High Court Grants Interim Relief in Tax Dispute Cases The High Court granted interim reliefs in Writ Petition No. 2864 and Writ Petition No. 1420, staying tax demands and restraining respondents from further ...
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High Court Grants Interim Relief in Tax Dispute Cases
The High Court granted interim reliefs in Writ Petition No. 2864 and Writ Petition No. 1420, staying tax demands and restraining respondents from further actions. The protection is limited to tax dues preceding the NCLT order and does not extend to future periods. The cases are set for further hearing on 25 August 2023.
Issues involved: 1. Tax demands raised against the petitioners by the respondents, including demands under the Sales Tax Act for the period prior to the petitioner being taken over in liquidation proceedings. 2. Jurisdiction of respondents to raise demands against the purchaser of a going concern, as per the order passed by the National Company Law Tribunal (NCLT). 3. Actions of respondents contrary to the resolution plan approved by NCLT.
Writ Petition No. 2864 of 2022: The petitioners, a company and its purchaser, challenge tax demands raised by respondents pre-acquisition. They argue that, as per the Supreme Court decision, once a resolution plan is approved, creditors cannot recover demands not part of the plan from the purchaser. The NCLT order protects the purchaser, and the tax dues could have been recovered from the directors pre-acquisition. Respondents are restrained from taking actions contrary to the resolution plan.
Writ Petition No. 1420 of 2022: Similar to the first petition, this one concerns Income Tax dues. The court observes that the legal position is the same as in the previous petition. Interim reliefs are granted to stay the operation of the intimation under section 143(1) of the Act and restrain respondents from taking further steps in implementation of the said intimation.
Conclusion: The High Court granted interim reliefs to both petitioners, staying the tax demands and restraining the respondents from taking further steps. The court emphasized that the protection granted is limited to tax dues preceding the NCLT order and will not apply to future periods. The matters are scheduled for further hearing on 25 August 2023.
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