CST dues are not secured debt absent an express statutory first charge, leaving the resolution plan intact.

Section 9(2) of the Central Sales Tax Act, 1956 was treated as a machinery provision for assessment and recovery, not as a source of substantive security or a first charge over the corporate debtor's assets. As the statute did not create an express charging provision comparable to the Gujarat VAT framework, CST dues were held not to be secured debt. On that basis, the challenge to the approved resolution plan failed, because non-recognition of CST dues as secured claims did not breach the Insolvency and Bankruptcy Code. The plan approval was therefore left undisturbed.

---

---

Issues: (i) Whether dues payable under Section 9(2) of the Central Sales Tax Act, 1956 constitute secured debt by creating a first charge on the corporate debtor's assets; (ii) Whether the approved resolution plan suffered from any infirmity on account of non-recognition of such CST dues as secured debt.

Issue (i): Whether dues payable under Section 9(2) of the Central Sales Tax Act, 1956 constitute secured debt by creating a first charge on the corporate debtor's assets.

Analysis: Section 9(2) of the Central Sales Tax Act, 1956 was held to be a machinery provision dealing with assessment, collection, enforcement, and allied recovery procedures through the State sales tax framework. The provision imports procedural powers and applicable recovery mechanisms, but it does not contain any express language creating a statutory first charge comparable to Section 48 of the Gujarat Value Added Tax Act, 2003. The distinction between procedural recovery powers and a substantive charge on property was treated as decisive. The precedents dealing with GVAT dues were found inapplicable because they rested on the express first-charge provision in that statute.

Conclusion: The CST dues were not secured debt and did not enjoy first-charge status on the corporate debtor's assets.

Issue (ii): Whether the approved resolution plan suffered from any infirmity on account of non-recognition of such CST dues as secured debt.

Analysis: Once CST dues were held not to be secured debt, the challenge to the resolution plan on that footing could not succeed. The approval of the plan was not shown to violate Section 30(2) of the Insolvency and Bankruptcy Code, 2016. The Tribunal also noted that the argument based on earlier decisions concerning GVAT dues did not extend to CST dues in the absence of a corresponding charging provision.

Conclusion: No infirmity was found in the approval of the resolution plan.

Final Conclusion: The appeals failed because CST dues could not be elevated to secured status in the absence of a statutory first charge, and the resolution plan approval was left undisturbed.

Ratio Decidendi: A tax claim becomes a secured debt only when the governing statute creates a substantive security interest or first charge by operation of law; a provision conferring only procedural recovery powers does not, by itself, confer secured status.

---