9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (8) TMI 474 - Tri - Insolvency and BankruptcySeeking direction to the respondents to release a refund for Assessment Year 2018-19 along with interest to the Corporate Debtor - Nature of the debt arising out of unpaid Income Tax and other such dues of the corporate debtor - the amount of refund for Assessment Year 2018-19 has been set off against the demand for Assessment Year 2016-17 after the Income Tax Department issued a notice under Section 245 to the applicant dated 20.09.2019 and the same was not contested. Whether refund due can be adjusted against pre-CIRP dues? Nature of the debt arising out of unpaid Income Tax and other such dues of the corporate debtor - HELD THAT - This issue fell for consideration before the Hon ble NCLAT in Pr. Director General of Income Tax (Admn. TPS) Vs. M/s. Synergies Dooray Automotive Ltd. Ors. 2019 (3) TMI 1238 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI wherein the Hon ble NCLAT observed and held that We hold such statutory dues has direct nexus with operation of the Company. For the said reason also, we hold that all statutory dues including Income Tax , Value Added Tax etc. come within the meaning of Operational Debt . In the present case, there was a demand against the corporate debtor for Assessment Year 2016-17 by the Income Tax Department on 06.12.2018 much prior to 28.02.2019 i.e., the CIRP commencement date. The said demand was to be paid within 30 days upto 06.01.2019 under the relevant provisions of the Income Tax Act. The corporate debtor has filed an appeal challenging the order dated 06.12.2018 of the Assessing Officer before the Commissioner of Income Tax (Appeals) on 14.12.2018 as per Annexure A-8 of the reply. The claim that the demand for Assessment Year 2016-17 has not crystallised because of the pending appeal appears to be an afterthought as the Department has already treated it as a crystallized demand and filed a Form B on 01.12.2020 before the Resolution Professional for the demand for the Assessment Year 2016-17 after deducting the refund amount of Rs.43,49,040/- which was already adjusted. Following the decisions of the Hon ble NCLAT in the case of Pr. Director General of Income Tax (Admn. TPS) Vs. M/s. Synergies Dooray Automotive Ltd. Ors., it is noted that under the provisions of IBC, the Income Tax Department is an operational creditor and is entitled to dues arising out of the existing law are Operational Creditor within the meaning of Section 5(20) of the I B Code. With the initiation of CIRP, the Moratorium under section 14 of the IBC, 2016 came into force on 28.02.2019. The provisions of Section 14 of the IBC provide that on the insolvency commencement date, the Adjudicating Authority shall, by order, declare a moratorium prohibiting the institution of suits or continuation of pending suits or proceedings against the corporate debtor, including the execution of any judgment, decree, or order in any court of law, Tribunal, Arbitration Panel, or any other authority. The present refund of Rs.43,49,040/- for the Assessment year 2018-19 was determined on 18.09.2019 and adjusted on 29.10.2019, i.e. after the initiation of the CIRP and the declaration of the moratorium period under the provisions of Section 14 of the IBC, 2016, which is unjustified being against the settled law - the respondent is directed to release the refund of an amount of Rs.43,49,040/- with interest up to the date of the issuance to the applicant - appeal allowed.
Issues Involved:
1. Release of Income Tax refund for Assessment Year 2018-19. 2. Adjustment of refund against pre-CIRP demand. 3. Jurisdiction of NCLT to direct Income Tax authorities. 4. Classification of tax dues as operational debt. Issue-wise Detailed Analysis: 1. Release of Income Tax refund for Assessment Year 2018-19: The applicant, Mr. Sumat Gupta, Resolution Professional of M/s International Mega Food Park Limited, sought a direction to the Income Tax Department to release a refund of Rs. 43,49,040/- for Assessment Year 2018-19. The Income Tax Department had set off this refund against the demand for Assessment Year 2016-17, which was not contested by the applicant initially. The applicant argued that post-CIRP initiation, the refund should not have been adjusted against pre-CIRP dues. 2. Adjustment of refund against pre-CIRP demand: The Income Tax Department justified the adjustment by citing a notice under Section 245 issued on 20.09.2019. The applicant contended that the adjustment was impermissible during the moratorium period declared under Section 14 of the IBC, 2016. The applicant emphasized that the refund crystallized post-CIRP initiation and should not be adjusted against pre-CIRP demands. 3. Jurisdiction of NCLT to direct Income Tax authorities: The Income Tax Department argued that NCLT lacks the power to direct any authority under the Income Tax Act, referencing decisions from the NCLT Ahmedabad Bench and the Supreme Court in the case of Swiss Ribbons Private Limited. The applicant countered by asserting that tax dues are operational debts and the Income Tax Department is an operational creditor, thus falling within NCLT's jurisdiction. 4. Classification of tax dues as operational debt: The applicant relied on the Supreme Court judgment in M/s Embassy Property Developments Pvt. Ltd., which classified government dues as operational debt. The NCLAT's decision in Pr. Director General of Income Tax (Admn. & TPS) Vs. M/s. Synergies Dooray Automotive Ltd. supported this view, holding that statutory dues like Income Tax are operational debts. The Income Tax Department's argument that the demand for Assessment Year 2016-17 had not crystallized due to a pending appeal was rejected, as the Department had already treated it as a crystallized demand. Conclusion: The NCLT concluded that the Income Tax Department's adjustment of the refund during the moratorium period was unjustified. The Tribunal directed the Department to release the refund of Rs. 43,49,040/- with interest to the applicant. The judgment reaffirmed that tax dues are operational debts and fall within the jurisdiction of the NCLT under the IBC, 2016. The appeal was allowed and disposed of accordingly.
|
