Department of State Tax Vs Pranav Constructions Systems Pvt. Ltd. & Anr. (NCLAT Delhi)
The National Company Law Appellate Tribunal (NCLAT), Delhi, first allowed an application seeking condonation of a 14-day delay in filing the appeal. The appellant explained that the delay occurred due to the time taken to obtain the necessary departmental approval for filing the appeal. Finding sufficient cause, the Tribunal condoned the delay and disposed of the application.
The appeal challenged the order dated 16.01.2024 passed by the Adjudicating Authority in IA No. 773/2023 approving the Resolution Plan of the corporate debtor, Pranav Constructions. The appellant, the Department of State Tax, contended that it had filed claims relating to MVAT and GST but had been allocated only 0.45% of its admitted claim under the approved Resolution Plan.
The NCLAT noted that it had already considered an identical issue in Department of State Tax, Through the Dy. Commissioner of State Tax vs. Zicom Saas Pvt. Ltd. & Anr., decided on 07.02.2023. In that decision, the Tribunal had rejected the State Tax Department’s contention that it should be treated as a secured creditor.
Referring to its earlier judgment, the Tribunal compared Section 48 of the Gujarat Value Added Tax Act, which was considered by the Supreme Court in Rainbow Paper Limited, with Section 37 of the Maharashtra Value Added Tax Act, 2002. The Tribunal observed that Section 37 expressly provides that the first charge created under the MVAT Act is subject to any provision regarding the creation of a first charge under any Central Act. It held that Section 53 of the Insolvency and Bankruptcy Code provides the waterfall mechanism contemplated by Section 37 of the MVAT Act. Consequently, the Tribunal reiterated its earlier view that the Supreme Court’s decision in Rainbow Paper Limited was distinguishable in cases governed by Section 37 of the MVAT Act.
