 2007. The court held that the approved resolution plan was binding on all stakeholders, including the Central Government, and that the Department's claim was a contingent liability covered under the plan. The court rejected the Department's arguments regarding the prospective application of the amendment to Section 31(1) of the IBC and the reliance on the Electrosteel case.
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