Tax appeals disposed as abated after insolvency resolution plan implementation under IBC Sections 31 and 32A

The Gujarat HC disposed of tax appeals as abated following implementation of a resolution plan under the Insolvency and Bankruptcy Code. The court applied the Supreme Court precedent in Ghanashyam Mishra and Sons v. Edelweiss Asset Reconstruction, holding that liabilities extinguished upon change in management and control under IBC Sections 31 and 32A. The appeals became infructuous due to identical facts with a previous 2022 order. Consequently, the proposed questions remained unanswered and related civil applications were also disposed of.

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Issues involved:
The judgment involves the following issues:
1. Interpretation of the Customs Act, 1962 u/s 130.
2. Application of Notification No.21/2002 - Cus dated 01.03.2002.
3. Effect of Insolvency and Bankruptcy Code, 2016 on tax appeals.

Interpretation of the Customs Act, 1962 u/s 130:
The Court considered R/Tax Appeal No.1270 of 2006 arising from an order passed by the Customs, Excise and Service Tax Appellate Tribunal. The substantial questions of law included the reliance on a private laboratory report regarding carotene content in Crude Palm Oil and the benefit of Notification No.21/2002. The Court admitted these questions for consideration.

Application of Notification No.21/2002 - Cus dated 01.03.2002:
The respondent's involvement in insolvency proceedings under the Insolvency and Bankruptcy Code, 2016 was highlighted. M/s. Patanjali Foods Limited took over M/s. Ruchi Soya Industries Limited through a Resolution Plan approved by the National Company Law Tribunal. The Court noted that similar cases had been disposed of as infructuous due to the implementation of Resolution Plans and changes in management and control.

Effect of Insolvency and Bankruptcy Code, 2016 on tax appeals:
The Court observed that the appellant Commissioner of Customs had not lodged any claim during the insolvency resolution process. Sections 31 and 32A of the IBC were cited to explain that liabilities of the corporate debtor cease upon completion of the resolution process. The Court referred to relevant provisions and a Supreme Court decision to support the conclusion that the tax appeals had become infructuous and abated due to the extinguishment of liabilities post-Resolution Plan implementation.

In conclusion, the Tax Appeals were disposed of as abated, and the proposed questions were not answered. Civil Applications were also disposed of accordingly.

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