9911796707
TMI Blog2024 (5) TMI 1151X X X X Extracts X X X X X X X X Extracts X X X X ..... deration that the Appellant vide its own letter dated 23.06.2023 acknowledged the fact that for A.Y. 2014-15, 2015-16 2016-17, the assessments were carried on during moratorium. It has been brought to notice that the Appellant passed attachment orders on the property of the Corporate Debtor i.e., 16.10.2018 in alleged and contravention of Section 14 of the Code Regulation therein, even after order dated 15.06.2023 passed by Adjudicating Authority whereby, the Appellant was directed to lift the attachment within ten days of receipt of such intimation from the Respondent, however, till date, the Appellant continues illegally and unlawfully attachment on the subject property of the Corporate Debtor. The time period of 330 days prescribed in the Code is indicative and directory in nature and not mandatory. In fact, large number of cases, due is several reasons, are not able to be resolved within such stipulated period and if the contentions of the Appellant is accepted then the Resolution Process of the Corporate Debtor, in most of the cases, may not take off at all. Thus, the pleadings of the Appellant on this grand, stand rejected. The Rainbow Paper [ 2022 (9) TMI 317 - SUPREME COURT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the last date of claim filing as on 06.09.2017. It has been stated that in the public announcement, it was indicated that the estimated date for closure of CIRP would be 19.02.2018. 6. It is further submitted that due to no resolution of the Corporate Debtor, the CoC decided to liquidate the Corporate Debtor and the Adjudicating Authority approved the Liquidation vide its order dated 25.10.2018. Subsequent to this, the Respondent again published public announcement on 27.10.2018 and last date of claims submission was 24.11.2018 and further indicated that date of closure of the liquidation process would be 20.05.2018. 7. It is a case of the Appellant that the prevailing moratorium under Section 14 of the Code ceased to have effect on 25.10.2018 and Section 33(5) of the Code came into effect. The Appellant submitted that the CIRP came to close on 20.05.2018. 8. The Appellant submitted that he passed an order for attachment for immovable properties of the Corporate Debtor vide attachment letter dated 16.10.2018 in terms of the Gujarat Vat Act, 2003 (in short VAT Act ) for outstanding dues pertaining to Assessment Year (in short AY ) 2007 to 2017. It was stated that the said attachmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 23 to the Appellant reiterating that the claims of the Appellant have been rejected. 14. The Appellant thereafter filed an I.A. No. 435 of 2023 seeking that he may be declared as Secured Creditors for his entire claims. 15. The Appellant gave the background of the case and stated that the Appellant had sent notices under Bombay Land Revenue Code (in short BLRC ) and Section 48 of the Gujarat Sales Tax Act 1969 (in short Sales Tax Act ) for the purpose of old Assessment years 1994 to 1998 attaching the immovable and movable properties of the Corporate debtor for these old assessment years which were much prior to the moratorium. The Appellant also submitted that notices dated 24.09.2009, 12.02.2010, 12.12.2011 and 03.02.2012 under Section 152 read with Section 200 of the BLRC were sent by him for attachment of movable and immovable property of the Corporate Debtor for the said assessment years, which had not been challenged by the Corporate Debtor. 16. It is the case of the Appellant that his claims are covered under the Judgment of State Tax Officer Vs. Rainbow Papers Limited [(2023) 9 SCC 545] and the Respondent could not have differentiated his claims for few Financial Years as S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is attachment are legal and valid as per VAT Act and belong to the prior CIRP period hence should not have been affected by the moratorium. 22. The Appellant pleaded that the Code does not provide the recovery mechanism for tax which is covered by the VAT Act and therefore the Appellant took actions according to VAT Act and in terms of Section 34(9) of the VAT Act, audit assessments can be done anytime during a period of four years and as such all his actions was legal according to the VAT Act. 23. The Appellant also assailed the Impugned Order wherein the Adjudicating Authority alleged to have wrongly relied upon the Judgement of Hon ble Supreme Court of India in the case of Sundaresh Bhat, Liquidator ABG Shipyard v. Central Board of Indirect Taxes [(2023) 1 SCC 472] held as follows, which has wrongly been followed in the present case, 45. We are of the clear opinion that the demand notices to seek enforcement of customs dues during the moratorium period would clearly violate the provisions of Sections 14 or 33(5) of the IBC, as the case may be. This is because the demand notices are an initiation of legal proceedings against the corporate debtor. However, the above analysis would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not take away his rights to be treated as Secured Creditors. 28. The Appellant pleaded that it is a spirit and the intention of the statute which is important and not the wordings and prints and submitted that the spirit of all the concerned acts and the Codes to treat the claims of the Appellant as Secured Creditors and had to be treated at par with land revenue claims and as such the Respondent should have treated the Appellant as a Secured Financial Creditor for his tax dues. 29. The Appellant further assailed the conduct of the Respondent who rejected the claims of the remaining assessments years on the ground that these would be hit by Section 14 of the Code. It is the case of the Appellant that the estimated date of closure of CIRP was 19.02.2018 and thereafter the Appellant decided to issue demand notices after giving dates and thus the new demand notices were issued by the Appellant are not hit by Section 14 of the Code. 30. The Appellant stated that as per the scheme of the Code the CIRP is expected to be completed within 330 days and as such the claims of the Appellant were fully covered. 31. Concluding his remarks, the Appellant requested to allow his appeal and set as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s acted completely as per law and followed various sections of the Code and the relevant regulations. It is a case of Respondent that he also kept in view the relevant judgments including Rainbow Papers (Supra) therefore the Appellant could not have any grievance against the rejection of claim which was not covered by the Code or by the Rainbow Papers (Supra) . 36. The Respondent further submitted that he had issued the detailed letters to the Appellant on 22.06.2023 and 26.06.2023 and clarified position of the various claims of the Appellant which was in conformity that Rainbow Papers (Supra) which were appreciated by the Adjudicating Authority in the Impugned Order. 37. It is the case of the Respondent that the Appellant was treated as Secured Creditor to the extent that he was illegible and remaining portion of the claims were not treated as Secured Creditors but these were treated as Unsecured Creditors and would be also governed under Section 53 of the Code. 38. The Respondent assailed the conduct of the Appellant who attached the assets of the Corporate Debtor during the moratorium and liquidation order thereby violated under Section 14 of the Code and further assailed the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ainbow Papers (Supra) could not have been considered by him as Secured Creditors. 46. The Respondent took pains to explain that all remaining claims of the Appellant have been admitted and treated, albeit, as Unsecured Creditors. The Respondent gave detailed analysis, year by year, as the Respondent claims have been classified and treated by the Appellant . 47. The Respondent also refuted the cited judgements of the Appellant during pleadings as these are not applicable in the present appeal. 48. Concluding his remarks, the Respondent submitted that the appeal may be dismissed with cost. Finding 49. The point which emerges from the pleadings is regarding treatment of claims as Secured claims vis-a -vis Unsecured claims. 50. We note that the Adjudicating Authority in its Impugned Order dated 31.10.2023 has captured the details of the claims and treatment given by the Respondent which reads as under : - This give bird s eye view of Financial Year, total claims, which classified as Secured and Unsecured Debts and reason for such classification by the Respondent 51. After perused of all records and pleading of the parties, we can bifurcate the Appellant s claims into three period (i) T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant. It is noted that the Appellant filed its claims for the AY 2013-14 wherein the Assessment Order was passed on 30.03.2018 by the Appellant, AY 2014-15 wherein the Assessment Order was passed on 31.07.2018 by the Appellant, AY 2015-16 wherein the Assessment Order was passed on 29.11.2019 by the Appellant and AY 2016-17 wherein the Assessment Order was passed on 23.03.2020 by the Appellant. 56. The CIRP of the Corporate Debtor came to be initiated vide order dated 23.08.2017 and accordingly moratorium was declared same day. 57. It has been brought to the notice of this Appellate Tribunal that pursuant to the initiation of liquidation process of the Corporate Debtor, the effect of moratorium is continued as per Section 33(5) of the Code which is also confirmed by the Hon'ble Supreme Court of India in the matter of Sundaresi Bhatt Vs. Central Board of Indirect Taxes and Custom [(2023) 1 SCC 472]. 58. Thus, it is undisputed that the Assessment Order dated 29.11.2019 for the AY 2015-16 and the Assessment Order dated 23.03.2020 for the AY 2016-17 came to be passed by the Appellant during liquidation process of the Corporate Debtor. 59. It is observed that during the course of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to Rs.3,80,70,08,255/- for AY 2014-15 accrued vide Assessment Order dated 31.07.2018 which is post the period of Moratoriums. 8. The department does not dispute the fact that for AY 2015- 16 and 2016-17, the assessment can be said to have been carried out during the moratorium period which commenced from the date when the Hon ble Tribunal passed the Liquidation order on 25.10.2018 which came to be passed in I.A. 291 of 2018. Thus, considering the abovementioned details the department, hereby requests the Liquidator to consider the state tax department for the period of AY 2013-14 and 2014- 15 as secured creditor . On the same being duly considered. the state tax department shall lift the attachment in due compliance the interim order passed by the Hon'ble National Company Law Tribunal on 15.06.2023 in IA 435 of 2023 in IA 501 of 2020.. (Emphasis Supplied) 62. It seems from above that the Appellant knew his legal rights very well. Only point of the Appellant is contained in Para 6, which reads as under :- 6. The Notice for demand of amount assessed for AY 2013-14 and 2014-15 would not fall within the moratorium period as mentioned by the Liquidator in the details provided on 22. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he IBC as they were issued after the initiation of the CIRP proceedings. Moratorium under Section 14 of the IBC was imposed when insolvency proceedings were initiated on 1-8-2017 [ICICI Bank Ltd. v. ABG Shipyard Ltd., 2017 SCC OnLine NCLT 554] . The first notice sent by the respondent authority was on 29-3-2019. Further, when insolvency resolution failed and the liquidation process began, NCLT passed an order on 25-4-2019 [Sunil Kumar Jain v. Sundaresh Bhatt, 2019 SCC OnLine NCLT 9931] imposing a moratorium under Section 33(5) of the IBC. It is only after this order that the respondent issued a notice under Section 72 of the Customs Act against the corporate debtor. The various demand notices have therefore clearly been issued by the respondent after the initiation of the insolvency proceedings, with some notices issued even after the liquidation moratorium was imposed. 45. We are of the clear opinion that the demand notices to seek enforcement of customs dues during the moratorium period would clearly violate the provisions of Sections 14 or 33(5) of the IBC, as the case may be. This is because the demand notices are an initiation of legal proceedings against the corporate debtor. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies that total 13 claims were submitted by the Appellant for the period 1994-95 onwards with total tax dues amounting to Rs. 1001,72,32,359/- and the Respondent considered the tax demands of Rs. 42,99,15,943/- relating to AY 2007-08, 2008-09, 2009-10, 2010-11, 2011-12, 2012-13 as Secured Creditors and the remaining claims of the Appellant were accepted but not as Secured Creditors and have treated as Unsecured Creditors which amount to Rs. 958,73,16,448/-. We find this to be in accordance with the Code and judgment of the Courts. 71. As regards, the arguments of the Appellant that the CIRP/liquidation process should have been completed within 330 days and therefore dues to reasoning that the Appellant and conclude the resolution of the Corporate Debtor the Appellant cannot be put to disadvantage. We are of the view that time period of 330 days prescribed in the Code is indicative and directory in nature and not mandatory. In fact, large number of cases, due is several reasons, are not able to be resolved within such stipulated period and if the contentions of the Appellant is accepted then the Resolution Process of the Corporate Debtor, in most of the cases, may not take off at all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the State, squarely falls within the definition of security interest under Section 3(31) IBC and the State becomes a secured creditor under Section 3(30) of the Code. 55. In our considered view, NCLAT clearly erred in its observation that Section 53 IBC overrides Section 48 of the GVAT Act. Section 53 IBC begins with a non obstante clause which reads: 53. Distribution of assets. (1) Notwithstanding anything to the contrary contained in any law enacted by the Parliament or any State Legislature for the time being in force, the proceeds from the sale of the liquidation assets shall be distributed in the following order of priority . 56. Section 48 of the GVAT Act is not contrary to or inconsistent with Section 53 or any other provisions of IBC. Under Section 53(1)(b)(ii), the debts owed to a secured creditor, which would include the State under the GVAT Act, are to rank equally with other specified debts including debts on account of workman's dues for a period of 24 months preceding the liquidation commencement date. 57. As observed above, the State is a secured creditor under the GVAT Act. Section 3(30) IBC defines secured creditor to mean a creditor in favour of whom securit ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
