TaxTMI 
TaxTMI 
2024 (1) TMI 829
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....(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 Respondent invited claims from all creditors of the CD/WPEPL under Regulation 12 of the Insolv....
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....tent 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 plan is approved even the statutory dues owed to the Central Government or State Government should be wiped off, is not applicable in this case as the same does n....
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....tory 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 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,....
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....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 the purposes of recovering such service tax or other sums recoverable or due from such predecessor at the time of such transfer or otherwise disposal or change.]" 8.2. A reading of the above provision would reveal that it enables the recovery of service tax dues from the transferee in the event of tran....
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....47, 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 "save as otherwise provided" employed in Section 88 of the Finance Act, 1994 and Section 238 of IBC which employs the non-obstante when read in tandem reflects consistency in the legislative intent viz., to give overriding effect to the provisions of IBC. It is clear that Section 88 of the Finance Act, would yield to the provisions of I....
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....ed ..... 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 its right to the statutory dues by lodging a claim. It has been held by the Apex Court that IBC is a time bound process and time lines for lodging claims must be strictly adhered to, though in exceptional cases and for strong reasons and depending on the stage of the proceedings departure may be made. In this regard, it may be relevant to refer to the....
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....ffers 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 preceding the liquidation commencement date;" 13.1. A reading of the above provision, would show that the proceeds from the sale of liquidated assets shall be distributed in the order of priority mentioned in Section 53 of the Act. Importantly, when it comes to the due to the Central / State Government in terms of Section 53(1)(e)(i) of IBC, the distribution from the sale proceeds of the liquidated ....
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....enusagar 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 Revenue Commissioners [174 LT Rep 133] calls them colourless words. This Court in S.S. Light Railway Co. Ltd. v. Upper Doab Sugar Mills Ltd.[AIR 1960 SC 695 : (1960) 2 SCR 926 : (1961) 1 SCJ 377] construing these words in Section 3(14) of the Indian Railways Act, 1890 has held that they are very wide. It seems to us that in the context of Section 23(1-B) "in respect of" has been used in the sense of being "connected with", and we have no difficulty in holding....