M/S Ultratech Nathdwara Cement Limited vs. The Assistant Commissioner, Commercial Tax Department, Special Circle, Pali

Facts

The petitioner, M/s. Ultratech Nathdwara Cement Limited, assails the order dated 28.12.2020 passed by the Rajasthan Tax Board, Ajmer. This order rejected the petitioner's applications for refund of mandatory statutory pre-deposits, along with interest, made with appeals filed before the Tax Board. The original assessment orders were issued by the Assistant Commissioner, Commercial Taxes Department, to M/s. Binani Cement Limited for various periods from 2005-06 to 2015-16. These orders were upheld by the Deputy Commissioner (Appeals). M/s. Binani Cement Limited filed appeals before the Rajasthan Tax Board, making mandatory statutory pre-deposits as per Section 82(3) of the Rajasthan Value Added Tax Act, 2003. Subsequently, M/s. Binani Cement Limited underwent insolvency proceedings under the IBC, 2016. The petitioner, M/s. Ultratech Nathdwara Cement Limited, submitted a resolution plan which was approved by the National Company Law Appellate Tribunal (NCLAT). The NCLAT admitted the Commercial Taxes Department's claim only to the extent of Rs. 61.05 Crores, dismissing the remaining claim.

Held

The Court held that the controversy was virtually concluded by the Supreme Court's decision in Ghanshyam Mishra & Sons Pvt. Ltd. Vs. Edelweiss Asset Reconstruction Company Ltd. The Supreme Court categorically held that once a resolution plan is approved, all claims not part of the plan stand extinguished, and no proceedings can be continued in respect of such claims for the period prior to the approval. The Court found that the original assessee, M/s. Binani Cement Ltd., was compelled to make pre-deposits as a mandatory statutory obligation. Consequently, the successful resolution applicant, the petitioner, who took over the assets and liabilities according to the approved Resolution Plan, is entitled to the refund of these pre-deposit amounts. The Court set aside the impugned order of the Rajasthan Tax Board to the extent it rejected the refund applications. The amounts deposited by M/s. Binani Cement Ltd. as pre-deposits shall be reimbursed to the petitioner within three months with applicable interest. The Court noted that the appeals before the Tax Board became infructuous as the petitioner's liability stood extinguished beyond what was quantified by the Tribunal.

Key Issues

1. Whether the Rajasthan Tax Board exercised its jurisdiction excessively and with material irregularity by ignoring the NCLAT order dated 14.11.2018, the resolution plan, and Supreme Court orders dated 26.07.2019, 19.05.2020, and 24.01.2020, and the Rajasthan High Court judgment dated 07.04.2020, in rejecting the prayer for refund of pre-deposit amounts with interest? (Question of law) 2. Whether the Rajasthan Tax Board wrongly exercised its jurisdiction and acted with material irregularity by holding that the maximum recoverable amount from the petitioner is Rs. 61.05 Crores, based on NCLAT and Supreme Court orders, yet rejecting the refund of pre-deposit amounts exceeding this sum? (Question of mixed law and fact) Petitioner's contentions: The petitioner argued that the Tax Board failed to adhere to the spirit of the law as laid down by the NCLAT and Supreme Court orders, which limited the liability of the company to Rs. 61.05 Crores. They contended that the pre-deposit amounts made by M/s. Binani Cement Limited, which were in excess of this admitted liability, should be refunded with interest. They relied on the Supreme Court judgment in Ghanshyam Mishra & Sons Pvt. Ltd. Vs. Edelweiss Asset Reconstruction Company Ltd. and the Gujarat High Court judgment in State of Gujarat Vs. Essar Steel Ltd. Respondents' contentions: The judgment does not record any specific contentions made by the respondents.