2023 (9) TMI 1684 - AT - Service Tax

Abatement of appeal - Liability of service tax - Business Auxiliary Service - payment of commission to foreign agency for facilitating the procurement of machinery - approval of Resolution Plan under sub-section (1) of section 31 of the Insolvency and Bankruptcy Code 2016 (Code) - HELD THAT - It is found from the copy of the order of the NCLT Chennai dated 26.3.2019 that in this case NCLT has approved the Resolution Plan of the Resolution Professional. The plan is hence binding on the Corporate Debtors and other stakeholders involved. As per the non-obstante clause of Section 238 of the Code ibid the provisions of the Code will have an overriding effect if there are any inconsistencies with any of the provisions of the law for time being in force. The appeal abates due to the binding effect of the Resolution Plan under the IBC - matter disposed off.

Summary

The Appellate Tribunal (CESTAT Chennai) considered an appeal by M/s. Dhanalakshmi Paper Mills Pvt. Ltd. challenging a service tax demand on commission paid to foreign agents for importing machinery, classified under 'Business Auxiliary Service' under the Finance Act, 1994. The original and appellate authorities confirmed the demand including penalties.The Tribunal noted that the National Company Law Tribunal (NCLT), Chennai, had approved a Resolution Plan under Section 31(1) of the Insolvency and Bankruptcy Code, 2016 (IBC), which, by virtue of the non-obstante clause in Section 238 of the IBC, overrides conflicting provisions of other laws. This principle was supported by the Supreme Court in Ghanashyam Mishra and Sons Pvt. Ltd. v. Edelweiss Asset Reconstruction Co. Ltd., (2021) 9 SCC 657.Accordingly, the Tribunal held that the appeal "abates" due to the binding effect of the Resolution Plan under the IBC and disposed of the matter.