UltraTech Nathdwara Cement Limited Vs Commercial Taxes Officer (Rajasthan High Court)
In terms of Section 31 of the Insolvency and Bankruptcy Code, 2013, the resolution plan, approved by the NCLAT, is binding on all stakeholders including the Operational Creditors, Financial Creditors and the Statutory Creditors, including the respondent Corporate Taxes Department and all claims and dues towards the pending demands, except those approved by the NCLAT, of these creditors stand discharged on the date of transfer of the Corporate Debtor unit to the Successful Resolution Applicant which, in the present case, is 20.11.2018. As a consequence, all liabilities of the Corporate Debtor, which do not form a part of the resolution plan as well as those which are settled by the NCLAT, were extinguished as on the date of approval of the resolution plan and resultantly, the pending demands raised against the Corporate Debtor would be rendered infructuous. The pre-deposits made by way of mandatory statutory obligation alongwith the appeals, if any, filed under the tax regime and other amounts deposited under protest would become refundable with interest. These revisions are being considered in this backdrop.
As the original assessee, i.e. M/s. Binani Cement Ltd., was compelled to file the appeals with pre-deposits of a percentage of the tax liability by way of mandatory statutory obligation as per the assessment orders issued by the Commercial Taxes Department, the consequential relief pursuant to extinguishment of the demands under the assessment order would definitely require a direction for refund of the amount to the successful Resolution Applicant, i.e. the petitioner herein, who took over the assets and liabilities of the sick unit according to the Resolution Plan approved by the NCLAT.
In the case of State of Gujarat Vs. Essar Steel Ltd. (supra), Hon’ble Gujarat High Court directed refund of pre-deposit on acceptance of the appeals and decided the issue in favour of the assessee. In the present case, though the appeals have not been accepted, but an analogous situation has been created with acceptance of the Resolution Plan and extinguishment of all debts/liabilities of the sick unit towards the statutory creditor, i.e. the State Government/Commercial Taxes Department.
As a consequence, the consolidated impugned order dated 28.12.2020 passed by the Rajasthan Tax Board, Ajmer in the appeals filed by the petitioner is set aside to the extent the applications filed by the petitioner for refund of pre-deposit amounts with interest were rejected. The amounts deposited by M/s. Binani Cement Ltd. as mandatory statutory obligation while filing the appeals before the Tax Board shall be reimbursed to the petitioner within a period of three months from today with interest at the rate applicable by law.”
FULL TEXT OF THE JUDGMENT/ORDER OF RAJASTHAN HIGH COURT
The instant batch of Revisions/ Sales Tax References involve common questions of facts and law and hence, the same have been heard and are being decided together by this judgment.
The revisions were originally preferred by the company M/s. Binani Cement Limited which went into liquidation. Insolvency proceedings were initiated by the creditors of the sick undertaking (hereinafter referred to as ‘the Corporate Debtor). The insolvency proceedings were transferred from the NCLT, Kolkata to NCLAT under directions of Hon’ble the Supreme Court which invited claims from financial, statutory and operational creditors of the Corporate Debtor. Resolution plans were also invited from parties interested in revival of sick undertakings. The respondent Commercial Taxes Department submitted its claim before the NCLAT. The resolution plan submitted by M/s.UltraTech Cement Limited was approved by the NCLAT on 14.11.2018 and it was declared to be the Successful Resolution Applicant. Hon’ble the Supreme Court approved the decision of NCLAT vide order dated 19.11.2018.
In terms of Section 31 of the Insolvency and Bankruptcy Code, 2013, the resolution plan, approved by the NCLAT, is binding on all stakeholders including the Operational Creditors, Financial Creditors and the Statutory Creditors, including the respondent Corporate Taxes Department and all claims and dues towards the pending demands, except those approved by the NCLAT, of these creditors stand discharged on the date of transfer of the Corporate Debtor unit to the Successful Resolution Applicant which, in the present case, is 20.11.2018. As a consequence, all liabilities of the Corporate Debtor, which do not form a part of the resolution plan as well as those which are settled by the NCLAT, were extinguished as on the date of approval of the resolution plan and resultantly, the pending demands raised against the Corporate Debtor would be rendered infructuous. The pre-deposits made by way of mandatory statutory obligation alongwith the appeals, if any, filed under the tax regime and other amounts deposited under protest would become refundable with interest. These revisions are being considered in this backdrop.
Brief summary of the transactions from which demands raised by the department flow and which were the subject matter of the appeals and the amounts deposited by the corporate debtor are narrated below for the sake of ready reference:
(1) D.B. Civil Revision Petition No. 211/2014
An order dated 01.08.2012 was passed by the Commercial Tax Officer, Anti Evasion, Rajasthan, Circle-II whereby, the Input Tax Credit allowed by the assessing authority for the period from 01.04.2006 to 31.03.2007, was disallowed. Output Tax on High Speed Diesel purchased against full payment of VAT within the State, was imposed along with penalty and interest thereupon. In this manner, total demand of Rs.4,33,93,123/- was raised against the Corporate Debtor. The demand notice was assailed by filing appeal under Section 82 of the RVAT Act, 2003 and thereafter before the learned Tax Board, Ajmer under Section 83 of the RVAT Act, 2003 which were dismissed by the learned Tax Board vide order dated 26.06.2014. The Corporate Debtor deposited the following amounts “under protest” against the demand raised by the Commercial Taxes Department and towards statutory pre-deposits:
