M/S Ultratech Nathdwara Cement Limited vs. The Commercial Taxes Officer, Anti Evasion

Facts

The petitioner, M/s. Ultratech Nathdwara Cement Limited, assails the order dated 28.12.2020 by the Rajasthan Tax Board, Ajmer, which rejected its applications for refund of mandatory statutory pre-deposits made with interest. These pre-deposits were made by M/s. Binani Cement Limited for appeals filed against VAT assessment orders for periods 2005-06 to 2015-16. Binani Cement Limited, facing insolvency, had its resolution plan approved by NCLAT, with the petitioner becoming the successful resolution applicant. The NCLAT admitted the Commercial Taxes Department's claim to Rs. 61.05 Crores only, extinguishing remaining claims. The petitioner argues that the pre-deposit amounts, exceeding Rs. 61.05 Crores, should be refunded as all liabilities not part of the resolution plan are wiped off.

Held

The Court held that the controversy was 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. The Court found that the original assessee, Binani Cement Ltd., was compelled to make pre-deposits as a mandatory statutory obligation. Consequently, the extinguishment of demands under the assessment orders, due to the acceptance of the resolution plan, necessitates a direction for the refund of these pre-deposit amounts, along with interest, to the successful resolution applicant, the petitioner. The Rajasthan Tax Board's order rejecting the refund applications was set aside to that extent. The amounts deposited by M/s. Binani Cement Ltd. as mandatory statutory obligation while filing appeals before the Tax Board are to be reimbursed to the petitioner within three months with applicable interest.

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 (26.07.2019, 19.05.2020, 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, yet rejecting the refund of pre-deposit amounts lying with the department in excess of this sum? (Question of mixed law and fact) Petitioner's arguments: The petitioner contended that the NCLAT order, read with Supreme Court and High Court judgments, extinguished all liabilities not included in the resolution plan. Therefore, the pre-deposit amounts exceeding the admitted claim of Rs. 61.05 Crores should be refunded. 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. Respondent's arguments: The judgment does not record specific arguments made by the respondents.