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TMI Blog2022 (6) TMI 106X X X X Extracts X X X X X X X X Extracts X X X X ..... de for raising the dispute. As in the circumstances stated, this is not a moonshine defence. The IBC is a summary proceeding. The role of the Code is limited to Insolvency Resolution to Corporate Persons in a time bound manner in case of initiation of CIRP by Operational Creditor, the Operational debt must be undisputed. As far as the GST dispute is concerned, he is free to approach Appropriate Forum under Chapter V of the Sale of Goods Act, 1930 for redressal of its grievance - I B Code clearly provides for the requirements of following three criteria s before admission of a petition under Section 9 of the Code for initiation of CIRP by Operational Creditor (i) the Debt must be due and payable in law (ii)there must be occurrence of default (iii) the Debt must be undisputed. It is very much clear that the amount is outstanding. But the amount is not due and payable in the law as is very much evident from the facts that one of the supplier of the Appellant has on the basis of intelligence input and investigation conducted by anti invasion branch of the Commissionerate of GST has revealed that the concerned supplier has taken registration under GST Regime is nonexis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Respondent- Corporate Debtor; c. Pending the hearing and final disposal of the present Appeal, direct the Respondent to deposit the amount of Rs. 26,89,290 so admitted by them before this Tribunal etc. 3. The Appellant is a trader of Iron Steel and other metals etc. The Appellant does not have warehouse and once it gets the order from the manufacturer/Supplier then it places the order on the other supplier / manufacturer and asked them to directly supply the material to the Manufacturer/Supplier / Corporate Debtor (CD) in the present case. The Appellant is the Sole Proprietor of M/s. Goyal Enterprises. It is stated by the Ld counsel for the Operational Creditor(OC)/Appellant that the CD has approached the Appellant for providing supplies of Sponge Iron etc. goods to the CD which will be used by the CD as raw materials / process materials for its plant at Bhavnagar - Vallabhipur Highway. The business dealing between the Operational Creditor (OC) and CD commenced from 2018 and thereafter, CD was placing orders on the Appellant / OC and the OC have been procuring the materials from the supporting manufacturer / suppliers and thereafter directly being supplied to the CD ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice in Form-3 Form-4 under the Code vide notice dated 01.07.2019. The Ld. Counsel for the Appellant has stated that there is a default in the payment and it is an unpaid operational debt and hence it is just and equitable that CIRP be initiated against the CD. 6. The Ld counsel for the Appellant has also stated that they have received the reply of demand notice on 22.07.2019. The Ld counsel for the Appellant has also stated that in the demand notice, the CD has admitted the Debt and hence the Appellant has filed the application under Section 9 of the Code before the Adjudicating Authority for initiation of the CIRP against the CD/Respondent. 7. While the Respondent side in its reply has submitted the followings: a. That an alert circular No. 13/Kol-S/2019 has been issued by the Commissioner of CGST Tax and Central Excise, Kolkata South Commissionerate, Kolkata 700107 in which it is mentioned that on verification one M/s. Rathank Retails Pvt, Ltd was found to be a non-existent fictious company who passed huge amount of irregular input tax credit to various recipients throughout India without physical supply of goods as revealed from the analysis of their GSTR-1 data ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of dues illegitimately to extort money and create undue pressure on the CD which is nothing but an abuse of process of law. 9. It was also submitted by the learned counsel for the Respondent/CD that they have explained through an additional affidavit dated 12.06.2020 before the Adjudicating Authority which indicates that the GST Registration No. of M/s. Rathank Retails Pvt, Ltd, GST No. Registration Number viz 19AAICR1096E1Z8, the supplier of the appellant has been cancelled w.e.f.18.06.2019. It proved that the said supplier of the appellant is a non-genuine party and the input tax credit which the appellant has availed from the alleged non-existent suppliers shall be disallowed as a result of which the Respondent/CD shall not be in a position to avail input tax credit from the said transactions. 10. In the demand notice which has been received by the Appellant on 22nd July, 2019, the CD/Respondent has emphatically stated as follows which is appearing at page 72 and 73 of the Appeal paper book: 11. The CD/Respondent has cited the judgment of Hon ble Supreme court Mobilox Innovations Pvt. Ltd. Vs. Kirusa Software Pvt. Ltd, AIR 2017 SC 4532 to supplement its case that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n provided by them and the relevant provisions of the Code and related law laid down by the Hon ble Apex Court on the subject and as such record following observations: a. It is not in dispute that the Appellant is a Trader and whenever he used to get any order from any source, he used to put corresponding order on the supplier/manufacturer of that particular goods and used to directly ask them to make direct supply to the concerned source/CD. b. It is also not in dispute that in the present case the involvement of CGST/SGST issue is not involved. c. It is also not in dispute that the CGST Commissionerate, Kolkata has not issued the above stated alert circular no. 13/Kol-S/2019 which involves M/s. Rathank Retails Pvt, Ltd and in that details the name of Subhash Goyal is also existing at page 75 of the Appeal paper book. d. It is also not in dispute that the GST Authorities have not cancelled the M/s. Rathank Retails Pvt, Ltd, GST No. Registration Number viz 19AAICR1096E1Z8 (appearing at page 33 of the Reply /objections on behalf of the Respondent/CD). The said firm date of registration is 13.12.2017 and date of cancellation is 18.06.2019. Search result is also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. As far as the GST dispute is concerned, he is free to approach Appropriate Forum under Chapter V of the Sale of Goods Act, 1930 for redressal of its grievance. h. It is also evident that the CD is a going concern and it has a turnover of Rs. 186 Crore (approx.) during 2018-19 and is a profit-making company and profit before tax is Rs. 3 Crore(approx.) and it has generated a net cash flow from operating activities Rs. 3.83 Crore (appearing at page131 of the Appeal paper book). It is also stated in the reply that the Company is having 60 employees and is paying a wages and salary to the extent of Rs. 75 lacs. The Company is having a good reputation in the market and its statutory audit report is also available in the appeal paper book at page 125. The Statutory Audit Report vide page 127 para -VII also reflects that there are no dues of sales tax authority. i. There are certain provisions of the Code which are involved for initiation of CIRP by Operational Creditor. For brevity and clarity, a few of them are extracted below: Section 3,(10) (11) (12) Section 5(20) (21), Section 8 9 of the Code. Section 3(10) - creditor means any person to whom a debt is owe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the period of ten days from the date of delivery of the notice or invoice demanding payment under subsection (1) of section 8, if the operational creditor does not receive payment from the corporate debtor or notice of the dispute under sub-section (2) of section 8, the operational creditor may file an application before the Adjudicating Authority for initiating a corporate insolvency resolution process. (2) The application under sub-section (1) shall be filed in such form and manner and accompanied with such fee as may be prescribed. (3) The operational creditor shall, along with the application furnish- (a) a copy of the invoice demanding payment or demand notice delivered by the operational creditor to the corporate debtor; (b) an affidavit to the effect that there is no notice given by the corporate debtor relating to a dispute of the unpaid operational debt; (c) a copy of the certificate from the financial institutions maintaining accounts of the operational creditor confirming that there is no payment of an unpaid operational debt [by the corporate debtor, if available;] (d) a copy of any record with information utility confirming that there is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Operational Creditor (i) the Debt must be due and payable in law (ii)there must be occurrence of default (iii) the Debt must be undisputed. k. The accumulation of input tax credit is a pool and if the said pool gets tainted then it is a grey area whether the dealer in the pool is permitted to withdraw any amount from the said pool irrespective of the period of transaction. In the present case, situation is being perceived. l. It is very much clear that the amount is outstanding. But the amount is not due and payable in the law as is very much evident from the facts that one of the supplier of the Appellant has on the basis of intelligence input and investigation conducted by anti invasion branch of the Commissionerate of GST has revealed that the concerned supplier has taken registration under GST Regime is nonexistent and fictious, resulting into perceived loss of more than two times of the outstanding amount loss to the CD without any mistake on the part of the CD. It has created a cumbersome situation and CD has asked for corresponding bank guarantees which has been refused by the Appellant and hence it has resulted into a dispute. So, it can be concluded that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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