2024 (5) TMI 806 - HC - Customs

Implementation of the Resolution Plan and change in management and control - demand for period prior to the approval of the Resolution Plan by the NCLT - HELD THAT - It was submitted that similar facts were recorded by this Court vide order dated 25th August 2022 passed in R/Tax Appeal No.32 of 2019, holding that the said R/Tax Appeal No.32 of 2019 is required to be disposed of as having become infructuous and abated with regard to any liability of any nature whatsoever having extinguished in view of the implementation of the Resolution Plan and change in management and control of the assessee in view of the provisions of Sections 31 and 32A of the IBC as per the decision of the Hon ble Apex Court referred to therein. Applying the ratio laid down in the case of Ghanashyam Mishra and Sons v. Edelweiss Asset Reconstruction 2021 (4) TMI 613 - SUPREME COURT , as the facts are identical, these Tax Appeals are disposed of as abated and the proposed questions are, accordingly, not answered. In view of disposal of the Tax Appeals, Civil Applications would not survive and are, accordingly, disposed of.

Summary

Issues involved:
The judgment involves the following issues:
1. Interpretation of the Customs Act, 1962 u/s 130.
2. Application of Notification No.21/2002 - Cus dated 01.03.2002.
3. Effect of Insolvency and Bankruptcy Code, 2016 on tax appeals.

Interpretation of the Customs Act, 1962 u/s 130:
The Court considered R/Tax Appeal No.1270 of 2006 arising from an order passed by the Customs, Excise and Service Tax Appellate Tribunal. The substantial questions of law included the reliance on a private laboratory report regarding carotene content in Crude Palm Oil and the benefit of Notification No.21/2002. The Court admitted these questions for consideration.

Application of Notification No.21/2002 - Cus dated 01.03.2002:
The respondent's involvement in insolvency proceedings under the Insolvency and Bankruptcy Code, 2016 was highlighted. M/s. Patanjali Foods Limited took over M/s. Ruchi Soya Industries Limited through a Resolution Plan approved by the National Company Law Tribunal. The Court noted that similar cases had been disposed of as infructuous due to the implementation of Resolution Plans and changes in management and control.

Effect of Insolvency and Bankruptcy Code, 2016 on tax appeals:
The Court observed that the appellant Commissioner of Customs had not lodged any claim during the insolvency resolution process. Sections 31 and 32A of the IBC were cited to explain that liabilities of the corporate debtor cease upon completion of the resolution process. The Court referred to relevant provisions and a Supreme Court decision to support the conclusion that the tax appeals had become infructuous and abated due to the extinguishment of liabilities post-Resolution Plan implementation.

In conclusion, the Tax Appeals were disposed of as abated, and the proposed questions were not answered. Civil Applications were also disposed of accordingly.