2025 (5) TMI 471 - HC - GST

Tax Recovery Halted: Insolvency Resolution Plan Shields Petitioner from GST Liability Under Interim Relief Mechanism

HC stayed recovery order under GST Act, finding merit in petitioner's argument that resolution plan under Insolvency and Bankruptcy Code extinguishes ... Approval of resolution plan under the Insolvency and Bankruptcy Code, 2016 by the National Company Law Tribunal, New Delhi Bench pertaining to the petitioner Company - whether the approval of resolution plan absolves liabilities prior to the plan's sanction unless expressly provided for therein? - the respondents prays for time to file counter affidavit - HELD THAT:- Time prayed for is allowed. The Allahabad High Court, presided over by Chief Justice Arun Bhansali and Justice Kshitij Shailendra, considered a petition challenging an order dated 03.02.2025 passed under Section 74 of the Central Goods and Services Tax Act, 2017, concerning the period July 2017 to May 2018. The petitioner contended that a resolution plan under the Insolvency and Bankruptcy Code, 2016, approved by the National Company Law Tribunal, New Delhi Bench, absolves liabilities prior to the plan's sanction unless expressly provided for therein. Citing the Supreme Court's ruling in Ghanshyam Mishra and Sons Pvt. Ltd. v. Edelweiss Asset Reconstruction Co. Ltd., (2021) 9 SCC 657, the petitioner argued that the impugned order cannot be sustained as the liability should cease once the resolution plan is under implementation. The petitioner also noted that this issue was raised in response to the show cause notice but was not addressed. The respondents sought time to file a counter affidavit, which was granted, with directions to complete the process within eight weeks. Meanwhile, the Court ordered a stay on recovery pursuant to the impugned order dated 03.02.2025.