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Issues: (i) whether the Gujarat VAT dues enjoyed a statutory charge so as to entitle the appellant to be treated as a secured creditor for the VAT component of its claim, and whether the entry of 'N.A.' in Form B amounted to waiver of that status; (ii) whether the resolution plan was liable to be rejected or interfered with on that basis, or could stand with only the distribution under the insolvency waterfall to be worked out.
Issue (i): whether the Gujarat VAT dues enjoyed a statutory charge so as to entitle the appellant to be treated as a secured creditor for the VAT component of its claim, and whether the entry of 'N.A.' in Form B amounted to waiver of that status.
Analysis: Section 48 of the Gujarat Value Added Tax Act, 2003 created a statutory charge only over the VAT component and not over the CST component of the composite claim. The appellant's declaration in Form B did not, by itself, amount to waiver of a charge created by statute, because waiver requires an intentional abandonment of a known right and a statutory charge is not ordinarily capable of being waived merely by conduct. The Resolution Professional was also on notice of the lien and the statutory basis of the appellant's claim through the proceedings and pleadings, so the incorrect entry in Form B could not be treated as conclusive against the appellant. The charge could, however, be recognised only to the extent the statute created it.
Conclusion: the appellant was entitled to be treated as a secured creditor only for the VAT component of its dues, and not for the entire composite claim.
Issue (ii): whether the resolution plan was liable to be rejected or interfered with on that basis, or could stand with only the distribution under the insolvency waterfall to be worked out.
Analysis: The dispute, after recognising the limited statutory charge, concerned the correct distribution of proceeds under the insolvency waterfall rather than the validity of the entire resolution plan. The plan had been approved, and the proper course was to adjust the distribution in accordance with the appellant's secured status for the VAT component, without unsettling the plan itself.
Conclusion: the resolution plan was not rejected, and only the treatment of the appellant as a secured operational creditor to the extent of the VAT dues was directed.
Final Conclusion: the appeal succeeded only in part, with recognition of secured status confined to the VAT component under the Gujarat VAT Act, while the approved resolution plan otherwise remained undisturbed.
Ratio Decidendi: a statutory charge under the VAT law confers secured-creditor status only to the extent of the charge actually created by statute, and an insolvency resolution plan need not be rejected where the dispute is confined to distribution of proceeds under the waterfall mechanism.
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