TaxTMI 
TaxTMI 
2021 (10) TMI 389
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....ing that there is no error in the Order in MA/140/KOB/2020, to be clarified by this Tribunal. Accordingly, the original status of the parties in the Company Petition is retained in this Appeal for the sake of convenience. 2. Brief Fact 2.1 The present Appeal is filed under Section 61(1) of Insolvency and Bankruptcy Code, 2016 arising out of the Impugned Order dated 28.01.2021 passed by the National Company Law Tribunal, Kochi Bench in MA/205/KOB/2020 about MA/140/KOB/2020 in TIBA/11/KOB/2019 filed under Section 60(5) of IBC, 2016. 2.2 The Adjudicating Authority/NCLT disposed of the IA/140/KOB/2020 on 04.11.2020 with the following Order: - "In view of the aforesaid decision of the CoC, the Resolution Professional is directed to immediately, at any rate within two weeks from today, to file an appeal before the Joint Commissioner, State Sales Tax Department with the relevant papers for re-assessing the GST amount payable, based on the audited financial statements for the financial year 2018-19 and also based on the Notification No.9/2017-Integrated TA (Rate) dated 28.6.2017 issued by the Government of India. Needless to mention here that on receipt of the Appeal from....
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....he CoC resolved to file an appeal before the GST Commissioner for revisiting the claim amount of the applicant. The relevant portion of the minutes of the CoC meeting held on 15 July, 2020 is reproduced below: 2.4.2 "Chairman further informed that in the best interest of CIRP, an appeal may be filed before the Joint Commissioner, GST, Kochi lo reduce the claim amount based on information given by Mrs. P.V Mini, Promoter and suspended Managing Director of the Corporate Debtor. Mrs. P.V. Mini had informed the RP that Mr. Jigesh who is the Internal Auditor of the Company was handling the matter and that will be able to provide required information to RP in the matter. The RP recommended to appoint a Chartered Accountant who is specialised in GST to make the revised computation and accept the revised claim amount accordingly. The RP then place the matter before the CoC for their deliberation", and based on the Notification No.9/2017 Integrated Tax (Rate) by the Government of India dated 28.6.2017. The Health Care Services by clinical establishment is exempted from GST and hence revenue generated under the Head, "In-patient Collections", "Outpatient Collections" and "Laboratory....
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.... NCLT, Kochi Bench, vide Order dated 16.10.2019. The Appellant was appointed as the Interim Resolution Professional ("IRP"), who was later confirmed as Resolution Professional (RP) based on the Resolution passed by the Committee of Creditors in its 1st Meeting held on 17.12.2019. 4. The Respondent had submitted the claim for Rs. 28,41,59,349.06 (Rupees Twenty-Eight crore Forty-One Lakh Fifty -Nine Thousand Three Hundred and Forty-Nine and Paise Zero six) in 'Form B' under Regulation 7 of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 on 20.02.2020. 5. During CIRP, the RP had revised the admitted claim amount of the Respondent to Rs. 1, 06, 09, 299 after due verification of the GST claim with the books of accounts of the Corporate Debtor and the electronic register maintained by the Respondent, in accordance with Regulation 14 of CIRP regulation and had sent detailed information on the revision of the admitted claim to the Respondent on 10.08.2020. 6. Being aggrieved by the action of RP, the Respondent' State Tax Officer (Works Contract)' filed an application bearing No. MA/140/KOB/2020 before the Adjudicating Authority unde....
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....nt's entire claim of Respondent of Rs. 28,41,59,349.06. 13. Subsequently, on 13 July 2020, Mrs P.V. Mini, the Promoter and Suspended Managing Director of the Corporate Debtor, had informed the RP that the amount claimed by the GST department is exorbitantly high as the department had erroneously charged GST on the total turnover of the Corporate Debtor without taking into account the Notification No. 9/2017-integrated tax rate dated 28 June 2017 issued by Government of India. 14. After getting access to the financial information of the Corporate Debtor maintained in the in-house IT server, the Appellant had verified the records of the Corporate Debtor with the assistance of the suspended Managing Director and verified the claims submitted by the GST Department with the books of accounts maintained by the Corporate Debtor and the information provided by the suspended Managing Director. 15. Further, on verification, it is found that the GST Department had calculated the GST liability for non-filing of return for the Financial Year 2018-19 and 2019-20 on the best judgement basis on the total turnover of the Corporate Debtor. However, as per Notification No.9 of the 2017-i....
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....hat the Corporate Debtor M/s. PVS Memorial Hospital Private Limited is registered under State Tax Officer (Works Contract), SGST Department, Ernakulam, Kerala State, having GST No.GSTTIN32AABCP3914G2ZT. The assessee is in arrears of a total amount of Rs. 28,41,59,349.06 as tax, interest and penalty. The Respondent submitted their claim before the Appellant on 19.02.2020. Further, the Appellant admitted the entire claim amount on 18.03.2020 after verifying relevant records submitted by the Respondent. 19.2 After five months from the date of admitted claim, on 10.08.2020, the RP revised the claims only to an amount Rs. 1,06,09,299/- and rejected a substantial portion of the claim submitted by the Tax Department purporting to be under the exercise of Regulation 14 of the CIRP Regulations on the ground that the charging of the GST liability on the total turn over of the Corporate Debtor is not correct given the notification No.9/2017/Integrated Tax (Rate) dated 28.6.2017. 19.3 It is pertinent to point out here that the Corporate Debtor Company purchased both exemption and non-exemption of tax, and a Notification will not supersede the GST Act. 19.4 Against the rejection of the....
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....020 in MA/104/KOB/2020 in (TIBA/11/KOB/2019 and IBA/28/KOB/2019 before the Hon'ble NCLT, Kochi Bench, praying to issue necessary clarification to the Appellant herein as to whether the RP has the authority under Regulation 13 & 14 of CIRP Regulations to file Appeal before the Joint Commissioner, GST, as part of verification and determination of claim submitted by the GST Department in Form-Band also, to issue necessary clarification to the Appellant herein as to whether the judgement, decree or Order if any passed by the Appellate Authority under CGST Act, pursuant to the Appeal filed by the Corporate Debtor shall be binding on the Corporate Debtor when Moratorium declared by the NCLT by virtue of Section 14 of the Insolvency and Bankruptcy Code is in effect and to issue necessary clarifications to the Appellant herein as to whether the requirement of pre-deposit of Rs.3,79,64,304/- mandated under Section 107 of GST Act, shall be prejudicial to the interest of CIRP and the said section is inconsistent with Regulation 13 & 14 of CIRP Regulations due to the overriding effect of IBC Code, 2016 over the Goods and Service Tax Act, 2017. 19.7 However, the Appellant herein, without....
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....sional admission. The Respondent also did not mention that the admission of the claim filed by the Respondent is provisional. Admittedly, the revision was made only at the instance of the Suspended Managing Director of the Corporate Debtor, and thus, the same is not bonafide. 19.15 The alleged issue of applicability of Notification is a matter for statutory adjudication by the authorities under the GST law. Thus, there is no jurisdiction for any of the authorities under the IBC. Therefore, section 238 of IBC would apply only when the IBC has jurisdiction over the subject issue. 19.16 Admittedly, the Corporate Debtor participated in the Assessment Proceedings not filed any appeal against the 18 assessment Orders passed under Section 62 of the SGST Act, even after a specific direction given by the Hon'ble NCLT. Section 14 of IBC and the Moratorium apply to the proceedings like recovery or claims against the Corporate Debtor. In contrast, the Assessment Proceedings are in the nature of statutory determination as to the Application of tax implications in respect of the activities of the Corporate Debtor. The Respondent could take recovery proceedings only after assessment pro....
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....ad with Rule 108 of the GST Rules 2017. Any revision of assessment orders also cannot be made under the pretext of Section 238 of IBC. Section 238 of Insolvency and Bankruptcy Code cannot be read as conferring any appellate or adjudicatory jurisdiction in respect of issues arising under other statutes. 20.5 Another very important question for our consideration is the scope of revision by the Resolution Professional in the exercise of powers conferred under Regulation 14 of the CIRP regulations. Before interpreting the scope of Regulation 14 of the CIRP regulations, it is necessary to go through the relative provisions which are given as under; "Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 20161 10. Substantiation of claims.- The interim Resolution professional or the Resolution professional, as the case may be, may call for such other evidence or clarification as he deems fit from a creditor for substantiating the whole or part of its claim. 12. Submission of proof of claims.-(1) Subject to sub-regulation (2), a creditor shall submit 29[claim with proof] on or before the last date ....
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....or the Resolution professional, as the case may be, shall make the best estimate of the amount of the claim based on the information available with him. (2) The interim Resolution professional or the Resolution professional, as the case may be, shall revise the amounts of claims admitted, including the estimates of claims made under sub-regulation (1), as soon as may be practicable, when he comes across additional information warranting such revision." 20.6 After going through the Regulations 10 to 14 of the CIRP Regulations, it is clear that IRP/RP may, under Regulation 10, call clarifications from a creditor for substantiating the whole or part of its claim. Furthermore, under Regulation 12, the IRP/RP is entitled to updation of the creditor's claim based on the satisfaction of the claim. Finally, Regulation 13 mandates to verify every claim as on the insolvency commencement date within seven days from the last date of the receipt of the claims. 20.7 Under Regulation 14, IRP/RP is entitled to determine the amount of claim in a case where the amount claimed by the creditor is not precise due to any contingency or other reasons. In such circumstances, IRP is auth....
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.... is not precise due to any contingency or other reasons. 20.11 It is pertinent to mention that Hon'ble Supreme Court in Embassy Property Developers Private Limited MSE Property Developers Private Limited versus State of Karnataka and Others (2020) 13 SCC 308 has held that Section 60 (5)(c) of the Insolvency and Bankruptcy Code, 2016 is very broad in its sweep, in that it speaks about any question of law or fact, arising out of or in relation to Insolvency Resolution. But the decision taken by the Government or Statutory Authority in relation to the matter which is in the realm of public law, cannot be brought within the fold of the phrase "arising out of or in relation to the Insolvency Resolution" appearing in Section 60 (5) (c) of the Code. 21. However, in the instant case, the Adjudicating Authority has rightly considered the statutory provision and suggested filing an Appeal before the appropriate forum. But at the same time, the Resolution professionals, considering the CoC as an authority in law, had exercised the powers of GST authorities. Therefore, the said act of the Resolution Professional is without jurisdiction and not sustainable in law. 22. It is also im....