TaxTMI 
TaxTMI 
2024 (1) TMI 829
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....on M/s. Winwind Power Energy Private Limited (hereinafter referred to as "WPEPL"). The impugned demand notice is made on the basis of the Order in Original in 12/2012, 80/2015-16 dated 27.03.2012 and 08.01.2016 respectively, for a sum of Rs.3,09,46,194/- representing taxes and penalty. 3. Brief Facts i. The petitioner herein is the successful auction purchaser of the erstwhile Corporate Debtor (CD) "Winwind Power Energy Pvt. Ltd., (hereinafter referred to as "WPEPL"). ii. CD/ WPEPL was a Company engaged in the manufacture of Wind Turbine Blades. iii. During 2013-14, it became a "Sick Company" within the meaning of Section 3(1)(o) of the Sick Industrial Companies (Special Provisions) Act, 1985 (hereinafter referred to as "SICA") and was referred to BIFR. Consequent upon promulgation of the IBC, the proceedings under BIFR came to be referred to the National Company Law Tribunal (hereinafter referred to as "NCLT"). iv. The CIRP failed, whereupon the CD was ordered to be liquidated by the NCLT vide order dated 07.08.2019. v. Pursuant thereto the 2nd Respondent was appointed as liquidator under Section 34 of IBC. vi. The 2nd Respo....
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....d on 22.01.2020 and M/s.Agniti Industrial Parks Pvt. Ltd., became the successful bidder with a reserve price of Rs.63Cr. Accordingly the letter of intent dated 24.01.2020 was issued by the liquidator to the successful bidder and the sale deed was effected on 14.10.2020. The deed of sale evidenced that the transaction was a sale of company as a "going concern" with issuance of transfer and allotment of shares. Clause 7 of the agreement specify thus : "7. With effect from the date of this deed, the purchaser shall HOLD, OWN, POSSESS AND ENJOY the sale Asset(s), absolutely and forever but subject to the payment of all taxes, assessments, dues and duties hereafter to become chargeable or payable in respect of the sale Asset(s) hereby conveyed in view of the foregoing you are requested to pay the Service tax of Rs.3,09,46169/- on account of the following provisions (i) In the context of applicability of IBC Code, as the resolution plan failed and the sale of the company in "as is where is" conditions was a consequent event to the liquidation process under Section 33 of the IBC Code. Thus the provisions of Section 31 of the IBC Code, which provide that if the resolution....
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....eedings under the BIFR stood transferred to NCLT. b) The sale by the liquidator was of WPEPL as a going concern, M/s.WPEPL would thus continue to survive, resultantly the successor company is liable to discharge the statutory dues of WPEPL. c) The Tender condition expressly provides that the purchaser shall hold, own, possess and enjoy the assets subject to the payment of taxes, assessments dues and duties hereafter to become chargeable or payable in respect of the assets conveyed. 7. Heard both sides and perused the materials on record. 8. On considering the arguments advanced on either sides, I am of the considered view that the impugned demand notice cannot be maintained/sustained for the following reasons: a. Clause 7 of the Tender document and its relevance: To appreciate the arguments advanced on the basis of Clause 7 of Tender Document, it may be relevant to take a closer scrutiny of the said clause which reads as under: "7. With effect from the date of this deed, the purchaser shall HOLD, OWN, POSSESS AND ENJOY the sale Asset(s), absolutely and forever but subject to the payment of all taxes, assessments, dues and duties hereafte....
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....strain any movable or immovable property belonging to or under the control of such person, and detain the same until the amount payable is paid; and in case, any part of the said amount payable or of the cost of the distress or keeping of the property, remains unpaid for a period of thirty days next after any such distress, may cause the said property to be sold and with the proceeds of such sale, may satisfy the amount payable and the costs including cost of sale remaining unpaid and shall render the surplus amount, if any, to such person: PROVIDED that where the person (hereinafter referred to as predecessor) from whom the service tax or any other sums of any kind, as specified in this section, is recoverable or due, transfers or otherwise disposes of his business or trade in whole or in part, or effects any change in the ownership thereof, in consequence of which he is succeeded in such business or trade by any other person, all goods, in the custody or possession of the person so succeeding may also be attached and sold by such officer empowered by the Central Board of Excise and Customs, after obtaining the written approval of the Commissioner of Central Excise, for t....
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....g in force', is normally appended to a section in the beginning, with a view to give the enacting part of the section, in case of conflict, an overriding effect over the other provision or Act. (i. Union of India v. G.M. Kokil, 1984 (Supp) SCC 196: AIR 1984 SC 1022; Chandavarkar Sita Ratna Rao v. Ashalata S. Gurum, (1986) 4 SCC 447, pp. 477, 478: AIR 1987 SC 117;) It is equivalent to saying that in spite of the provision or Act mentioned in the non-obstante clause, the enactment following it will have its full operation or that the provisions embraced in the non-obstante clause will not be an impediment for the operation of the enactment (ii. South India Corporation (P) Ltd. v. Secy., Board of Revenue, Trivandrum, AIR 1964 SC 207, p. 215; Chandavarkar Sita Ratna Rao v. Ashalata S. Guram, supra, M. Venugopal v. Divisional Manager, Life Insurance Corporation, JT 1994 (1) SC 281, p. 289: AIR 1994 SC 1343, p. 1348,) 9. Section 88 of the Finance Act, 1994 while creating a first charge on the properties of the defaulter for recovery for any tax, penalty, interest employs the expressions "save as otherwise provided" and enumerates various enactments including IBC . The expression "....
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....st charge on the property of the assessee or the person as the case may be." 11. The above provisions when contrasted, would reveal that Section 88 of the Finance Act and Section 48 of the Gujarat Value Added Tax are different in its scope and operation inasmuch as Section 88 of the Finance Act employs the expressions "save as otherwise provided ..... in Insolvency and Bankruptcy Code..". I have already discussed the scope of the above set of expressions, on the other hand the Gujarat Value Added Tax do not contain any such provision. In view thereof, the above judgment may not have relevance while construing Section 88 of the Finance Act. 11.1. It thus appears to me to be beyond the cavil of any doubt that the provisions of IBC would override the provisions of Finance Act in the event of a conflict, thus reliance on Section 87C or 88 of the Finance Act to claim priority over IBC and to sustain the impugned demand notice is misplaced. 12. The third reason as to why the present demand notice cannot be sustained is in view of the fact that the Central Government had not made any claim before the IRP / RP. There is gross inaction on the part of the revenue in even asserting i....
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.... lodged as contemplated under IBC and its Rules, a demand notice being raised much after the completion of the sale of assets in the process of liquidation vitiates the action in view of the unreasonable delay resulting in arbitrariness. It is trite law that all State actions must satisfy the test of fairness and must stand the scrutiny of arbitrariness. Any State action which suffers from the vice of arbitrariness would fall foul of Article 14 of the Constitution of India, I would think that inaction of the revenue to participate and lodge its claim within the period prescribed under IBC and its Rules vitiates the impugned demand notice. 13. Yet another reason as to why the impugned notice cannot be sustained is in view of the fact that, Section 53 of IBC while providing for the waterfall mechanism reads as under: "53. ..... (e) the following dues shall rank equally between and among the following:- (i) any amount due to the Central Government and the State Government including the amount to be received on account of the Consolidated Fund of India and the Consolidated Fund of a State, if any, in respect of the whole or any part of the period of two years prece....
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.... Expressions such as "arising out of" or "in respect of" or "in connection with" or "in relation to" or "in consequence of" or "concerning" or "relating to" the contract are of the widest amplitude and content and include even questions as to the existence, validity and effect (scope) of the arbitration agreement." iii) Giriraj Garg v. Coal India Ltd., (2019) 5 SCC 192 "7.2. In Renusagar Power Co. Ltd. v. General Electric Co.[Renusagar Power Co. Ltd. v. General Electric Co., (1984) 4 SCC 679 : (1985) 1 SCR 432] this Court observed that expressions such as "arising out of", or "in respect of", or "in connection with", or "in relation to", the contract are of the widest amplitude, and content. In Doypack Systems (P) Ltd. v. Union of India [Doypack Systems (P) Ltd. v. Union of India, (1988) 2 SCC 299 : (1988) 36 ELT 201] this Court observed that expressions such as - "pertaining to", "in relation to" and "arising out of", are used in the expansive sense, and must be construed accordingly." iv) Union of India v. Vijay Chand Jain, (1977) 2 SCC 405 "3. The words "in respect of" admit of a wide connotation; Lord Geene, M.R. in Cunard Trustees v. Inland ....