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TMI Blog2025 (2) TMI 304X X X X Extracts X X X X X X X X Extracts X X X X ..... eptember 2008 to operate a planned 1.25 million metric tonnes per year purified terephthalic acid (PTA) plant at Mangalore, Karnataka. The plant, a backward integration project of the Respondent Company's polyester plant, was about to be commissioned in 2017 but ceased operations after the Respondent Company defaulted on a loan the very same year. 3. On an application filed by IDBI Bank Ltd. under Section 7 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as "IBC"), which pertains to the initiation of insolvency proceedings by the financial creditors in cases of default, the Respondent Company was admitted into Corporate Insolvency Resolution Process (hereinafter referred to as "CIRP") by the National Company Law Tribunal (hereinafter referred to as "NCLT") vide order dated 28.01.2022. The NCLT's order triggered the imposition of a moratorium, a legally mandated pause on all the proceedings (including litigation, arbitration, and enforcement actions) against the Respondent Company, and Mr. Sundaresh Bhat was first appointed as an Interim Resolution Professional (hereinafter referred to as "IRP") and later on as Resolution Professional (hereinafter referred to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vate Limited ("MCPI"); and iii GAIL (India) Limited ("GAIL"). 7.2 After evaluating in terms of both qualitative and quantitative criteria, on 15.10.2022, the CoC approved the Resolution Plan submitted by GAIL with 100% voting share. The Letter of Intent dated 16.10.2022 was duly acknowledged by GAIL, signifying their acceptance of the terms outlined in the resolution process. Also, on 18.10.2022, GAIL submitted a performance bank guarantee amounting to 10% of the total Resolution Plan value, i.e. Rs. 210,10,00,000. 8. The RP filed IA 899/22 on 20.10.2022 before the NCLT, seeking approval of the Resolution Plan pursuant to Section 30(6) of the IBC. The statutory period of 270 days for the completion of the CIRP, as prescribed under section 12(3) of the IBC, expired on 30.10.2022. 9. Upon the filing of IA 899/22, the NCLT, on 09.11.2022. issued notice to the Income Tax Department, affording an opportunity to appear and make submissions, including any claims or objections they may have had concerning the Resolution Plan. The matter was subsequently listed for hearing before the NCLT on 21.02.2023; however, no submissions were made on behalf of the Income Tax Department, either re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per Book. 12. Ld. AR has drawn attention to the relevant clauses of the Resolution Plan, dealing with the treatment of government/ statutory dues, made available at page 59 to 60 of PB: "4.4. Treatment of Government/ Statutory Dues 4.4.1. Pursuant to the settlement of the Statutory Creditors as per Clause 4,3.5 of Part D above and on Effective Date, all the dues under the provisions of Income Tax Act, 1961, including taxes, duty, penalties, interest, fines, cesses, unpaid tax deducted at source / tax collected at source, whether admitted or not, due or contingent, whether part of above claim of income tax authorities or not, asserted or unasserted, crystallized or uncrystallised, known, or unknown, secured or unsecured, disputed or undisputed, present or future, in relation to any period prior to the Closing Date, shall stand extinguished and the Corporate Debtor or Resolution Applicant shall not be liable to pay any amount against such demand. 4.4.2. All assessments/ appellate or other proceedings pending in case of the Corporate Debtor, on the Effective Date, relating to the period prior to that date, shall stand terminated and all consequential liabilities, if any, stan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hed and the Respondent Company shall not be liable to pay any amount against such demand. In other words, any dues/ demands raised even subsequent to the date of approval of the Resolution Plan (but within 89 days therefrom) shall also stand extinguished. 14. It is a settled law that once the Resolution Plan has been approved by the NCLT, new claims of the Tax Department cannot be considered. This position has been upheld by the Hon'ble Supreme Court in the case of Ghanashyam Mishra and Sons Private Limited vs. Edelweiss Asset Reconstruction Company Limited (2021) (13 S.C.R. 737) (SC). The relevant extracts of the Hon'ble Supreme Court judgement are as follows: "86. As discussed hereinabove, one of the principal objects of l&B Code is, providing for revival of the Corporate Debtor and to make it a going concern. I&B Code is a complete Code in itself. Upon admission of petition under Section 1, there are various important duties and functions entrusted to RP and CoC. RP is required to issue a publication inviting claims from all the stakeholders. He is required to collate the said information and submit necessary details in the information memorandum. The resolution applicants su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ken by the Hon'ble Supreme Court in the case of Committee of Creditors of Essar Steel India Limited vs. Satish Kumar Gupta and Ors. (2019) (16 S.C.R. 275) (SC). It has been held by the Hon'ble Supreme Court that: "67. For the same reason, the impugned NCLAT judgment in holding that claims that may exist apart from those decided on merits by the resolution professional and by the Adjudicating Authority/ Appellate Tribunal can now be decided by an appropriate forum in terms of Section 60(6) of the Code, also militates against the rationale of Section 31 of the Code. A successful resolution applicant cannot suddenly be faced with "undecided" claims after the resolution plan submitted by him has been accepted as this would amount to a hydra head popping up which would throw into uncertainty amounts payable by a prospective resolution applicant who successfully take over the business of the corporate debtor. All claims must be submitted to and decided by the resolution professional so that a prospective resolution applicant knows exactly what has to be paid in order that it may then take over and run the business of the corporate debtor. This the successful resolution applicant does o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e State exchequer, it cannot be bound by the Resolution Process provisions of the Code has been recorded only to be rejected in view of the above quoted extract from the judgment in the case of Ghanshyam Mishra (supra).'' 17. The similar view has been taken by the Hon'ble High Court of Calcutta also in the case of Principal Commissioner of Income-tax vs. Subhlabh Steels (P.) Ltd. [2022] 141 taxmann.com 190 (Cal.) (HC). 18. We find that the sequence of relevant facts of insolvency proceedings establish that the impugned assessment order was framed on 27/09/2021 and during the insolvency proceedings income tax Department was informed by the resolution professional and only claim with regard to TDS violation of Rs. 10.14 Cr. was filed. The same was also not accepted in insolvency proceedings and even appeal by the department stands dismissed by the NCLAT. The resolution plan as adopted, in para-4.4 specifically, held that all dues of the revenue department in relation to any period prior to the closing date, which the date of approval of resolution plan by NCLT, shall stand extinguished. As discussed above, the law in this regard is quite settled now and we have no hesitation to ho ..... 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