TaxTMI 
TaxTMI 
TaxTMI 
2019 (3) TMI 1238
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....Jayant Mehta, Mr. Rishi Sood, Mr. Manu Krishnan, Mr. Sajal Jain, Mr. Divyanshu Aggarwal, Advocates JUDGMENT SUDHANSU JYOTI MUKHOPADHAYA, J. These appeals though heard separately but the question being common are being disposed of by this common judgment. In Company Appeal (AT) (Insolvency) No. 205 of 2017 2. This appeal has been preferred by 'Pr. Director General of Income Tax (Admn. & TPS)' against the order dated 2nd August, 2017 passed by the Adjudicating Authority (National Company Law Tribunal), Hyderabad Bench, Hyderabad under Section 31 of the Insolvency and Bankruptcy Code, 2016 ("I&B Code" for short) approving the 'Resolution Plan' of 'M/s. Synergies Dooray Automotive Ltd.'. 3. The grievance of the Appellant is that the Adjudicating Authority has granted huge Income Tax benefits to the 2nd Respondent- 'Synergies Castings Ltd.' without impleading the Appellant department as a Respondent to the said proceedings. In Company Appeal (AT) (Insolvency) No. 671 of 2018 4. This appeal has been preferred by 'Pr. Commissioner of Income Tax (Central)-3, Mumbai' against the order dated 19th April, 2018 passed by the Adjudicating Authority (National Company Law Tribunal), Mu....
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....contained in any contract to the contrary but subject to any provision regarding creation of first charge in any Central Act for the time being in force, any amount of tax, penalty, interest, sum forfeited, fine or any other sum, payable by a dealer or any other person under this Act, shall be the first charge on the property of the dealer or, as the case may be, person. (2) The first chare a mentioned in sub-section (1) shall be deemed to have been created on the expiry of the period specified in sub-section (4) of Section 32, for the payment of tax, penalty, interest, sum forfeited, fine or any other amount." 11. Reliance has also been placed on the decision of the Hon'ble Supreme Court in "Central Bank of India vs. State of Kerala & Ors.─ (2009) 4 SCC 94", wherein the Hon'ble Supreme Court held: "179. In this case the Bank had taken possession of the mortgaged assets on 15-2-2005 and sold the same. On 11-7-2005, the officers of the Commercial Tax Department informed the Bank about outstanding dues of sales tax amounting to Rs. 3,62,82,768. The Assistant Commissioner issued notice under Section 39 of the Bombay Act for recovery of Rs. 48,48,614. The High Court negati....
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....bility of every person under Section 4 of the Income Tax Act, who are bound to pay Income Tax on its 'Total Income' (as defined under Section 5 of the Act). This is required to be discharged by every person including a 'Resolution Applicant'. Placing reliance on Chapter XVII (Collection and recovery tax), particularly Sections 190 to Sections 234F of the Income Tax Act, 1961 it was submitted that the said provisions if contravened will become redundant. Further, according to learned counsel for the Appellant, the 'Resolution Plan' approved by the Adjudicating Authority is in contravention of provisions of Section 220 read with Section 156 of the Income Tax Act, which read as under: "156. When any tax, interest, penalty, fine or any other sum is payable in consequence of any order passed under this Act, the Assessing Officer shall serve upon the assesse a notice of demand in the prescribed form specifying the sum so payable" Xxx &....
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....unt on which interest was payable under this section had been reduced, the interest shall be reduced accordingly and the excess interest paid, if any, shall be refunded : xxx xxx xxx (2A) Notwithstanding anything contained in sub-section (2), the Principal Chief Commissioner or] Chief Commissioner or Principal Commissioner or] Commissioner may reduce or waive the amount of interest paid or payable by an assessee under the said....
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.... goods' or services rendered to the 'Corporate Debtor', they cannot be treated to be the 'Operational Debt'. 22. For determination of the issue, it is relevant to notice the definition of 'Operational Creditor' and the 'Operational Debt' as defined in Section 5(20) and Section 5(21), as quoted below: "(20) "operational creditor" means a person to whom an operational debt is owed and includes any person to whom such debt has been legally assigned or transferred; (21) "operational debt" means a claim in respect of the provision of goods or services including employment or a debt in respect of the payment of dues arising under any law for the time being in force and payable to the Central Government, any State Government or any local authority;" 23. The word 'or' has been used at three places in Section 5 (21) namely- a claim in respect of provision of goods 'or' services including employment 'or' a debt in respect of the payment of dues arising under any law for the time being in force and payable to the Central Government, any State Government 'or' any local authority. 24. Whether 'or' used in three places in Section 5(21) is disjunctive or should be given the meaning 'and'....
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.... of construction is that a provision of a statute must be construed in accordance with the language used therein unless there are compelling reasons, such as where a literal construction would reduce the provision to absurdity or prevent the manifest intention of the legislature from being carried out. There is no reason why the word 'or' should be construed otherwise than in its ordinary meaning." 26. The word 'or' is normally disjunctive and 'and' is normally conjunctive, but at times they are read as vice versa, was noticed by the Hon'ble Supreme Court in "Municipal Corpn. Of Delhi v. Tek Chand Bhatia─ (1980) 1 SCC 158", as follows: "11............(ii) In Stroud's Judicial Dictionary, 3rd Edn., Vol. 1, it is stated that p. 135: "And' has generally a cumulative sense, requiring the fulfilment of all the conditions that it joins together, and herein it is the antithesis of 'or'. Sometimes, however, even in such a connection, it is, by force of a context, read as 'or'." "You will find it said in some cases that 'or' means 'and' but 'or' never does means 'and'." Similarly, in Maxwell on Interpretation of Statutes, 11th Edn. Pp. 229-230, it has been accepted that "....
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....r any local authority'. 29. 'Operational Debt' in normal course means a debt arising during the operation of the Company ('Corporate Debtor'). The 'goods' and 'services' including employment are required to keep the Company ('Corporate Debtor') operational as a going concern. If the Company ('Corporate Debtor') is operational and remains a going concern, only in such case, the statutory liability, such as payment of Income Tax, Value Added Tax etc., will arise. As the 'Income Tax', 'Value Added Tax' and other statutory dues arising out of the existing law, arises when the Company is operational, we hold such statutory dues has direct nexus with operation of the Company. For the said reason also, we hold that all statutory dues including 'Income Tax', 'Value Added Tax' etc. come within the meaning of 'Operational Debt'. 30. For the said very reason, we also hold that 'Income Tax Department of the Central Government' and the 'Sales Tax Department(s) of the State Government' and 'local authority', who are entitled for dues arising out of the existing law are 'Operational Creditor' within the meaning of Section 5(20) of the 'I&B Code'. 31. In Company Appeal (AT) (Insolvency) No. 205....