Court overturns tax orders, grants refund to petitioners due to Resolution Plan exclusion.

The court set aside the orders passed by the Joint Commissioner, Central Goods and Services Tax and Central Excise, Nagpur-II, regarding Cenvat Credit availed by the petitioners. It was held that claims not included in the Resolution Plan stand extinguished, following a relevant Supreme Court decision. The court found the writ petition maintainable despite the availability of an alternate statutory remedy, as the impugned orders were considered recovery orders rather than mere liability determinations. The petitioners were entitled to a refund of the pre-deposit made with interest.

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Issues Involved:

1. Validity of the orders dated 31.07.2020 and 31.12.2020 passed by the Joint Commissioner, Central Goods and Services Tax and Central Excise.
2. Whether the claims not lodged in the insolvency proceedings under the Insolvency and Bankruptcy Code, 2016 (I & B Code) stand extinguished.
3. Jurisdictional challenge based on the decision in Ghanashyam Mishra And Sons Private Limited Versus Edelweiss Asset Reconstruction Company Limited.
4. Whether the writ petition is maintainable despite the availability of an alternate statutory remedy.

Summary:

Issue 1: Validity of the Orders

The petitioners challenged the orders dated 31.07.2020 and 31.12.2020 issued by the Joint Commissioner, Central Goods and Services Tax and Central Excise, Nagpur-II, which partly allowed and partly reversed the Cenvat Credit availed by the petitioners, directing recovery of the reversed credit. The orders pertain to different periods between 25.08.2011 and 31.03.2015.

Issue 2: Claims in Insolvency Proceedings

The petitioners argued that the adjudication was undertaken without lodging claims in the insolvency proceedings under the I & B Code, which were pending against petitioner no. 1. The NCLT and subsequently the NCLAT had approved the Resolution Plan, making it binding on all creditors, including government authorities. The petitioners contended that since the claims were not part of the Resolution Plan, they stood extinguished, and no recovery could be effected.

Issue 3: Jurisdictional Challenge

The petitioners relied on the Supreme Court decision in Ghanashyam Mishra And Sons Private Limited, which held that all dues, including statutory dues not part of the Resolution Plan, stand extinguished, and no proceedings for recovery can be initiated post-approval of the Resolution Plan. The petitioners argued that the impugned orders were unsustainable as they directed recovery of amounts not claimed in the Resolution Plan.

Issue 4: Maintainability of Writ Petition

The respondents contended that the petitioners should have availed the alternate statutory remedy under the Central Excise Act, 1944. However, the court noted that the availability of an alternate remedy does not bar the court from exercising jurisdiction under Article 226 of the Constitution, especially when jurisdictional issues are raised. The court found that the impugned orders directed recovery under Section 11A of the Act of 1944, making them recovery orders rather than mere determinations of liability.

Judgment:

1. The impugned orders dated 31.07.2020 and 31.12.2020 passed by the Joint Commissioner, Central Goods and Services Tax and Central Excise, Nagpur-II, are set aside.
2. It is held that the claims not made part of the Resolution Plan stand extinguished as per the decision in Ghanashyam Mishra And Sons.
3. The amount of pre-deposit made by the petitioners shall be refunded with interest at prevailing bank rates within eight weeks.
4. Rule is made absolute in the aforesaid terms. No costs.

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