2023 (9) TMI 1385 - AT - Insolvency and Bankruptcy

Tribunal upholds Resolution Professional's decision, emphasizing IBC supremacy over tax acts.

The Tribunal dismissed the Appeal, holding that the Appellant's contentions were devoid of merit and that the Adjudicating Authority's order was free from ... Approval of Resolution Plan - Non Consideration of GST liability as First Charge - failure to follow the requirements u/s 30(2) of the I&B Code which mandates that the 1st Respondent, to ensure that the ‘Resolution Plan’ conforms to the parameters prescribed in the said provision, in the I&B Code - HELD THAT:- This ‘Tribunal,’ pertinently points out that the ‘Appellant’ / ‘Applicant’ had filed a claim in Form-F for a sum of Rs.54,46,13,819/-, on 12.012.2018, after adjusting the receipts of Rs.30,36,36,873/-, in respect of GST Liability and the same was rejected by the 1st Respondent / Resolution Professional of the Corporate Debtor, because of the fact that the claim was resting upon the Estimates and Best Judgment Assessment orders, in the teeth of Section 62 of the KGST Act, 2017. Considering the fact that Appellant / Petitioner, came up with the same ‘claim’, ‘sum’, which arose, based on ‘Best Judgment Assessment’ order, made on earlier occasion, and the ‘regular assessment’, was not made, hence, this Tribunal, is of the ‘cocksure’ opinion, that the ‘demand’ was not ‘ascertained’ and not crystalised and placed before the 1st Respondent / Resolution Professional for consideration of the ‘Committee of Creditors’. Suffice it, for this ‘Tribunal’, to pertinently point out that the Appellant / Petitioner, is prohibited, based on the ‘Principle of Res judicata’, and ‘by its conduct, is estopped’ from agitating the likewise, grounds for determination before the ‘Adjudicating Authority’ / ‘Tribunal’. This Tribunal, ongoing through the impugned order passed by the ‘Adjudicating Authority’ / ‘NCLT Bengaluru Bench, is of the considered opinion, that the ‘observations’ made in paragraph 18 and 19 to the effect ‘that the claim of Applicant, would not be considered to have ‘First Charge’ at par with secured creditors under the mandatory provisions of Section 82 of the Karnataka Goods and Services Act, 2017, Section 82 of the Central Goods and Services Tax Act, 2017 and Section 20 of the integrated goods and Services Tax Act, 2017 and that ‘Section 20 of the IGST Act provides that certain provisions of CGST Act inter alia, those falling under Demands and recovery section of CGST Act shall, ‘mutatis mutandis’, apply, so far as may be, in relation to integrated tax, as they apply in relation to the ‘Central Tax’, as if they are enacted under the IGST Act etc.’ and that apart, a ‘specific exception to the provisions of the Code’ was prescribed in the aforesaid provisions, and expressly providing and overriding effect to the I&B Code, are ‘free from any legal errors’. Appeal dismissed. Issues Involved:1. Whether the Adjudicating Authority erred in dismissing the Appellant's application on the grounds of res judicata.2. Whether the Appellant's statutory demand has a 'First Charge' over the Corporate Debtor's property.3. Whether the Resolution Professional erred in waiving statutory dues without approval from the concerned revenue authority.Summary:Issue 1: Res JudicataThe Appellant, Assistant Commissioner of Commercial Taxes, filed a claim for Rs. 54,46,13,819/- in respect of GST liability, which was dismissed by the Adjudicating Authority on the grounds of res judicata. The Tribunal noted that the Appellant had previously moved the Adjudicating Authority with similar reliefs in IA No. 134/2020, which was dismissed. The Tribunal held that the Appellant is prohibited from agitating the same grounds again due to the principle of res judicata and estoppel by conduct.Issue 2: First ChargeThe Appellant argued that its statutory demand should have a 'First Charge' on the property of the Corporate Debtor. The Tribunal referred to the Supreme Court's decision in the Rainbow Papers case and noted that the Appellant is not a 'secured creditor' under the IBC. The Tribunal highlighted that Section 82 of the KGST Act and CGST Act makes a specific exception to the provisions of the IBC, and thus, the Appellant's claim does not have a 'First Charge' over the Corporate Debtor's property.Issue 3: Waiving of Statutory DuesThe Appellant contended that the Resolution Professional erred in waiving statutory dues without approval from the concerned revenue authority. The Tribunal referred to the Supreme Court's decision in Ebix Singapore Pvt. Ltd. Vs. Committee of Creditors of Educomp Solutions Ltd., which emphasized the role of the Adjudicating Authority in ensuring compliance with Section 30(2) of the IBC. The Tribunal found that the Resolution Professional's actions were in accordance with the IBC and did not constitute a breach of the relevant statute.Conclusion:The Tribunal dismissed the Appeal, holding that the Appellant's contentions were devoid of merit and that the Adjudicating Authority's order was free from any legal errors. The Tribunal emphasized the overriding effect of the IBC over the KGST Act and CGST Act, and upheld the Resolution Professional's actions in rejecting the Appellant's claim.