TaxTMI 
TaxTMI 
2024 (9) TMI 324
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....ny Private Limited are : 2.1 It is stated that this Tribunal admitted the application filed by M/s. Sun Edison Energy India Private Limited under Section 7 of the IBC against the Corporate Debtor. On 23th December, 2022 order was passed by this Tribunal against the Corporate Debtor was undergoing the Corporate Insolvency Resolution Process (CIRP). 2.2 It is stated the Resolution Professional of the Corporate Debtor had moved an application under Section 33 of the IBC read with Rules 11, 13 and 32 of the NCLT Rules before this Hon'ble Tribunal seeking orders to liquidate the Corporate Debtor. The Tribunal had passed an order of liquidation of the Corporate Debtor vide its order dated 23.05.2023 wherein it appointed Mr. Krishna Komaravolu as the Liquidator ("Liquidation Order"). A Copy of the Liquidation Order is herewith annexed as Annexure - 1. 2.3 It is stated that the Liquidator had issued a sale notice dated 07.07.2023 and corrigendum dated 24.07.2023 inviting Expressions of Interest ("EoIs") for participating in the E-auction process of M/s. KSK Energy Company Private Limited which was proposed to be sold on a going concern basis ("E- Auction Process"/ "Auction Pro....
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....he Liquidator issued Certificate of Sale of Company ("Sale Certificate") dated 02.10.2023 in favour of the Successful Bidder, confirming the sale of the Corporate Debtor to the Successful Bidder and acknowledging the payment of entire sale consideration. As such, the Applicant has paid the entire Consideration for the purchase of the Corporate Debtor as a going concern. Copy of the Letter of Intent sent by the Liquidator to the Applicant dated 14.08.2023 is annexed as Annexure - 7. Copy of the Sale Certificate dated 02.10.2023 issued by the Liquidator is annexed as Annexure-8. 2.8 It is stated that the Applicant is approaching this Tribunal seeking this Tribunal's orders and directions allowing certain exemptions/grants put forth in this Application in relation to the Auction Process of the Corporate Debtor. The following are the exemptions, reliefs and directions that the Applicant is seeking in relation to the Auction Process of the Corporate Debtor: 2.9 Capital Structure Related/Share Issuance/ ROC Related - i. A direction may be issued that on the Transfer Date, the entire existing Equity Shares and Preference Shares issued by the Corporate Debtor (held by the er....
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....Debtor, arising for any period until the Transfer Date shall stand permanently extinguished and the Corporate Debtor or the Bidder shall at no point of time be, directly or indirectly, held responsible or liable in relation thereto. b. Other than amount received by the Liquidator from the Bidder which is distributable under Section 53 of IBC, all other dues including claims or demands made by or liabilities or obligations owed or payable to (including any demand for any loss or damages, principal, interest, compound interest, penal interest, liquidated damages, notional or crystalized mark to mark losses on derivatives, including claims under existing outstanding Bank Guarantees or Corporate Guarantees (whether claimed or not) or claims under existing outstanding Letter of Credits and other charges already accrued accruing or in connection with any third party claims), any actual or potential financial creditors of the Corporate Debtor or in connection with any debt of the Corporate Debtor (including those arising out of any contractual liability such as corporate guarantee, pledge, shortfall undertaking or similar instruments issued by Corporate Debtor to secure loans tak....
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.... Bidder shall have a clean title over the Corporate Debtor and its underlying Assets, if any. iv. A direction be issued to the creditors to issue No-objection Certificates for the charge satisfaction and to enable the Corporate Debtor to file the charge satisfaction with ROC. 2.11 Operational Creditors- i. Effects on operational debt dues or claims of Operational Creditors/Statutory Authorities/Creditors of the Corporate Debtor- direction(s) may be issued in relation to the following reliefs: a. Upon the distribution of the proceeds in terms of Section 53 of the IBC, the liabilities of the Corporate Debtor towards the dues owed to Operational Creditors/Statutory Dues shall stand settled in full, including any claims whether filed or not, whether admitted or not, whether asserted or not and whether or not set out in the audited balance sheet or the list of stakeholders. b. All demands/interest and penalty charges for the period up-to the Transfer Date including but not limited to dues with respect to the pending income tax, customs, DGFT, GST, Professional Tax, PF, Labour Laws (As applicable), ESI, RBI Guidelines/regulations, Foreign Exchange M....
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.... liable for any Taxes and shall be granted an exemption from all Taxes, levies, fees, transfer charges, transfer premiums, surcharges, interests, penal charges and any such other levies, that arise from or relate to the Acquisition, since payment of these amounts may make the Acquisition unviable. Any reference to Taxes shall include any transfer premiums or charges, change of ownership/ Control charges payable in connection with the Acquisition and the consequent change in ownership and Control of the Corporate Debtor. Further: a. All the assessments, proceedings, demand notices, penalty proceedings, show- cause notice and appeals, whether completed or uncompleted, initiated or not initiated with respect to Income Tax, Central Sales Tax, GST, VAT, CENVAT, MODVAT, Customs and any other applicable Taxes under any applicable Laws, shall be deemed to have been completed and closed and the Bidder and/or the Corporate Debtor shall not be liable to pay any Taxes or interest or penalty or any prosecution arising out of such assessments or adjust its taxable income or brought forward losses under Income-tax Act, 1961 pertaining to any period prior to the Transfer Date including bu....
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.... give or issue necessary directions, instructions to the CBDT, Central Board of Indirect Taxes and Customs and State GST authorities to exempt income/gain/profits, if any, arising as a result of giving effect to the Acquisition and from being subjected to income tax in the hands of the Corporate Debtor or the Bidder under the provisions of Value Added Tax, Customs. Octroi, Excise Duty, Service Tax, Goods & Services Tax, Income-tax Act including but not limited to any income tax and Minimum Alternate Tax (MAT) liability arising on capital reduction in Corporate Debtor, consolidation of share capital of Corporate Debtor, write off write down of current amounts due to employees, vendors, Operational Creditors, Financial Creditors, value of assets, value of inventories, etc. without any impact on brought forward tax and book loss / depreciation; and waive all liabilities whether crystallized or not in respect of Taxes (including interest and penalty) arising in respect of periods up to the Transfer Date. v. A direction be issued to the effect of waiving any withholding tax, income-tax and MAT liability or consequences (including interest, fine, penalty, etc.) on Corporate Debt....
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....r Section 79 of the Income Tax Act, 1961 to this resolution plan approved under the Insolvency and Bankruptcy Code, 2016 (31 of 2016) shall be available to the Corporate Debtor upon approval of this application/plan by the Adjudicating Authority, and this bid to be considered to be resolution plan under Section 79 of Income Tax Act, 1961. As the change in the shareholding of the Corporate Debtor pursuant to this application/plan approved and letter requesting inputs of the Principal Commissioner or Commissioner shall be filed by the Bidder/ Corporate Debtor, existing losses of the Corporate Debtor shall be allowed to be carried forward without triggering the provisions of section 79 of the Act. a. Income tax authorities to allow representation of the case/appeal for the different financial years, without any additional burden on the Corporate Debtor and/or Bidder, for the income tax notices/ demands/penalties/assessments/ adjustments of the accumulated losses (including but not limited to additions/ adjustments under Transfer Pricing under the Income Tax Act, 1961) up to the Transfer Date, where the Corporate Debtor failed to represent the case effectively. Such representa....
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....d mentioned paragraphs for the successful implementation of this Acquisition done by the Applicant. 3. Reply filed by the Respondent/Liquidator, inter-alia stating that: 3.1 It is stated that all the averments put forth by the Applicant in the instant Application are either facts as asserted by the Applicant or the legal rights of the Applicant being enumerated or the Applicant's prayers. 3.2 It is stated that this Tribunal had passed an order of liquidation of the Corporate Debtor vide its order dated 25.05.2023 (Order copy received on 26.05.2023) wherein it appointed Mr. Krishna Komaravolu/Respondent as the Liquidator (Copy of the "Liquidation Order" is attached as Annexure- A1). 3.3 It is stated that E-Auction Process Information Document issued by the Liquidator which consisted the terms and conditions for participating in the E-Auction Process for sale of KSK Energy Company Private Limited indicated that the qualified bidders will have to bid for an amount not less than an aggregate price of Rs.1,21,44,000/- (Rupees One Crore twenty one lakh forty four thousand only) ("Reserve Price"). 3.4 It is stated that the in response to the sale notice and corrigendum ....
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....Rs. 65,735/- (for 15 days beyond prescribed 30 days @ 12% p.a.). 3.8 It is stated that the Sale Certificate was issued to the Successful bidder - M/s. Innopark (India) Private Limited with regard to the sale of KSK Energy Company Private Limited as a Going concern on 02.10.2023. Copy of the Sale Certificate acknowledged by the Successful bidder is attached as Annexure-A8. 3.9 It is stated that the Corporate Debtor is being sold / transferred during liquidation on a going concern basis to the Successful Bidder and the IBBI Liquidation Regulations would apply to the liquidation process of the Corporate Debtor. It is stated that Regulation 32A of the IBBI Liquidation Regulations provides for sale of assets of the Corporate Debtor on a going concern basis. It is stated that in the instant case, the Corporate Debtor is being sold on a going concern basis which is more or less in the nature of resolution of the Corporate Debtor. It is further stated that the prayers made by the applicant/ Successful Bidder are in letter and spirit of E-Auction Process Document and Respondent/Liquidator has no objection to the said prayers of the Applicant. 3.10 It is stated that the Applicant is....
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....ndian Rupees Ten Lacs only) (100,000 equity shares @ Rs. 10 each (Rupee Ten each) which will be issued and allotted to Innopark (India) Private Limited and its nominees: Name of Shareholder Post Takeover Number of shares Innopark (India) Private Limited 99,999 Nominee of Innopark (India) Private Limited 1 Total 100,000 iii. Post the infusion of Rs. 10,00,000 (Indian Rupees Ten Lacs only) towards Equity Shares allotment, a direction may be issued that, the Bidder may be permitted to structure the balance amount of INR 1,36,44,000/- (Indian Rupees One Crore Thirty-Six Lacs Forty-Four Thousand only) by way of Optionally Convertible Debentures/Non-Convertibles Debentures/Secured Term Loan or such other instrument as may be decided from time to time, with terms and conditions as mutually agreed between the Bidder and the Corporate Debtor. iv. A direction may be issued that from the Transfer Date, all past liabilities, penalties, and any form of payment by way of late fees, damages, etc., which occurred or become due because of any non-compliance related to Companies Act, 1956/2013 rules and regulations framed thereunder till the Transfer Da....
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....y of any guarantor towards the debt of the Corporate Debtor shall continue and such person shall continue to remain liable for their personal/ corporate guarantees. However, the Corporate Debtor and/or the Bidder shall not be liable against personal guarantees. C. On payment of the Consideration by the Bidder, the Creditors shall have the effect to have released their charges over all the assets of Corporate Debtor, including the charges registered with Registrar of Companies, which have been provided as security against the facilities availed from the financial creditors and no amount of any nature shall be payable either by the Bidder or by the Corporate Debtor having new management / directors. D. On payment of the Consideration by the Bidder, the Financial Creditors to "UPGRADE" the Account of Corporate Debtor with Banks/Fl under the CIBIL Mechanism to "Standard Category" from NPA on the completion of the Acquisition so as to enable the New Promoters (Bidder) to revive the business of Corporate Debtor afresh and such action would enable the Bidder to quickly turn around the Corporate Debtor. ii. A direction be issued that all notifications with regards to....
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....ible debentures or any form of liabilities. Granted 4. Legal/ Litigations - That, on and from the Transfer Date, the liability of the Corporate Debtor for an offence committed prior to the issuance of Sale certificate under the liquidation process shall cease, and the Corporate Debtor shall not be prosecuted for such an offence. Further no action shall be taken against any property of the Corporate Debtor in relation to an offence committed prior to the issuance of Sale certificate under the liquidation process and Debtor pursuant to the Acquisition. Litigations/Legal Proceedings: direction(s) may be issued in relation to the following reliefs: As mentioned hereinabove, the Bidder hereby reiterate that from the Transfer Date, all the liabilities, litigations, proceedings of whatever nature in relation to liabilities or obligations owed or payable to any creditor of the Corporate Debtor, including those relating to direct or indirect taxation, or of any other nature, in respect of the issues, claims, etc., pertaining to the period prior to the Transfer Date shall cease and the Corporate Debtor and Bidder, shall not be prosecuted or liable for any civil or any other conseque....
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....ities in relation to all Taxes/interest/ penalty which the (including with respect to financial years under assessment), all deductions and all withholding Taxes on any payment, as required under Applicable Law and pertaining to the period prior to the Transfer Date shall stand extinguished on the Transfer Date. Furthermore, and without prejudice to the generality of the foregoing, any assessment, re- assessment, revision or other proceedings under the provisions of the applicable Laws relating to Taxes would be deemed to be barred in relation to any period prior to the Transfer Date, by virtue of the order of the Adjudicating Authority; and A direction be issued that the requirement of obtaining a no objection certificate under section 281 of the Income-tax Act, 1961 and provisions of taking over its predecessor's Tax liability under section 170 of the Income-tax Act shall not be applicable. Further, the transaction shall not be treated as void under section 281 of the Income Tax Act, 1961 for any claims in respect of Tax or any other sum payable by the Corporate Debtor or any shareholder of the Corporate Debtor. Similarly, any requirements to obtain waivers from any Tax Autho....
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....Exemption from requirement of No Objection Certificate under Sec 281 of the Income Tax Act, 1961 by the selling shareholders, provision of taking over predecessor's tax liability under Sec 170 of the Income Tax Act, 1961 and specific order for treating such transactions as void under Section 281 of the Income Tax Act, 1961 for any claims in respect of tax or any other sum payable by selling shareholders. Grant relief under Section 28, Section 41, Section 56, Section 115 JB, and Section 170 against any Income Tax liability arising due to Capital Reduction in the Corporate Debtor, write off/ write down/ write back of various liabilities, including liabilities pertaining to all the Financial Creditors, Workmen and Employees, Operational Creditors, Other Creditors, writeback of impairment of assets receivables, loans & advances, and other current & non-current assets etc. without any impact on carried forward loss and further waive all liabilities whether crystallized or not in respect of Taxes (including interest and penalty thereon) pertaining to the period prior to the date on which the Acquirer takes control of the Corporate Debtor. The exemption shall be available under Sectio....