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TMI Blog2023 (9) TMI 1385X X X X Extracts X X X X X X X X Extracts X X X X ..... the Corporate Debtor, because of the fact that the claim was resting upon the Estimates and Best Judgment Assessment orders, in the teeth of Section 62 of the KGST Act, 2017. Considering the fact that Appellant / Petitioner, came up with the same claim , sum , which arose, based on Best Judgment Assessment order, made on earlier occasion, and the regular assessment , was not made, hence, this Tribunal, is of the cocksure opinion, that the demand was not ascertained and not crystalised and placed before the 1st Respondent / Resolution Professional for consideration of the Committee of Creditors . Suffice it, for this Tribunal , to pertinently point out that the Appellant / Petitioner, is prohibited, based on the Principle of Res judicata , and by its conduct, is estopped from agitating the likewise, grounds for determination before the Adjudicating Authority / Tribunal . This Tribunal, ongoing through the impugned order passed by the Adjudicating Authority / NCLT Bengaluru Bench, is of the considered opinion, that the observations made in paragraph 18 and 19 to the effect that the claim of Applicant, would not be considered to have First Charge at pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , among other things, engaged in the Business of Manufacture and sale of products of wood, cork, straw and plating materials . In the course of its Business , the Corporate Debtor , had effected taxable supplies of Goods in and from the State of Karnataka and registered under the provisions of the Karnataka VAT Act , KGST Act , the Central Goods and Services Tax Act, 2017 , ( the CGST Act for short), and the Integrated Goods and Services Tax Act, 2017 ( the IGST Act, for short) and accordingly, liable to comply with the requirement of the aforesaid Acts, including for payment of taxes as applicable. 4. The Learned Counsel for the Appellant, advances an argument that the Adjudicating Authority / Tribunal had passed the impugned order, in an unjustified manner, against law, facts, and the same is liable to be set aside. 5. The Learned Counsel for the Appellant points out that the Adjudicating Authority / Tribunal , committed an error in dismissing the interlocutory application filed by the Appellant bearing IA No. 393/2023, on the ground that it was barred by res judicata without appreciating the vital fact, that the Appellant, was prevented from proceedings, to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de. 9. Advancing his argument, the Learned Counsel for the Appellant, comes out with a plea, that the Adjudicating Authority had not appreciated the decision of the Hon ble Supreme Court in Ebix Singapore Pvt. Ltd. Vs. Committee of Creditors of Educomp Solutions Ltd. and Anr., reported in (2022) 2 SCC 401 wherein at paragraph 147 it is observed as under:- 147. In terms of Regulation 39(4), the RP shall endeavour to submit the Resolution Plan approved by the CoC before the Adjudicating Authority for its approval under Section 31 of the IBC, at least fifteen days before the maximum period for completion of CIRP. Section 31(1) provides that the Adjudicating Authority shall approve the Resolution Plan if it is satisfied that it complies with the requirements set out under Section 30(2) of the IBC. Essentially, the Adjudicating Authority functions as a check on the role of the RP to ensure compliance with Section 30(2) of the IBC and satisfies itself that the plan approved by the CoC can be effectively implemented as provided under the proviso to Section 31(1) of the IBC. Once the Resolution Plan is approved by the Adjudicating Authority, it becomes binding on the Corporate Debt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st and hence, cannot be allowed to stand. 15. The Learned Counsel for the Appellant, points out that the Adjudicating Authority / Tribunal has failed to taking into account that actions of 1st Respondent, adjudicating, and rejecting the demand of Appellant, of a sum of Rs.54,46,13,819/- in the information memorandum, is nothing but an abuse of process of law, and the same had resulted in causing use loss to the Exchequer , besides, being contrary to law, absurd, arbitrary and bad in Law . 16. The Learned Counsel for the Appellant, submits that the Adjudicating Authority has failed to appreciate that, on a perusal of Information Memorandum , it could be seen, that out of the claims submitted in Form-F, to the extent Rs. 146.35 crores, comprising of all State and Central Government authority, the 1st Respondent / Resolution Professional had rejected the claims of the value of Rs.105.43 crore, unilaterally, arbitrarily and in an illegal manner without any authority of law and restricted the claim to Rs. 40.92 crores by rejecting the entire demand of Appellant of Rs. 54,46,13,819/-. 17. According, to the Appellant, the Adjudicating Authority , has failed to take into ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment Order quashed on the Hon ble High Court in its order dated 02.07.2021 and is estopped , by the Principle of Res-Judicata . 24. It is represented on behalf of the 1st Respondent, that the Adjudicating Authority , had rightly held, that the Appellant, is not a secured creditor , and that the decision of the Hon ble Supreme Court in Rainbow Papers case, inapplicable , to the facts of the present case, as the Section 82 of the KGST Act and CGST Act makes a specific exception , to the provisions of the I B Code, 2016 . 25. In this connection, the Learned Counsel for the 1st Respondent, points out in the judgment dated 02.08.2023 of this Tribunal, in the matter of Assistant Commissioner of Central Tax Vs. Mr. Sreenivasa Rao Ravinuthala RP Samyu Glass Pvt. Ltd. (Company Appeal (AT) (CH)(Ins.) No. 346 of 2021, wherein, at paragraph Nos. 7 to 9, it is observed as under: 7. As regarding the contention of the Learned Counsel for the Appellant that the decision of the Hon ble Supreme Court in the matter on State Tax Officer Vs. Rainbow Papers Limited , reported in [(2022) SCC Online SC 1162], is applicable to the facts of this case, this Tribunal is of the con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the decision in the matter of State Tax Officer Vs. Rainbow Papers Limited , (Supra) cannot be made applicable to the facts of this case. It is also pertinent to mention that the Master Circular No.1053/02/2017-CX, issued by the Ministry of Finance, Department of Revenue, Central Board of Excise and Customs specifies that dues under Central Excise Act, 1944 would have first charge only after the dues under the Provisions of the Code are recovered. Once again, for better understanding of the case, Clause 20 of the Regulation is reproduced as hereunder: 20. Recovery from the assets under liquidation: Section 53 of the Insolvency and Bankruptcy Code, 2016 provides for order of priority for distribution of proceeds from the sale of the liquidation assets. Pari-materia changes have been made in Section 11E of the Central Excise Act, 1944. In effect, the Central Excise dues shall have first charge, after the dues, if any, under the provisions of Companies Act, Recovery of Debt due to Bank and Financial Institution Act, 1993 and Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 and the Insolvency and Bankruptcy Code, 2016, have b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /2022 in CP(IB) No.51/BB/2018, (Filed by the Appellant / Petitioner under Section 60(5) of the Code, 2016, read with Rule 11 of the NCLT Rules, 2016), a declaration was sought in respect of the Resolution Plan, approved by the Committee of Creditors, based on the Information Memorandum prepared by the 1st Respondent / Resolution Professional, as null and void , since, the plan is contrary to the provisions of the Code and Regulations and added further, in directing the R2 to R4, to comply with the common order, passed by the Adjudicating Authority / Tribunal on 28.05.2021 in IA No. 134/2020. 32. It cannot be gainsaid that, if an issue , was already determined, by a Tribunal , once again, the same cannot be decided, without taking resultant necessary steps, in terms of the observations made by the Tribunal . It may not be out of place for this Tribunal, to make a significant mention that the Adjudicating Authority / Tribunal , in the common order dated 28.05.2021 had pertinently observed that once the return was already filed and taxes paid, the Demand made in the Best Judgment Assessment order is an unenforceable one, viewed in that prospective with the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Club Ors. 52. The views expressed by the present judgment finds support in the decision reported as Sundaresh Bhatt, Liquidator of ABG Shipyard v. Central Board of Indirect Taxes and Customs38. In that case, Section 142A of the Customs Act 1962 was in issue authorities had submitted that dues payable to it were to be treated as first charge on the property of the assessee concerned. In the resolution process, it was argued that the Customs Act, 1962 acquired primacy and had to be given effect to. This court, after noticing the overriding effect of Section 238 of the IBC, held as follows: 55. For the sake of clarity following questions, may be answered as under: (a) Whether the provisions of the IBC would prevail over the Customs Act, and ifso, to what extent? The IBC would prevail over the Customs Act, to the extent that once moratorium is imposed in terms of Sections 14 or 33(5) of the IBC as the case may be, the respondent authority only has a limited jurisdiction to assess/determine the quantum of customs duty and other levies. The respondent authority does not have the power to initiate recovery of dues by means of sale/confiscation, as provided und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 18, and directed the GST Department to process the Return, filed by the Corporate Debtor in accordance with law, however, the GST Department had not adhered to the Hon ble High Court s order dated 02.07.2021, in WP No.45290/2019 and had not made any Regular Assessment in accordance with the Returns Filed. 36. As far as the present case is concerned, this Tribunal, ongoing through the impugned order dated 28.06.2023, in IA No. 393/2022 in CP(IB) No. 51/BB/2018, passed by the Adjudicating Authority / NCLT Bengaluru Bench, is of the considered opinion, that the observations made in paragraph 18 and 19 to the effect that the claim of Applicant, would not be considered to have First Charge at par with secured creditors under the mandatory provisions of Section 82 of the Karnataka Goods and Services Act, 2017, Section 82 of the Central Goods and Services Tax Act, 2017 and Section 20 of the integrated goods and Services Tax Act, 2017 and that Section 20 of the IGST Act provides that certain provisions of CGST Act inter alia, those falling under Demands and recovery section of CGST Act shall, mutatis mutandis , apply, so far as may be, in relation to integrated tax, as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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