First charge under fiscal law and insolvency moratorium clash resolved in favour of statutory tax dues and secured status.

Delay in filing the appeal was condoned because the filing fell within the Supreme Court's COVID-19 limitation extension and the appellant had sought a certified copy within the protected period. On the merits, the tribunal held that a State tax authority's assessment order and lien/attachment created during CIRP could not be sustained on the reasoning adopted below, because a fiscal statute creating a first charge by operation of law may confer secured-creditor status and its effect must be assessed in light of the Insolvency and Bankruptcy Code and the liquidation framework. The impugned order was set aside and the matter was directed to proceed in accordance with law.

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Issues: (i) Whether the delay in filing the appeal was liable to be condoned in view of the Supreme Court's extension of limitation orders during the period. (ii) Whether the assessment order and lien/attachment created by the State tax authority during CIRP could be sustained despite the moratorium and the statutory framework under the Insolvency and Bankruptcy Code, 2016 and the Himachal Pradesh Value Added Tax Act, 2005.

Issue (i): Whether the delay in filing the appeal was liable to be condoned in view of the Supreme Court's extension of limitation orders during the period.

Analysis: The appeal was filed beyond the normal period of limitation, but the filing fell within the period covered by the Supreme Court's general extension of limitation on account of the COVID-19 pandemic. The record also showed that the appellant had sought a certified copy and the appeal was presented during the extended period protected by those directions.

Conclusion: The delay was condoned and the interlocutory application for condonation was allowed.

Issue (ii): Whether the assessment order and lien/attachment created by the State tax authority during CIRP could be sustained despite the moratorium and the statutory framework under the Insolvency and Bankruptcy Code, 2016 and the Himachal Pradesh Value Added Tax Act, 2005.

Analysis: The dispute turned on the effect of the State's first charge under the Himachal Pradesh Value Added Tax Act, 2005 and the later assessment and lien created after commencement of CIRP and during liquidation. The impugned order had proceeded on the footing that Section 238 of the Insolvency and Bankruptcy Code, 2016 would override the State tax lien, but the appellate tribunal held that the later authoritative view of the Supreme Court in Rainbow Papers required recognition of statutory tax dues and the State's secured status where the charging provision creates a first charge by operation of law. The tribunal therefore held that the impugned order had not correctly applied the governing law.

Conclusion: The impugned order was unsustainable and was set aside; the appeal was allowed and the matter was directed to proceed in accordance with law.

Final Conclusion: The State's statutory tax claim and charge could not be displaced on the reasoning adopted by the adjudicating authority, and the order vacating the lien was reversed.

Ratio Decidendi: Where a fiscal statute creates a first charge by operation of law, the State may be treated as a secured creditor in liquidation, and the interplay with the Insolvency and Bankruptcy Code must be determined in light of that statutory charge and the governing liquidation framework.

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