2023 (6) TMI 903 - HC - Companies Law

Liability of Purchaser of the Company which was sold as a going concern in liquidation proceedings - Old and past sales tax dues - raising tax demand against the petitioners as impugned, which include demands under the Sales Tax Act - HELD THAT - In view of the orders dated 9th March, 2021 passed by NCLT, the petitioners would submit that it was always open to the respondents to take steps to recover the tax dues from the Directors of the erstwhile company, as it stood prior to the same being taken over by the petitioner. The next contention as urged on behalf of the petitioners is that the respondents in the present case cannot take any action, which is contrary to resolution plan which has attained finality in view of the order dated 9th March, 2021 passed by NCLT - In the said application, the State Tax Authorities sought to contend that the claims of the Sales Tax Department, should be treated as the claim of a secured creditor and in that regard the adjudicating authority viz. NCLT had committed an error - It is stated that till the date no further steps are taken by the State Government to challenge the said order. In this view of the matter, there appears to be much substance in the contentions as urged on behalf of the petitioners in assailing the actions of the respondents as challenged in the petition. The parties need to be finally heard on the present proceedings. Hence, Rule. Respondents waive service. Rule is made returnable on 25 August 2023.

Summary

Issues involved:
1. Tax demands raised against the petitioners by the respondents, including demands under the Sales Tax Act for the period prior to the petitioner being taken over in liquidation proceedings.
2. Jurisdiction of respondents to raise demands against the purchaser of a going concern, as per the order passed by the National Company Law Tribunal (NCLT).
3. Actions of respondents contrary to the resolution plan approved by NCLT.

Writ Petition No. 2864 of 2022:
The petitioners, a company and its purchaser, challenge tax demands raised by respondents pre-acquisition. They argue that, as per the Supreme Court decision, once a resolution plan is approved, creditors cannot recover demands not part of the plan from the purchaser. The NCLT order protects the purchaser, and the tax dues could have been recovered from the directors pre-acquisition. Respondents are restrained from taking actions contrary to the resolution plan.

Writ Petition No. 1420 of 2022:
Similar to the first petition, this one concerns Income Tax dues. The court observes that the legal position is the same as in the previous petition. Interim reliefs are granted to stay the operation of the intimation under section 143(1) of the Act and restrain respondents from taking further steps in implementation of the said intimation.

Conclusion:
The High Court granted interim reliefs to both petitioners, staying the tax demands and restraining the respondents from taking further steps. The court emphasized that the protection granted is limited to tax dues preceding the NCLT order and will not apply to future periods. The matters are scheduled for further hearing on 25 August 2023.