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2024 (4) TMI 23 - HC - GSTRefund of pre-deposit alongwith interest - CIRP - Approval of Resolution Plan under IBC - wrongful availment of CENVAT credit - HELD THAT - There are no hesitation in holding that the Revenue in the impugned order has completely misdirected itself in law and has completely misconstrued the orders passed by the Ld. NCLT. The purport of the order dated 22.04.2022 passed by the Ld. NCLT which has been relied by the Revenue to reject the claim of the Petitioner that no persons will claim any dues including the statutory dues owed to Central State Government or any local authority is rather applicable qua the claims of the Revenue against the Petitioner and does not in any manner imply that the pre-deposit made by the Petitioner is not to be refunded; more so when the very tax liability has stood extinguished. Further if at all the Revenue retains the pre-deposits made by the Petitioner; the same would amount to unjust enrichment since the very tax liability which was subject matter of appeals stood extinguished. So far as stand of the Revenue that Refund application of Petitioner was examined as per Circular No. 984/08/2014-CX dated 16.09.2014; in this regard it is observed that the said circular is inapplicable to the facts of the instant case and it is of a period prior to the enactment of the Insolvency Bankruptcy Code 2016. Moreover there is no reference to the said circular in the impugned order. In the case of Rainbow Papers 2022 (9) TMI 317 - SUPREME COURT the Revenue not only filed its claims before the resolution professional and also had challenged the resolution plan before the NCLT. However in the instant case there was neither any claim filed by the Revenue before the resolution professional nor there was any challenge by the Revenue to the resolution plan or any other orders passed by the NCLT. In the case of Sanjay Kumar Agarwal 2023 (11) TMI 54 - SUPREME COURT a review was filed against the judgment in Rainbow Papers and the same was dismissed. The order is hereby quashed and set aside. The Respondent-Revenue is directed to refund the aforesaid pre-deposit amount of Rs. 2, 06, 31, 698/- to the Petitioner along with applicable statutory interest - the instant writ application is allowed.
Issues Involved:
1. Quashing of the order rejecting the refund application. 2. Direction for refund of the pre-deposit amount with interest. 3. Examination of the impact of insolvency proceedings on tax liabilities and refund claims. Issue 1: Quashing of the Order Rejecting the Refund Application The petitioner sought to quash the order dated 25.04.2023, which rejected their application for a refund of the pre-deposit amount of Rs. 2,06,31,698. The petitioner had made these pre-deposits while appealing against Orders-in-Original before the CESTAT, Kolkata. During the pendency of these appeals, insolvency proceedings were initiated against the petitioner, and a resolution plan was approved by the NCLT, Kolkata. The petitioner argued that the claims of the Revenue were extinguished as they were not filed during the insolvency resolution process. The High Court found that the Revenue had misconstrued the orders of the NCLT and that the tax liabilities stood extinguished, making the retention of the pre-deposit amount unjust enrichment. Issue 2: Direction for Refund of the Pre-deposit Amount with Interest The petitioner requested a direction for the immediate refund of the pre-deposit amount along with applicable statutory interest. The High Court noted that the pre-deposit was made as per Section 35F of the Central Excise Act, 1944, and that Section 35FF provides for interest on delayed refunds. The Court held that the Revenue's reliance on Circular No. 984/08/2014-CX was inapplicable as it predated the Insolvency & Bankruptcy Code, 2016. The Court directed the Revenue to refund the pre-deposit amount along with statutory interest within six weeks. Issue 3: Examination of the Impact of Insolvency Proceedings on Tax Liabilities and Refund Claims The High Court examined the impact of the insolvency proceedings on the petitioner's tax liabilities and refund claims. The Court referred to the Supreme Court's judgments in Ghanashyam Mishra & Sons Pvt. Ltd. v. Edelweiss Asset Reconstruction Company Ltd. and M/s Ruchi Soya Industries v. Union of India, which held that once a resolution plan is approved, all claims not part of the plan are extinguished. The Court found that the Revenue did not file any claims during the insolvency resolution process, and therefore, their claims stood extinguished. The Court also noted that the Revenue had not challenged the NCLT orders, making them final and binding. Conclusion The High Court quashed the order dated 25.04.2023 and directed the Revenue to refund the pre-deposit amount of Rs. 2,06,31,698 along with applicable statutory interest within six weeks. The writ application was allowed, and any pending interlocutory applications were closed.
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