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2023 (5) TMI 767 - AT - Service TaxRecovery of Service tax - code share charges and inter airline service charges - resolution plan approved by NCLT in the insolvency proceedings - HELD THAT - The matter is no more res integra, as the Hon ble Supreme Court in GHANASHYAM MISHRA AND SONS PRIVATE LIMITED THROUGH THE AUTHORIZED SIGNATORY VERSUS EDELWEISS ASSET RECONSTRUCTION COMPANY LIMITED THROUGH THE DIRECTOR ORS. 2021 (4) TMI 613 - SUPREME COURT , had decided the settled position of law, holding that all the dues including the statutory dues owed to the Central Government, any State Government or any local authority, if not part of the resolution plan, shall stand extinguished and no proceedings in respect of such dues for the period prior the date on which the Adjudicating Authority grants its approval under Section 31 could be continued. CBIC has vide Instruction No.1083/04/2022-CX9 dated 23.05.2022 has laid down the guidelines in the form of Standard Operating Procedure (SOP) for handling the NCLT cases by the department, and reiterated the legal position that as operational creditors, GST and Customs authorities are required to submit their claims against the corporate debtors when the corporate insolvency and resolution process has been initiated. Once the Resolution plan is approved by NCLT, no demands can be raised on the Resolution Applicant. However from the date of approval of the resolution plan by the NCLT, the appeal filed by the applicant has abated and CESTAT has become functus officio in the matters relating to this appeal. In view of the order passed by the Co-ordinate Bench of this Tribunal in the judgement of the Hon ble Supreme Court in Ghanashyam Mishra and upon taking note of the fact that the NCLT has approved the resolution plan in the insolvency proceedings in regard to the corporate debtor of the appellant-assessee company, we are of the view that the appeals before this Tribunal are abated. Appeals filed by the appellant-assessee and the Revenue are disposed off.
Issues Involved:
The issues involved in the judgment are the recovery of service tax, financial difficulties faced by the appellant, the binding nature of the Resolution Plan approved by NCLT, the legal position regarding claims and proceedings post-approval of Resolution Plan, and the abatement of appeals post-approval of Resolution Plan. Recovery of Service Tax: The Commissioner of Service Tax-V, Mumbai confirmed the demands for service tax on code share charges and inter airline service charges against the appellant-assessee. The impugned order dated 29.06.2015 imposed penalties under Section 78 of the Finance Act, 1994. During the pendency of the appeals, the appellant-assessee faced financial difficulties leading to the initiation of Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code, 2016. The Resolution Plan approved by NCLT was deemed binding, extinguishing claims not part of the plan. Legal Position on Resolution Plan: The judgment of the Hon'ble Supreme Court in Civil Appeal No. 8129 of 2019 established that once a resolution plan is approved by the Adjudicating Authority, claims as per the plan are frozen and binding on the Corporate Debtor and stakeholders. The 2019 amendment to Section 31 of the I&B Code was deemed clarificatory and declaratory. CBIC guidelines reiterated that once the Resolution Plan is approved, no further demands can be raised on the Resolution Applicant. Refund of Pre-Deposit: The appellant-assessee claimed a refund of pre-deposit, citing the precedent set in the case of Ruchi Soya. The Supreme Court held that claims not part of the Resolution Plan do not survive post-approval. Consequently, the amount deposited by the appellant was directed to be refunded. Abatement of Appeals: Following the approval of the Resolution Plan by NCLT, the appeal filed by the appellant was deemed abated, making the CESTAT functus officio in matters related to the appeal. The appeals before the Tribunal were considered abated based on the Co-ordinate Bench's order and the judgment of the Hon'ble Supreme Court in Ghanashyam Mishra. Both appeals by the appellant-assessee and the Revenue were disposed of accordingly.
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