Resolution plan approval extinguishes pre-approval GST dues and bars recovery proceedings against the corporate debtor.

Under the Insolvency and Bankruptcy Code, 2016, approval of a resolution plan freezes claims not included in the plan, and a successful resolution applicant acquires the corporate debtor on a clean slate. The Gujarat HC applied this principle to GST demands, adjudication orders and show-cause notices relating to periods before approval and implementation of the resolution plan. It held that pre-approval statutory dues of the Central or State Government not forming part of the plan stand extinguished, so recovery proceedings for those liabilities could not be continued or initiated after approval. The impugned GST proceedings for the pre-approval period were therefore quashed.

---

---

Issues: Whether GST demands, adjudication orders and show-cause notices for periods prior to approval and implementation of the resolution plan could be sustained after the resolution plan was approved under the Insolvency and Bankruptcy Code, 2016.

Analysis: On approval of the resolution plan, all claims not forming part of the plan stand frozen and are binding in the manner contemplated by Section 31 of the Insolvency and Bankruptcy Code, 2016. The legal position applied is that a successful resolution applicant takes over the corporate debtor on a clean slate, and statutory dues of the Central or State Government that are not included in the resolution plan stand extinguished. The Court applied this principle to the impugned GST proceedings and held that, once the resolution plan had been approved and implemented, there was no basis to continue or initiate recovery proceedings for pre-approval liabilities.

Conclusion: The impugned GST orders, notices and allied coercive proceedings for the pre-approval period could not be sustained and were quashed.

---