TaxTMI 
TaxTMI 
2026 (4) TMI 600
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....unsel for R3, Mr.D.Prabhu Mukunth Arunkumar, Standing Counsel for R1and R2 W.P.No.22500 of 2024 For the Petitioner : Ms.R.Vidhya Shankar For the Respondent : Mr.R.Sankaranarayanan, Senior Advocate for Mr.Rajnish Pathiyil, Senior Panel Counsel for R4, Mr.D.Prabhu Mukunth Arunkumar, Standing Counsel for R1 to R3 W.P.No.15238 of 2024 For the Petitioner : Mr.R.Sivaraman For the Respondent : Mr.A.P.Srinivas, Senior Standing Counsel, assisted by Mr.ANR. Jayaprathap, Junior Standing Counsel for R1, Mr.R.Sankaranarayanan, Senior Advocate for Mr.Rajnish Pathiyil, Senior Panel Counsel for R2 W.P.No.15459 of 2024 For the Petitioner : Mr.R.Sivaraman For the Respondent : Mr.D.Prabhu Mukunth Arunkumar, Standing Counsel for R1, Mr.R.Sankaranarayanan, Senior Advocate for Mr.Rajnish Pathiyil, Senior Panel Counsel for R2 W.P.No.30364 of 2024 For the Petitioner : Mr.AR.Karthik Lakshmanan For the Respondent : Mr.C.Harsha Raj, Special Government Pleader for R1, Mr.S.Rajendran for R2, Mr.Varun Srinivasan for R3 and R4, M/s.T.S.Gopalan and Co., for R5 (Vakalat not filed) Mr.A.Arafat Mohammed for R6 (Vakalat not filed) No Appearance for R7 and R8 W.P.No.32637 of 2024....
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.... i) M/s. Empee Distilleries Ltd. / petitioner is a company engaged in the business of manufacturing of liquor and a registered dealer bearing GSTIN 33AAACE1687N1ZF. ii) CIRP was initiated by Union Bank of India under Section 7 of IBC, before the National Company Law Tribunal (hereinafter referred to as "NCLT"), Chennai and the same was admitted on 01.11.2018. An order of moratorium was declared in terms of Section 14 of IBC. iii) Claims were invited through paper publication on 04.11.2018 by fixing the last date for filing of the claim on 17.11.2018. No claims were made by the Respondent Department. iv) A Resolution Plan submitted by M/s. SNJ Distilleries for Rs. 475 Crores was approved by the Committee of Creditors (hereinafter referred to as "CoC") on 22.07.2019, and approved by NCLT under Section 31(1) of IBC on 20.01.2020. v) The above order of NCLT stood confirmed by National Company Law Appellate Tribunal (hereinafter referred to as "NCLAT") vide Order dated 27.08.2020, and thereafter by the Hon'ble Supreme Court on 26.11.2020, in Civil Appeal No.3283 of 2020. vi) Petitioner submits that a show cause notice dated 31.05.....
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.... to the acquisition onto the GST portal using petitioner Company's registered ID. viii) On 23.10.2024, impugned Notice was issued to petitioner demanding payment of Rs. 50,94,30,044/- for the FY 2022-23 arrears and required to make payment within 90 days from the date of the order i.e, 31.07.2024. Challenging the same, the present writ petition has been filed. c) M/s. Frontier Lifeline Private Ltd., vs. AssistantCommissioner(ST) - W.P.No. 32637 of 2024: i) M/s. Frontier Lifeline Private Ltd. ("FLPL") was incorporated on 26.06.2003, as a Cardiac Specialty Hospital in Chennai. ii) An application under Section 7 of IBC was filed by State Bank of India and Bank of Baroda, before NCLT Chennai to initiate CIRP against petitioner and the same was admitted on 02.08.2018. Moratorium was declared on the same date. iii) On 29.04.2019, CoC passed a resolution with 100% voting for liquidation of FLPL, since no Resolution Plan got approved within CIRP period i.e., 270 days. iv) Subsequently, NCLT vide its order dated 04.09.2019 approved the decision of CoC and ordered liquidation of FLPL and the Resolution Professional (hereinafter referred t....
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....7/2023, W.P.No. 23856/2022, W.P.No. 11431/2022) : i) M/s. Empee Distilleries Ltd. / petitioner is a company engaged in the business of manufacturing of liquor and an Income Tax Assessee. ii) CIRP was initiated by Union Bank of India under Section 7 of IBC, before NCLT, Chennai and the same was admitted on 01.11.2018. iii) Claims were invited through paper publication on 04.11.2018 by fixing the last date for filing of claims on 17.11.2018. The Tax Recovery Officer on behalf of Income Tax Department filed claims to the tune of Rs. 70,17,05,490/- on 19.03.2019 with the RP for the assessment years from 2007 - 2008 to 2015 - 2016, insofar as the assessment years 2017 - 2018, no claims were made. iv) No claim or demand of Income Tax Department, in respect of any assessment year is part of admitted claims by the RP. A Resolution Plan submitted by M/s. SNJ Distilleries for Rs. 475 Crores was approved by the CoC on 22.07.2019, subsequently approved by NCLT on 20.01.2020 and confirmed by the NCLAT on 27.08.2020. Thereafter, by the Hon'ble Supreme Court on 26.11.2020, in Civil Appeal No.3283 of 2020. v) Petitioner submits that the return of in....
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....the order passed u/s 143(3) r.w.s 147 & 144 on 13.12.2017 was confirmed Rs.19,55,20,070 5. 30332/2022 2013-14 Filed/Not admitted Order passed u/s. 250 on 26.09.2022 by which the order passed u/s 143(3) r.w.s 147 & 144 on 13.12.2017 was confirmed Rs.4,19,25,450 6. 1547/2023 2014-15 Filed/Not admitted Order passed u/s. 250 on 26.09.2022 by which the order passed u/s 143(3) r.w.s 147 & 144 on 30.12.2016 was confirmed Rs.5,94,65,832 7. 23856/2022 2015-16 Filed/Not admitted Notice issued u/s. 148 on 17.06.2021 and the order passed on 29.07.2022 u/s. 148A(d) rejecting the objections to the 148 notice Rs.5,12,07,640 8. 11431/2022 2017-18 Not filed Order passed u/s. 270A on 24.01.2022 levying penalty, order passed on 19.03.2022 rejecting the objections of to the 148 notice, assessment order passed u/s. 147 on 29.03.2022 and notice issued on 29.03.2022 u/s. 274 r.w.s. 270 A Rs.4,37,33,398 b) Aqua Terra Coke and Energy Ltd., v. Income Tax Officer - WP.No.22505/2024 and 22500/2024: i) Petitioner/Aqua Tera Coke and Energy Ltd., formally known as M/s. Bhatia Coke and Energy Limited, the CD was admitted ....
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.... Consequently, moratorium was declared and Public announcement was made on 08.07.2019 inviting claims on or before 23.07.2020. iv) A Resolution Plan submitted by M/s. Sherisha Technologies Private Limited was approved by CoC on 02.09.2021, subsequently by NCLT on 13.01.2022. v) Resolution Professional (RP) failed to file the income tax return for the Assessment Year 2020-21. Therefore, Petitioner made an application under Section 119(2)(b) of IT Act to condone the delay in filing income tax return before CBDT on 12.10.2022. vi) Respondent issued a Show Cause Notice under Section 148A(b) of IT Act on 24.02.2024 to reopen the assessment for the Assessment Year 2020-21. In response, petitioner submitted a reply to the respondent on 12.03.2024. vii) However, without considering the response of petitioner, the impugned order dated 31.3.24 was passed by the respondent under Section 148A(d) of IT Act and issued a notice under Section 148 of IT Act. Challenging the same, present writ petition has been filed. d. M/s. Orchid Pharma Limited v. Assistant Commissioner of Income Tax and another -W.P.No.18804 of 2023: i) Petitioner is a Public....
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....e impugned order dated 31.05.2023 levying a penalty of Rs. 5,13,71,186/-. Challenging the same, present writ petition has been filed. e. M/s. Orchid Pharma Limited v. Assistant Commissioner of Income Tax and another -W.P.No.15238 of 2024: i) Petitioner is a Public Limited company incorporated on 01.07.1992 and engaged in manufacturing pharmaceutical products. ii) Petitioner company has filed its Return of Income for the Assessment Year 2012-13 on 30.11.2012. After scrutiny, respondent passed a Draft Assessment Order on 29.03.2016 and an objection was filed to the same. iii) Thereafter, an assessment order was passed on 08.12.2016. iv) CIRP was initiated by M/s.Lakshmi Vilas Bank Limited, an Operational Creditor under Section 7 of IBC and the same was admitted by the NCLT on 17.08.2017. v) The Resolution Plan submitted by M/s. Dhanuka Laboratories Ltd. was approved by the CoC and subsequently by the NCLT on 27.06.2019. vi) M/s.Accord Life Spec Private Limited challenged the order of NCLT before NCLAT and vide its order dated 13.11.2019, NCLAT allowed the appeal and set aside approval of Resolution Plan and remitted the m....
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....t of tax law and Insolvency and Bankruptcy Code. Any conflict or inconsistency is sought to be resolved with the introduction of Section 238 of IBC, a provision which provides for primacy of IBC, over other laws to the extent of any inconsistencies. In support thereof, reliance was placed on the judgment of the Supreme Court in Sundaresh Bhatt, Liquidator of ABG Shipyard vs Central Board of Indirect Taxes and Customs [(2023) 1 SCC 472], wherein the Supreme Court held that IBC prevails over the Customs Act in case of conflict. iv) Reliance was sought to be placed on Section 31 of IBC to indicate that the legislative intent, was to make a plan approved by the Adjudication Authority, binding on statutory authorities including, Central Government, State Government and local authorities in respect of statutory dues. The binding nature is crucial to ensure that once a plan is approved all creditors, including statutory creditors, must adhere to its terms, effectively extinguishing preexisting claims not included in the plan. v) That when it comes to liquidation, Section 53 of IBC prescribes a waterfall mechanism that dictates, order of priority for disbursing the procee....
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....g in view the above object, it is important that all claims of CD are submitted and incorporated in the Resolution Plan, all claims not made must be understood as having been extinguished. v) The doctrine of a clean slate is statutorily recognized and stands reflected in Section 31 of IBC, which states that an approved plan is binding on all stakeholder including binding Central/State Government and any other statutory dues by virtue of Insolvency and Bankruptcy Code (Amendment) Act, 2019. With the above amendment any doubt as to the binding nature of Resolution Plan on the State and Central government or any statutory authority was put to rest legislatively. vi) That Parliament codified the clean slate theory into law by introducing Section 32A to IBC, which was introduced vide Insolvency and Bankruptcy Code (Amendment) Act, 2020. The above amendment provides that once the plan is approved by the Adjudicating Authority, Section 32A of IBC provides for security and immunity to the CD, its new management, officials and properties from any offences committed by the CD prior to the commencement of CIRP. vii) Section 32A of IBC stipulates that upon approval o....
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....tors including government should also be taken into consideration in the process of value maximization. 5.1.3. That the date on which the application under Section 7 or Section 9 of IBC is admitted by NCLT and moratorium is declared, is the date on which CIRP is deemed to have commenced. This date becomes relevant for the purpose of appreciating the present controversy for a demarcation is required to be made with respect to the affairs of the company prior to commencement of CIRP vis a vis during CIRP. The present batch of cases deals with the tax dues that arose after CIRP had commenced i.e., during the period of CIRP, either by virtue of period of assessment being post CIRP or re-assessment having been made post CIRP though assessment relates to a prior period. 5.1.4. That once CIRP commences, Interim Resolution Professional (hereinafter referred to as "IRP)/RP takes over management of the CD. IRP/RP is conferred and cast with certain rights and obligations inter alia including preparing Information Memorandum which contains details necessary for CoC and any intending Resolution Applicant to analyse the viability of revival of CD. Secondly, it is the duty of RP to continue....
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....ove circular and notification enables RP to take a fresh registration to carry on the business of CD and hand over CD as a running business to SRA. Thus under the scheme of GST law, proceedings under IBC are not seen as a break in the continuous assessment process or registration process of the company. 5.1.12. Dues accruing during CIRP period cannot be categorized as claim under IBC. Claim has been defined under Section 3(6) of IBC to mean "a right to payment, whether or not such right is reduced to judgment, fixed, disputed, undisputed, legal, equitable, secured or unsecured". Debt has been defined in Section 3(11) of IBC to mean "a liability or obligation in respect of a claim which is due from any person and includes a financial debt and operational debt". "Default" is defined under Section 3(12) of IBC to mean "non-payment of debt when whole or any part or instalment of the amount of debt has become due and payable and is not paid by the debtor or the CD as the case may be". On the basis of the above legislative scheme, an application for claim can be lodged with the RP or IRP only when there is a default from the CD. Default as defined under IBC means non-payment of debt w....
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...., to submit that the above provision mandates that transfer of credit in case of sale, merger, demerger, amalgamation, lease or transfer of business is on the condition that there is a specific provision for transfer of liabilities from the existing entities. Rule 41(1) of TNGST Rules was also relied upon to state that the manner in which the transfer of credit on account of sale, merger, amalgamation, lease or transfer of a business is governed by the TNGST Rules. Reliance was then placed on Section 85 of the TNGST Act, which provides for the modus of transfer of liabilities in case of transfer of business, to submit that all the aforesaid provisions of GST Act were enacted after IBC had come into force. However these provisions, importantly, do not contain the expression "subject to IBC". It was thus submitted that transfer of business takes place when a Resolution Plan is approved by NCLT in favour of SRA or when a scheme under Section 230 of the Companies Act is approved by NCLT or when a company is sold as a going concern. 5.1.18. During CIRP, IBC would have no role with respect to any of the aspects relating to assessment under GST in view of Explanation to Section 14(1)(A....
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....ut tax credit to the CD as well as to its customers without verification whatsoever. He would submit that could have never been the intent of IBC and such interpretation would be in contravention of public policy and common good. 5.1.20. The judgments of the Supreme Court in Essar Steel supra and Ghanashyam Mishra supra on which great deal of emphasis was laid was distinguished by pointing out that on facts they related to recovery sought in respect of dues arising pre-CIRP, same cannot be equated with dues arising during CIRP. 5.1.21. From the above it is clear that what weighed with the Hon'ble Supreme Court was that the Resolution Plan which was made by looking into the information memorandum, will be protected under Section 31 of IBC. A resolution applicant should not be expected to deal with anything more than what is covered under the information memorandum in relation to claims that have been made or could have been made prior to the commencement of CIRP. 5.2. CIRP costs - Lack of jurisdiction of NCLT to deal with tax matters: 5.2.1. Tax dues payable to the GST department during moratorium is not CIRP/liquidation cost. The case of the petitioner that tax dues....
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....stitute insolvency resolution process cost may not be justified. 5.3. Finally, insofar as the person against whom recovery proceedings ought to be initiated, it was submitted that the dues are that of the company and it is the company that it is liable to pay the tax and to meet its consequent assessment. The source of funds to meet this liability is not within the purview of the department. He would submit that while tax dues arising during CIRP period ought to be paid and it would be recovered by the GST department against the company whether it would be paid by the SRA or RP or CoC is something which needs to be resolved between the company, SRA and CoC. 6. Submissions of Amicus Curiae: 6.1. Learned Amicus Curiae Mr.P.H. Aravind Pandian, Senior Advocate would submit as follows: a. That the extinguishment of all liabilities prior to CIRP is imperative to ensure that pursuant to the approval of Resolution Plan, SRA starts afresh without the burden of "hydra-head" or "suprise claims" surfacing postresolution in light of the "Clean Slate Theory" propounded by the Apex Court in Ghanashyam Mishra supra, followed by various High Courts. b. Doctrine of Clean S....
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...."Clean Slate Theory", the Larger Bench decision of the Supreme Court in Ghanashyam Mishra supra, holds the prime position wherein it held that the dominant purpose of IBC is revival of the CD and to make it a running concern; that the legislative intent of making the Resolution Plan binding on all the stakeholders on approval by the adjudicating authority upon its satisfaction that the Resolution Plan approved by CoC meets the requirement as referred to in Section 30(2) of IBC. The reason being that after the approval of the Resolution Plan, no surprise claims should be flung on the SRA. The dominant purpose is that the SAR should start with fresh slate on the basis of the Resolution Plan approved. 9.2. Though I had earlier referred to the decision in Ghanashyam Mishra supra, I must clarify that "Clean Slate" was not being spoken about by the Supreme Court for the first time rather Ghanashyam Mishra supra noted and reaffirmed the earlier decisions in Essar Steel supra, wherein it was found that a SRA cannot suddenly be faced with "undecided" claims, after approval of the Resolution Plan as this would amount to a hydra head popping up which would throw into uncertainty Resolution....
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....ion (1) of Section 31, the claims as provided in the resolution plan shall stand frozen and will be binding on the corporate debtor and its employees, members, creditors, including the Central Government, any State Government or any local authority, guarantors and other stakeholders. On the date of approval of resolution plan by the adjudicating authority, all such claims, which are not a part of resolution plan, shall stand extinguished and no person will be entitled to initiate or continue any proceedings in respect to a claim, which is not part of the resolution plan. 102.2. The 2019 Amendment to Section 31 of the I&B Code is clarificatory and declaratory in nature and therefore will be effective from the date on which the I&B Code 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. 103. In the light of what has been he....
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....upra was filed and the same came to be rejected by the Supreme Court, finding that it is settled proposition of law that a Coordinate Bench cannot comment upon discretion exercised or judgment rendered by another Coordinate Bench and the only recourse if a subsequent Bench may have to disagree with the view expressed by an earlier Coordinate Bench was to refer the matter for an authoritative decision, else the law would be thrown into a state of uncertainty. After stating so, while dismissing the Review Petition, it found the attempt by petitioners therein to take advantage of the observations in the case of Paschimanchal supra, wherein it was found that Rainbow Papers supra was decided without considering the Water Fall Mechanism as contained in Section 53 of IBC, was factually incorrect and observed that a bare reading of the judgment in Rainbow Papers supra would show that the Supreme Court therein had not only considered the Water Fall Mechanism under Section 53 of IBC but other relevant provisions of IBC while deciding the priority for the purpose of distributing the proceeds from the sale as liquidation assets. It observed that Rainbow Papers supra was decided after consideri....
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....approve the resolution plan which shall be binding on the corporate debtor and its employees, members, creditors, including the Central Government, any State Government or any local authority to whom a debt in respect of the payment of dues arising under any law for the time being in force, such as authorities to whom statutory dues are owed, guarantors and other stakeholders involved in the resolution plan. Provided that the Adjudicating Authority shall, before passing an order for approval of resolution plan under this sub-section, satisfy that the resolution plan has provisions for its effective implementation." 10.2. On a reading of the above provision the following position would emerge: a. Section 31 of IBC provides for approval of Resolution Plan by the adjudicating authority and also provides for the effect upon the stakeholders on such approval. b. Section 31(1) of IBC provides that if the Adjudicating Authority is satisfied that the Resolution Plan as approved by the CoC under sub-section (4) to Section 30 of IBC meets the requirements as referred to in sub-section (2) of Section 30 of IBC, it shall by order approve the Resolution Plan which ....
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....djudicating authority) but not part of the Resolution Plan. ii) The sheet anchor of petitioners argument has been "Clean Slate Theory", as enunciated in Ghanashyam Mishra supra, and other decisions applying "Clean Slate", in support of their contention that all dues prior to the date of approval of the Resolution Plan by NCLT are extinguished and that SRA cannot be made to face the hydra heads of surprise debts due with regard to periods prior to the date of approval of Resolution Plan. iii) Revenue submitted that the aforesaid decisions dealt only with the debts that became due only until the commencement of the CIRP and not debts that arose during the CIRP process which are by legislative design not considered claims nor debts in terms of Section 3(6) and 3(11) of IBC. The above dues inasmuch as do not constitute claim of debt for the purposes of IBC, Resolution Plan can neither cover nor extinguish such claims or debts. 11.1. The Amicus, true to his position, has put forth a measured position that under Section 31(1) of IBC, it is only the "Resolution Plan" which shall be binding and, therefore, the language, purport and extent of each Resolution Plan must b....
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.... issues/questions decided by Supreme Court by any Court including High Court in view of the binding nature of the Supreme Court. 12.4. To answer the question as to whether the judgments applying "Clean Slate Theory", would constitute a precedent for extending its applicability in respect of dues arising during CIRP, we need to understand the precedential value of those decisions in respect of dues arising during CIRP. 12.5. Now that would take one to Article 141 of the Constitution which contains a declaration that law declared by Supreme Court shall be binding on all courts within the territory of India. There can be no two views about the fact that once Supreme Court declares the law on an issue it is binding on all courts, however the question is whether the decisions relied upon by petitioners wherein "Clean Slate theory", was applied would be a precedent with regard to tax dues arising during CIRP period. 12.6. Before embarking on this enquiry it may do well to remind ourselves that while it is beyond the pale of any doubt that law laid down by the Supreme Court is binding on all Courts, however what is binding is the law laid down by the Supreme Court on a particular....
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....fer to the following judgments: i) Bhavnagar University v. Palitana Sugar Mill (P) Ltd., reported in (2003) 2 SCC 111 : "59. A decision, as is well known, is an authority for which it is decided and not what can logically be deduced therefrom. It is also well settled that a little difference in facts or additional facts may make a lot of difference in the precedential value of a decision." (emphasis supplied) ii) Regional Manager v. Pawan Kumar Dubey, reported in (1976) 3 SCC 334: "7. ....... But, the application of the same law to the differing circumstances and facts of various cases which have come up to this Court could create the impression sometimes that there is some conflict between different decisions of this Court. Even where there appears to be some conflict, it would, we think, vanish when the ratio decidendi of each case is correctly understood. It is the rule deducible from the application of law to the facts and circumstances of a case which constitutes its ratio decidendi and not some conclusion based upon facts which may appear to be similar. One additional or different fact can make a world of difference between conclus....
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....e erstwhile management and that this can be achieved by applying a purposive interpretation to the provisions of the Code by not permitting the problems of the earlier regime to enter the resolved/revived entity through the backdoor. Therefore, in this context, the problems of the earlier regime of the corporate debtor which are wiped through the clean slate theory could necessarily be only till the date of commencement of CIRP. b. Judgment - Precedent for what it decides - Not what logically flows therefrom: 12.11. The second reason which leads me to believe that the above judgments of the Supreme Court including Ghanashyam Mishra supra applying "Clean Slate Theory" may not constitute precedent in respect of tax dues arising during CIRP period is in view of the settled position on precedent, that a judgment is a precedent for what it decides and not what logically flows therefrom. As discussed supra the question of applicability of "Clean Slate Theory" to tax dues arising during CIRP period never arose nor could have arisen inasmuch as none of the decisions of the Supreme Court wherein Clean Slate Theory was applied related to tax dues/debts that arose during CIRP period. Th....
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.... the consideration of the Supreme Court in this judgment. This was not denied by the petitioners. They however, submitted that their submissions are a logical consequence of the aforesaid observations. Apart from the fact that we do not agree with this contention, such an approach is not even permissible. It is well established that a judgment is a precedent for what it decides and not what may appear to logically flow from it." (emphasis supplied) 12.12. The judgments relied upon by petitioners on Clean Slate related to dues that arose prior to CIRP the submission of the petitioners that it applies even in respect of dues that arise during CIRP is nothing more than an attempt by the petitioners to logically extend the principle of "Clean Slate" even in respect of dues arising during CIRP which is impermissible. c. A decision which passes sub-silentio - Not a precedent: 12.13. Yet another reason why I would think that the judgments of the Supreme Court on "Clean Slate", may not be applicable is in view of the fact that the question with which we are confronted viz., whether Clean Slate would apply for tax dues arising during CIRP period is a point of law which had not p....
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....followed. Precedents sub silentio and without argument are of no moment. This rule has ever since been followed. One of the chief reasons for the doctrine of precedent is that a matter that has once been fully argued and decided should not be allowed to be reopened. The weight accorded to dicta varies with the type of dictum. Mere casual expressions carry no weight at all. Not every passing expression of a judge, however eminent, can be treated as an ex cathedra statement, having the weight of authority.'' (emphasis supplied) 12.14. From the above discussion, I would think that inasmuch as in none of the judgments relied upon by the petitioners wherein "Clean Slate Theory" was applied the particular point of law involved in these matters viz., applicability of "Clean Slate" in respect of dues arising during CIRP was neither raised nor perceived by the court or present to its mind thus the decisions on Clean Slate relied upon by petitioners may not be precedent on the question as to whether "Clean Slate" would apply to dues arising during CIRP but thus passes sub silentio on the above question and is thus of no moment and may not carry on weight. 12.15. Fro....
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....ms from interested creditors as per Sections 13 and 15 of IBC read with Regulation 6 of CIRP Regulations. e. Regulation 12 of CIRP Regulations provides that such claims may be filed with proof within the date mentioned in the Public Announcement or before 90 days from the insolvency commencement date. The claims so filed are ones that accrue upto the CIRP commencement date. f. The IRP is vested with the management of the CD, from the insolvency commencement date and is under a statutory mandate to make best endeavours to run the CD as a going concern and to perform all such duties as provided under Sections 17 to 20 of IBC. g. The IRP soon after the identification of creditors shall form the CoC in terms of Section 21 of IBC which inter alia consists of all the Financial Creditors of the CD, who shall being a Central decision making body vested with the "commercial wisdom" to determine either to revive the CD through Resolution Plan or go through the liquidation process and act as a fiduciary for all the stakeholders i.e., this process envisages suspending erring promoters/management putting the creditor in charge of the process. h. First meeting....
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....l aids under IBC which are indicative that there is a need to discharge liability arising during CIRP period which militates against the plea of applicability of "Clean Slate" during CIRP. 13.2.2. I shall now refer to the provisions which would appear to suggest that during the CIRP period, liability to pay taxes would continue and does not cease. Thus submission by the learned counsel for the petitioners that during CIRP period, the need to discharge liabilities ceases and in any event once a Resolution Plan is approved, the same would be binding and the State would have to forego the tax dues that had arisen during CIRP period cannot be countenanced as would be clear from a reading of the following provisions under IBC: i) Section 14 of IBC: "14. Moratorium.-(1) Subject to provisions of sub-sections (2) and (3), on the insolvency commencement date, the Adjudicating Authority shall by order declare moratorium for prohibiting all of the following, namely:- (a) the institution of suits or continuation of pending suits or proceedings against the corporate debtor including execution of any judgment, decree or order in any court of law, tribunal, arbitration pan....
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....he requirements under any law for the time being in force on behalf of the corporate debtor." iii) Section 30(2)(e) of IBC: "30. Submission of resolution plan.- ..... (2) The resolution professional shall examine each resolution plan received by him to confirm that each resolution plan- ..... (e) does not contravene any of the provisions of the law for the time being in force;" iv) Section 32A of IBC: "32A. Liability for prior offences, etc.-(1) Notwithstanding anything to the contrary contained in this Code or any other law for the time being in force, the liability of a corporate debtor for an offence committed prior to the commencement of the corporate insolvency resolution process shall cease, and the corporate debtor shall not be prosecuted for such an offence from the date the resolution plan has been approved by the Adjudicating Authority under section 31, if the resolution plan results in the change in the management or control of the corporate debtor to a person who was not- (a) a promoter or in the management or control of the corporate debtor or a related party of such a person; or (b) a person....
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....his section, the corporate debtor and any person who may be required to provide assistance under such law as may be applicable to such corporate debtor or person, shall extend all assistance and co-operation to any authority investigating an offence committed prior to the commencement of the corporate insolvency resolution process." 13.2.3. From a cumulative reading of the above provisions it would appear that IBC contemplates compliance with the laws in force including payment of taxes during CIRP for the following reasons: 13.2.4. Firstly, Section 14 of IBC which provides for moratorium during CIRP vide its Explanation provides that license, permit, registration, quota, concession, clearance or a similar grant or right given by the Central Government, State Government, local authority, sectoral regulator or any authority constituted under any other law for the time being in force shall not be suspended or terminated on the grounds of insolvency, subject to the condition that there is no default in payment of current dues arising for the use or continuation of the license or a similar grant or right during moratorium period. 13.2.5. While it is possible to suggest that th....
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....-CIRP and during CIRP. More importantly, when the legislative design/intent appears to mandate payment even to private entities with regard to commercial dealings applying the same yardstick it appears to me that position of the need to discharge fiscal dues arising during CIRP cannot be of a lower status, if we only bear in mind the significance of tax under the Constitution. 13.2.7. Thirdly "Clean Slate Theory" has two aspects to it - one that applies to the civil liabilities which is governed by Section 31(1) of IBC and one that applies to criminal liability in relation to an offence committed by the CD governed by Section 32A of IBC. They both have the same intent of enabling the SRA to revive the CD without the baggage of the past liabilities. Section 32A of IBC provides for very specific language and points out with precision the time until which the clean slate theory would apply in relation to criminal liabilities; Section 32A of IBC reads thus "... the liability of a corporate debtor for an offence committed prior to the commencement of the corporate insolvency resolution process shall cease...". 13.2.8. It would perplex any mind to consider that the statute which ha....
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....erefore, no claims could be lodged beyond the said period. It thus appears that claims to be submitted with the RP/IRP in terms of Regulation 12 and 13 of CIRP was never envisaged to take within its fold the tax dues that arise during CIRP period. This would be consistent with the scheme of IBC, more particularly Section 14 and Section 30 of IBC which provides that during CIRP period, RP is required to discharge the entire tax dues that arise during CIRP period. As found supra, since the claims ought to be submitted within a period of 90 days from the initiation of the Corporate Insolvency Resolution Process (CIRP), it becomes well-nigh impossible to even lodge a claim in respect of the period subsequent thereto, whereas the Resolution Plans are framed much thereafter and approved much later. This may also fall foul of the doctrine of the Latin maxim Lex Non Cogit Ad Impossibilia. 13.2.12. This maxim and law itself and the administration of it must yield to that to which everything must bend, to necessity; the law, in its most positive and peremptory injunctions, is understood to disclaim, as it does in its general aphorisms, all intention of compelling to impossibilities. It is....
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....repared by the RP which is immediately after the CIRP commencement and, therefore, may not include information and claims of the liability that arise or become due at the end of the CIRP period. 13.2.14. However, from the language of Section 30 read with Regulation 36, the Resolution Plan is only "on the basis" of the information memorandum; it does not dispense with the due diligence that is required of the resolution applicant to ensure that the CD is in compliance with the tax legislations; the doctrine of "caveat emptor" would equally apply to a resolution applicant. All resolution applicants are required to make their own due diligence and submit the Resolution Plan and cannot merely take shelter under the "clean slate theory" per se. 13.2.15. The rationale behind the clean slate theory as enunciated by the Supreme Court is that a SRA cannot be faced with "undecided" claims after the Resolution Plan submitted by it has been accepted as that would amount to "hydra heads popping up" which would throw into uncertainty the amounts payable by a prospective resolution applicant who would successfully take over the business of the CD. Therefore, the mischief that the clean slat....
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....aud on the Constitution. In this regard it may be relevant to refer to the decision of the Supreme Court in Amrit Banaspati supra wherein while dealing with a promise of benefit/concession by way of refund of sales tax collected from customers with a view to encourage new industries it was held that agreement to refund tax realised by the State which is due under the Act and realised in accordance with law would be a fraud on the Constitution and breach of faith of the people, the relevant portion is extracted hereunder: "10. But promissory estoppel being an extension of principle of equity, the basic purpose of which is to promote justice founded on fairness and relieve a promisee of any injustice perpetrated due to promisor's going back on its promise, is incapable of being enforced in a court of law if the promise which furnishes the cause of action or the agreement, express or implied, giving rise to binding contract is statutorily prohibited or is against public policy. What then was the nature of refund which was promised by the government? Was such promise contrary to law and against public policy? Could it be enforced in a court of law? Taxation is a sovereign ....
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....Such provisions in an Act or Notification or orders issued by Government are neither illegal nor against public policy. 12. But refund of tax is made in consequence of excess payment of it or its realisation illegally or contrary to the provisions of law. A provision or agreement to refund tax due or realised in accordance with law cannot be comprehended. No law can be made to refund tax to a manufacturer realised under a statute. It would be invalid and ultra vires. The Punjab Sales Tax Act provided for refund of sales tax and grant of exemption in circumstances specified in Sections 12 and 30 respectively. Neither empowered the Government to refund sales tax realised by a manufacturer on sales of its finished product. Refund could be allowed if tax paid was in excess of amount due. An agreement or even a notification or order permitting refund of sales tax which was due shall be contrary to the statute. To illustrate it the appellant claimed refund of sales tax paid by it to the State Government on sale made by it of its finished products. But the tax paid is not an amount spent by the appellant but realised on sale by it. What is deposited under this head is tax which i....
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.... future, knowing as well as intending that the representation, assurance or the promise would be acted upon by the other party to whom it has been made and has in fact been so acted upon by the other party, the promise, assurance or representation should be binding on the party making it and that party should not be permitted to go back upon it, if it would be inequitable to allow him to do so, having regard to the dealings, which have taken place or are intended to take place between the parties. 12. It has been settled by this Court that the doctrine of promissory estoppel is applicable against the Government also particularly where it is necessary to prevent fraud or manifest injustice. The doctrine, however, cannot be pressed into aid to compel the Government or the public authority 'to carry out a representation or promise which is contrary to law or which was outside the authority or power of the officer of the Government or of the public authority to make'. There is preponderance of judicial opinion that to invoke the doctrine of promissory estoppel clear, sound and positive foundation must be laid in the petition itself by the party invoking the doctrine and that b....
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....y are not statutorily entitled in view of limitation/restriction under Section 16, 17 or 18 of GST Act. b) There may be cases were ITC is claimed on the basis of bogus suppliers or fictitious transactions even such ITC credit may have to be extended without being examined. c) The "CD" may pay taxes on receipt of supplies and claim ITC of taxes so paid while not discharging its output tax liability this could produce unintended results. 14.5. Thirdly, it is possible that such construction may also render the provision vulnerable to challenge as being violative of Article 14 of Constitution in view of the fact that while Company 'A' which complies with the mandate contained in Section 14, 17 and 31 of IBC and other fiscal laws would be treated on par with an entity/CD, which does not comply with the law while committing a breach or default. This parity in treatment of two unequals would possibly attract the wrath of Article 14 of the Constitution of India. 14.6. Having considered the submissions made on either side and Amicus Curiae, this court is of the view that it is not desirable rather cannot extend Clean Slate Doctrine in respect of dues arising ....
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....ent of Objects and Reasons of IBC: "Statement of Objects and Reasons of IBC: There is no single law in India that deals with insolvency and bankruptcy. Provisions relating to insolvency and bankruptcy for companies can be found in the Sick Industrial Companies (Special Provisions) Act, 1985, the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 and the Companies Act, 2013. These statutes provide for creation of multiple fora such as Board of Industrial and Financial Reconstruction (BIFR), Debts Recovery Tribunal (DRT) and National Company Law Tribunal (NCLT) and their respective Appellate Tribunals. Liquidation of companies is handled by the High Courts. Individual bankruptcy and insolvency is dealt with under the Presidency Towns Insolvency Act, 1909, and the Provincial Insolvency Act, 1920 and is dealt with by the courts. The existing framework for insolvency and bankruptcy is inadequate, ineffective and results in undue delays in resolution, therefore, the proposed legislation. 2.The objective of the Insolvency and Bankruptcy Code....
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....epreneurship, enhance the ease of doing business and provide an environment conducive to investment, setting the economy on the path to growth and development. In resolving some of the complex issues which arise under the new legal regime envisaged under the IBC, it then becomes necessary to vacuum the cobwebs of the past. Interpreting the IBC in a manner which would facilitate the salutary objects which it is intended to achieve requires all stakeholders to shed concepts and notions associated with the earlier legal regime, which was largely a debtor's paradise. The earlier regime was one in which the debtor would largely remain in possession of the company and its assets and individual creditors were left to paddle their own canoe in headwinds controlled by those in debt and default. 15.3.5. Pithly put IBC is an economic legislation and its key objectives are to ensure: (a) good corporate governance; (b) control deviant behaviour; (c) protect the integrity of the resolution process; (d) enhance commercial morality; and (e) foster respect for the rule of law. 15.3.6. IBC is premised on the principle that there is a significant....
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....1. Reference to the Statement of Objects and Reasons is permissible for understanding the background, the antecedent state of affairs, the surrounding circumstances in relation to the statute, and the evil which the statute sought to remedy. The weight of judicial authority leans in favour of the view that the Statement of Objects and Reasons cannot be utilised for the purpose of restricting and controlling the plain meaning of the language employed by the legislature in drafting a statute and excluding from its operation such transactions which it plainly covers. (See Principles of Statutory Interpretation by Justice G.P. Singh, 8th Edn., 2001, pp. 206-09.)" 52. The Statement of Objects of the U.P. Civil Laws (Amendment) Act, 2015 thus explains the reason for bringing the amendment for increasing the pecuniary jurisdiction but the word "institution" used in the Statement of Objects shall not control the expressed language of Section 15." (emphasis supplied) ii) Bhaiji v. SDO, reported in (2003) 1 SCC 692: "11. Reference to the Statement of Objects and Reasons is permissible for understanding the background, the antecedent state of affairs, the surrounding c....
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....ion of money or other property in accordance with some reasonable rule or apportionment for the purpose of defraying public expenses. The following passage from the book is apposite: "57. Power to tax as an inherent attribute of sovereignty.-The power of taxation is an essential and inherent attribute of sovereignty, belonging as a matter of right to every independent Government. It is possessed by the Government without being expressly conferred by the people. The power is inherent in the people because the sustenance of the Government requires contributions from them. In fact the power of taxation may be defined as "the power inherent in the sovereign State to recover a contribution of money or other property, in accordance with some reasonable rule or apportionment, from the property or occupations within its jurisdiction for the purpose of defraying the public expenses". Constitutional provisions relating to the power of taxation do not operate as grants of the power of taxation to the Government but instead merely constitute limitations upon a power which would otherwise be practically without limit. This inherent power to tax extends to everything over which the sove....
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.... by the Constitution itself and not by any obligation which had been undertaken by either the Dominion Government or the Province of Bombay or even the State of Bombay . ..... But unless and until the court came to the conclusion that the Constitution itself had expressly prohibited legislation on the subject either absolutely or conditionally the power of the State Legislature to enact legislation within its legislative competence was plenary. Once the topic of legislation was comprised within any of the entries in the Lists II and III of the Seventh Schedule to the Constitution the fetter or limitation on such legislative power had to be found within the Constitution itself and if there was no such fetter or limitation to be found there the State Legislature had full competence to enact the impugned Act no matter whether such enactment was contrary to the guarantee given, or the obligation undertaken by the Dominion Government or the Province of Bombay or even the State of Bombay." (emphasis supplied) 15.4.3. The above view on significance of tax and unfettered power of the State except express limitations under the Constitution has been explained and reiterated by the Apex....
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...., the Legislature of any State has exclusive power to make laws for such State or any part thereof with respect to any of the matters enumerated in List II in the Seventh Schedule (in the Constitution, referred to as the "State List"). (4) Parliament has power to make laws with respect to any matter for any part of the territory of India not included (in a State) notwithstanding that such matter is a matter enumerated in the State List." 15.5.3. The position as to the legislative competence of the State/Parliament to tax under the Constitution as it existed at the time of introduction of IBC, was such that the powers to tax was clearly demarcated and there was no overlapping between the States and the Union's power to tax. Importantly, the Concurrent list did not provide the power to tax, which is unique and clearly reflects that the power to tax was mutually exclusive i.e., either it vested with the State or the Union. In this regard, it may be relevant to refer to the Constitutional bench decision in Jindal Stainless Ltd supra wherein after referring to a line of decision held that the constitution provides for demarcation of taxing powers and there is no overlapping ....
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....nd II and List III has priority over List II. However, still, the predominance of the Union List would not prevent the State Legislature from dealing with any matter within List II though it may incidentally affect any item in List I." b. Position post 101 s t Constitutional Amendment:- 15.5.5. States' Power under Art.246A - Its Impact: The Supreme Court in Union of India v. Mohit Minerals (P) Ltd., reported in (2022) 10 SCC 700, while dealing with the binding nature of GST Council recommendations on the State had dealt with the scope of Article 246A of the Constitution and explained as under: Power under Article 246-A can be exercised simultaneously by the State Legislature and Parliament and none hold any "unilateral or exclusive" legislative power [Id, para 22.] . Article 246-A provides Parliament and the State Legislature with the concurrent power to legislate on GST. Article 246-A has a non- obstante provision which overrides Article 254. Article 246-A does not provide a repugnancy clause. ....... If the GST Council was intended to be a decision-making authority whose recommendations transform to legislation, such a qualification wo....
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....t to goods and services tax imposed by the Union or by such State. (2) Parliament has exclusive power to make laws with respect to goods and services tax where the supply of goods, or of services, or both takes place in the course of inter-state trade or commerce. Explanation.- The provisions of this article, shall, in respect of goods and services tax referred to in clause (5) of article 279A, take effect from the date recommended by the Goods and Services Tax Council)" 15.5.9. Importantly, with the introduction of Article 246A to the Constitution, as stated supra apart from putting an end to the theory of mutual exclusivity of taxing powers between the Union and States, the theory/principle of predominance of Union over the State list, may no longer survive in view of the non-obstante clause contained in Article 246-A of Constitution. The non-obstante clause in Article 246A with express reference to Article 246 is significant, if we bear in mind that a clause beginning with "notwithstanding anything" is appended with a view to give the enacting part in case of conflict an overriding effect over the provision mentioned in the non obstante clause [Orient Paper ....
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.... 12. Thus, the question of repugnancy between the parliamentary legislation and the State legislation can arise in two ways. First, where the legislations, though enacted with respect to matters in their allotted sphere, overlap and conflict. Second, where the two legislations are with respect to matters in the Concurrent List and there is a conflict. In both the situations, parliamentary legislation will predominate, in the first, by virtue of the non obstante clause in Article 246(1), in the second, by reason of Article 254(1). Clause (2) of Article 254 deals with a situation where the State legislation having been reserved and having obtained President's assent, prevails in that State; this again is subject to the proviso that Parliament can again bring a legislation to override even such State legislation." (emphasis supplied) 15.5.11. The non-obstante clause employed in Article 246 of the Constitution was held to give predominance or supremacy of the law made by the Union Legislature in the event of an overlap of the law made by Parliament with respect to a matter enumerated in List I and a law made by the State Legislature with respect to a matter enumerated....
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....in respect of laws made in exercise powers conferred under Article 246A of the Constitution over laws made under Article 246 and 254 of the Constitution including that made by Parliament. In this regard it may be relevant to refer to the decision of the Supreme Court in the case of Keshavji Ravji & Co. v. CIT, reported in (1990) 2 SCC 231, wherein it was held as under: "15. ...... This is, no doubt, a well recognised guide to construction. When words acquire a particular meaning or sense because of their authoritative construction by superior courts, they are presumed to have been used in the same sense when used in a subsequent legislation in the same or similar context. This principle was stated by the Judicial Committee in H.H. Ruckmaboye v. Lulloobhoy Mottichund [5 Moo IA 234, 250: 8 Moo PC 4] thus: "....it is, therefore, of considerable importance to ascertain what has been deemed to be the legal import and meaning of them, because, if it shall appear that they have long been used, in a sense which may not improperly be called technical, and have been judicially construed to have a certain meaning, and have been adopted by the legislature in that sense, long ....
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.... relates to Charge in respect of due arising under TNGST Act and provides that while it would prevail over any other law for the time being in force, however this overriding effect by virtue of non-obstante clause is however made subservient to IBC by use of the expressions "save as otherwise provided in the Insolvency and Bankruptcy Code". This is a self imposed limitation by the State legislature, recognition of the supremacy which it otherwise enjoys over Parliamentary legislations. But for this provision i.e., Section 82 in TNGST Act, in the event of conflict between the provision of SGST and IBC the former would prevail over provisions of IBC by virtue of non-obstante clause contained in Article 246A of the Constitution. 15.5.19. On gleaning through the provisions of GST, this Court finds that no other provision is designed to yield to provisions under IBC. In the absence of a similar provision with regard to the other provisions of GST more particularly, provisions pertaining to levy as well as Section 73 and 74 of SGST Act, which deals with determination of taxes inter alia of taxes not paid or short paid, in the absence of a similar "subject to" or similar such clause in....
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....es that arise during CIRP period. The only provision which was relied upon by the petitioner to support their contention that "Clean Slate" would apply during CIRP is Section 238 of IBC which reads as under: "Section 238: Provisions of this Code to override other laws. 238. The provisions of this Code shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law." 15.6.2. A reading of Section 238 of IBC would make it clear that the non-obstante clause give an overriding effect to provisions of IBC in the event of conflict of law with any other law. However with the introduction of 101st Constitutional amendment the scope of the non-obstante clause must be understood in a manner consistent with Article 246A of the Constitution which confers power on the Parliament and State legislature to make laws in respect of supply on goods and service tax. The need to tread cautiously as to the scope of Section 238 of IBC assumes significance for the following reasons: a. With the 101st Constitutional amendment States by virtue of nonobstante clause....
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....s of collection and recovery GST subservient to IBC, when GST laws are made by the States in exercise of hierarchically superior legislative power under the Constitution. d. The non-obstante clause in Section 238 of IBC must be understood keeping in view the shift in legislative primacy which the States have now been granted and come to enjoy by virtue of the non-obstante clause contained in Article 246A of Constitution which expressly prevails over Article 246 of Constitution and is made only subject to Sub-clause (2) to Article 246 of Constitution. Any attempt to understand the non-obstante clause in Section 238 of IBC as giving the Union overarching legislative power in respect of legislation made under Article 246A may render it vulnerable to challenge as being unconstitutional and ultra vires Article 246A insofar the States legislative competence under Article 246A of Constitution. A non-obstante clause must be interpreted keeping in view the policy of the Constitution. In this regard it may be relevant to refer to the decision in Jay Engg. Works Ltd. v. Industry Facilitation Council, reported in (2006) 8 SCC 677: "33. In ICICI Bank Ltd. v. SIDCO Leathers Ltd....
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....at the object of an another legislation, in the present case, IBC. Restriction or limitation more so an embargo, cannot be introduced through a process of interpretation by courts. That would not only be judicial legislation, but one which results in imposing fetters on power of a competent legislative bodies power to tax, which as seen supra in the absence of express provision under the Constitution is impermissible. 16. Jurisdiction of IBC Authorities and Tribunal: 16.1. While the NCLT may determine if the resolution plan has made sufficient provisions for tax dues arising during CIRP, whether the resolution plan is in consonance with the tax laws and the underlying public policy, during the course of hearing yet another aspect which was raised related to the remedy that may be available to the CD to decide disputes on merits arising under tax laws such as GST, Income Tax etc during the course of proceedings under IBC. The counsel for petitioners would submit that the petitioners are not remediless instead they would have to approach under Section 60(5) of IBC. 16.2. Question would then arise as to whether the power and jurisdiction of the authorities/ Tribunal under IBC....
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....n relation to a matter which is in the realm of public law, cannot, by any stretch of imagination, be brought within the fold of the phrase " arising out of or in relation to the insolvency resolution " appearing in clause (c) of sub-section (5). Let us take for instance a case where a corporate debtor had suffered an order at the hands of the Income Tax Appellate Tribunal, at the time of initiation of CIRP. If Section 60(5)(c) of the IBC is interpreted to include all questions of law or facts under the sky, an Interim Resolution Professional/Resolution Professional will then claim a right to challenge the order of the Income Tax Appellate Tribunal before the NCLT, instead of moving a statutory appeal under Section 260-A of the Income Tax Act, 1961. Therefore the jurisdiction of the NCLT delineated in Section 60(5) cannot be stretched so far as to bring absurd results . [It will be a different matter, if proceedings under statutes like Income Tax Act had attained finality, fastening a liability upon the corporate debtor, since, in such cases, the dues payable to the Government would come within the meaning of the expression "operational debt" under Section 5(21), making the Governm....
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....iction. NCLT cannot derive its powers from the "spirit" or "object" of IBC . Section 60(5)(c) of IBC vests NCLT with wide powers since it can entertain and dispose of any question of fact or law arising out or in relation to the insolvency resolution process. We hasten to add, however, that NCLT's residuary jurisdiction, though wide, is nonetheless defined by the text of IBC. Specifically, NCLT cannot do what IBC consciously did not provide it the power to do." (emphasis supplied) 16.3. There is yet another reason why I would think that it may not be permissible for the authorities or the tribunal under IBC to examine the correctness or otherwise of a claim or an assessment made under the GST Act. This is also in view of the fact that the GST Act especially the State GST Act is administered by the authorities under the State Act. It may well constitute a transgression by the authorities under IBC into the powers which are vested under the statute of a State legislation made under Article 246A of the Constitution, which may not be permissible. There may well be two sets of orders, if we permit the NCLT/ Tribunals to also examine the correctness or otherwise of an order of ....
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....r Prints (II) v. Union of India, reported in (1989) 3 SCC 488, wherein it was held as under: "53. If a legislation purporting to be under a particular legislative entry is assailed for lack of legislative competence, the State can seek to support it on the basis of any other entry within the legislative competence of the legislature. It is not necessary for the State to show that the legislature, in enacting the law, consciously applied its mind to the source of its own competence. Competence to legislate flows from Articles 245, 246, and the other articles following, in Part XI of the Constitution. In defending the validity of a law questioned on ground of legislative incompetence, the State can always show that the law was supportable under any other entry within the competence of the legislature. Indeed in supporting a legislation sustenance could be drawn and had from a number of entries. The legislation could be a composite legislation drawing upon several entries. Such a "ragbag" legislation is particularly familiar in taxation. 54. Bennion in his Statutory Interpretation (at p. 644) refers to such a composite legislation, though the observations must be und....
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....t and SGST Act respectively. This is an aspect which has not been examined in the impugned proceedings thus requires to be adjudicated. 18.2. CIRP Cost: 18.2.1. The Amicus and some of the Petitioners here have also raised the following issues: a) Although the tax dues during the CIRP period may not fall under the scope of claims, it may nevertheless be a "insolvency resolution process costs" and thus must be construed as being covered in the resolution plan. However, this aspect appears to have neither been placed nor considered in the assessment orders under challenge, and the Government also questions this interpretation as taxes are not incurred "by the resolution professional" for it is a levy on the corporate debtor per se. In response, it is submitted by the Amicus that it may be covered under Regulation 31(b) read with Section 5(13)(e) which provides that amounts due to a person whose rights are prejudicially affected on account of the moratorium imposed under section 14(1)(d) shall constitute CIRP costs and must be interpreted so since the tax authorities could not embark on an assessment/collection during the moratorium. It is the language of the resolution ....
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.... writ petitions whether sale as a going concern as part of liquidation process can be treated as transfer of business as a whole for the purpose of GST in terms of Section 85 of TNGST Act has not been examined and needs to be gone into keeping in view the Terms of Scheme /Compromise under Section 230 of Companies Act. 19. Conclusion: 19.1. W.P.No.30364 of 2024: 19.1.1. The impugned order of assessment is set aside inasmuch as one of the grounds raised by the petitioner is that the objections and reply filed has not been considered while passing the impugned order. The respondent authority is directed to redo the assessment keeping in view the law laid down by this Court in the present batch of writ petitions. While passing fresh orders the adjudicating authority shall inter alia examine the following: a. Terms of Resolution Plan. b. Whether the tax element would constitute "Corporate Insolvency Resolution Process Cost", if the answer is in the affirmative, whether the Resolution Plan provides for the same in terms of Section 31 of IBC, if not, whether Resolution Plan is objected to by the State, or in its absence whether Resolution Plan would attain final....
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.....5.1. The impugned order of assessment passed under Section 148 (A) (d) of IT Act, dated 30.03.2024 is set aside with a direction to redo the assessment keeping in view the law laid down by this Court in the present batch of writ petitions. While passing fresh orders the adjudicating authority shall inter alia examine the following: a. Terms of Resolution Plan. b. Whether the Income Tax element would constitute "Corporate Insolvency Resolution Process Cost", if the answer is in the affirmative, whether the Resolution Plan provides for the same in terms of Section 31 of IBC, if not, whether Resolution Plan is objected to by the State, or in its absence whether Resolution Plan would attain finality. c. Impugned order dated 10.05 2024 under Section 119(2) of IT Act is set aside and remanded back for fresh consideration in the light of the law laid down by this Court, though the same may not be directly on exercise of power under Section 119 of IT Act, however to re-examine if there are circumstances that precluded the petitioner from filing the return within the statutory period keeping in view the proceedings under IBC and importantly the law laid down by t....