NCLAT Dismisses Tax Authorities' Claim Not Filed During CIRP

NCLAT Dismisses Tax Authorities' Claim Not Filed During CIRP

A Supreme Court judgement was referred to that all the dues, if not part of the resolution plan, would stand extinguished before the Appellate Tribunal dismissed the claim

The National Company Law Appellate Tribunal (NCLAT) dismissed an appeal challenging the Resolution Plan, wherein no provision was made for the statutory dues payable to the tax authorities, on the ground that these claims were never filed during the Corporate Insolvency Resolution Process (CIRP).

The Principal Bench of the National Company Law Appellate Tribunal at New Delhi, comprising Justice A.I.S. Cheema and Mr V.P. Singh heard the matter titled The Deputy Commissioner of GST & Central Excise v Mr Vijaykumar V. Iyer Resolution Professional of Dishnet Wireless Limited & Anr.

The factual background of the matter was that the National Company Law Tribunal (NCLT) at Mumbai had accepted the Resolution Plan submitted by the Respondent – Resolution Professional by giving reliefs to the Corporate Debtor – Dishnet Wireless Ltd. Therefore, the present appeal was preferred by the Deputy Commissioner of GST and Central Excise with regards to their claims.

The Appellant – Authorities contended that they had no notice of the Corporate Insolvency Resolution Process (CIRP) of the Corporate Debtor and that there were previous pending litigations between the Appellant and the Corporate Debtor, in which orders had already been passed. It was further submitted by the Appellant – Authorities that the records showed the dues of the Appellant but no provision was made in the Resolution Plan for the dues of the Appellant – Authorities.

However, the Appellant – Authorities admitted that they did not file a resolution plan or their claims, during the pendency of CIRP with regards to the Corporate Debtor due to the COVID-19 situation. By the time, the Appellant – Authorities filed their claims under the Insolvency and Bankruptcy Code, 2016 (IBC) for their operational dues, the Resolution Plan had already been approved.

No submissions were placed by the Respondent – Resolution Professional of the Corporate Debtor regarding this matter.

The Appellate Tribunal noted that no claim was submitted by the Appellant – Authorities until the Respondent – Resolution Professional was approved.

The Appellate Tribunal relied on the judgment of the Supreme Court of India, wherein it was held that all the dues including the statutory dues owed to the Central Government, any State Government or any local authority, if not part of the resolution plan, would stand extinguished.

By relying on the aforesaid judgment of the Supreme Court, it was held by the Appellate Tribunal that there was no question of considering the claim of the Appellant – Authorities in the Resolution Plan since the claims were never filed during the CIRP and, therefore, the appeal was dismissed.