Case Law Details
Sanjay Kumar Agarwal Vs State Tax Officer (1) & Anr. (Supreme Court of India)
Introduction: This article delves into the recent review of whether sales tax dues under Section 48 of the Gujarat VAT Act 2003 will rank equally with other specified secured debts for the purpose of Section 53 of the Insolvency and Bankruptcy Code (IBC) 2016. The review process stems from a common Judgment and Order dated 06.09.2022 passed by the Supreme Court in response to Civil Appeal No. 1661 of 2020 and Civil Appeal No. 2568 of 2020, both filed by the State Tax Officer-appellant.
Detailed Analysis: In Civil Appeal No. 1661 of 2020, the State Tax Officer-appellant had challenged the Judgment and Order dated 19.12.2019 passed by the National Company Law Appellate Tribunal (NCLAT). This order had dismissed the Company Appeal and held that Section 48 of the Gujarat VAT Act could not prevail over Section 53 of the IBC. The key point of contention was whether sales tax dues, being a state-secured debt, should rank equally with other specified debts under the IBC.
The Supreme Court, in its judgment dated 06.09.2022, clarified that Section 48 of the Gujarat VAT Act is not contrary to or inconsistent with Section 53 or any other provisions of the IBC. It emphasized that the State qualifies as a secured creditor under the GVAT Act, and the IBC’s definition of secured creditor does not exclude any Government or Governmental Authority. The Court held that the Adjudicating Authority and NCLAT erred in law in rejecting the appellant’s claim solely based on the delay in filing a claim. Consequently, the appeals were allowed, and the Resolution plan was set aside.
Subsequently, five Review Petitions were filed by aggrieved parties. Review Petition (Civil) No. 1620 of 2023 was filed by Sanjay Kumar Agarwal, the Liquidator of Biotor Industries Limited, as the impugned order’s effects could influence proceedings before the Gujarat High Court. Review Petition No. 1621 of 2023 was filed by Ramchandra Dallaram Choudhary, the Resolution Professional of the Corporate Debtor, Rainbow Papers Limited. Review Petition (Civil) No. 1622 of 2023 was filed by the State Bank of India, representing a Consortium of lenders of Biotor Industries Limited. Review Petition (Civil) No. 236 of 2023 was filed by Chandra Prakash Jain and M/s. Mekaster Engineering Ltd., the respondents in Civil Appeal No. 2568 of 2020. Review Petition (Civil) No. 1623 of 2023 was filed by the Indian Overseas Bank, a member of the Committee of creditors.
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