2021 (10) TMI 389 - AT - Insolvency and Bankruptcy

Seeking to allow the claim amount submitted by the Respondent in full - Section 60(5) of Insolvency and Bankruptcy Code - HELD THAT - It is pertinent to mention that all the assessment orders were passed before the declaration of Moratorium. Therefore, it has attained finality in the absence of any challenge against the assessment orders before the Appellate Authority as provided under the statutes - the GST amount is an amount of tax levied under the assessment order as per the Goods and Service Act, 2017. It cannot be edited or reduced by the Resolution Professional himself. Even if the IRP/Resolution Professional was aggrieved by the said Order, they should have filed the Appeal under Section 107 of the CGST/SGST Act, 2017, read with Rule 108 of the GST Rules 2017. Any revision of assessment orders also cannot be made under the pretext of Section 238 of IBC. Section 238 of Insolvency and Bankruptcy Code cannot be read as conferring any appellate or adjudicatory jurisdiction in respect of issues arising under other statutes. Scope of revision by the Resolution Professional - powers conferred under Regulation 14 of the CIRP regulations - HELD THAT - After going through the Regulations 10 to 14 of the CIRP Regulations, it is clear that IRP/RP may, under Regulation 10, call clarifications from a creditor for substantiating the whole or part of its claim. Furthermore, under Regulation 12, the IRP/RP is entitled to updation of the creditor's claim based on the satisfaction of the claim. Finally, Regulation 13 mandates to verify every claim as on the insolvency commencement date within seven days from the last date of the receipt of the claims - Undisputedly, the IRP/RP has revised the admitted claim of the Respondent based on the circumstances. The exercise of revision of the GST assessment order was beyond the jurisdiction of the IRP/RP. It is pertinent to mention that the IRP/RP was not having the adjudicatory power given by the GST Act. Regulation 14 of the CIRP Regulations only authorises the IRP/RP to exercise power where the claim is not precise due to any contingency or other reasons. In the instant case, the Adjudicating Authority has rightly considered the statutory provision and suggested filing an Appeal before the appropriate forum. But at the same time, the Resolution professionals, considering the CoC as an authority in law, had exercised the powers of GST authorities. Therefore, the said act of the Resolution Professional is without jurisdiction and not sustainable in law. The Resolution professional committed an error in exercising their power and exercised the powers of GST Authorities under the pretext of Regulation 14 of the Code, which is not sustainable - Appeal dismissed.

Summary

Issues Involved:
1. Authority of Resolution Professional (RP) to file an appeal under GST regulations.
2. Binding nature of appellate orders under CGST Act during moratorium.
3. Requirement and impact of pre-deposit under GST Act on CIRP.

Issue-wise Detailed Analysis:

1. Authority of Resolution Professional (RP) to file an appeal under GST regulations:
The RP sought clarification on whether he had the authority under Regulation 13 and 14 of the CIRP Regulations to file an appeal before the Joint Commissioner, GST, as part of the verification and determination of a claim submitted by the GST department. The Adjudicating Authority/NCLT, in its order dated 28 January 2021, held that the RP does not have the adjudicatory power to revise GST claims. The RP’s role is limited to verifying claims based on available information. The Tribunal emphasized that the RP should have filed an appeal under Section 107 of the CGST/SGST Act, 2017, instead of revising the claims himself. The Tribunal concluded that the RP overstepped his jurisdiction by revising the GST assessment orders, which is not permissible under the IBC.

2. Binding nature of appellate orders under CGST Act during moratorium:
The RP also sought clarification on whether any judgment, decree, or order passed by the Appellate Authority under the CGST Act would be binding on the Corporate Debtor during the moratorium period declared by the NCLT. The Tribunal referred to the decision of the Calcutta High Court in Burn Standard, which stated that the moratorium would not prevent the RP from filing an appeal before the State Tax Department. The Tribunal upheld that the RP must comply with statutory requirements under the GST Act, and any appellate order passed would be binding on the Corporate Debtor.

3. Requirement and impact of pre-deposit under GST Act on CIRP:
The RP questioned whether the requirement of a pre-deposit of ?3,79,64,304 under Section 107 of the GST Act would be prejudicial to the interests of the CIRP. The Tribunal noted that the GST amount is a tax liability and cannot be altered by the RP. The Tribunal highlighted that any revision of assessment orders must be made in accordance with GST law and not under the pretext of Section 238 of the IBC, which does not confer appellate or adjudicatory jurisdiction over issues arising under other statutes. The Tribunal dismissed the RP’s argument, stating that the requirement of pre-deposit is a statutory mandate and must be complied with.

Conclusion:
The Tribunal dismissed the appeal, emphasizing that the RP overstepped his jurisdiction by revising GST claims and should have followed the statutory appeal process under the GST Act. The Tribunal clarified that appellate orders under the CGST Act are binding during the moratorium and that the requirement of pre-deposit under the GST Act must be adhered to. The Tribunal upheld the Adjudicating Authority's decision, directing the RP to file an appeal before the appropriate GST authority.