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of <h1>Assessment order against insolvent company lacks enforceability when resolution plan extinguishes all revenue dues</h1> <h3>ACIT (OSD), Range-10, Delhi Versus GAIL Mangalore Petrochemicals Ltd., Mumbai</h3> ACIT (OSD), Range-10, Delhi Versus GAIL Mangalore Petrochemicals Ltd., Mumbai - TMI ISSUES PRESENTED and CONSIDEREDThe core legal questions considered in this judgment are:1. Whether the claims of the Income Tax Department were adequately addressed in the approved Resolution Plan under the Insolvency and Bankruptcy Code, 2016 (IBC).2. Whether the Resolution Plan approved by the National Company Law Tribunal (NCLT) extinguishes the claims of statutory authorities, including the Income Tax Department, as per the provisions of the IBC.3. Whether the Income Tax Department's appeal challenging the approval of the Resolution Plan was valid, given the procedural opportunities provided during the Corporate Insolvency Resolution Process (CIRP).ISSUE-WISE DETAILED ANALYSIS1. Adequacy of Addressing Income Tax Department's Claims in the Resolution Plan- Relevant Legal Framework and Precedents: The IBC provides a framework for resolving insolvency, including the imposition of a moratorium on proceedings against the debtor. Section 31 of the IBC binds all stakeholders to the approved Resolution Plan.- Court's Interpretation and Reasoning: The Tribunal noted that the Resolution Plan, once approved by the NCLT, is binding on all stakeholders, including statutory authorities. The Plan explicitly stated that all dues under the Income Tax Act, 1961, prior to the effective date, would be extinguished.- Key Evidence and Findings: The Resolution Plan included clauses that extinguished all statutory dues, including those of the Income Tax Department, for periods before the effective date.- Application of Law to Facts: The Tribunal applied the provisions of the IBC, which prioritize the revival of the corporate debtor and ensure that the Resolution Applicant starts with a clean slate.- Treatment of Competing Arguments: The Tribunal considered the Income Tax Department's argument regarding the priority of government dues but found it unpersuasive in light of the IBC's provisions.- Conclusions: The Tribunal concluded that the Resolution Plan adequately addressed the claims of the Income Tax Department, in compliance with the IBC.2. Extinguishment of Statutory Claims by the Approved Resolution Plan- Relevant Legal Framework and Precedents: Section 31 of the IBC provides that the approved Resolution Plan is binding on all stakeholders. The Supreme Court's decision in Ghanashyam Mishra and Sons Private Limited vs. Edelweiss Asset Reconstruction Company Limited supports this interpretation.- Court's Interpretation and Reasoning: The Tribunal emphasized that the IBC is a special statute that overrides other laws, including claims for statutory dues under general law.- Key Evidence and Findings: The Tribunal found that the Resolution Plan was compliant with the IBC and extinguished all statutory claims prior to the effective date.- Application of Law to Facts: The Tribunal applied the Supreme Court's interpretation that once a Resolution Plan is approved, all claims not part of the plan are extinguished.- Treatment of Competing Arguments: The Tribunal rejected the Income Tax Department's argument that government dues have priority, reaffirming the IBC's supremacy.- Conclusions: The Tribunal concluded that the Resolution Plan extinguished the statutory claims of the Income Tax Department as per the IBC.3. Validity of the Income Tax Department's Appeal- Relevant Legal Framework and Precedents: The IBC mandates that all claims must be submitted during the CIRP, and once a plan is approved, it is binding.- Court's Interpretation and Reasoning: The Tribunal noted that the Income Tax Department had the opportunity to submit claims and objections during the CIRP but failed to do so.- Key Evidence and Findings: The Tribunal found that the Income Tax Department did not make submissions or objections during the CIRP or the NCLT proceedings.- Application of Law to Facts: The Tribunal applied the principle that failure to submit claims during the CIRP precludes subsequent challenges to the Resolution Plan.- Treatment of Competing Arguments: The Tribunal dismissed the Income Tax Department's appeal, noting the procedural opportunities provided and the binding nature of the approved plan.- Conclusions: The Tribunal concluded that the appeal by the Income Tax Department was invalid due to procedural defaults and the binding nature of the approved Resolution Plan.SIGNIFICANT HOLDINGS- Preserve Verbatim Quotes of Crucial Legal Reasoning: 'The legislative intent behind this is, to freeze all the claims so that the resolution applicant starts on a clean slate and is not flung with any surprise claims.'- Core Principles Established: The IBC overrides other laws regarding statutory dues, and once a Resolution Plan is approved, all claims not included in the plan are extinguished.- Final Determinations on Each Issue: The Tribunal dismissed the Income Tax Department's appeal, affirming that the approved Resolution Plan extinguished all prior statutory claims, and the Department's procedural opportunities were not utilized.
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