TaxTMI 
TaxTMI 
2020 (5) TMI 39
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....e order bearing No.727 dated 21.11.2019, issued under Section 46 of the Jharkhand Value Added Tax Act, 2005 (hereinafter referred to as the 'JVAT Act'), as contained in Annexure-4 to the writ applications, issued by the respondent No.3, Deputy Commissioner of Commercial Taxes, Bokaro Circle, Bokaro, to the Respondent No.5, State Bank of India, in its branch situated in the campus of the petitioner Company, asking the respondent Bank to pay into the Government Treasury, the sum of Rs. 37,41,41,602/-, on account of tax / penalty due under the JVAT Act, from the petitioner Company, who failed to deposit the taxes for the period from 2011-12 & 2012-13, from the Bank account of the Company. The petitioner Company has also challenged the letter No.733 dated 22.11.2009, as contained in Annexure-5 to the writ applications, issued by the State Tax Officer, Bokaro Circle, Bokaro, to the Respondent Bank, to deposit the amount of Rs. 75,57,000/- by way of demand draft in favour of the Deputy Commissioner, Commercial Taxes, Bokaro Circle, Bokaro, in view of the fact that pursuant to the aforesaid garnishee order dated 21.11.2019, the respondent Bank had furnished the information that on....
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....ny which was not claimed by the State Government during the corporate insolvency resolution process, stood completely barred under Section 31 of the IB Code. 5. Admittedly, in the present writ applications, there is no challenge to the tax liabilities of the petitioner Company, though the re-assessment orders dated 17.08.2018 passed by the Assessing Authority, i.e., Assistant Commissioner of State Tax, Bokaro Circle, Bokaro, have been brought on record as Annexures-3 to the writ applications, pursuant to which the impugned garnishee order has been issued. Learned counsel for the petitioner has vehemently argued that the State Government, whose tax dues could not be paid by the petitioner Company, was also the 'operational creditor' within the meaning of Section 5 (20) of the IB Code, but no claim was made by the State Government during the corporate insolvency resolution process, and accordingly, upon an approval of the resolution plan by the NCLT, any claim of the State Government stood barred under Section 31 of the IB Code. 6. It is submitted by learned counsel for the petitioner that in spite of the fact that the claim of the State Government now stands barred, the ga....
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....right to challenge the order of the Income Tax Appellate Tribunal before the NCLT, instead of moving a statutory appeal under Section 260A of the Income Tax Act, 1961. Therefore, the jurisdiction of the NCLT delineated in Section 60(5) cannot be stretched so far as to bring absurd results. (It will be a different matter, if proceedings under statutes like Income Tax Act had attained finality, fastening a liability upon the corporate debtor, since, in such cases, the dues payable to the Government would come within the meaning of the expression "operational debt" Under Section 5 (21), making the Government an "operational creditor" in terms of Section 5(20). The moment the dues to the Government are crystalized and what remains is only payment, the claim of the Government will have to be adjudicated and paid only in a manner prescribed in the resolution plan as approved by the Adjudicating Authority, namely the NCLT.)" (Emphasis supplied). 10. In this connection learned counsel has further placed reliance upon the decision of the Hon'ble Apex Court in Swiss Ribbons Pvt. Ltd. & Anr. Vs. Union of India & Ors., reported in (2019) 4 SCC 17, wherein it is held as follows:- "42. A pe....
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....s:- "88. For the same reason, the impugned NCLAT judgment in holding that claims that may exist apart from those decided on merits by the resolution professional and by the Adjudicating Authority/Appellate Tribunal can now be decided by an appropriate forum in terms of Section 60(6) of the Code, also militates against the rationale of Section 31 of the Code. A successful resolution applicant cannot suddenly be faced with "undecided" claims after the resolution plan submitted by him has been accepted as this would amount to a hydra head popping up which would throw into uncertainty amounts payable by a prospective resolution applicant who successfully take over the business of the corporate debtor. All claims must be submitted to and decided by the resolution professional so that a prospective resolution applicant knows exactly what has to be paid in order that it may then take over and run the business of the corporate debtor. This the successful resolution applicant does on a fresh slate, as has been pointed out by us hereinabove. For these reasons, the NCLAT judgment must also be set aside on this count." (Emphasis supplied). 13. Placing reliance on these decisions, learned co....
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....---------." 16. It is also pointed out by the learned AAG that admittedly, the petitioner Company had collected the tax from its purchasers / customers in the name of VAT, but has not deposited the same in the State Exchequer, thus, amounting to criminal misappropriation of the Government money entrusted to the petitioner Company by its purchasers / customers, and has thus committed the offence of criminal breach of trust. 17. Learned AAG has also pointed out that in the present case, the corporate insolvency resolution process was started on 21.07.2017. The right of the State Government to recover the tax from the petitioner Company accrued in the years 2011-12 & 2012-13. The IB Code itself was enacted in the year 2016 and accordingly, the tax liability of the petitioner, which the petitioner Company ought to have discharged in the years 2011-12 and 2012-13, cannot be said to be affected by the IB Code. 18. Learned Additional Advocate General has also pointed out that Section 31 of the IB Code clearly states that the approved resolution plan shall be binding on the stake-holders involved in the resolution plan. It is submitted that the State Government was never involved in the....
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....xes, even if accrued in the years 2011-12 and 2012-13, can no more be realized from the petitioner Company after approval of the resolution plan by the NCLT. 21. Having heard the learned counsels for both sides and upon going through the record, we find that in the present cases, the State Government shall fall within the definition of 'operational creditor', and the taxes payable by the petitioner shall fall within the definition of 'operational debt', as defined in the IB Code as follows:- "Section 5 (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; Section 5 (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;" As such, there can be no doubt that the case of the petitioner shall be governed by the provisions of the IB Code. 22. We however, find force in the submissions of the learned Additional Advocate General that th....
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....on 13 of the IBC Code was never published in the State of Jharkhand, rather the notice was published only in the Business Standard of Kolkata Edition on 24.07.2017 as contained in Annexure-7 to the supplementary affidavit. There is no denial to the fact that such notice was never published in the State of Jharkhand. 26. Section 13 of the IB Code reads as follows:- "13. (1) The Adjudicating Authority, after admission of the application under section 7 or section 9 or section 10, shall, by an order- (a) declare a moratorium for the purposes referred to in section 14; (b) cause a public announcement of the initiation of corporate insolvency resolution process and call for the submission of claims under section 15; and (c) appoint an interim resolution professional in the manner as laid down in section 16. (2) The public announcement referred to in clause (b) of sub-section (1) shall be made immediately after the appointment of the interim resolution professional." 27. The detailed procedure for public announcement, as required under Section 13(1)(b) of the IB Code, is provided in Regulation 6 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process fo....
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....the IB Code, relevant portion of which reads as follows:- "31. (1)- If the Adjudicating Authority is satisfied that the resolution plan as approved by the committee of creditors under sub section (4) of section 30 meets the requirements as referred to in sub-section (2) of section 30, it shall by order approve the resolution plan which shall be binding on the corporate debtor and its employees, members, creditors, including the Central Government, any State Government or any local authority to whom a debt in respect of the payment of dues arising under any law for the time being in force, such as authorities to whom statutory dues are owed, guarantors and other stakeholders involved in the resolution plan;" (Emphasis is ours). 29. We also find from the record that though it is the specific case of the petitioner that the management of the petitioner company has been taken over by M/s Vedanta Limited on 04.06.2018, but the fact remains that M/s. Vedanta Limited is not the petitioner before us, rather it is the original Company which had the tax liabilities to be discharged in the years 2011-12 and 2012-13, after having realized the amount from its customers, is only the pe....