M/S Tata Steel Limited vs. Union Of INDIA And Ors.

Held

The Court held that the CESTAT/Tribunal did not act irregularly or fail to exercise jurisdiction in not adjudicating whether the payments made in relation to the adjudication orders, which formed the subject matter of the appeals, could constitute a claim by the respondent no.2. The appeals were heard on the basis of orders that waived pre-deposit payments. The Court found that the CESTAT, as a creature of statute, could not have adjudicated whether the voluntary deposit made by the petitioner prior to filing the appeals would constitute a security deposit, especially once the appeals had abated. The Court noted that the respondent no.2, as an operational creditor, did not include any claim in relation to the assessment orders in its claim before the IRP, as the corporate debtor had voluntarily discharged its liability. The Court found no irregularity or jurisdictional error in the CESTAT's common order, nor did the petitioner identify any illegality or violation of principles of natural justice. Therefore, no interference was called for, and the writ petitions were dismissed. The ratio is that in the absence of an express provision in the statute or rules, a tribunal cannot adjudicate on the merits of an appeal that has abated due to insolvency proceedings, particularly when the resolution plan extinguishes prior claims and the revenue did not file a claim for the disputed amount.

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). The CESTAT had held that appeals filed by BSL against orders disallowing CENVAT credit had abated due to the corporate insolvency of BSL. The dispute concerns CENVAT credit taken on steel structures, parts, accessories, and cement, which the revenue authorities classified as 'supporting structures' and not 'capital goods'. Show-cause notices were issued for periods between August 2005 and July 2009, demanding a total of Rs. 151,98,18,355, Rs. 5,01,82,810, Rs. 4,78,91,060, and Rs. 3,04,17,110. Orders in original disallowed CENVAT credit amounting to Rs. 140,46,88,065, Rs. 2,74,86,476, Rs. 2,09,40,479, and Rs. 15,46,214. BSL appealed these orders to CESTAT, and recovery of penalties was stayed. Subsequently, insolvency proceedings were initiated against BSL under the IBC, 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 CESTAT erred in holding that the appeals filed by the erstwhile entity, M/s. Bhusan Steel Ltd. (BSL), had abated consequent upon the corporate insolvency of BSL, under Rule 22 of The Rules, thereby failing to adjudicate the merits of the disallowance of CENVAT credit. Petitioner's arguments: The petitioner contended that the CESTAT acted irregularly and failed to exercise its jurisdiction by not adjudicating the appeals on merits. They argued that the resolution plan, approved under the IBC, extinguished all claims, including tax dues, whether claimed or not, prior to its approval. The petitioner relied on the principle that what is good for the goose is good for the gander, implying that if the new operator (petitioner) takes over the assets, the liabilities should also be addressed or extinguished as per the plan. They cited Supreme Court judgments emphasizing strict interpretation of taxing statutes and the absence of equitable considerations. Revenue/State's arguments: The judgment does not explicitly record arguments made by the Union of India or the CGST authorities regarding the abatement of appeals. However, the CESTAT's order, which the petitioner is challenging, held that the appeals had abated due to the corporate insolvency.