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TMI Blog2024 (5) TMI 884X X X X Extracts X X X X X X X X Extracts X X X X ..... ssued moratorium till the completion of Corporate insolvency resolution process for the purposes referred to in Section 14 of the Code, in respect of the following: "(i) the institution of suits or continuation of pending suits or proceedings against the corporate debtor including execution of any judgment, decree or order in any court of law, tribunal, arbitration panel or authority. (ii) transferring, encumbering, alienating or disposing of by the corporate debtors any of its assets or any legal right or beneficial interest. (iii) any action of foreclose, recover or enforce any security interest created by the corporate debtor in respect of its property including any action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (54 of 2002) (iv) the recovery of any property by an owner or lessor where such properties are occupied by or in the possession of the corporate debtor." 2. The resolution Professional had called for submission of resolution plans from prospective resolution applicants for taking over the company as a going concern. The plan submitted by M/s SNJ Distillers Private Ltd having its registered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndisputed and whether or not filed with Government authorities in relation to all taxes, levies or other statutory dues including but not limited to Income Tax, Goods and Service Tax, Sales Tax, VAT, Water, Electricity, Excise Duty, Custom Duty, Royalties and Fees, and/ or penalties including but not limited to fines and interest on FEMA/FERA/AML and other compliances and fines which the Corporate Debtor was or may be liable to pay (including with respect to Financial years under Assessments), all deductions and all withholding taxes on any payment, as required under applicable laws and pertaining to the period prior to the date of approval of the Resolution Plan by the Hon'ble Adjudicating Authorities stand irrevocably and unconditionally abated, settled and extinguished ........................................................................... (xxiii) Governmental authorities shall not initiate any investigations, actions or proceedings against the Resolution Applicant and / or the corporate debtor in relation to any actions or omissions of the Corporate Debtor in relation to the period prior to the date of approval of the Resolution Plan. (xxiv) All claims of any perso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and no proceeding 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. 6. Learned counsel for the petitioner has placed reliance on the following judgments in Ghanasyam Mishra and sons Private limited vs. Edelweiss Asst Reconstruction company Ltd. [(2021) 9 SCC 657], Ruchi Soya Industries Limited vs. Union of India and ors [2022 Livel Law (SC) 207]. 7. Learned counsel for the petitioner submitted that the resolution plan was approved on 20.01.2020. The period covered by Ext. P9 is prior to the date of approval of the resolution plan, and therefore, Ext. P9 and the impugned notices for recovery of the tax are illegal and barred by Section 31 of the IB Code 2016. Learned counsel for the petitioner also submits though appeal is provided against Ext. P11 under Section 34 of the Act but as Ext. P11 order has been passed in clear violation of the provision of the IB Code, hence without jurisdiction. An order passed without jurisdiction or in other words where there is a jurisdictional error in the order of an authority or court is amenable to writ jurisdiction, despite the availability of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceedings and instead of filing replies to the show cause notices, sought one after another opportunity to produce the documents, but did not submit the relevant documents. After the NCLT passed the order, the petitioner is claiming that it is not liable to pay any amount as tax, as the petitioner has been taken over under insolvency process after the resolution plan got approved by the NCLT. 12. On merit, it is submitted that, as no assessment orders were passed for the year 2017-2018 or subsequent thereto at the time of approval of resolution plan, the liability in pursuance to the assessment orders would not get extinguished, as they were not part of the resolution plan approved by the NCLT. Assessment for the year 2017- 2018 was not finalised before the resolution plan was approved. The tax liability, if any was not able to be fixed prior to the approval date of the resolution plan. It would not have been possible for the assessing authority to intimate the non-existing tax liability of the dealer to the NCLT. The petitioner was only requested to produce the documents for the relevant year and on verification of the same, if it was proved that no discrepancy was there, the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... One Lakh or more. A Corporate insolvency resolution process may be sit in motion by the corporate debtor itself for the financial creditor or an operational creditor. Financial creditor and operational creditors are defined under Section 5 (7) and Section 5 (21) of the Code respectively. The procedure for setting in motion the resolution process plan by financial creditor or by corporate debtor is prescribed under Sections 7 and 8 of the Code. Section 30 of the Code provides that a person who is interested in reviving a corporate body as a going a concern may submit the resolution plan to the resolution professional, which is prepared on the basis of an information memorandum. This plan must provide for payment of insolvency resolution process caused, management of the affairs of the corporate debtor after approval of the plan, implementation and supervision of the plan. It is only when such plan is approved by a board not less than 75% of the voting share of the financial creditors and the adjudicating authority is satisfied that the plan as approved meets the statutory requirement mentioned in Section 30, it may approves the plans, then it becomes binding on corporate debtors as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated 18.03.2023, was issued to the petitioner for producing books of accounts with personal hearing within fifteen days of the receipt of the said notice, then the petitioner had filed reply only on 01.04.2023 and 20.04.2023. The assessment was completed after considering the objections and granting the opportunity of being heard. 20. The resolution plan was approved by the NCLT by order dated 20.01.2020. The notices have been issued after the resolution plan was approved by the NCLT. The preassessment notice was issued to the resolution professional on 18.03.2023, there was no bar for undertaking the proceedings after the resolution plan got approved. It is further submitted that the respondents were entitled to issue notices and pass orders pertaining to the sale tax dues upto 19.01.2020, the penultimate date of the order passed by the NCLT approving the resolution plan. The assessment was pertaining to 2018-2019 covering the period from 01.04.2018 to 31.03.2019, and therefore, the assessment order for the assessment year 2018-2019 was well within the ambit of the powers of the authorities under the KGST Act, 1963 and the resolution plan approved on 20.01.2020 would not make the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y other local authority which does not formed part of the approved resolution shall stand extinguished. However, in respect of the dues for the period prior to 16.08.2018, wherein Section 7 states that, 'petition shall be admitted' and it has been held that the amendment is clarificatory in nature. Once such a resolution plan is approved by the adjudicating authority, all such claims and dues owned to Central Government, State Government or any other local authorities, including the tax authorities which were not part of the resolution plan shall stand extinguished. In Paragraph 95 of the said judgment, the questions had been answered as under:- "(i) That once are solution 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ral Government, State Government, Statutory authority any financial creditor or other creditor to whom in respect of dues arising under any law for the time being in force is void. Such a resolution plan would not bind the State when there are outstanding statutory dues of Corporate debtors. Paragraphs 48, 52, 54 of the judgment in State Tax Officer v. Rainbow papers limited (supra) are extracted hereunder:-- "48. A resolution plan which does not meet the requirements of Sub-section (2) of Section 30 of the IBC, would be invalid and not binding on the Central Government, any State Government, any statutory or other authority, any financial creditor, or other creditor to whom a debt in respect of dues arising under any law for the time being in force is owed. Such a resolution plan would not bind the State when there are outstanding statutory dues of a Corporate Debtor. 52. If the Resolution Plan ignores the statutory demands payable to any State Government or a legal authority, altogether, the Adjudicating Authority is bound to reject the Resolution Plan. 54. In our considered view, the Committee of Creditors, which might include financial institutions and other financial ..... X X X X Extracts X X X X X X X X Extracts X X X X
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