Tax Appeal Succeeds: CGST Challenge Upheld with Complex Resolution Plan and Creditor Claim Considerations Resolved

HC allowed appellant's appeal challenging tax demand under CGST Act, setting aside previous order and admitting writ petition. The court recognized complex legal issues surrounding resolution plan approved by NCLT, freezing of creditor claims, and jurisdictional challenges. Respondents directed to file affidavit-in-opposition, with case listed for future hearing.

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Issues Involved:
The judgment involves issues related to challenging an order under the CGST Act, 2017, in the context of a resolution plan approved by the NCLT, Kolkata Bench, and the applicability of the Insolvency and Bankruptcy Code, 2016.

Details of the Judgment:

Issue 1: Challenge to Order under CGST Act
The appellant challenged an order-in-original dated 21.11.2023 passed by the respondents under the provisions of the CGST Act, 2017. The order affirmed a demand of service tax and imposed a penalty equal to the tax amount. The appellant raised questions regarding the legality of the demand and the liability to pay the tax amount.

Issue 2: Applicability of Resolution Plan Approved by NCLT
The appellant questioned whether the approved resolution plan by the NCLT, Kolkata Bench, absolved the appellant of all debts and liabilities accrued till the date of approval. The appellant argued that creditors are estopped from making claims post-approval of the resolution plan. The resolution plan was approved in 2019, and subsequent legal proceedings raised concerns about the liabilities of the appellant.

Issue 3: Jurisdiction under Insolvency and Bankruptcy Code
The judgment highlighted the commencement of proceedings under the Insolvency and Bankruptcy Code, 2016 before the issuance of the show cause notice related to the service tax demand. The court referred to precedents, emphasizing that all claims stood frozen upon approval of the resolution plan by the NCLT, barring claims included in the plan.

The court acknowledged the need to address the legal points raised by the appellant regarding the resolution plan, creditor claims, and the jurisdiction of the respondents. Given the complexity of the issues and the challenge to the jurisdiction of the second respondent, the court allowed the appeal, set aside the previous order, and admitted the writ petition for further hearing. The respondents were directed to file an affidavit-in-opposition, and the case was listed for a future hearing before the appropriate Bench.

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