Tax Claims Of The Govt. Extinguishes Post Approval Of Resolution Plan By NCLT: CESTAT

The Hyderabad Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that all claims prior to the National Company Law Tribunal (NCLT) approval date of government authorities in relation to all taxes for which the appellant was liable to pay shall stand extinguished on the approval date.

The bench of Anil Choudhary (Judicial Member) and A.K. Jyotishi (Technical Member) has observed that any tax, duty, and legal liability for the period prior to the approval date will be waived and extinguished. The appeal filed in 2012 is a claim that existed prior to the approval date and stands extinguished by virtue of the resolution plan. The payment schedules described in the resolution plan have been completed. The dispute underlying the above appeal stands settled under the Resolution Plan, and nothing survives.

The company faced financial difficulties, and an application was filed by one of the financial creditors under Section 7 of the Insolvency and Bankruptcy Code (IBC) of 2016 to recover debts owned by the company.

The Hyderabad Bench of the NCLT issued an Order dated October 17, 2019, for initiating the Corporate Insolvency Resolution Process (CIRP) in regard to the company under Section 13 of the IBC.

A resolution plan was floated by the resolution professional for approval by the Committee of Creditors. It was approved on May 29, 2019. The resolution plan was submitted before NCLT as required under Sec. 30(6) of the IBC. It was approved by NCLT, and the resolution plan is effective from the NCLT approval date.

The resolution plan provided that all debts of the company would be fully and finally settled upon due compliance with the payment schedules. As per the Resolution Plan, all proceedings against the company in relation to any period prior to October 17, 2019, whether forming part of admitted claims or not, shall stand extinguished by virtue of the Order dated October 17, 2019. Clause 1(f) in Chapter X of the Resolution Plan states that all claims prior to the NCLT approval date of government authorities in relation to all taxes for which the appellant was liable to pay shall stand extinguished on the approval date.

The tribunal held that the appeal stands settled under the Resolution Plan, and nothing survives. The appeal does not survive any more.

Counsel For Appellant: None

Counsel For Respondent: A. Rangadham

Case Title: Icomm Tele Ltd Versus Commissioner of Central Tax Puducherry - GST

Case No.: Excise Appeal No. 1335 of 2012

Click Here To Read The Order