2023 (2) TMI 1170 - AT - Insolvency and Bankruptcy

Appeal Dismissed: Tax Claimant's Status Upheld in Resolution Plan Allocation.

The Tribunal dismissed the appeal challenging the approval of a Resolution Plan by the Adjudicating Authority. The Department of State Tax contested the ... Approval of Resolution Plan - It is submitted that the Adjudicating Authority committed error in not accepting the entire claim of the Appellant which was admitted - HELD THAT:- There are no dispute between the parties regarding the facts which took place in the CIRP and the claim which was admitted in the CIRP. On comparison of the provisions of Section 48 of the provision of Gujarat Values Added Tax which was relied in “Rainbow Papers Limited [2022 (9) TMI 317 - SUPREME COURT]” and the Provisions of Section 37 which is sought to be relied on in the present Appeal, distinction between the provisions is clear. Section 37 specifically uses the expression “subject to any provision regarding creation of first charge in any central act”. The provision itself contemplated thus that Section 37 was subject to any provision in Central Act. The IBC Section 53 itself provides waterfall mechanism which may be treated to be law which has been contemplated under Section 37 of the MVAT Act, 2002. The Judgement of the Hon’ble Supreme Court in “Rainbow Paper Limited” relied by Learned Counsel for the Appellant is distinguishable. The Appellant having been treated as Operational Creditor allocation of amount in the Resolution Plan cannot be said to be in violation of Section 30 (2)(b) - thus, no ground has been made to interfere with the Impugned Order. Appeal dismissed. Issues:Challenge to approval of Resolution Plan by Adjudicating Authority based on claim treatment and legal interpretation.Analysis:The appeal was filed by the Department of State Tax challenging the approval of a Resolution Plan by the Adjudicating Authority. The Appellant claimed an amount in the Corporate Insolvency Resolution Process (CIRP), out of which only a portion was accepted and allotted in the Resolution Plan. The Appellant argued that their claim should have been treated as a secured charge, citing a judgment of the Supreme Court and provisions of the Maharashtra Value Added Tax Act, 2002. The Respondent contested this, mentioning a Review Petition filed regarding the Supreme Court judgment and stating that the judgment was distinguishable from the current case.Upon hearing both parties and examining the records, the Tribunal noted that there was no dispute about the facts of the CIRP and the admitted claim. The Tribunal compared the relevant provisions of the Gujarat Value Added Tax Act and the Maharashtra Value Added Tax Act, 2002. It highlighted that the Maharashtra Act included a provision subject to any creation of a first charge in a Central Act, indicating that the Insolvency and Bankruptcy Code (IBC) Section 53 could be considered such a law. The Tribunal concluded that the Supreme Court judgment cited by the Appellant was distinguishable, especially since the Appellant was treated as an Operational Creditor, and the allocation of the amount in the Resolution Plan did not violate Section 30(2)(b).In light of the above analysis, the Tribunal dismissed the appeal, finding no grounds to interfere with the Impugned Order.