Insolvency resolution plan and VAT recovery: tax dues remained recoverable where the State had no effective notice in CIRP.

Approved resolution plans under the Insolvency and Bankruptcy Code were discussed as binding only on stakeholders who were part of the insolvency process, and the Court treated State VAT dues as recoverable where the tax authority had no effective notice or opportunity to lodge its claim. The recovery was also linked to tax collected from customers but not deposited with the treasury. On maintainability, the writ petitions were denied relief because the reassessment orders were not directly challenged, an alternative revisional remedy had been pursued, and the petitioner had not approached the Court with clean hands.

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Issues: (i) Whether the approved resolution plan under the Insolvency and Bankruptcy Code barred the State from recovering VAT dues raised after the corporate insolvency resolution process; (ii) Whether the writ petitions were maintainable in view of the statutory and factual circumstances surrounding the reassessment and recovery proceedings.

Issue (i): Whether the approved resolution plan under the Insolvency and Bankruptcy Code barred the State from recovering VAT dues raised after the corporate insolvency resolution process.

Analysis: The State was treated as falling within the expression of operational creditor and the tax dues as operational debt in principle, but the Court found that the claim had not been disclosed to the Jharkhand tax authorities during the resolution process. The public announcement initiating the corporate insolvency resolution process was not made in the State where the registered office and principal place of business were situated, so the State had no real opportunity to submit its claim. The Court also held that the reassessment and recovery were based on dues already collected from customers and not deposited in the Government treasury, and that the resolution plan could not bind stakeholders who were not involved in the process.

Conclusion: The approved resolution plan did not bar the State from proceeding with recovery of the tax dues, and the challenge failed on this issue.

Issue (ii): Whether the writ petitions were maintainable in view of the statutory and factual circumstances surrounding the reassessment and recovery proceedings.

Analysis: The Court noted that the reassessment orders were not directly challenged, that the petitioner had pursued an alternative revisional remedy, and that the petitioner had not approached the Court with clean hands. The Court also found that the State authorities had not been shown to have knowledge of the insolvency process and that the recovery was sought against the original corporate debtor for liabilities arising long before the asserted resolution relief.

Conclusion: The writ petitions were not entitled to relief and were liable to be dismissed.

Final Conclusion: The recovery action under the State tax law was upheld, and the writ petitions were rejected as lacking merit.

Ratio Decidendi: An approved resolution plan binds only stakeholders who were part of the insolvency process, and statutory tax recovery cannot be defeated where the authority had no effective notice or opportunity to participate in that process.

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