MVAT Dues Outside Approved Resolution Plan Stand Extinguished: Bombay HC

Aarem Insights Pvt. Ltd. Vs Joint Commissioner of State Tax (Appeals)-VII (Bombay High Court)

Summary: The Bombay High Court held that once the NCLT approved the petitioner’s Resolution Plan on a “clean slate” basis, all past statutory claims or dues not surviving under the approved plan stood extinguished and the State tax authorities could not continue pending proceedings or recover the earlier MVAT demand. Aarem Insights Pvt. Ltd., formerly Shop CJ Network Pvt. Ltd., had been assessed under Section 23(2) of the Maharashtra Value Added Tax Act, 2002 for Assessment Year 2011-12. During the pendency of its appeal, the company underwent CIRP under the Insolvency and Bankruptcy Code, 2016.

The Resolution Plan dated 15 September 2022 was approved by the NCLT on 21 March 2023 and subsequently rectified on 18 April 2023, providing for payment towards disputed Government dues. Despite being informed of the approved plan, the First Appellate Authority dismissed the MVAT appeal as withdrawn on 31 July 2025 and directed recovery of the balance assessed dues. The High Court held that this action lacked jurisdiction because Section 31 of the IBC makes an approved resolution plan binding on all stakeholders, including Government tax authorities. Relying principally on Ghanashyam Mishra and Sons Private Limited and other precedents, the Court reiterated that claims outside the approved resolution plan cannot thereafter be initiated or continued.