Tehri Iron And Steel Casting Limited And 2 Others Vs State of U.P. And 2 Others (Allahabad High Court)
The Allahabad High Court has nullified a series of tax orders and demand notices issued against Tehri Iron And Steel Casting Limited, ruling that these claims are invalid once a corporate debtor’s resolution plan is approved under the Insolvency and Bankruptcy Code (IBC). The company had filed a writ petition challenging orders passed by the State Tax Department related to the assessment year 2012-13, which were issued well after its resolution plan was approved by the National Company Law Tribunal (NCLT) in May 2019. The court’s decision reinforces the “clean slate” principle of the IBC, which aims to provide a fresh start for companies undergoing a successful resolution process.
The company entered the Corporate Insolvency Resolution Process (CIRP) in May 2018, and a Resolution Professional was appointed. As per the legal procedure, the Resolution Professional had notified all creditors, including the Commercial Tax Department, to submit their claims. Despite the resolution plan’s approval in 2019, the tax department issued assessment orders and demand notices in late 2022 and early 2023, seeking to impose Integrated Goods and Services Tax (IGST) and penalties. The petitioner argued that these new demands were illegal as all pre-existing claims against the company stood extinguished after the NCLT’s approval of the resolution plan.
