Service tax refund appeal abated after NCLT approves Resolution Plan with no provision for pending case

CESTAT Chandigarh disposed of a service tax refund appeal filed by a company undergoing CIRP proceedings. The appellant sought refund of service tax paid on transport of goods by road services for the period 1997-2008. Following precedents set by coordinate benches in similar cases involving companies under resolution plans, the Tribunal held that once a Resolution Plan is approved by NCLT, pending appeals before CESTAT stand abated as the Tribunal becomes functus officio. Since the Resolution Plan made no provision for this pending case, the appeal was disposed of as abated.

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Issues involved:
The appeal against the rejection of a refund of service tax, financial difficulties faced by the appellant-assessee, approval of a Resolution Plan in insolvency proceedings, impact of Resolution Plan on pending legal cases, and the abatement of the appeal before the Tribunal.

Refund of Service Tax Issue:
The appellant filed a refund of service tax for Transport of Goods by Road, which was rejected by the Assistant Commissioner and upheld by the Commissioner (Appeals), leading to the present appeal before the Tribunal.

Financial Difficulties and Insolvency Proceedings Issue:
During the appeal, a financial creditor initiated Corporate Insolvency Resolution Process (CIRP) against the appellant-assessee company, resulting in the approval of a Resolution Plan by the National Company Law Tribunal (NCLT) Mumbai Bench, which did not address the pending case.

Impact of Resolution Plan on Pending Legal Cases Issue:
The Tribunal considered the Resolution Plan's approval and cited previous cases to conclude that once a Resolution Plan is approved, all claims not part of the plan are extinguished, and no further proceedings can be initiated against the corporate debtor.

Abatement of Appeal Issue:
Following the legal precedent and the approval of the Resolution Plan, the Tribunal held that the appeal stands abated, as the Tribunal becomes functus officio in matters related to the appeal.

In summary, the Tribunal dismissed the appeal against the rejection of the service tax refund, citing the approval of the Resolution Plan in insolvency proceedings as extinguishing all claims not included in the plan. Consequently, the appeal was deemed abated, as the Tribunal had become functus officio in the matter.

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