TaxTMI 
TaxTMI 
TaxTMI 
2025 (9) TMI 1591
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....Assistant Government Pleader for the respondent in Special Civil Application No.9864 of 2025. 2 Rule returnable forthwith. Learned Assistant Government Pleader Ms.Shrunjal Shah, waives service of notice of rule on behalf of the respondent. 3 With consent of learned advocates for the respective parties, the matters are taken up for hearing as the issue involved is very short. All the three petitions have common issue, therefore, are being disposed of by this common order and judgement. For the sake of convenience, the facts of Special Civil Application No.9855 of 2025 are taken as lead matter. 4 The petition has been filed under Article 226 of the Constitution of India, with the following prayers: "(a) Issue a writ of certiorari and / or any other appropriate writ, order or direction quashing and setting aside (i) order dated 8th April 2022 for FY 2019-20 at Annexure A passed by Respondent No.2, (ii) order dated 9th December 2024 at Annexure B for FY 2017-18 passed by Respondent No.2; (iii) order dated 15th February 2025 at Annexure C, for FY 2020-21 passed by Respondent No.3 against the petitioner; and (iv) Notice dated 5th June 2025 at Annexure D, for FY 2021-22 ....
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....27th June 2025 at Annexure F for FY 2018-19 issued by Respondent No.4; and (vii) Show Cause Notice dated 30th June 2025 at Annexure G for FY 2018-19 issued by Respondent No.3 along with all other proceedings or coercive action relating thereto; (f) Pending admission, hearing and final disposal of the present Petition, this Hon'ble Court be pleased to restrain the Respondents from initiating or continuing any proceedings against the Petitioner for GST which relate to a period prior to the Effective Date i.e. 29th March 2023;" 5 The brief facts of the case are as under: 5.1 The petitioner is a Corporate Debtor Company, registered under the Companies Act, 1956, and is also registered under the provisions of the Central Goods & Services Tax Act, 2017 (for short 'the CGST Act') as well as under the Gujarat Goods & Services Tax Act, 2017 (for short 'the GGST Act') as well as under the provisions of Integrated Goods & Service Tax Act, 2017 (for short 'IGST Act'). 5.2 The petitioner is engaged in the business of manufacturing and supplying of wide range of plastic products. 5.3 A Company Petition being CP (IB) No. 759 of 2019 was filed by operational creditor under Sec....
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.... of the petitioner was transferred to Plastauto Private Limited. 5.8 On 26.07.2024, an intimation under Sec.74(5) of the GGST Act and CGST Act for the period from July 2017 till March 2018, in Form GST DRC-01A was issued by the respondent No.2 for the alleged ineligible input tax credit claimed by the petitioner. The respondent No.2 advised the petitioner to pay an amount of Rs. 6,74,77,650/-, including interest and penalty by 30.07.2024, failure of which resulted in issuance of show-cause notice dated 01.08.2024 ("SCN 2") in Form GST DRC-01 asking the petitioner as to why the tax determined along with the interest and penalty be recovered from the petitioner for alleged failure to correctly declare its tax liability for F.Y 2017-18. 5.9 On 30.08.2024, response in Form GST DRC-06 to ("SCN 2") was submitted by the petitioner, calling upon the respondent to withdraw show-cause notice ("SCN 2") considering that after the approval of the Resolution Plan, all claims, demands, debt and liabilities stood extinguished. On 19.10.2024, respondent No.3 issued a show-cause notice in Form GST DRC-01 ("SCN 3") to the petitioner, asking the petitioner to show-cause as to why the tax determi....
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....rch 2019 for the alleged excess availed / utilized ITC. The petitioner, to this intimation-cum-demand notice dated 29.05.2025, filed its detailed response dated 03.06.2025 in Form GST DRC-01A-Part B requesting the respondent No.4 to withdraw the intimation-cum-demand notice dated 29.05.2025, considering that the approved Resolution Plan extinguishes all claims, demands, debt and liabilities for a period prior to the approval of the Resolution Plan. 5.13 On 05.06.2025, respondent No.2 issued a notice for intimation for discrepancies in return after scrutiny in Form ASMT-10 for period of 2021-22, to which, the petitioner filed detailed response in Form GST ASMT-11 dated 10.06.2025 requesting the respondent No.2 to withdraw the impugned notice dated 05.06.2025 considering that the approved Resolution Plan extinguishes all claims, demands, debt and liabilities for a period prior to the approval of the Resolution Plan. 5.14 On 12.06.2025, respondent No.4 issued a showcause notice ("SCN 4") in Form GST DRC-01 to the petitioner to show cause as to why the tax determined under SCN 4 of Rs. 74,97,496/- along with interest of Rs. 90,43,830/- and penalty of Rs. 74,97,496/- be not recove....
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.... for in the Resolution Plan would stand extinguished in terms of the provisions of the IBC and in view of the decisions of the Hon'ble Apex Court in the case of The Committee of Creditors of Essar Steel Ltd. Vs. Satishkumar Gupta reported in (2020) 8 SCC 531 and in case of Ghanshyam Mishra and Sons Pvt. Ltd. Vs. Edelweiss Asset Reconstruction Company Ltd., reported in (2021) 9 SCC 657. Mr. Soparkar, learned Senior Advocate submitted that in the present case, the tax dues stand extinguished in terms of the Resolution Plan. 7 Mr. Shrunjal Shah, learned Assistant Government Pleader for the respondent is not in a position to controvert the position of law as far as the extinguishment of the tax dues are concerned in terms of Section 31 of the IBC. She however submits that in view of the said position, this Court may not enter into the merits of the issuance of notice. 8. DISCUSSION & FINDINGS :- 8.1 A perusal of the Resolution Plan which came to be approved on 17.03.2023 by the learned NCLT would reveal the following provisions as evident from the relevant portion extracted below:- "19. We have also noted that as per para 7.1 of the resolution plan as contained in pag....
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.... only if there is a continuity in the beneficial owner of the shares carrying not less than 51% of the voting power, on the last date of the year or years in which the loss was incurred. The learned counsel Mr Soparkar has also drawn our attention to the clause (c) of sub-section (2) to the said section which provides that nothing contained in that section shall apply to a company where a change in the shareholding takes place in a previous year pursuant to resolution plan approved under the IBC, 2016, after affording a reasonable opportunity of being heard to the jurisdictional Principal Commissioner or Commissioner. For ready reference, the relevant provisions of section 79 of Income Tax Act is reproduced hereunder: Carry forward and set off losses in case of certain companies 79 (1). Notwithstanding anything contained in this Chapter, where a change in shareholding has taken place during the previous year in the case of a company, not being a company in which the public are substantially interested, no loss incurred in any year prior to the previous year shall be carried forward and set off against the income of the previous year, unless on the last da....
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....ted that he has submitted such notice to the Assessing Officer and thereafter to the Principal Commissioner of Income Tax Department as a matter of abundant precaution, though the Corporate Debtor being a company in which public or substantially interested, the provisions of section 79 of the Income Tax are not applicable to its case. Shri Navın Pahwa, Sr. Advocate appearing for the Resolution Applicant also made similar submissions. We have duly considered the submissions made by the learned counsels for the RP, RA as well as the Income Tax Department A bare reading of the provisions of section 79 of the Income Tax Act makes it very clear that the provision is applicable for the closely held/private companies only. The provision is not at all applicable in case of a company in which public are substantially interest (ie a widely held company) It is noted that the provision is intended to curb taxpayers intention to transfer losses of a closely held company through a transfer of shareholding by putting a restriction for continuity of the beneficial owner of the shares carrying not less than 51% of the voting power To that provision, exceptions are carved out in sub-se....
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....d long term capital losses relating to AY 2016-17, 2017-18 amounting to Rs. 475.22 crores. The Assessing Officer and/or Principal Commissioner would verify the claim from the assessment records and shall allow the eligible losses incurred in the past to be carried forward ahead for set-off against profit in subsequent years, after the take over on approval of the resolution plan, in accordance with the provisions under the Income Tax Act. It would also meet the requirement of giving reasonable opportunity to the Income Tax Department, if at all required, in terms of the section 79(2)(c). 20. As far as reliefs and concessions claimed by the Resolution Applicant relating to previous claims of the Corporate Debtor is concerned, the law has been well settled by the Hon'ble Supreme Court in the case of Ghanashyam Mishra and Sons Private Limited Vs. Edelweiss Asset Reconstruction Company Limited and Ors. reported in MANU/SC/0273/2021 in the following words: "....86. The legislative intent behind this is, to freeze all the claims so that the resolution applicant starts on a clean slate and is not flung with any surprise claims If that is permitted, the very calculati....
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.... of the IBC, 2016, III. The approved Resolution Plan' shall become effective from the date of passing of this order, IV. The order of moratorium dated 18 12 2020 passed by this Adjudicating Authority under section 14 of I&B Code, 2016 shall cease to have effect from the date of passing of this order, V. The Resolution Professional shall forthwith send a copy of this order to the participants and the Resolution Applicant(s), VI. The Resolution Applicant shall, pursuant to the resolution plan approved under section 31(1) of the IBC, 2016, obtain necessary approvals required under any law for the time being in force within a period of one year from the date of approval of the Resolution Plan by the Adjudicating Authority under section 31 or within such period as provided for in such law, whichever is later, as the case may be; VII. The Resolution Professional shall forward all records relating to the conduct of the Corporate Insolvency Resolution Process and Resolution Plan to the Insolvency and Bankruptcy Board of India to be recorded in its database, VIII. Accordingly, IA/187(AHM)2023 in CP (IB) 759 of 2019 is allowed and stands dispo....
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....art of the resolution plan. 102.2 The 2019 Amendment to Section 31 IBC is clarificatory and declaratory in nature and therefore will be effective from the date on which IBC has come into effect. 102.3 Consequently all the dues including the statutory dues owed to the Central Government, any State Government or any local authority, if not part of the resolution plan, shall stand extinguished and no proceedings in respect of such dues for the period prior to the date on which the adjudicating authority grants its approval under Section 31 could be continued. 138 In the forgoing paragraph, we have held that the 2019 Amendment to Section 31 IBC is clarificatory and declaratory in nature and therefore will have a retrospective operation. As such, when the resolution plan is approved by NCLT, the claims, which are not part of the resolution plan, shall stand extinguished and the proceedings related thereto shall stand terminated. Since the subject-matter of the petition are the proceedings which relate to the claims of the respondents prior to the approval of the plan, the same cannot be continued. Equally the claims, which are not part of the resolution plan, ....