Dismissed application under Section 60(5) of Insolvency Code due to resolved GST compliance issue

The Tribunal dismissed the application under Section 60(5) of the Insolvency and Bankruptcy Code, 2016, as the Respondent, a Secured Financial Creditor, had already transferred the GST amount to the Corporate Debtor's account, resolving the compliance issue. The dispute arose from the disagreement over the GST liability on the sale of assets, with the Liquidator seeking direction for payment. The Tribunal found the matter resolved and deemed the application unnecessary, emphasizing compliance with GST laws in the liquidation process.

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Issues involved:
1. Application under Section 60(5) of the Insolvency and Bankruptcy Code, 2016 seeking direction to deposit GST amount.
2. Dispute over payment of GST by Secured Financial Creditor.
3. Compliance with GST laws in the context of liquidation process.

Issue 1: Application under Section 60(5) of the Insolvency and Bankruptcy Code, 2016 seeking direction to deposit GST amount
The judgment pertains to I.A. No. 446 of 2020 in C.P. (IB) No. 20/BB/2017 filed by the Liquidator under Section 60(5) of the Insolvency and Bankruptcy Code, 2016. The Liquidator sought direction for the Respondent No. 1 to deposit the GST amount of Rs. 4.46 Crores along with applicable penalty/late fee and interest to enable the Liquidator to make the payment of GST on behalf of the Corporate Debtor. The Liquidator argued that the Respondent No. 1 was required to pay GST as there was a transfer of assets, and the Respondent declined the request, leading to the application.

Issue 2: Dispute over payment of GST by Secured Financial Creditor
The dispute arose as the Respondent No. 1, the Secured Financial Creditor of the Corporate Debtor, realized a gross amount from the sale of assets forming part of their security interest. The Liquidator contended that the sale and handing over of assets constituted supply of goods attracting GST liability. The Liquidator requested the Respondent to collect and remit the GST amount to the account of the Corporate Debtor for compliance with GST laws. However, the Respondent, based on their opinion, declined the request, leading to the disagreement and subsequent legal action.

Issue 3: Compliance with GST laws in the context of liquidation process
The Tribunal examined the compliance with GST laws in the context of the liquidation process. During the hearing, it was revealed that the GST collected on the sale of assets had already been transferred to the account of the Corporate Debtor managed by the Liquidator. The Respondent, State Bank of India, confirmed the transfer of the GST amount, addressing the grievance raised by the Liquidator. Consequently, the Tribunal dismissed the application as infructuous, as the issue was resolved with the payment of the GST amount to the Corporate Debtor's account.

This detailed analysis of the judgment highlights the key issues involved in the legal dispute regarding the payment of GST in the context of insolvency and liquidation proceedings, emphasizing the application of relevant provisions of the Insolvency and Bankruptcy Code, 2016 and GST laws.

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