2024 (6) TMI 394 - AT - Service Tax

Abatement of appeal due to approval of Resolution Plan by NCLT - recovery of service tax dues with interest and penalties - HELD THAT - The identical matter has been considered by two coordinate benches of the Tribunal; Mumbai Bench in the case of M/s Jet Airways (India) Limited vs. Commissioner of Service Tax-IV 2023 (5) TMI 767 - CESTAT MUMBAI and Hyderabad Bench in the case of Icomm Tele Ltd. vs. Commissioner of Central Tax, Puducherry 2023 (10) TMI 1344 - CESTAT HYDERABAD . It is pertinent to refer the findings of Mumbai Bench of the Tribunal in the case of M/s Jet Airways (India) Limited where it was ordered that the appeals stand abated once the Resolution Plan has been approved by NCLT and the CESTAT has become functus officio in the matters relating to this appeal. Thus, once the Resolution Plan has been approved by the NCLT, thereafter, the present appeal stands abated as the CESTAT has become functus officio in the matter relating to the present appeal. The appeal filed by the appellant is disposed of as abated.

Summary

Issues:
- Confirmation of service tax demand
- Imposition of penalties
- Abatement of appeal due to approved Resolution Plan by NCLT

Confirmation of Service Tax Demand:
The appeal was against an order confirming a service tax demand of over Rs. 6.6 crores, including education cess and interest, against a company. The Commissioner ordered recovery under the Finance Act, 1994. No penalty was imposed under Section 76 due to the proviso of Section 78. However, penalties were imposed under Sections 77 and 78, with an option for reduced penalty if the entire amount was paid within 30 days of the order.

Imposition of Penalties:
Penalties of Rs. 5,000 and Rs. 6.6 crores were imposed under Sections 77 and 78, respectively, on the company. The company could avail a reduced penalty of 25% if the service tax and interest were paid within 30 days of the order. The penalties were based on omissions and commissions by the company, as discussed in the order.

Abatement of Appeal due to Approved Resolution Plan by NCLT:
During the appeal, the NCLT approved a Resolution Plan for the appellant's company, leading to financial difficulties. The appellant argued for abatement of the appeal based on the Supreme Court's decision in a related case. Both parties acknowledged the approved Resolution Plan. The Tribunal considered similar cases and found that once a Resolution Plan is approved, the claims stand frozen and extinguished, binding on all stakeholders. The Tribunal referred to CBIC guidelines and a Supreme Court judgment supporting the abatement of appeals post-Resolution Plan approval. Consequently, the appeal was disposed of as abated, following the precedent and legal principles.

This detailed analysis covers the issues of the confirmation of service tax demand, imposition of penalties, and abatement of the appeal due to the approved Resolution Plan by NCLT, as per the judgment delivered by the Appellate Tribunal CESTAT CHANDIGARH.