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TMI Blog2024 (12) TMI 294X X X X Extracts X X X X X X X X Extracts X X X X ..... the Notice dated 03.07.2019. Thus, clearly Section 43 was not attracted and Application under Section 43 was wholly misconceived. Whether the deposit of the VAT Tax by M/s. VE Commercial Vehicles Limited can be treated to be in violation of Moratorium imposed under Section 14 against the Corporate Debtor? - HELD THAT:- Present is a case where no recovery has been affected by Commercial Tax Department from the Corporate Debtor, the GST Tax Liability of the Corporate Debtor which was not satisfied by the Corporate Debtor was directed to be discharged by M/s. VE Commercial Vehicles Limited which has taken benefit of input tax without GST dues being deposited by the Corporate Debtor. As noted above, under Section 28 of the MP VAT Act, 2002, the recovery can be from any person who holds any money for on account of such dealer or person. M/s. VE Commercial Vehicles Limited has contended before the Adjudicating Authority that it has reversed input tax benefit taken by it by depositing the amount of Rs.17,12,094/-, since the Corporate Debtor did not deposit the GST amount - The transaction which was questioned by the RP before the Adjudicating Authority of M/s. VE Commercial Vehicles Limi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Resolution Professional (RP) filed an IA131/MP/2020 against the VE Commercial Vehicles Limited, Respondent No. 1 and Commercial Tax Officers as Respondent No. 2 under Section 43 read with Section 60(5) of the Insolvency and Bankruptcy Code, 2016, (for short `The Code or `The IBC ) for refund of the aforesaid amount from the Commercial Tax Department. iv. The Application I.A. 131/MP/2020 was opposed both by VE Commercial Vehicles Limited as well as the Commercial Tax Department pleading that the deposit of amount of Rs.17,12,094/- is not a Preferential Transaction within meaning of Section 43 and the Application is not maintainable. v. It is further pleaded that there is no violation of Moratorium by the Respondents to the Application. vi. Adjudicating Authority after hearing the Parties observing that VAT/GST recovered the amount of tax payable by Corporate Debtor as per Notice dated 03.07.2019, whereas CIRP was initiated vide Order dated 21.06.2019. The recovery having been made during Moratorium period, the Commercial Tax Department is liable to refund the amount. vii. Aggrieved by the Order passed by the Adjudicating Authority in I.A. 131/MP/2020, this Appeal has been filed. 3. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T Tax. The above amount was deposited by M/s. VE Commercial Vehicles Limited consequent to the Notice issued under Section 28(1) of the MP VAT Act, 2002. Section 28(1) of the MP VAT Act, 2002 provides as follows: 28: Special mode of recovery (1) Notwithstanding anything contained in Section 24 or any law or contract to the contrary, the Commissioner or any officer other than the officer appointed under clause (g) of subsection (1) of section 3, may at any time or from time to time, by a notice in the prescribed form a copy of which shall be sent to the dealer or person, at his last address known to the officer issuing the notice, require, - (a) any person from whom any amount is due or may become due to a dealer or person who has failed to comply with a notice of demand for any amount due under this Act; (b) any person who holds or may subsequently hold any money for or on account of such dealer or person, to pay to the Government under this sub-section, either forthwith or upon the money becoming due or being held, or within the time specified in the notice (not being before the money becomes due or is held), so much of the money, as is equal to the amount due from the dealer or p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dar) Indore, Circle 15 9. We may first notice the applicability of Section 43 under which the Application was filed by the RP questioning the above transaction. Section 43(1) 43(2) provides as follows: 43. Preferential transactions and relevant time. (1) Where the liquidator or the resolution professional, as the case may be, is of the opinion that the corporate debtor has at a relevant time given a preference in such transactions and in such manner as laid down in subsection (2) to any persons as referred to in subsection (4), he shall apply to the Adjudicating Authority for avoidance of preferential transactions and for, one or more of the orders referred to in section 44. (2) A corporate debtor shall be deemed to have given a preference, if (a) there is a transfer of property or an interest thereof of the corporate debtor for the benefit of a creditor or a surety or a guarantor for or on account of an antecedent financial debt or operational debt or other liabilities owed by the corporate debtor; and (b) the transfer under clause (a) has the effect of putting such creditor or a surety or a guarantor in a beneficial position than it would have been in the event of a distribution ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e applicable laws and regulations, respondent no. 1 did not require the consent of the management of the corporate debtor. (v) The claim made in the present application is strongly disputed. In this context, it is submitted from the latest statement of account of respondent no.1, a sum of Rs 69,41,214/- has been shown as a GST amount paid by respondent no. 1 to the corporate debtor as of 01.03.2020 but the same has not been remitted by the corporate debtor to the GST authority, therefore, despite such payment, the corporate debtor has failed to make a contemporaneous payment to the GST Authority. Assuming an amount of Rs 11,90,744/- as claimed by the resolution professional is payable, the same is to be deducted from the sum of Rs 69,41,214/- which is the unremitted GST amount withheld by the corporate debtor, for which respondent no. 1 is entitled to the ITC of a sum of Rs 57,15,862/-. Despite the remittance of the payment to the corporate debtor, the said amount was not paid further to the competent authority and respondent no. 1 is unable to claim a credit for such amount. 13. Section 14(1) of the IBC provides as follows: 14. Moratorium. (1) Subject to provisions of sub-sections ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... porate Debtor did not deposit the GST amount. GST amount was paid by VE Commercial Vehicles Limited to the Corporate Debtor but the same was not remitted by the Corporate Debtor to the GST Authority which submission has been noticed in Paragraph 5(v) of the Order of the Adjudicating Authority as extracted above. The transaction which was questioned by the RP before the Adjudicating Authority of M/s. VE Commercial Vehicles Limited depositing the amount of Rs.17,12,094/- before the Commercial Tax Department to reverse the input tax availed by it cannot be in any manner said to be violate provisions of Section 14 of the IBC. Commercial Tax Department did not recover any amount from the Corporate Debtor or form its assets, the amount was recovered from an entity, M/s. VE Commercial Vehicles Limited which had taken the benefit of input tax where GST had not been deposited, hence M/s. VE Commercial Vehicles Limited reversed it benefits of input tax taken from Commercial Tax Department. 15. We, thus are satisfied that there was no applicability of Section 14, the transaction in question under which the M/s. VE Commercial Vehicles Limited deposited the amount of Rs.17,12,094/- before the C ..... X X X X Extracts X X X X X X X X Extracts X X X X
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