Sree Metaliks Limited Vs Director General of Income Tax (Orissa High Court)
Cuttack: In a significant ruling, the Orissa High Court has held that a tax refund pertaining to a period prior to the approval of a resolution plan under the Insolvency and Bankruptcy Code (IBC), 2016, cannot be claimed by the successful resolution applicant and can be adjusted by the tax authorities against old tax dues that were considered during the insolvency resolution process. The judgment came in the case of Sree Metaliks Limited against the Director General of Income Tax.
The petitioner, Sree Metaliks Limited, the successful resolution applicant, approached the High Court challenging the Income Tax Department’s action of adjusting a tax refund of over ₹6 crore for the assessment year 2010-11 against outstanding ‘old income tax dues’. The company argued that with the approval of the resolution plan by the National Company Law Tribunal (NCLT) on November 7, 2017, all prior claims, including tax dues not specifically part of the approved plan, stood extinguished.
Representing Sree Metaliks, senior counsel contended that while the company’s balance sheet considered ‘income tax old’ amounting to over ₹14.26 crore, the specific claim leading to the adjustment was not formally submitted to the Resolution Professional during the Corporate Insolvency Resolution Process (CIRP). The petitioner relied on the Supreme Court’s pronouncement in the case of Ghanashyam Mishra and Sons (P) Ltd. v. Edelweiss Asset Reconstruction Company Limited, which held that once a resolution plan is approved under Section 31(1) of the IBC, all claims not forming part of the plan stand extinguished and no person is entitled to initiate or continue proceedings in respect of such claims. The counsel emphasised that this judgment reiterated the principle enshrined in Section 31(1) of the IBC, making the approved plan binding on all stakeholders, including the Central Government, State Governments, and local authorities.
