Aarem Insights Pvt. Ltd. Vs Joint Commissioner of State Tax (Appeals)-VII (Bombay High Court)
Summary: The Bombay High Court held that once the NCLT approved the petitioner’s Resolution Plan on a “clean slate” basis, all past statutory claims or dues not surviving under the approved plan stood extinguished and the State tax authorities could not continue pending proceedings or recover the earlier MVAT demand. Aarem Insights Pvt. Ltd., formerly Shop CJ Network Pvt. Ltd., had been assessed under Section 23(2) of the Maharashtra Value Added Tax Act, 2002 for Assessment Year 2011-12. During the pendency of its appeal, the company underwent CIRP under the Insolvency and Bankruptcy Code, 2016.
The Resolution Plan dated 15 September 2022 was approved by the NCLT on 21 March 2023 and subsequently rectified on 18 April 2023, providing for payment towards disputed Government dues. Despite being informed of the approved plan, the First Appellate Authority dismissed the MVAT appeal as withdrawn on 31 July 2025 and directed recovery of the balance assessed dues. The High Court held that this action lacked jurisdiction because Section 31 of the IBC makes an approved resolution plan binding on all stakeholders, including Government tax authorities. Relying principally on Ghanashyam Mishra and Sons Private Limited and other precedents, the Court reiterated that claims outside the approved resolution plan cannot thereafter be initiated or continued.
The Court further held that the statutory pre-deposit made under Section 26(6A)(c) of the MVAT Act formed part of the overall tax demand extinguished by the Resolution Plan. Retaining that amount over and above the sum allocated to the tax department under the approved plan was impermissible. Accordingly, the impugned appellate order and consequential proceedings were set aside and the respondents were directed to refund ₹72,000 along with applicable interest.
Cases Discussed/Relied Upon
- Ghanashyam Mishra and Sons Private Limited vs. Edelweiss Asset Reconstruction Company Limited and ors. — (2021) 9 SCC 657 — relied upon for the principle that claims outside an approved resolution plan stand extinguished.
- Srei Equipment Finance Ltd. vs. Assistant Commissioner, DIV-III CGST & C-EX, Navi Mumbai & Ors. — Writ Petition No. 2220 of 2025, decided on 16/10/2025 — relied upon.
- Essar Steel India Limited Vs Satish Kumar Gupta — (2020) 8 SCC 531 — relied upon on the fresh-slate objective of Section 31(1) of the IBC.
- Murli Industries Ltd vs. Assistant Commissioner of Income Tax — (2022) 441 ITR 8 (Bom) — relied upon.
- Uttam Value Steels Ltd vs. Assistant Commissioner of Income Tax — 2024 (9) TMI 426 (Bom) — relied upon.
- Principal Commissioner of Income Tax vs. Patanjali Foods Ltd. — 2024 (5) TMI 57 (Bom) — relied upon.
- Ruchi Soya Industries Limited and others vs. Union of India and others — 2022 (380) ELT 8 (SC) — relied upon.
- Dalmia Cement (Bharat) Ltd. and another vs. Union of India and others — (2023) 10 Centax 190 (Bom.) — relied upon for refund of pre-deposit with applicable interest.
FULL TEXT OF THE JUDGMENT/ORDER OF BOMBAY HIGH COURT
1. The present writ petition pertains to an Assessment Order for the Assessment Year 2011-2012 dated 7th June 2018, confirming a tax liability against the petitioner (then Shop CJ Network Pvt. Ltd.).
2. The challenge in this writ petition filed under Article 226 of the Constitution of India is to the Appeal Order dated 31st July 2025 passed by the respondent No.1 – Joint Commissioner of State Tax (Appeals)-VII, Bandra, Mumbai confirming the assessment order passed by the Assessing Officer.
3. The brief facts of the case are as under :-
The petitioner was formerly known as Shop CJ Network Pvt. Ltd. which operated a 24×7 home-shopping television channel under the brand name “Shop CJ”. The petitioner (as Shop CJ Network Pvt. Ltd.) was subject to assessment proceedings under the provisions of the Maharashtra Value Added Tax Act, 2002 (“MVAT Act”, for short) and the said proceedings culminated in an assessment order passed under Section 23(2) of the MVAT Act. Aggrieved by the above assessment order, the petitioner filed an appeal.
4. The petitioner paid the pre-deposit in terms of Section 26(6A)(c) of the MVAT Act for filing of appeal. The petitioner (in its erstwhile identity as Shop CJ Network Pvt. Ltd.) was subject to CIRP proceedings under Section 9 of the Insolvency and Bankruptcy Code, 2016 (“IBC”, for short) vide order dated 19th January 2022 of the National Company Law Tribunal, Mumbai (“NCLT”, for short).
5. The claims of respondent No.3 (MVAT Department) in respect of Assessment Years 2011-2012 to 2016-2017 were duly considered in the Resolution Plan dated 15th September 2022. The said Resolution Plan was approved vide NCLT order dated 21st March 2023 on a “clean slate” basis, thereby binding all stakeholders to its terms and extinguishing all claims or liabilities of the petitioner based on the decision of the Hon’ble Supreme Court in Ghanashyam Mishra and Sons Private Limited vs. Edelweiss Asset Reconstruction Company Limited and ors.1. The order dated 21st March 2023 was rectified by NCLT vide order dated 18th April 2023 clarifying that the approved Resolution Plan included payment of Rs.1,00,00,000/- on a proportionate basis in full satisfaction of all disputed government dues (including VAT claims). An amount of Rs.58,58,444/- was paid by way of challan to respondent No.3 (Office of Department of GST, Government of Maharashtra, Commissioner of State Tax-E-611-Mumbai) against the full and final settlement towards Rs.27,91,64,187/-.
6. The petitioner filed a letter dated 19th May 2023 with the respondent No.1 – the First Appellate Authority informing the authority of the NCLT’s approval of the Resolution Plan and that the pending MVAT appeals be disposed of on the basis that all tax liabilities had been settled under the Plan and requesting refund of pre-deposit.
7. The National Company Law Appellate Tribunal (“NCLAT”, for short) dismissed the appeal of respondent No.3 against the NCLT’s rectification order by its order dated 26th July 2023, thereby affirming the NCLT’s orders. The respondent No.1 passed the impugned order in appeal on 31st July 2025 dismissing the petitioner’s appeal for the relevant Assessment Year and directing the recovery of the assessed tax.
8. The petitioner filed a letter dated 22nd August 2025 and 23rd September 2025 with respondent Nos.2 and 3 requesting refund of the statutory pre-deposit paid for the appeal, on the ground that the Resolution Plan has extinguished the tax liability. No response was received. Hence, this writ petition was filed.
9. We have heard learned counsel for the petitioner. We have also heard learned AGP for the respondent – Department, who opposed the writ petition. We have perused the materials on record and the impugned order. The impugned order passed by the First Appellate Authority reads thus :-
“01. The appellant M/s. Shop CJ Network Pvt. Ltd. (TIN-27985217718V) having place of business at “6th Floor, Shop CJ Plaza, Dr. D.B. Marg, Lamington Rd, Grant Road East, Mumbai-400007” has preferred the appeal against the assessment order for the period 01-04-2011 to 31-03-2012 passed on 07-06-2018 by the Dy. Commissioner of Sales Tax, MUM-VAT-E-611, LTU-04, Mumbai. The assessment order u/s 23 (2) of MVAT Act, 2002 resulted into demand of Rs.13,66,264, which comprises of net tax of Rs.7,14,386/-, interest u/s 30(2) at Rs.0/- and interest u/s 30(3) at Rs.6,51,878/-. Being aggrieved by the said order, the appeal was filed by the appellant.
02. The appeal was admitted on the part payment of Rs.72,000/- paid on 28/07/2017 under Bank CIN-69103342807201722385, IDBI Bank. The Admission Memo-Cum-Stay order was granted on 31/07/2017.
03. This appeal was transferred from the jurisdiction of JC Appeal-04 to this office as per Reference No.2. Subsequently, a hearing notice under B-264 was issued on 27-04-2023, calling upon the appellant to appear on 26-05-2023. However, no one attended the hearing, nor was any communication received from the appellant.
Application for Withdrawal of appeal petition received from the appellant on dt. 29-05-2024 was filed by the appellant is found in the file record; mistakenly, hearing notices were issued to the appellant thereafter.
04. From the facts as mentioned above, the appeal is dismissed as withdrawn.
05. In view of the above, I proceed to pass the following order.
ORDER
[First Appeal u/s 26 of the MVAT Act, 2002]
No.JC/APP-7/MUM/MVAT-183 (2023-24)/ADO/
25-26/B-150 Mumbai, Dt:-31-07-2025
Appeal No.MVAT-183/2023-24 is dismissed as withdrawn. The appellant had demand of Rs.13,66,265/- as per the assessment order of Dy. Commissioner of Sales Tax, E-611, LTU-4, Mumbai. After giving the credit of the part payment of Rs.72,000/- made in appeal, the balance dues remains to be recovered are of Rs.12,94,265/-. The Assessing Authority is directed to proceed as per the provisions of law.”
10. In our view, the issue involved in the present writ petition is squarely covered by the decision of the Hon’ble Supreme Court in Ghanashyam Mishra and Sons Private Limited (supra). We also find that the issue is squarely covered by the decision of this Court in Srei Equipment Finance Ltd. vs. Assistant Commissioner, DIV-III CGST & C-EX, Navi Mumbai & Ors.2, wherein this Court quashed similar proceedings initiated after approval of a Resolution Plan.
11. We have perused the proposed Resolution Plan, the order dated 21st March 2023 passed by the NCLT and the rectification order dated 18th April 2023 of the NCLT. Having perused the decision of the Hon’ble Supreme Court in Ghanashyam Mishra and Sons Private Limited (supra), in our view, in the present case, once the NCLT approved the Resolution Plan on a “clean slate” basis, all past claims or dues not forming part of the Resolution stood extinguished. In terms of Section 31 of the IBC, such approval is binding on all Stakeholders, including the tax authority, and no fresh or pending proceedings could be continued thereafter. Consequently, respondent No.1 lacks jurisdiction to pass the impugned order directing recovery of tax dues, as such action is directly in the teeth of the binding scheme of the IBC.
12. As per Section 31 of the IBC, if the NCLT is satisfied that the Committee of Creditors (“CoC”, for short) have met the requirements of law while arriving at a draft resolution plan, it shall by order approve the resolution plan which shall be binding on the corporate debtor and its employees, members, creditors, including the Central Government, to whom a debt in respect of the payment of dues arising under any law for the time being in force, such as authorities to whom statutory dues are owed. Elucidating the objective of Section 31(1) of IBC, it was held in the case of Essar Steel India Limited Vs Satish Kumar Gupta3, that it meant to ensure that the successful resolution applicant starts running the business of the corporate debtor on a fresh slate. It was also specifically held that the resolution applicant cannot suddenly be faced with ‘undecided’ claims after the resolution plan submitted by him is approved by NCLT as it would lead to uncertainties in how much amount would be payable by the resolution applicant.
13. Further, as briefly indicated earlier, the Hon’ble Supreme Court in Ghanashyam Mishra and Sons Private Limited (supra) held that once a resolution plan is duly approved by the NCLT under Section 31(1) of IBC, the claims as provided in the resolution plan shall stand frozen and will be binding on the Corporate Debtor and its employees, members, creditors, including the Central Government, any State Government or any local authority, guarantors and other stake holders. On the date of approval of the resolution plan (or, as the case may be, the Acquisition Plan) by the NCLT, all such claims, which are not a part of such plan, shall stand extinguished and no person will be entitled to initiate or continue any proceedings in respect of a claim, which is not part of the said plan. Further, all the dues including the statutory dues owed to the Central Government, any State Government or any local authority, if not part of the resolution plan, shall stand extinguished and no proceedings in respect of such dues for the period prior to the date on which the NCLT grants its approval under Section 31 of IBC could be continued.
14. Relevant is a decision of this Court, in Murli Industries Ltd vs. Assistant Commissioner of Income Tax4, wherein it held that the aim and object of IBC is to revive the Corporate Debtor by putting quietus to the claims against it. Providing certainty to the resolution applicant of ‘no’ claims in future against the Corporate Debtor appears to be the essence of the resolution. A similar ratio was laid down even in the following cases:
i. Uttam Value Steels Ltd vs. Assistant Commissioner of Income Tax5.
ii. Principal Commissioner of Income Tax vs. Patanjali Foods Ltd.6
15. The Hon’ble Supreme Court in Ruchi Soya Industries Limited and others vs. Union of India and others7 held that on the date on which the resolution is approved by the NCLT, all claims stand frozen, and no claim, which is not a part of the resolution, would survive.
16. The statutory pre-deposits made under Section 26(6A)(c) of the MVAT Act for filing appeals, being 10% of the disputed tax, formed part of the overall tax demands which are now extinguished by the Resolution Plan. Since the NCLT approved plan allocated a fixed sum to the tax department in full settlement of its dues, retention of such pre-deposits over and above the approved amount would be impermissible and contrary to law. Since the NCLT has approved the Resolution Plan on a clean slate basis, all proceedings against the petitioner stand abated and consequently, the respondents are liable to refund the said pre-deposit amounts. The issue is no more res integra and is covered by the decision of the Hon’ble Supreme Court in Ruchi Soya Industries Limited and others (supra) and the judgment of this Court in Dalmia Cement (Bharat) Ltd. and another vs. Union of India and others8, wherein this Court set aside the impugned order and directed refund of the amount of pre-deposit with applicable interest.
17. Though learned AGP was at pains to point out that the authority had the necessary jurisdiction to pass the impugned order and that the claim of MVAT Department would not be covered by the Resolution Plan, we are of the considered view that having regard to the aforesaid reasons, the said submission can only be stated to be rejected. Consequently, the writ petition is allowed in terms of prayer clauses (a) and (b) which read thus :-
“(a) This Hon’ble Court be pleased to issue a Writ of Certiorari or a Writ in the nature of Certiorari, or any other appropriate Writ, Order or directions and call for records and proceedings of the Impugned Appeal Order JC/APP-7/MUM/MVAT-183 (2023-24)/ADO/25-26/B-150 dated 31.07.2025 (annexed in Exhibit A) and after going through the legality, validity and proprietary of the aforesaid Impugned Order, be pleased to set aside the said Impugned Order and all proceedings pursuant thereto;
(b) This Hon’ble Court be pleased to issue a Writ of Mandamus or a Writ in the nature of Mandamus, or any other appropriate Writ, Order directing Respondent No. 2 to refund a total amount of Rs.72,000/- along with applicable interest paid by the Petitioner vide the challan, enclosed at Exhibit D respectively.”
18. The writ petition is disposed of.
Notes:
1 (2021) 9 SCC 657
2 Writ Petition No.2220 of 2025 decided on 16/10/2025.
3 (2020) 8 SCC 531
4 (2022) 441 ITR 8 (Bom)
5 2024 (9) TMI 426 (Bom)
6 2024 (5) TMI 57 (Bom)
7 2022 (380) ELT 8 (SC)
8 (2023) 10 Centax 190(Bom.)
