2020 (11) TMI 355 - Tri - Insolvency and Bankruptcy

Recovery of Arrears from Corporate Debtor - applicant s contention is that the rejection under Regulation 14 is not sustainable for the reason that there is no un-preciseness in the amount claimed by the creditor either due to any contingency or other reasons - HELD THAT - It is true that the claim of GST amounting to ₹ 28,41,59,349.06 has been made from the Corporate Debtor by the applicant, as per the detailed statement furnished by them to the Resolution Professional. It is stated that different notices envisaged under Section 46 was issued by the applicant for the period from April, 2018 to September, 2019 (18 months). In this connection, it is to be noticed that the Corporate Debtor was inoperative from July, 2019 and the applicant made the claim before the Resolution Professional only in February, 2020.. It is not clear as to why the applicant slept over till 19.2.2020 to recover the amount from the Corporate Debtor. The Resolution Professional even though has admitted the full amount, as per Regulation 14(2) of the CIRP Regulations, the RP can revise the amounts of claims admitted, including the estimates of claims made under Sub-Regulation (1) when he comes across additional information warranting such revision, This additional information he has received from the suspended Managing Director on 13th Jul, 2020 that the amount charged by the GST Department is not correct, as the GST is to be charged only on certain heads of income and not on total turn over of the Corporate Debtor. After re-assessing the amount payable by the Corporate Debtor with the assistance of the Internal Auditor of the Corporate Debtor, the amount worked out to be ₹ 1,06,09,299, which fact has been intimated to the applicant - It was resolved to file an appeal before the Joint Commissioner after getting the audited financial statements of the financial year 2018-19. The RP was directed that after receipt of proper and validated information from the part of the promoters of the Corporate Debtor he shall revise the claim amount after due verification and to explore other possibilities to arrive at a correct GST liability. Since the quantification of the actual amount to be paid as GST due by the Corporate Debtor is to be decided in an appeal going to be filed by the Resolution Professional before the concerned authorities, this Tribunal is not going into the question whether the Resolution Professional has adjudicatory power to decide the amount of GST due from the Corporate Debtor. - the Resolution Professional is directed to immediately, at any rate within two weeks from today, to file an appeal before the Joint Commissioner, State Sales Tax Department with the relevant papers for re-assessing the GST amount payable, based on the audited financial statements for the financial year 2018-19 and also based on the Notification No.9/2017-Integrated TA (Rate) dated 28.6.2017 issued by the Government of India. Application disposed off.

Summary

Issues Involved:
Claim rejection under Regulation 14 of CIRP Regulation for GST liability assessment.

Detailed Analysis:

Issue 1: Claim Rejection under Regulation 14
The State Tax Officer filed a MA as an operational creditor against a Corporate Debtor seeking to set aside the rejection of their claim by the Resolution Professional. The applicant claimed an amount of ?28,41,59,349.06 for tax, interest, and penalty. The Resolution Professional initially admitted the total claim but later rejected a major portion based on the interpretation of GST liability on different revenue streams of the Corporate Debtor. The applicant contended that the rejection under Regulation 14 was not justified as there was no ambiguity in the claimed amount. The Resolution Professional, on the other hand, revised the admitted claim amount after receiving additional information from the suspended Managing Director of the Corporate Debtor regarding GST liability specifics. The matter was placed before the Committee of Creditors (CoC) for approval, which decided to file an appeal before the GST Commissioner to revisit the claim amount.

Issue 2: Adjudicatory Power of Resolution Professional
The applicant cited a NCLAT decision to argue that the Resolution Professional lacks adjudicatory power in determining GST claims. However, the Resolution Professional justified the revision of the admitted claim based on new information and the need to comply with Regulation 14(2) of the CIRP Regulations. The Tribunal acknowledged the ongoing dispute regarding the actual GST amount payable by the Corporate Debtor and directed the Resolution Professional to file an appeal before the Joint Commissioner for reassessment based on audited financial statements and relevant notifications.

Conclusion:
The Tribunal disposed of the matter by directing the Resolution Professional to appeal before the Joint Commissioner for reassessment of the GST amount payable by the Corporate Debtor. The decision highlighted the importance of resolving the dispute promptly to avoid further delays in recovering the GST amount.