2024 (10) TMI 45 - HC - VAT / Sales Tax

Assessment order for recovery of alleged dues pertaining to the Financial Year 2014-15 - order issued post approval of resolution plan under IBC, 2016 - HELD THAT - Considering the observation of the Hon ble Apex Court in case of M/s. Ghanashyam Mishra Sons (P) Ltd. 2021 (4) TMI 613 - SUPREME COURT , it is opined that the petition deserves to be allowed - it was held in the said case that ' That once a resolution plan is duly approved by the Adjudicating Authority under sub-section (1) of Section 31, the claims as provided in the resolution plan shall stand frozen and will be binding on the Corporate Debtor and its employees, members, creditors, including the Central Government, any State Government or any local authority, guarantors and other stakeholders. On the date of approval of resolution plan by the Adjudicating Authority, all such claims, which are not a part of resolution plan, shall stand extinguished and no person will be entitled to initiate or continue any proceedings in respect to a claim, which is not part of the resolution plan.' Impugned assessment order dated 08.01.2021 and the subsequent notices issued by the respondent are hereby quashed and set aside - petition allowed.

Summary

Issues:
Challenge to assessment order under the Gujarat Value Added Tax Act, 2003 post approval of resolution plan under IBC, 2016.

Analysis:
The petitioner filed a petition under Article 227 of the Constitution of India seeking various reliefs, including quashing the assessment order and notices issued by the respondent demanding payments post approval of the resolution plan by NCLT. The petitioner argued that as per the Supreme Court's decision in Ghanashyam Mishra & Sons (P) Ltd vs. Edelweiss Asset Reconstruction Co. Ltd, all claims not part of the approved plan stand extinguished. The respondent did not contest this legal position.

The petitioner was subjected to insolvency proceedings under the IBC, and the NCLT admitted the petition initiating the Corporate Insolvency Resolution Process (CIRP). Subsequently, a resolution plan was approved by NCLT, and a company took over the management of the petitioner. The petitioner received an assessment order demanding payment under the Gujarat Value Added Tax Act, 2003, and subsequent notices for recovery of dues under GST. The respondent also placed a lien on the petitioner's bank account.

The High Court, citing the Supreme Court's ruling in Ghanashyam Mishra & Sons (P) Ltd case, held that once a resolution plan is approved, claims not part of the plan stand extinguished. Therefore, the court allowed the petition, quashed the assessment order and subsequent notices, and set aside the lien on the petitioner's bank account. The court disposed of the case, stating that no costs were to be awarded.

In conclusion, the High Court's judgment was in favor of the petitioner, emphasizing the extinguishment of claims not included in the approved resolution plan under the IBC, 2016, as per the legal precedent set by the Supreme Court. The court's decision provided relief to the petitioner by quashing the assessment order and related notices issued by the respondent post approval of the resolution plan.