Professional Documents
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STATE TAX OFFICER Case
STATE TAX OFFICER Case
VERSUS
WITH
JUDGMENT
Indira Banerjee, J.
Digitally signed by
GULSHAN KUMAR
Company Appeal (AT)(Insolvency) No. 404 of 2019 filed by the
ARORA
Date: 2022.09.06
17:24:04 IST
Reason:
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No.224/271/272/337 of 2018 and P-01 of 2019 in C.P. No. (IB)
the said GVAT Act, cannot prevail over Section 53 of the IBC.
thereof, overrides Section 48 of the GVAT Act which is set out herein
and sale of Crafts and Oars within and outside the State of Gujarat
4. The appellant has, from time to time, been assessed for Value
Added Tax (VAT) and Central Sales Tax (CST) under the GVAT Act. It
Respondent to the Sales Tax authorities towards CST and VAT, as per
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the statement enclosed at Page 44 of the Paper Book.
against the respondent, in respect of its dues for the year 2011-
September, 2017.
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D. Choudhary, a Chartered Accountant, was appointed as Resolution
10. The appellant filed a claim before the RP in the requisite Form
11. After admission of the CIRP and appointment of the RP, one
dues.
appellant had been waived off. The order of the RP was conveyed
4
15. On or about 20th December, 2018, the appellant challenged
Government dues could not be waived off. The appellant prayed for
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17. On or about 8th April, 2019, the appellant filed an appeal
appeal has been dismissed by the NCLAT by the judgment and order
impugned.
35. We find that the Appellant has not filed claim within
time. It approached the ‘Resolution Professional’ at belated
stage after approval of the ‘Resolution Plan’ by the
Adjudicating Authority.
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entertained.”
19. Sections 30 and 31 of the IBC are set out hereinbelow for
convenience:-
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(iii) where a legal proceeding has been initiated in any court
against the decision of the Adjudicating Authority in respect
of a resolution plan;
(c) provides for the management of the affairs of the
corporate debtor after approval of the resolution plan;
(d) the implementation and supervision of the resolution
plan;
(e) does not contravene any of the provisions of the law for
the time being in force;
(f) conforms to such other requirements as may be specified
by the Board.
Explanation.—For the purposes of clause (e), if any approval
of shareholders is required under the Companies Act, 2013
or any other law for the time being in force for the
implementation of actions under the resolution plan, such
approval shall be deemed to have been given and it shall not
be a contravention of that Act or law.
(3) The resolution professional shall present to the
committee of creditors for its approval such resolution plans
which confirm the conditions referred to in sub-section (2).
(4) The committee of creditors may approve a resolution
plan by a vote of not less than sixty-six per cent of voting
share of the financial creditors, after considering its
feasibility and viability the manner of distribution proposed,
which may take into account the order of priority amongst
creditors as laid down in sub-section (1) of Section 53,
including the priority and value of the security interest of a
secured creditor, and such other requirements as may be
specified by the Board:
Provided that the committee of creditors shall not approve a
resolution plan, submitted before the commencement of the
Insolvency and Bankruptcy Code (Amendment) Ordinance,
2017 (Ord. 7 of 2017), where the resolution applicant is
ineligible under Section 29-A and may require the resolution
professional to invite a fresh resolution plan where no other
resolution plan is available with it:
Provided further that where the resolution applicant referred
to in the first proviso is ineligible under clause (c) of Section
29-A, the resolution applicant shall be allowed by the
committee of creditors such period, not exceeding thirty
days, to make payment of overdue amounts in accordance
with the proviso to clause (c) of Section 29-A:
Provided also that nothing in the second proviso shall be
construed as extension of period for the purposes of the
proviso to sub-section (3) of Section 12, and the corporate
insolvency resolution process shall be completed within the
period specified in that sub-section.
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Provided also that the eligibility criteria in Section 29-A as
amended by the Insolvency and Bankruptcy Code
(Amendment) Ordinance, 2018 (Ord. 6 of 2018) shall apply
to the resolution applicant who has not submitted resolution
plan as on the date of commencement of the Insolvency and
Bankruptcy Code (Amendment) Ordinance, 2018.
(5) The resolution applicant may attend the meeting of the
committee of creditors in which the resolution plan of the
applicant is considered:
Provided that the resolution applicant shall not have a right
to vote at the meeting of the committee of creditors unless
such resolution applicant is also a financial creditor.
(6) The resolution professional shall submit the resolution
plan as approved by the committee of creditors to the
Adjudicating Authority.
31. Approval of resolution plan.—(1) If the
Adjudicating Authority is satisfied that the resolution plan as
approved by the committee of creditors under sub-section
(4) of Section 30 meets the requirements as referred to in
sub-section (2) of Section 30, 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, any State Government or any local
authority 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, guarantors
and other stakeholders involved in the resolution plan:
Provided that the Adjudicating Authority shall, before passing
an order for approval of resolution plan under this sub-
section, satisfy that the resolution plan has provisions for its
effective implementation.
(2) Where the Adjudicating Authority is satisfied that the
resolution plan does not confirm to the requirements referred
to in sub-section (1), it may, by an order, reject the
resolution plan.
(3) After the order of approval under sub-section (1),—
(a) the moratorium order passed by the Adjudicating
Authority under Section 14 shall cease to have effect; and
(b) the resolution professional shall forward all records
relating to the conduct of the corporate insolvency resolution
process and the resolution plan to the Board to be recorded
on its database.
(4) The resolution applicant shall, pursuant to the resolution
plan approved under sub-section (1), obtain the necessary
approval required under any law for the time being in force
within a period of one year from the date of approval of the
resolution plan by the Adjudicating Authority under sub-
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section (1) or within such period as provided for in such law,
whichever is later:
Provided that where the resolution plan contains a provision
for combination, as referred to in Section 5 of the
Competition Act, 2002 (12 of 2003), the resolution applicant
shall obtain the approval of the Competition Commission of
India under that Act prior to the approval of such resolution
plan by the committee of creditors.”
20. Section 53 of the IBC, which provides for the mode and
convenience :-
(b) the following debts which shall rank equally between and
among the following—
(e) the following dues shall rank equally between and among
the following :—
(i) any amount due to the Central Government and the State
Government including the amount to be received on account
of the Consolidated Fund of India and the Consolidated Fund
of a State, if any, in respect of the whole or any part of the
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period of two years preceding the liquidation
commencement date;
(ii) the term “workmen's dues” shall have the same meaning
as assigned to it in Section 326 of the Companies Act, 2013
(18 of 2013).”
18, 21, 24, 25, 29, 30, 196 and 208 read with Section 240 of the IBC,
for convenience :-
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“4. Access to books.—(1) Without prejudice to Section
17(2)(d), the interim resolution professional or the resolution
professional, as the case may be, may access the books of
account, records and other relevant documents and
information, to the extent relevant for discharging his duties
under the Code, of the corporate debtor held with—
(a) depositories of securities;
(b) professional advisors of the corporate debtor;
(c) information utilities;
(d) other registries that records the ownership of assets;
(e) members, promoters, partners, board of directors and
joint venture partners of the corporate debtor; and
(f) contractual counterparties of the corporate debtor.
(2) The personnel of the corporate debtor, its promoters or
any other person associated with the management of the
corporate debtor shall provide the information within such
time and in such format as sought by the interim resolution
professional or the resolution professional, as the case may
be.
(3) The creditor shall provide to the interim resolution
professional or resolution professional, as the case may be,
the information in respect of assets and liabilities of the
corporate debtor from the last valuation report, stock
statement, receivables statement, inspection reports of
properties, audit report, stock audit report, title search
report, technical officers report, bank account statement and
such other information which shall assist the interim
resolution professional or the resolution professional in
preparing the information memorandum, getting valuation
determined and in conducting the corporate insolvency
resolution process.
4-A. Choice of authorised representative.—(1) On an
examination of books of account and other relevant records
of the corporate debtor, the interim resolution professional
shall ascertain class(s) of creditors, if any.
(2) For representation of creditors in a class ascertained
under sub-regulation (1) in the committee, the interim
resolution professional shall identify three insolvency
professionals who are—
(a) not his relatives or related parties;
(aa) having their addresses, as registered with the Board,in
the State or Union Territory, as the case may be,which has
the highest number of creditors in the class as per their
addresses in the records of the corporate debtor:
Provided that where such State or Union Territory does not
have adequate number of insolvency professionals, the
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insolvency professionals having addresses in a nearby State
or Union Territory, as the case may be, shall be considered;
(b) eligible to be resolution professional under Regulation 3;
and
(c) willing to act as authorised representative of creditors in
the class.
(3) The interim resolution professional shall obtain the
consent of each insolvency professional identified under sub-
regulation (2) to act as the authorised representative of
creditors in the class in Form AB of the Schedule.
6. Public announcement.—(1) An insolvency professional
shall make a public announcement immediately on his
appointment as an interim resolution professional.
Explanation:‘Immediately’ means not later than three days
from the date of his appointment.
(2) The public announcement referred to in sub-regulation
(1) shall:
(a) be in Form A of the Schedule;
(b) be published—
(i) in one English and one regional language newspaper with
wide circulation at the location of the registered office and
principal office, if any, of the corporate debtor and any other
location where in the opinion of the interim resolution
professional, the corporate debtor conducts material
business operations;
(ii) on the website, if any, of the corporate debtor; and
(iii) on the website, if any, designated by the Board for the
purpose,
(ba) state where claim forms can be downloaded or obtained
from, as the case may be;
(bb) offer choice of three insolvency professionals identified
under Regulation 4-A to act as the authorised representative
of creditors in each class; and
(c) provide the last date for submission of proofs of claim,
which shall be fourteen days from the date of appointment
of the interim resolution professional.
(3) The applicant shall bear the expenses of the public
announcement which may be reimbursed by the committee
to the extent it ratifies them.
7. Claims by operational creditors.—(1) A person
claiming to be an operational creditor, other than workman
or employee of the corporate debtor, shall submit claim with
proof to the interim resolution professional in person, by post
or by electronic means in Form B of the Schedule:
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Provided that such person may submit supplementary
documents or clarifications in support of the claim before the
constitution of the committee.
(2) The existence of debt due to the operational creditor
under this regulation may be proved on the basis of—
(a) the records available with an information utility, if any; or
(b) other relevant documents, including—
(i) a contract for the supply of goods and services with
corporate debtor;
(ii) an invoice demanding payment for the goods and
services supplied to the corporate debtor;
(iii) an order of a court or tribunal that has adjudicated upon
the non-payment of a debt, if any; or
(iv) financial accounts.
(v) copies of relevant extracts of Form GSTR-1 and Form
GSTR-3B filed under the provisions of the relevant laws
relating to Goods and Services Tax and the copy of e-way bill
wherever applicable:
Provided that provisions of this sub-clause shall not apply to
those creditors who do not require registration and to those
goods and services which are not covered under any law
relating to Goods and Services Tax.
8. Claims by financial creditors.—(1) A person claiming to
be a financial creditor, other than a financial creditor
belonging to a class of creditors, shall submit claim with
proof to the interim resolution professional in electronic form
in Form C of the Schedule:
Provided that such person may submit supplementary
documents or clarifications in support of the claim before the
constitution of the committee.
(2) The existence of debt due to the financial creditor may
be proved on the basis of—
(a) the records available with an information utility, if any; or
(b) other relevant documents, including—
(i) a financial contract supported by financial statements as
evidence of the debt;
(ii) a record evidencing that the amounts committed by the
financial creditor to the corporate debtor under a facility has
been drawn by the corporate debtor;
(iii) financial statements showing that the debt has not been
paid; or
(iv) an order of a court or tribunal that has adjudicated upon
the non-payment of a debt, if any.
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8-A. Claims by creditors in a class.—(1) A person
claiming to be a creditor in a class shall submit claim with
proof to the interim resolution professional in electronic form
in Form CA of the Schedule.
(2) The existence of debt due to a creditor in a class may be
proved on the basis of—
(a) the records available with an information utility, if any; or
(b) other relevant documents, including any—
(i) agreement for sale;
(ii) letter of allotment;
(iii) receipt of payment made; or
(iv) such other document, evidencing existence of debt.
(3) A creditor in a class may indicate its choice of an
insolvency professional, from amongst the three choices
provided by the interim resolution professional in the public
announcement, to act as its authorised representative.
9. Claims by workmen and employees.—(1) A person
claiming to be a workman or an employee of the corporate
debtor shall submit claim with proof to the interim resolution
professional in person, by post or by electronic means in
Form D of the Schedule:
Provided that such person may submit supplementary
documents or clarifications in support of the claim, on his
own or if required by the interim resolution professional,
before the constitution of the committee.
(2) Where there are dues to numerous workmen or
employees of the corporate debtor, an authorised
representative may submit one claim with proof for all such
dues on their behalf in Form E of the Schedule.
(3) The existence of dues to workmen or employees may be
proved by them, individually or collectively on the basis of—
(a) records available with an information utility, if any; or
(b) other relevant documents, including—
(i) a proof of employment such as contract of employment
for the period for which such workman or employee is
claiming dues;
(ii) evidence of notice demanding payment of unpaid dues
and any documentary or other proof that payment has not
been made; or
(iii) an order of a court or tribunal that has adjudicated upon
the non-payment of a dues, if any.
9-A. Claims by other creditors.—(1) A person claiming to
be a creditor, other than those covered under Regulations 7,
8, 8-A or 9, shall submit its claim with proof to the interim
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resolution professional or resolution professional in person,
by post or by electronic means in Form F of the Schedule.
(2) The existence of the claim of the creditor referred to in
sub-section (1) may be proved on the basis of—
(a) the records available in an information utility, if any, or
(b) other relevant documents sufficient to establish the
claim, including any or all of the following—
(i) documentary evidence demanding satisfaction of the
claim;
(ii) bank statements of the creditor showing non-satisfaction
of claim;
(iii) an order of court or tribunal that has adjudicated upon
non-satisfaction of claim, if any.
10. Substantiation of claims.—The interim resolution
professional or the resolution professional, as the case may
be, may call for such other evidence or clarification as he
deems fit from a creditor for substantiating the whole or part
of its claim.
11. Cost of proof.—A creditor shall bear the cost of proving
the debt due to such creditor.
12. Submission of proof of claims.—(1) Subject to sub-
regulation (2), a creditor shall submit claim with proof on or
before the last date mentioned in the public announcement.
(2) A creditor, who fails to submit claim with proof within the
time stipulated in the public announcement, may submit the
claim with proof to the interim resolution professional or the
resolution professional, as the case may be, on or before the
ninetieth day of the insolvency commencement date.
(3) Where the creditor in sub-regulation (2) is a financial
creditor under Regulation 8, it shall be included in the
committee from the date of admission of such claim:
Provided that such inclusion shall not affect the validity of
any decision taken by the committee prior to such inclusion.
12-A. Updation of claim.—A creditor shall update its claim
as and when the claim is satisfied, partly or fully, from any
source in any manner, after the insolvency commencement
date.
13. Verification of claims.—(1) The interim resolution
professional or the resolution professional, as the case may
be, shall verify every claim, as on the insolvency
commencement date, within seven days from the last date
of the receipt of the claims, and thereupon maintain a list of
creditors containing names of creditors along with the
amount claimed by them, the amount of their claims
admitted and the security interest, if any, in respect of such
claims, and update it.
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(2) The list of creditors shall be—
(a) available for inspection by the persons who submitted
proofs of claim;
(b) available for inspection by members, partners,
directors and guarantors of the corporate debtor or their
authorised representatives;
(c) displayed on the website, if any, of the corporate
debtor;
(ca) filed on the electronic platform of the Board for
dissemination on its website:
Provided that this clause shall apply to every corporate
insolvency resolution process ongoing and commencing on
or after the date of commencement of the Insolvency and
Bankruptcy Board of India (Insolvency Resolution Process for
Corporate Persons) (Fifth Amendment) Regulations, 2020;
(d) filed with the Adjudicating Authority; and
(e) presented at the first meeting of the committee.
14. Determination of amount of claim.—(1) Where the
amount claimed by a creditor is not precise due to any
contingency or other reason, the interim resolution
professional or the resolution professional, as the case may
be, shall make the best estimate of the amount of the claim
based on the information available with him.
(2) The interim resolution professional or the resolution
professional, as the case may be, shall revise the amounts of
claims admitted, including the estimates of claims made
under sub-regulation (1), as soon as may be practicable,
when he comes across additional information warranting
such revision.”
dated 3rd July 2018, with effect from 4 th July, 2018, Sub-Regulation (1) of
submit proof of claim on or before the last date mentioned in the public
July, 2018 and now reads “a creditor shall submit claim with proof on or
17
23. The Regulations have to be read as a whole and not in a truncated
IBC, as interpreted by this Court. This Court has time and again held
that the time lines stipulated in the IBC even for completion of
24. In this case, claims were invited well before the 5th October, 2017
which was the last date for submission of claims. Under the
required to file any claim. Read with Regulation 10, the appellant would
25. In this case, at the cost of repetition, it may be noted that there
dues which are statutory dues for which recovery proceedings have also
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26. On behalf of the Appellant, it has been argued that there were
memorandum and make provision for the same in the Resolution Plan.
Sections 3(30) and 3(31) of the IBC, set out herein below :-
Sections 3(30) and 3(31) of the IBC makes it clear that the finding of the
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NCLAT that the State is not a secured creditor is erroneous and contrary
to cover all types of security interests namely, the right, title, interest or
30. The learned Solicitor General rightly argued that in view of the
statutory charge in terms of Section 48 of the GVAT Act, the claim of the
“Security Interest” under Section 3(31) of the IBC and the State
Appellate Authority, NCLAT has held that the Tax Department of the
State does not fall within the meaning of “Secured Creditor”. The
erroneous premise that Section 48 of the GVAT Act, 2003, cannot prevail
32. The learned ASG argued that, it was not the case of the Appellant
that Section 48 of the GVAT Act prevails over Section 53 of the IBC. It
20
was the case of the Appellant that the State falls within the purview of
“Secured Creditor”.
33. The learned ASG submitted that the mere fact that a creditor
34. The learned ASG pointed out that the Appellant had made its
approved by the CoC under Section 30(4) of the IBC. Yet, the RP did not
35. The learned ASG emphatically argued that the RP was obliged to
receive, verify and collate claims and forward the same to the
Ribbons (P) Ltd. v. Union of India, 1 where this Court held that the
reject the claim. His duty is only to receive, verify and collate the
claims.
36. Referring to Section 30(2) of the IBC, the learned ASG argued that
examine, ensure and verify that the resolution plan conformed to the
1 (2019) 4 SCC 17
21
Further, Section 29 of the IBC casts a statutory duty and/or obligation
37. The learned ASG pointed out that under Section 29 of the IBC, the
Regulations, 2016.
(a) .....
(d) ....
.......
(i) ....
......
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39. The Adjudicating Authority (NCLT) and the Appellate Authority
(NCLAT) have held that the claim of the State is belated. Regulation 12
of the 2016 Regulations deals with the time period for submission of a
Section 15 of the IBC. The time period is, however, not mandatory but
only directory.
40. In the case of Vishal Saxena & Anr. v. Swami Deen Gupta
Resolution Professional2, the NCLT took the view that the time
not mandatory. Similar view was also taken by the NCLT in its judgment
Authority can approve the Resolution Plan only upon satisfaction that
Resolution Plan does not meet the requirements of Section 30(2), the
23
42. In Ghanshyam Mishra & Sons (P) Ltd. v. Edelweiss Asset
Court observed :-
24
43. The learned Solicitor General rightly argued that when a
the Resolution Plan met the requirements of Section 30(2) of the IBC.
44. Section 61(3) of the IBC which stipulated the grounds for
convenience :-
25
with the statutory provisions of Section 31(2) of the IBC. Section 30(2)
examine each resolution plan received by him and to confirm that such
creditors, as specified by the Board, which shall not be less than the
Corporate Debtor under Section 53, or the amount that would have
under the resolution plan had been distributed in accordance with the
and provided for the payment of debts of financial creditors, who did
approval of a resolution plan is that the resolution plan should meet the
26
affirmed that Resolution Plans would have to conform to the statutory
48. A resolution plan which does not meet the requirements of Sub-
Section (2) of Section 30 of the IBC, would be invalid and not binding on
respect of dues arising under any law for the time being in force
is owed. Such a resolution plan would not bind the State when there
the condition that the Resolution Plan meets the requirements of sub-
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Resolution Plan. On the other hand, Sub-section (2) of Section 31,
other.
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53. In other words, if a company is unable to pay its debts, which
their own dues at the cost of statutory dues owed to any Government or
55. In our considered view, the NCLAT clearly erred in its observation
the debts owed to a secured creditor, which would include the State
under the GVAT Act, are to rank equally with other specified debts
29
57. As observed above, the State is a secured creditor under the GVAT
Authority.
59. The appeals are allowed. The impugned orders are set aside. The
Resolution plan approved by the CoC is also set aside. The Resolution
observations made above. However, this judgment and order will not,
the observations made above, making provisions for the dues of the
…………………………………,J.
[ INDIRA BANERJEE ]
…………………………………,J.
[ A.S. BOPANNA ]
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NEW DELHI;
SEPTEMBER 6, 2022
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