The Allahabad High Court recently ruled that once the Resolution Plan has been approved by the National Company Law Tribunal (NCLT), all other creditors are barred from raising their claims subsequently, as the same would disrupt the entire resolution process. The Court therefore clarified that the demands raised by the GST Department against the Corporate Debtor (CD) are invalid and cannot be enforced.
The Division Bench comprising Justice Shekhar B. Saraf and Justice Praveen Kumar Giri observed that additional demands made by the GST Department (first respondent) in respect of the assessment years 2012-13 and 2013-14 will operate as roadblocks in implementing the approved Resolution Plan, and appellants will not be able to restart the operations of the CD on a clean slate.
Reference was made to the decision of the Apex Court in Vaibhav Goyal & Another Vs. Deputy Commissioner of Income Tax & Another [Civil Appeal No. 49 of 2022, decided on March 20, 2025], where it was held that “all the dues including the statutory dues owed to the Central Government, if not a part of the Resolution Plan, shall stand extinguished and no proceedings could be continued in respect of such dues for the period prior to the date on which the adjudicating authority grants its approval under Section 31 of the IBC”.
Further, the Bench referred to the decision of the Coordinate Bench in M/s NS Papers Limited vs Union of India [Writ Tax No. 408 of 2021], where it was held that an assessment kept pending for a prior period cannot be quantified after the approval of the Resolution Plan, as that would be an anathema to the fundamental principles of the moratorium provided under the IBC. The Coordinate Bench also strongly asserted that any new liability being fastened after the approval of the Resolution Plan would inherently and palpably be illegal and go beyond the Lakshman Rekha of the Code.
Accordingly, the Bench allowed the petition and quashed the assessment order passed under Section 73 of the CGST/UPGST Act, 2017.
Cases Relied On:
Vaibhav Goyal & Another Vs. Deputy Commissioner of Income Tax & Another [Civil Appeal No. 49 of 2022]
M/s NS Papers Limited vs Union of India [Writ Tax No. 408 of 2021]
Appearances:
Advocate Vedant Agarwal, for the Petitioner
Chief Standing Counsel, for the Respondent
