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2023 (8) TMI 1139 - HC - Central ExciseRefund of pre-deposit with interest - Recovery of CENVAT Credit - CIRP proceedings undergoing - adjudication has been undertaken without such claims being lodged in the insolvency proceedings under the Insolvency and Bankruptcy Code, 2016 - Maintainability of petition - availability of alternative remedy - HELD THAT - The availability of an alternate statutory remedy by itself is not a bar for the Court to exercise jurisdiction under Article 226 of the Constitution of India. Subject to well-settled parameters, including the matters touching the jurisdictional aspects, the Court could in a given case consider entertaining such proceedings notwithstanding the fact that a statutory remedy is available to the petitioners. According to the respondents since the present proceedings arise out of the adjudication undertaken by the Joint Commissioner, CGST and Central Excise with regard to input tax credit being availed by the petitioners and it having been found that such input tax credit was wrongly availed by the petitioners, the proceedings could not be treated to be recovery proceedings. The petitioners having wrongly utilized the assets in the form of input tax credit it was merely a case of reversal of such credit and the same was beyond the purview of the I B Code, 2016. It is seen from the impugned orders that the Joint Commissioner has proceeded to consider the entitlement of the petitioners to availing the aforesaid Cenvat Credit and on finding the petitioners not entitled to do so, recovery of the said amount with interest has been directed. The provisions of Section 11A of the Act of 1944 pertain to recovery of Central Excise and since such direction is contained in the impugned orders it cannot be said that the said orders merely determined the liability of the petitioners to claim Cenvat Credit. The ratio of the decisions in ALD Automotive (P) Ltd. and TVS Motor Company Limited 2018 (10) TMI 814 - SUPREME COURT is that input credit is in the nature of benefit/concession extended. The said ratio however cannot be applied in the present facts since the impugned orders also direct recovery to be made. The contention raised by the learned counsel for the respondents that the impugned orders merely determine liability and are not orders of recovery therefore cannot be accepted. Once it is found that the impugned orders direct recovery of the amounts of Cenvat Credit that has been wrongly availed by the petitioners, it would be necessary to consider the challenge based on the decision of the Hon ble Supreme Court in Ghanashyam Mishra And Sons 2021 (4) TMI 613 - SUPREME COURT . The petitioners contend that in view of the law laid down therein the impugned orders are liable to be struck down as having adjudicated on aspects beyond the jurisdiction of the Joint Commissioner - It was thus held that these Authorities would be bound by the Resolution Plan once it is approved by the Adjudicating Authority which was in the said case the NCLT. While answering the question as framed, it was held that on the date of approval of the Resolution Plan by the Adjudicating Authority, all such claims that were not a part of the Resolution Plan would stand extinguished and no person would be entitled to initiate or continue any proceedings in respect of a claim which is not part of the Resolution Plan. The amendment of 2019 was held to be clarificatory and declaratory in nature. It was thus effective from the date on which the I B Code, 2016 had come into effect. The impugned orders seek to undertake recovery of the amounts with regard to which no claim was made by the respondents Operational Creditor in proceedings under the I B Code, 2016. In view of the decision in Ghanashyam Mishra And Sons 2021 (4) TMI 613 - SUPREME COURT said claims would stand extinguished and are not liable to be pursued further. The challenge as raised is thus liable to be upheld - By relying upon the decision in M/s Ruchi Soya Industries Ltd. 2022 (3) TMI 60 - SUPREME COURT in such situation when the proceedings are held to be not maintainable on the ground that the claim was not part of the Resolution plan, the amount of pre-deposit made by the petitioners is liable to be directed to be refunded with accrued interest. Following the aforesaid decision it is held that the petitioners would be entitled to receive the amount of pre-deposit if made alongwith interest at the prevailing bank rates. Thus, it is held that for failure to make any claim of the amounts recoverable under Section 11A of the Act of 1944 the claims in that regard stand extinguished in view of the decision in Ghanashyam Mishra And Sons - amount of pre-deposit if any made by the petitioners shall be refunded with interest at the prevailing bank rates within a period of eight weeks of the date of the judgment - petition disposed off.
Issues Involved:
1. Validity of the orders dated 31.07.2020 and 31.12.2020 passed by the Joint Commissioner, Central Goods and Services Tax and Central Excise. 2. Whether the claims not lodged in the insolvency proceedings under the Insolvency and Bankruptcy Code, 2016 (I & B Code) stand extinguished. 3. Jurisdictional challenge based on the decision in Ghanashyam Mishra And Sons Private Limited Versus Edelweiss Asset Reconstruction Company Limited. 4. Whether the writ petition is maintainable despite the availability of an alternate statutory remedy. Summary: Issue 1: Validity of the Orders The petitioners challenged the orders dated 31.07.2020 and 31.12.2020 issued by the Joint Commissioner, Central Goods and Services Tax and Central Excise, Nagpur-II, which partly allowed and partly reversed the Cenvat Credit availed by the petitioners, directing recovery of the reversed credit. The orders pertain to different periods between 25.08.2011 and 31.03.2015. Issue 2: Claims in Insolvency Proceedings The petitioners argued that the adjudication was undertaken without lodging claims in the insolvency proceedings under the I & B Code, which were pending against petitioner no. 1. The NCLT and subsequently the NCLAT had approved the Resolution Plan, making it binding on all creditors, including government authorities. The petitioners contended that since the claims were not part of the Resolution Plan, they stood extinguished, and no recovery could be effected. Issue 3: Jurisdictional Challenge The petitioners relied on the Supreme Court decision in Ghanashyam Mishra And Sons Private Limited, which held that all dues, including statutory dues not part of the Resolution Plan, stand extinguished, and no proceedings for recovery can be initiated post-approval of the Resolution Plan. The petitioners argued that the impugned orders were unsustainable as they directed recovery of amounts not claimed in the Resolution Plan. Issue 4: Maintainability of Writ Petition The respondents contended that the petitioners should have availed the alternate statutory remedy under the Central Excise Act, 1944. However, the court noted that the availability of an alternate remedy does not bar the court from exercising jurisdiction under Article 226 of the Constitution, especially when jurisdictional issues are raised. The court found that the impugned orders directed recovery under Section 11A of the Act of 1944, making them recovery orders rather than mere determinations of liability. Judgment: 1. The impugned orders dated 31.07.2020 and 31.12.2020 passed by the Joint Commissioner, Central Goods and Services Tax and Central Excise, Nagpur-II, are set aside. 2. It is held that the claims not made part of the Resolution Plan stand extinguished as per the decision in Ghanashyam Mishra And Sons. 3. The amount of pre-deposit made by the petitioners shall be refunded with interest at prevailing bank rates within eight weeks. 4. Rule is made absolute in the aforesaid terms. No costs.
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