Shaifali Steels Limited Vs ITO (Gujarat High Court)
Summary: M/S. Shaifali Steels Limited filed a petition under Article 226 of the Constitution of India challenging the adjustment of its income tax refunds towards earlier income tax demands. The petitioner sought quashing of the adjustment of refunds aggregating to Rs. 26,86,580/- for Assessment Years 2019-20 to 2023-24 as stated in the prayers, as well as the communication dated 22.01.2026. It also sought processing of the refund without adjustment against income tax demands which, according to the petitioner, had been extinguished pursuant to approval of the resolution plan under the Insolvency and Bankruptcy Code, 2016.
The petitioner company had undergone Corporate Insolvency Resolution Process under the IBC. The CIRP was initiated under Section 9 of the IBC and admitted by the Adjudicating Authority on 17.12.2019. An Interim Resolution Professional was appointed and claims were invited from creditors. During the CIRP, the Resolution Plan submitted by M/s. Caxchem Chemical Corporation was approved by the Tribunal on 13.12.2021 under Section 30(6) of the IBC. The Resolution Plan provided for waiver and extinguishment of the unassessed and assessed tax liabilities for the period prior to the Tribunal approval date.
The petitioner contended that notwithstanding the approval of the Resolution Plan, the respondent adjusted income tax refunds for Assessment Years 2018-19 to 2023-24 against income tax dues. The petitioner challenged such adjustment on the basis that the relevant tax liabilities had already been extinguished under the approved Resolution Plan. The petitioner also pointed out that, while processing the return for Assessment Year 2024-25, the respondent had processed a refund of Rs. 9,34,830/- without adjusting it against the past dues.
