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TMI Blog2021 (5) TMI 45X X X X Extracts X X X X X X X X Extracts X X X X ..... on No. 12/2012-Customs dated 16.3.2012 as it stood on 15.09.2015. 3. However,after the import and at the time when the said Bill of Entry was taken up for assessment, Serial No.55 to Notification No.12/2012-Customs dated 17.3.2012 was amendedvide Notification No.46/2015-Customs dated 17.9.2015. Serial No.55 to Notification No.12/2012-Customs dated 17.3.2012 increased the rate of Basic Customs Duty ( BCD) to 12.5% from 7.5%. 4. It is the contention of the petitioner that as per Section 25 (4) of the Customs Act, 1962 as it stood them every notification issued under Section 25(1) or (2A) of the Customs Act, 1962 comes into force on the date of its issue by the Central Government for publication in the Official Gazette and also when it is published and offered for sale on the date of its issue by the Directorate of Publicity And Public Relations of the Board, New Delhi. 5. It is submitted that although the notification had been published in the official Gazette on 17.9.2015, the second condition that it was offered for sale on the date of its issue by the Directorate of Publicity And Public Relations of the Board, New Delhi had not been satisfied and therefore the respondents were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ince the issue has not attained finality and therefore submits this Court can come to an independent conclusion based on the available material regarding the correctness of the reassessment and imposition of the higher rate of Customs Duty on the petitioner in the impugned Bill of Entry. 11. Alternatively, it is submitted that the petitioner was under the provisions of the Insolvency and Bankruptcy Code, 2016during the pendency of the present writ petition. 12. It is submitted that a petition under Section of the aforesaid Code was filed by a Financial Creditor namely Standard Chartered Bank and that the National Company Law Tribunal, Mumbai by an order dated 8/15.12.2017 had ordered a moratorium with effect from 15.12.2017 till the completion of the Corporate Insolvency Resolution process. 13. It is submitted that the National Company Law Tribunal, Mumbai had appointed an Interim Resolution Professional and that the Resolution Professional filed M.A.No.1721/2019 under Section 30 (6) of the aforesaid Code for approval of the Corporate Resolution Plan submitted by a Consortium led by Patanjali Ayurvedic Ltd as Corporate Application as approved by the members of the Committee of C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herefore the writ petition is liable to be dismissed on merits. 20. I have considered the arguments advanced by the learned counsel for the petitioner and the learned counsel for the respondent customs Department. I have also perused the notification and the documents filed along with the typeset of papers. I have also perused the affidavit filed in support of the present writ petition. 21. Facts are not in dispute. The petitioner has an alternate remedy to file an appeal against the assessment before an Appellate Commissioner under Section 128 of the Customs Act, 1962 against the reassessment in the impugned Bill of Entry. 22. Considering the fact that the writ petition has been admitted in the year 2015, I do not see any point in relegating the petitioner to work out the remedy before the Commissioner of Customs (Appeals) at this distant point of time straight away without examining the case on merits. The petitioner has also persuaded this court that a final decision may be given on merits as well. 23. I have considered the decision in Union of India versus Param Industries Ltd 2015 (321) ELT 192 (SC) cited by the learned counsel. It was rendered in the context of the prevai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, 2016 to read as under:- " (4) Every Notification issued under sub- section (1) or under sub- section (2A), unless otherwise provided, come into force on the date of its issue by the central government for publication in the Official Gazette." 31. In fact, section 4 of the Information Technology Act, 2000 also makes it clear that where any law provides that information or other matter shall be in writing or in the typewritten or printed form, then, notwithstanding anything contained in such law, such requirement shall be deemed to have been satisfied if such information are matters- " (a) rendered or made available in an electronic form; and (b) accessible so as to be usable for the subsequent reference." 32. The above two conditions have been satisfied and therefore the argument based on the decision of the Hon'ble Supreme Court in Union of India versus Param Industries Ltd 2015 (321) ELT 192 (SC) the facts of the case are to be rejected. 33. In fact, the decision of the Honourable Supreme Court in Union of India versus Param Industries Ltd 2015 (321) ELT 192 (SC) has not examined the issue from the perspective of section 4 of the Information Technology Act, 2000. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... garding extinguishing of the rights of the respondent Customs Department to Duty in view of the Insolvency and Bankruptcy proceedings initiated against the petitioner. 42. It is the case of the petitioner that the respondent Customs Department has lost all its rights over the differential duty demanded in view of the corporate resolution plan approved by the National Company Law Board, Mumbai under the provisions of the Insolvency and Bankruptcy Code, 2016. 43. Question to be answered is, whether the "customs duty" payable under the provisions of the Customs Act, 1962 and the Customs Tariff Act, 1975 is "an operational debt" of the petitioner within the meaning of Section 5 (21) of the IBC Code, 2016 and whether the respondent Customs Department is an "operational creditor" within the meaning of Section 5 (20) of the IBC Code, 2016? 44. At the outset, I would like to emphasize that such proceedings initiated at behest of a Financial creditor or an operating creditor should come in the legitimate way of the Department collecting the taxes due from the petitioner. 45. It should be remembered that Insolvency and Bankruptcy Code 2016 was enacted with a view to provide a speedy mech ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l debt. 50. The expression "Debt" in Section 3(11) means a liability or obligation in respect of the "claim" which is due from any person and includes a "financial debt" and an "operational debt. 51. The expression "claim" as defined in Section 3(11) of the IBC, 2016, means- " a) a right to payment, whether or not such right is reduced to judgment, fixed, disputed, undisputed, legal, equitable or secure or unsecured; b) right or remedy for breach of contract under any law for the time being in force, if such breach gives rise to a right to payment, whether or not such right is reduced to judgment, fixed, mature, and mature, disputed undisputed, secure or unsecured." 52. A "claim" is a reward for the provision of goods or service or employment. Therefore, "operational debt" cannot include a "tax"or "duty" under an enactment. 53. The expression "claim" means a right to payment, whether or not such right is reduced to judgment, fixed, disputed, undisputed, legal, equitable or secure or unsecured or a right or remedy for breach of contract under any law for the time being in force, if such breach gives right to payment, whether or not such right is reduced in judgment, fixed, m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Creditors is entrusted with the primary responsibility of financial restructuring. They are required to assess the viability of a corporate debtor by taking into account all available information as well as to evaluate all alternative investment opportunities that are available. The Committee of Creditors is required to evaluate the resolution plan on the basis of feasibility and viability. Thus, Section 30(4) states: "30.Submission of resolution plan.- (1)-(3)*** (4) The Committee of Creditors may approve a resolution plan by a vote of not less than sixty-six per cent of voting share of the financial creditors, after considering its feasibility and viability, and such other requirements as may be specified by the Board: Provided that the Committee of Creditors shall not approve a resolution plan, submitted before the commencement of the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2017, where the resolution applicant is ineligible under Section 29-A and may require the resolution professional to invite a fresh resolution plan where no other resolution plan is available with it: Provided further that where the resolution applicant referred to in the first pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appointment of the interim resolution professional). We make it clear that at any stage where the Committee of Creditors is not yet constituted, a party can approach NCLT directly, which Tribunal may, in exercise of its inherent powers under Rule 11 of NCLT Rules, 2016, allow or disallow an application for withdrawal or settlement. This will be decided after hearing all the parties concerned and considering all relevant factors on the facts of each case." 63. Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 has been framed by the Insolvency and Bankruptcy Board of India in the exercise of power conferred under the provisions of the IBC, 2016. 64. Regulation 38 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 has been amended. The said provision as it stood before and after amendment reads as under:- Regulation 38 before the amendment on 5-10-2018. Regulation 38 after the amendment on 5-10-2018. 38. Mandatory contents of the resolution plan.- (1) A resolution plan shall identify specific sources of funds that will be used to pay the- (a) inso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dge has observed, that since the resolution plan was approved by NCLT on 17.4.2018, 2019 amendment to Section 31(1) of I&B Code would not apply to the said plan. We find, that the finding of the High Court, that the dues owed to the State Government and Central Government would not come within the definition of 'operational debt', is incorrect in law in the light of the view that is taken by us. So also the finding, that since the order of NCLT is prior to the date on which Section 31(1) of I&B Code was amended, the provisions of Section 31 would not be applicable, also cannot stand in view of the foregoing observations made by us hereinabove." 69. Though it was also never the intention of the Parliament to enact Insolvency and Bankruptcy Code 2016 (IBC, 2016) to have such far reaching impact on the tax administration, the decision of the Hon'ble Supreme Court has held it otherwise. 70. The entire tax administration of the country is now in a pell-mell. All the tax authorities will have to make a beeline before the National Company Law Tribunal every time to recover tax dues if under any circumstances proceedings are initiated against corporate debtor under the IBC, 2016. This ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the resolution plan approved by the Adjudicating Authority shall also be binding on the Central Government, any State Government or any local authority to whom a debt in respect of payment of dues arising under any law for the time being in force, such as authorities to whom statutory dues are owed, including tax authorities; (g) ......................................" [emphasis supplied]" 72. Noting the above, in paragraph No.71, the Court in Ghanashym Mishra and Sons Vs. Edelweiss Asset Construction held as under :- " 71. Perusal of the SOR would reveal, that one of the prime objects of I&B Code was to provide for implementation of insolvency resolution process in a time bound manner for maximisation of value of assets in order to balance the interests of all stakeholders. However, it was noticed, that in some cases there was extensive litigation causing undue delays resultantly hampering the value maximisation. It was also found necessary to ensure, that all creditors are treated fairly. It was therefore in view of the various difficulties faced and in order to fill the critical gaps in the corporate insolvency framework, it was necessary to amend certain provisions of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing to restore the company. So, that is very clear ................. (emphasis supplied)" 73. It could thus be seen, that in the speech the Hon'ble Finance Minister has categorically stated, that Section 238 provides that I & B Code will prevail in case of inconsistency between two laws. She also stated, that there was question about indemnity for successful resolution applicant and that the amendment was clearly making it binding on the Government. She stated, that the Government will not make any further claim after resolution plan is approved. So, that is going to be a major sense of assurance for the people who are using the resolution plan. She has categorically stated, that she would want all the Hon'ble Members to recognize this message and communicate further that I&B Code gives that comfort to all new bidders. They need not be scared that the taxman will come after them for the faults of the earlier promoters. She further states, that once the resolution plan is accepted, the earlier promoters will be dealt with as individuals for their criminality but not the new bidder who is trying to restore the company. 74. The Court further held as follows:- 77. It is clear, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applicant starts on a clean slate and is not flung with any surprise claims. If that is permitted, the very calculations on the basis of which the resolution applicant submits its plans, would go haywire and the plan would be unworkable. 87. We have no hesitation to say, that the word "other stakeholders" would squarely cover the Central Government, any State Government or any local authorities. The legislature, noticing that on account of obvious omission, certain tax authorities were not abiding by the mandate of I&B Code and continuing with the proceedings, has brought out the 2019 amendment so as to cure the said mischief. We therefore hold, that the 2019 amendment is declaratory and clarificatory in nature and therefore retrospective in operation. 88. There is another reason, which persuades us to take the said view. Sub-section (10) of Section 3 of the I&B Code defines "creditor" thus: "(10) "creditor" means any person to whom a debt is owed and includes a financial creditor, an operational creditor, a secured creditor, an unsecured creditor and a decree-holder;" 89. Sub-sections (20) and (21) of Section 5 of the I&B Code define "operational creditor" and "operationa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of doubt to hold, that the 2019 amendment is declaratory and clarificatory in nature. We also hold, that even if 2019 amendment was not effected, still in light of the view taken by us, the Central Government, any State Government or any local authority 35 2018 SCC OnLine Cal. 142would be bound by the resolution plan, once it is approved by the Adjudicating Authority (i.e. NCLT). CONCLUSION 95. In the result, we answer the questions framed by us as under: (i) 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; (ii) 2019 amendment to Section 31 of the I&B Code is clarifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... larified from the National Company Law Board that the indeed crown debts like the differential " customs duty" payable to the respondent under the subject bill of entry which is the subject matter of the present writ petition were treated as "operational debt" before it by the " corporate applicant" . 81. The corporate applicant has indirectly taken over the petitioner in their "Corporate Resolution Plan" before the said Tribunal. It is for the petitioner to prove that the "customs duty" payable to the respondent under the subject Bill of Entry was factored by the Corporate Applicant in the Corporate Resolution Plan submitted before the National Company Law Board. 82. The petitioner shall therefore approach the National Company Law Board within a period of 30 days from the date of receipt of copy of this Order and obtain appropriate clarification from the National Company Law Board. Needless to state, the respondent shall be made a respondent and given a notice. 83. The petitioner is given another 150 days to obtain such clarification from the said National Company Law Board. Therefore, during the period of next 180 days from the date of the receipt of this Order, the respectiv ..... X X X X Extracts X X X X X X X X Extracts X X X X
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