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TMI Blog2022 (4) TMI 1250X X X X Extracts X X X X X X X X Extracts X X X X ..... 06). Rule 27 of the Rules of 2006 also deals with refund of excess tax/penalty/interest/other sum due, as a result of an assessment made or in pursuance of an order passed by any competent officer, authority or court. Once the tax liability raised by the Department had been fixed by effect of acceptance of Resolution Plan, manifestly, the Department could not hold on to any payment made by the assessee in excess of what has been approved under the Resolution Plan, i.e. ₹ 61.05 crores. The reasoning given by the Tax Board in the impugned orders that the amount deposited by the assessee by way of statutory pre-deposit was not a part of the Resolution Plan is absolutely without foundation for the simple reason that this amount was a proportion of the tax liability fixed on the assessee and once the total tax liability has been quantified by the NCLAT, any amount paid by the assessee over and above such amount would have to be reimbursed as per Section 53 (3) (3A) of the Act of 2003 read with Rule 27 of the Rules of 2006. In the case of STATE OF GUJARAT VERSUS ESSAR STEEL LTD [ 2016 (5) TMI 221 - GUJARAT HIGH COURT] , Hon ble Gujarat High Court directed refund of pre-depo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid as pre-deposit with the appeals (along with interest)? B. Whether in the facts and circumstances of the case, the learned Rajasthan Tax Board wrongly exercised its jurisdiction and acted with material irregularity as on one hand it has held that in view of order dated 14.11.2018 passed by NCLAT, New Delhi read with the resolution plan and orders passed by Hon ble Supreme Court dated 26.07.2019 and 19.05.2020 and 24.01.2020 and the judgment dated 07.04.2020 of the Hon ble Division Bench of Rajasthan High Court, maximum amount which can be recovered from the petitioner is ₹ 61.05 Cr while on another hand has rejected the refund of pre-deposit amount which was deposited and lying with the respondent department in excess of ₹ 61.05 Cr? Brief facts, relevant and essential for disposal of these revisions are noted hereinbelow :- The Assistant Commissioner, Commercial Taxes Department issued VAT assessment orders fixing liability of company M/s. Binani Cement Limited for different periods ranging from 2005-06 to 2015-16 and also imposed upon it, additional tax and interest. These orders were carried by M/s. Binani Cement Limited in appeal to the Deputy Commissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... td. Vs. Union of India Ors.) came to be filed on behalf of the petitioner in this court, which was accepted vide order dated 07.04.2020 and the demands raised by the GST Department were quashed as being contrary to the IBC and the Judgment of Hon ble Supreme Court in the case of Essar Steel Ltd. (supra). The said judgment of this court has attained finality. Pursuant to acceptance of its Resolution Plan, the petitioner stepped into the shoes of the original appellant M/s. Binani Cement Ltd. in the pending appeals before the Tax Board. As the Commercial Taxes Department was itself contemplating to dispose off the outstanding demands against the sick unit as a consequence of the NCLAT s acceptance of the petitioner s Resolution Plan, applications seeking withdrawal of the appeals and refund of the amount of pre-deposits made by way of mandatory statutory obligation alongwith the appeals filed before the Tax Board on behalf of the petitioner. All the appeals were disposed off by the Tax Board by the common order dated 28.12.2020 observing that all demands of the Commercial Taxes Department, Government of Rajasthan beyond a sum of ₹ 61.05 crores had been turned down by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contentions, Dr. Acharya relied upon the following judgments :- 1. Ghanshyam Mishra and Sons Private limited Vs. Edelweiss Asset Reconstruction Company Limited Ors [2021 SCC Online SC 313] 2. GGS Infrastructure Private Limited Vs. Commissioner of CGST Central Excise (WP-LD-VC-NO.269 of 2020) decided on 22.12.2020 3. M/s. Jagat Janani Services Vs. Goods Service Tax Council and Others [W.P.(C) No.17196 of 2020] decided on 21.09.2021 4. Suvidhe Ltd. Vs. Union of India, 1996 (82) ELT 177 (Bom.) (Affirmed in Union of India Vs. Suvidhe Ltd., [(2016) 11 SCC 808)]) 5. State of Gujarat Vs. Essar Steel Ltd. [2016 SCC Online Guj 4125] 6. Nelco Limited Versus Union of India [2001 SCC Online Bom 1251] and prayed that the revisions deserve to be accepted and the amounts pre-deposited with the appeals by way of mandatory statutory obligation deserve to be reimbursed to the petitioner with interest. Per contra, Mr. Hemant Dutt, learned counsel representing the respondent Commercial Taxes Department, vehemently opposed the submissions advanced by Dr. Acharya. He contended that the amounts pre-deposited with the appeals filed by Binani Cement Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the appellant to be due from him or of such installment thereof as might have become payable and in case of an appeal from an ex-parte assessment order, five percent of, and in other cases ten percent of the 3[ disputed tax amount ]. (Emphasis supplied) (4) Notwithstanding that an appeal has been preferred to the appellate authority, the tax or any other sum shall, subject to the provisions contained in sub sections (4) and (5) of section 38, be paid in accordance with the order against which appeal has been preferred. (5) The appeal shall be in the prescribed form and shall be verified in the prescribed manner. (6) The following shall have the right to be heard at the hearing of the appeal, (a) the appellant, either in person or by the authorized representative; (b) the authority or officer against whose order the appeal has been preferred either in person or by a representative. (7) The appellate authority may, before disposing of any appeal make such further enquiry as it thinks fit, or may direct the assessing authority or the officer against whose order appeal has been preferred to make further enquiry and report the result of the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d shall be refunded in the prescribed manner by the Assistant Commissioner or the Commercial Taxes Officer, as the case may be, in whose territorial jurisdiction such person or contractor ordinarily resides; and where such person or contractor does not reside in the State, then such refund shall be made by such officer as may be directed by the Commissioner. [(3A) Where any amount has been deposited wrongly or in excess, by a dealer and it is found that such amount is not payable or has been deposited in excess of the amount payable by the dealer for the tax period mentioned in the challan, the Commissioner or any officer as authorized by the Commissioner in this behalf shall direct the assessing authority to grant refund of the said amount in the manner as prescribed.] (4) [Where refund of any amount becomes due to a dealer, he shall be entitled to receive, in addition to the amount of refund, simple interest at such rate as may be notified by the State Government with effect from 1st April of the year immediately following the year to which it relates upto the date of payment: Provided that where the dealer has paid any amount of tax after the closing of the year a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers in Form VAT-23.] On going through the aforesaid provisions of the Act of 2003 and the Rules of 2006, it becomes clear that mandatory statutory obligation pre-deposit with the appeal comprises of a proportion of VAT liability imposed upon the assessee by the assessing authority. M/s. Binani Cement Limited became sick and during pendency of the insolvency proceedings and Corporate Insolvency Resolution process was undertaken under the IBC, 2016. With the acceptance of the Resolution Plan of the petitioner who was declared the successful applicant by the NCLAT, the petitioner gained absolute control over the unit and was under an obligation to discharge the existing liabilities of the sick unit, strictly in terms of the Resolution Plan approved by the NCLAT. It is not in dispute that the respondent Department had submitted a claim for an outstanding amount of ₹ 479,73,13,819/- before the NCLAT in the resolution proceedings in the capacity of an operational creditor. The amount so claimed would relat to Value Adeed Tax and nothing else. The NCLAT disposed of the demands raised by all corporate/operational creditors including the respondent Department while acceptin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt paid by the assessee over and above such amount would have to be reimbursed as per Section 53 (3) (3A) of the Act of 2003 read with Rule 27 of the Rules of 2006. The Tax Board held that the burden of establishing that the amount deposited with the appeals by way of mandatory statutory obligation was also a part of the Resolution proceedings and in absence of any such material, the appellant could not stake a claim for the same. Superficially this logic of the Tax Board appears to be justified in view the stipulation made in Section 53 (5) of the Act of 2003 that the burden of proof is on the dealer or the person claiming the refund. However, when the situation is considered in light of the order passed in the insolvency proceedings, it becomes clear that the entire tax liability accruing to the Department was put forth by way of a claim filed by the Department before the NCLAT in the capacity of a statutory creditor. As the NCLAT comprehensively decided the claim of the Department and restricted the liability of the Resolution applicant, i.e. the petitioner herein, towards the Department to ₹ 61.05 crores, it can be presumed that there was no other liability of the pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of that approved by the NCLAT would have to be struck off and if any amount has already been received over and above what has been approved under the Resolution Plan, the same would have to be refunded. The Commercial Taxes Department issued the order dated 12.08.2021, whereby it has been resolved as below :- Apparently, as per this order, all demands of the Department against the sick unit as they existed prior to date of transfer of the original unit to the petitioner, i.e. 25.07.2017, were disposed of in accordance with the Resolution Plan. The predeposits, of which refund is sought by the petitioner, had been made by way of mandatory statutory obligation while filing appeals before the Tax Board as part of the tax liability of M/s. Binani Cement. However, as all demands raised by the Department for the date prior to the taking over of the sick unit under the Resolution Plan have been disposed of, the appeals pending before the Tax Board became infructuous as the liability of the successful Resolution Applicant, i.e. the petitioner herein, qua the Commercial Taxes Department stood extinguished beyond what has been quantified by the Tribunal. In the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eedings 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 clarificatory and declaratory in nature and therefore will be effective from the date on which I B Code has come into effect; (iii) Consequently all the dues including the statutory dues owed to the Central Government, any State Government or any local authority, if not part of the resolution plan, shall stand extinguished and no proceedings in respect of such dues for the period prior to the date on which the Adjudicating Authority grants its approval under Section 31 could be continued. 132. The appeal therefore is allowed. The impugned judgment and order dated 6.7.2020 passed by the Allahabad High Court is quashed and set aside. We hold and declare, that the respondents are not entitled to recover any claims or claim any debts owed to them from the Corporate Debtor accruing prior to the transfer date. Needless to state, that the consequences thereof shall follow. The controversy at hand is virtually concluded by the observations made at para 132 of the above judgment, wherein Hon ble Supreme Court has categorically held that the respon ..... X X X X Extracts X X X X X X X X Extracts X X X X
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