Vaibhav Goel & Anr. Vs DCIT (Supreme Court of India)
Supreme Court ruled in favor of the appellants, Vaibhav Goel & Anr., in a dispute against the Income Tax Department concerning M/s. Tehri Iron and Steel Casting Ltd. (the corporate debtor) under the Insolvency and Bankruptcy Code (IBC), 2016. The case involved tax demands raised after the approval of a Resolution Plan by the National Company Law Tribunal (NCLT) on May 21, 2019. The Income Tax Department issued fresh tax demands for the assessment years 2012-13 and 2013-14, despite these liabilities not being part of the approved Resolution Plan. The Monitoring Professional challenged these demands before the NCLT, which dismissed the application, terming it frivolous and imposing costs on the appellants. The National Company Law Appellate Tribunal (NCLAT) upheld this decision, prompting the appeal to the Supreme Court.
The Supreme Court found that, under Section 31 of the IBC, once a Resolution Plan is approved, all claims not included in the plan stand extinguished. Citing the precedent set in Ghanashyam Mishra & Sons Pvt. Ltd. vs. Edelweiss Asset Reconstruction Co. Ltd., the Court held that statutory dues not accounted for before the approval of the plan cannot be enforced later. The Court criticized the NCLAT’s disregard for binding precedents and ruled that the fresh income tax demands were invalid. It emphasized that allowing belated claims would hinder the resolution process and prevent the successful applicant from operating the business on a clean slate. The Court, therefore, set aside the orders of the NCLT and NCLAT and ruled that the tax demands for assessment years 2012-13 and 2013-14 were unenforceable.
