Supreme Court rules on tax liabilities in liquidation cases, emphasizing Insolvency and Bankruptcy Code.

The Supreme Court acknowledged the financial unviability of the respondent company undergoing liquidation proceedings. Despite potential success in the appeal, the Official Liquidator's inability to pay taxes led the Court to dismiss the appeal, keeping the legal question open for future cases. The Court recognized the overriding effect of the Insolvency and Bankruptcy Code, emphasizing its precedence over conflicting provisions in other laws like the Income-tax Act. Consequently, all claims, including tax liabilities, would be handled by the Official Liquidator under the Code's provisions. The appeal was withdrawn by the assessee, rendering it moot due to the company's liquidation status.

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Issues involved:
Liquidation of the assessee company under the Insolvency and Bankruptcy Code, 2016 and the impact on the pending appeal. The overriding effect of section 238 of the Insolvency and Bankruptcy Code on other statutes, including the Income-tax Act, 1961.

Analysis:
The Appellant, M/s. Moserbaer India Ltd., brought to the notice of the Bench that the National Company Law Tribunal (NCLT) had ordered the liquidation of the assessee company and appointed a Liquidator under section 33(2) of the Insolvency and Bankruptcy Code, 2016. This information was supported by an order passed by the Hon'ble Supreme Court in the assessee's own case.

The Hon'ble Supreme Court, in a previous order, acknowledged that the respondent company was financially unviable and undergoing liquidation proceedings. The Court noted that even if the Revenue succeeded in the appeal, the Official Liquidator would not be able to pay the tax amount involved. Given the company's liquidation status and inability to pay outstanding dues, the Court decided to dispose of the appeals, leaving the question of law open for future cases.

The Tribunal considered the overriding effect of section 238 of the Insolvency and Bankruptcy Code, as highlighted in a previous Supreme Court judgment. It was established that the Code would prevail over any inconsistent provisions in other enactments, including the Income-tax Act, 1961. Consequently, all claims, including those of the Income-tax Department, would be entertained by the Official Liquidator under section 53(1) of the Code.

In light of these legal principles and the specific circumstances of the case, the authorized representative for the assessee informed the Bench that they did not wish to pursue the appeal. As a result, the appeal was dismissed as withdrawn, as it had become infructuous due to the company's liquidation status. The order was pronounced in open court after a virtual hearing on March 17, 2021.

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