Case Law Details
GGS Infrastructure Private Limited Vs Commissioner of CGST & Central Excise (Bombay High Court)
Once a resolution plan is approved by the committee of creditors by the requisite percentage of voting and the same is thereafter sanctioned by the adjudicating authority (Tribunal in this case), the same is binding on all the stakeholders including the operational creditors. As a matter of fact, respondent herein as an operational creditor had lodged its claim before the resolution professional. The resolution plan provides for settlement of service tax dues at 5% of the amount of principal dues that would be crystallized upon adjudication, further providing for waiver of interest, penal interest and penalty that may be charged. As we have held above, respondent may be justified in proceeding with the show-cause cum demand notices because that has resulted in crystallization of the total amount of service tax dues i.e., the principal amount payable by the petitioner which is Rs.7,02,20,725.00. The amount of service tax dues having thus crystallized as above, the resolution plan says that the same would be settled at 5% of the principal dues adjudicated. The word used is “adjudicated” and not “adjusted” as sought to be read and applied by the respondent. Therefore, the amount that the petitioner would be required to pay is 5% of Rs.7,02,20,725.00. In so far the recovered amount i.e. Rs.6,23,82,214.00 is concerned, the same is part of the total demand determined i.e. Rs.7,02,20,725.00. After retaining 5% of Rs.7,02,20,725.00, respondent would be duty bound to refund the balance amount to the petitioner which will not only be in terms of the resolution plan and thus in accordance with law but will also be a step in the right direction for revival of the petitioner which is the key objective of the Code.
There is no question of retaining the said amount. Submissions made by Mr. Jetly that the amount already recovered should be allowed to be appropriated by the respondent and that petitioner should pay 5% of the balance of the principal dues i.e. 5% of Rs.7,02,20,725.00 less Rs.6,23,82,214.00 is without any substance and liable to be rejected. It is accordingly rejected.
It cannot be argued that the State having recovered certain money even though such recovery may be illegal or questionable cannot be compelled to refund the same. Such a contention is clearly untenable, notwithstanding the question as to whether it is a case of unjust enrichment or not. Once it is determined that the State is holding money beyond what is legally permissible, it has a binding duty to refund the same. A Full Bench of this Court in New India Industries Ltd. Vs. Union of India, 1990 Mh.L.J. 5, held that an application under Article 226 of the Constitution of India would lie for enforcing the obligation of the State to refund and/or return the money collected towards illegal tax or dues. In that case, this Court held that it would be abhorrent to the principles of justice if the State is permitted to retain money unjustly gained or recovered. The same would have to be be refunded. The Full Bench also negated a contention that in a case of tax refundable, the State should be allowed to retain the same with the discretion of how to benefit those who has borne the burden.
Thus, having considered all aspects of the matter, we have no hesitation to hold that principal service tax dues quantified by the respondent vide order in original dated 22.07.2020 has to be settled at the rate of 5%, in other words 5% of Rs.7,02,20,725.00. The directions of the respondent for appropriation of the amount of Rs.6,23,82,214.00 already recovered cannot be sustained. Respondent shall retain 5% of Rs.7,02,20,725.00 from the above amount recovered and thereafter refund the balance amount to the petitioner. To that extent, impugned order in original dated 22.07.2020 is interfered with. Refund shall be made within a period of three months from the date of receipt of a copy of this judgment and order.
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