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2024 (10) TMI 615 - HC - VAT / Sales TaxChallenge to demand notice for recovery of outstanding dues - whether the claims if any under the Gujarat Value Added Tax Act, 2003 which are not considered in the Resolution Plan would stand extinguished? - HELD THAT - From the record, it is noticed that in the proceedings filed before NCLT, during CIRP process, the Assistant Commissioner of State Tax, as one of the operational creditors, lodged a claim of Rs.38,86,63,983/- for its dues under the Gujarat Value Added Tax Act, 2003 for the assessment years 2006-07, 2009-10, 2010-11 and 2011-12. Thus, it cannot be denied that the respondent authorities were not aware about the pending liquidation proceedings. Further, from record it appears that objections were not raised by the respondent authorities against approval of the plan. Since, respondent did not object to approval of the plan, question of respondent not being heard would not arise. No application was filed before NCLT in the pending proceedings by the State authorities. In view of settled principle of law that once the resolution plan is approved, the claim, if any, stands extinguished and no claim can be made by any entity including the State Tax Authority, it is deemed appropriate to quash and set aside the demand notice dated 16.07.2020. Therefore, the demand notice dated 16.07.2020, issued by State Tax Officer (1), Unit-7, Ahmedabad is hereby quashed and set-aside. Petition allowed.
Issues:
Challenge to demand notice issued by State Tax Officer for outstanding dues under the Gujarat Value Added Tax Act, 2003 for assessment years. Interpretation of the effect of a resolution plan approved by the National Company Law Tribunal (NCLT) on pending claims against the corporate debtor. Application of the principles laid down by the Supreme Court in the case of Ghanashyam Mishra and Sons Private Limited regarding the extinguishment of claims post-approval of a resolution plan. Detailed Analysis: The petition challenges a demand notice issued by the State Tax Officer for outstanding dues under the Gujarat Value Added Tax Act, 2003 for specific assessment years. The petitioner, a company engaged in various business activities, had undergone Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code, 2016 (IBC). During the CIRP, the Assistant Commissioner of State Tax lodged a claim for dues, which was later admitted by the Resolution Professional. Subsequently, a resolution plan was approved by the NCLT, which allegedly included the waiver of statutory dues. The petitioner argued that as per the IBC and the approved resolution plan, any claims not considered in the plan are extinguished, preventing entities, including State Tax Authorities, from making further claims beyond what is provided in the plan. The respondent, represented by the Assistant Government Pleader, contended that the NCLT approved the resolution plan without providing an opportunity of hearing to the respondent authorities whose claim was admitted as operational creditors. The respondent authorities were part of the resolution process but were not served with notice before the plan was sanctioned. It was argued that since statutory dues were pending and the resolution plan was approved without their participation, the demand notice was valid. The respondent emphasized the lack of notice and hearing before the approval of the resolution plan as a ground for their claim to remain valid. Upon considering the submissions and the precedent set by the Supreme Court in the case of Ghanashyam Mishra and Sons Private Limited, the Court held that once a resolution plan is approved, all claims not included in the plan stand extinguished. The Court reiterated that no entity, including State Tax Authorities, can make claims beyond what is provided in the approved resolution plan. The Court, relying on the principle that post-approval of a resolution plan, pending claims are extinguished, quashed and set aside the demand notice issued by the State Tax Officer. Consequently, the demand notice for outstanding dues under the Gujarat Value Added Tax Act, 2003 was declared invalid, and the petition challenging the notice was allowed.
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