M/S. Tata Steel Limited (Formerly Tata Steel Bsl Limited) vs. Union Of INDIA And Ors.

Held

The Court held that the CESTAT did not act irregularly or fail to exercise jurisdiction in holding that the appeals had abated consequent upon the corporate insolvency of the petitioner's erstwhile entity, M/s. Bhusan Steel Ltd. (BSL). The Court reasoned that the CESTAT, as a creature of statute, could not adjudicate on whether voluntary deposits made by the petitioner prior to the appeals would constitute a security deposit once the appeals had abated. The Court relied on the Supreme Court's judgment in Ghanashyam Mishra and Sons Pvt. Ltd. and the principles of strict interpretation of taxing statutes, emphasizing that there is no room for equitable considerations or implied provisions. The Court found that the respondent no.2, as an operational creditor, did not include any claim related to the assessment orders in its claim before the IRP, and the appeals stood abated by operation of law. The Court found no irregularity or jurisdictional error in the CESTAT's order and dismissed the writ petitions.

Facts

The petitioner, M/s. Tata Steel Limited (formerly M/s. Bhusan Steel Ltd. - BSL), filed writ petitions challenging a common final order dated April 16, 2024, by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Eastern Zonal Bench, Kolkata. The CESTAT had held that appeals filed by BSL against orders disallowing CENVAT credit had abated due to the corporate insolvency of BSL. Show-cause notices were issued to BSL for periods between August 2005 and July 2009, demanding disallowance of CENVAT credit on steel structures, parts, accessories, and cement, totaling approximately Rs. 205 crore. Orders in original dated January 31, 2011, April 29, 2011, July 24, 2012, and February 4, 2011, disallowed CENVAT credit amounting to approximately Rs. 163.5 crore, deeming these items as 'supporting structures' not covered under 'capital goods'. BSL reversed the credit under protest and filed appeals before CESTAT, which stayed recovery. Subsequently, insolvency proceedings were initiated against BSL, and a resolution plan was approved by the NCLT and affirmed by the appellate tribunal. BSL was renamed Tata Steel BSL Limited.

Key Issues

1. Whether the appeals before the CESTAT, concerning the disallowance of CENVAT credit, abated due to the corporate insolvency of the erstwhile entity, M/s. Bhusan Steel Ltd. (BSL), under the provisions of the Insolvency and Bankruptcy Code, 2016 (IBC) and Rule 22 of The Rules (presumably referring to the Central Excise Rules, 2001 or similar). The petitioner argued that the resolution plan, approved by the NCLT, extinguished all claims, including tax dues, whether claimed or not, prior to its approval. They contended that the new entity took over assets, including receivables, and that the abatement of appeals by CESTAT was irregular. The revenue/State argued, and the CESTAT held, that the appeals abated by operation of law due to the insolvency proceedings. The court had to decide if the CESTAT acted irregularly or failed to exercise jurisdiction by not adjudicating whether payments made in relation to the adjudication orders could constitute a claim, especially when appeals were heard on the basis of waived pre-deposits. The court also considered whether the CESTAT, as a creature of statute, could adjudicate on voluntary deposits made prior to appeals if the appeals had abated.