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2023 (4) TMI 1076 - AT - Service TaxNon-payment of Service Tax on commissions paid by the Appellant for external commercial borrowings - alleged mis-match of freight charges reflected in ST-3 vis- -vis the books of account of the Appellant - HELD THAT - CBIC has vide Instruction No.1083/04/2022- CX9 dated 23.05.2022 has laid down the guidelines (SOP) for NCLT cases - it was held in the Circular that A timeline of 90 days from the insolvency commencement date is available for filing of claims. However, it has been observed that there is an inordinate delay in filing of claims by Customs and GST authorities. This leads to their claims not being admitted and extinguished once a resolution plan is approved. It is also observed that the authorities then litigate on the rejection of each claims, despite the settled position that no claims can be raised once the plan is approved and no demands can be raised on the Resolution Application who has taken over the company through such a resolution plan. It is found that from the date of approval of the Resolution Plan by the NCLT, the Appeal filed by the Appellant has abated and this Tribunal has become functus officio in the matters relating to this Appeal. Further it is also settled that the impugned Order-in-Appeal has got merged in the order of the NCLT approving the Resolution Plan. The Appeal stands abated as per Rule 22 of the CESTAT Procedure Rules, 1982 w.e.f. the date of approval of the Resolution Plan by the NCLT, i.e., 24.02.2023. Appeal disposed off.
Issues:
The issues involved in the judgment are the confirmation of Service Tax demand, mis-match of freight charges, non-payment of Service Tax on commissions, insolvency resolution process, and finality of Resolution Plan. Service Tax Demand: The Appellant contested the Order-in-Appeal confirming a Service Tax demand of Rs.19,61,585/- along with interest and penalties. The demand was based on alleged mis-match of freight charges and non-payment of Service Tax on commissions. Insolvency Resolution Process: The Appellant underwent Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code, 2016. The Resolution Plan was approved by the Hon'ble NCLT, Kolkata, leading to the finality of the insolvency proceedings. CBIC Circular and Claims: The CBIC issued a Standard Operating Procedure (SOP) for cases involving insolvency under the Insolvency and Bankruptcy Code, 2016. The Central Government, as an operational creditor, can file claims within 90 days of insolvency commencement. In this case, a claim was made by the department before the Resolution Professional. Finality of Resolution Plan: The Resolution Plan approved by the Hon'ble NCLT discharged all demands against the Appellant prior to the closing date. The Resolution Plan is binding on all stakeholders, including the Central Government, extinguishing any liabilities against operational creditors for claims prior to the closing date. Abatement of Appeal: Citing the Alok Industries Ltd. case, it was argued that the orders impugned in the appeal stood merged in the order of the NCLT approving the Resolution Plan. The Appellant prayed for the appeal to be declared abated based on the binding nature of the NCLT order. Judgment and Disposal: The Tribunal noted the guidelines for NCLT cases and the binding nature of approved Resolution Plans. Following the Supreme Court's decision in Ghanashyam Mishra & Sons Pvt. Ltd. vs. Edelweiss ARC, it was held that once a Resolution Plan is approved, all claims not part of the plan stand extinguished. Consequently, the Appeal was disposed of as abated from the date of approval of the Resolution Plan by the NCLT.
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