Commissioner Of Central Excise vs. Sirpur Paper Mills Limited
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The Commissioner of Central Excise (Appellant) filed an appeal before the High Court challenging the order of the Central Excise and Service Tax Appellate Tribunal (CESTAT). The CESTAT had set aside an Order-in-Original passed by the Commissioner of Customs & Central Excise. During the pendency of the appeal before the High Court, the respondent company, Sirpur Paper Mills Limited, was referred to the National Company Law Tribunal (NCLT) under the Insolvency and Bankruptcy Code. The NCLT, by its Final Order, approved a resolution plan which stipulated that all dues under indirect taxes, including Central Excise, Service Tax, Customs, CST, and GST, for periods prior to the completion date, shall stand extinguished. The respondent company would not be liable to pay any such amounts, and all consequential liabilities would abate.
Held
The High Court held that in light of the order passed by the National Company Law Tribunal (NCLT), the present appeal stands disposed of. The NCLT's Final Order, in clause 7.5(d), clearly stipulated that upon approval of the resolution plan, all dues under indirect taxes, including taxes, duties, penalties, interest, and fines for any period prior to the completion date, shall stand extinguished, and the Corporate Debtor will not be liable to pay any amount against such demands. Furthermore, all outstanding litigations and demands related to the period prior to the completion date shall stand terminated and consequential liabilities will abate. The respondent's counsel submitted that this NCLT order extinguishes the entire dispute raised by the Department, and this submission was not disputed by the Department's counsel. Consequently, the appeal was disposed of in terms of the NCLT's order.
Key Issues
1. Whether the order of the National Company Law Tribunal (NCLT) approving the resolution plan, which extinguishes all indirect tax dues for periods prior to the completion date, has the effect of abating the present appeal filed by the Revenue? Contentions of the Petitioner (Revenue): The judgment does not record any specific arguments made by the Revenue regarding the NCLT order. However, their continued pursuit of the appeal implies a disagreement with the extinguishment of dues. Contentions of the Respondent (Sirpur Paper Mills Limited): The respondent argued that the NCLT's order, by extinguishing all indirect tax dues and liabilities for periods prior to the completion date, including disputed ones, effectively resolves the dispute raised by the Department. They contended that the present appeal, being a dispute concerning such dues, stands abated and extinguished by operation of the NCLT's order.
Sections Cited
Section 35G
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Cause title — parties, addresses and appearances
The Court made the following: ORDER
THE HON'BLE SRI JUSTICE P.SAM KOSITY AND THE HON'BLE SRI JUSTICE N.TUKARAMJT C.E.A. No. 45 of 2oo6 JUDGMENT: (per Hon't;te Si Jt-tstrce p.sAM KoSHy) I-{eard Mr. B. Narayana Reddy, learned counsel for the appeliant and Mr. Vedula Srinivas, learned counsel for the respondent. Perused the entire record.
The challenge in the present appeal is to the Order dated 22.O8.2OO5 passed in E.A.No.866 of 2OO4 by CESTAT, Bangalore, (for short.'lhc'lr ibunal').
Pending tlre appeal before this Court, thc respondent_ compan), u,as reli:rred to the National Company Larv Tribunal (for short, 'NCLT) under C.P.(IB)No.52 /9/HDB/2OtZ, dared 19.O7.2018 arrrl in I.A.No. 180 of 2018, before the Rench of N.C.t-.T., by Final Order No.3O839 of 2O2O, dated 04.O3.2O2O, in clause 7.5(d), the N.C.L.T. held as under: "Upon approval of this Resolution plan by the NCL.I-, all ducs under the provisions of all the indirect taxes, including but not limited to, the Central Excise Act, 1944, the Finirnce Act, 1994 (Service Tax), the Customs Act, 1962, the, Cerrtral Sales Tax Act, 1956, the Goods and Services Tax AcL. :2O17 and arly othcr indirect tax laws, including taxes, rluty, penalties, intcrest, fines, cesses, charges, unpaid TDS/TCS(Io rht: extent applicable), whether admitted or not, dnc or conLingcnt, whether part of the above mcntioned contingcnt lr:rbilrty, scheduled dues or not, q,hether clairned tI' thc tax au thorities or not, asserLed or unasserl-ed_ \.
2 crystallized or uncrystallised, known or unknown, secured or_ unsecured, disputed or undisputed, prescnt or future, in relatiln to any period prior to the Completion Date, shall stand extinguished and the Corporate Debtor will not be iiable to pay any amount against such demand. Upon approval of the Approved Resolution plan by the NCLT, all outstanding litigations/ demands, assessments/ appellate or other proceedings, including but not limited to any audits, investigations, search and seizure. pending in case of the Corporate Debtor relatrng to the period prior to the Completion Date, shall stand terminated zrnd all consequential liabiliLies, if aly, will stand abated and shalt be considered to be not payable by the Cor.porate Debtor. All notices proposing to initiate any proceedings against the Corporate Debtor in relation to the period prior to the date of NCLT order and pending on that date, shall be considered deleted and sha_ll not be proceeded against. post thc order of the NCLT, no re-assessment/ rivision or any other proceedings under t-he provisions of any of the indirect tax laws should be initiated on the proieedings under thc provisions of any of the indirect tax laws strouia Uc initiated on the Corporate Debtor in relation to the pcriod prior to acquisition.of control by the Resolution Appiicant and any consequentia.l demand shall be considcrcd norr-r:xisting arnd as not payable by the Corporate Debtor. An-y proceedings which were kept in abeyancc in view o[ insoli,cncy proccss or otlerwise shall not be revived post the ordcr-of NCLT.,,
Today, counsel for when the matter is taken up for hearing, learned the respondent submits that in the light of the aforesaid order passed by the NCLT and as a consequence of the said order, the entire dispute raised by the Department now stands extinguished subject to the conditions and liberties available with the Department in terms of the said order passed by the NCLT.
The submission made by the learrred counsel for the respondent is not disputed by the learned counsel for the Department so far as the order passed by the NCI.T is conccrned.
In the ligi-rt of the orders passed by the NCLT, the present appeal stands disposed of. No order as to costs. Consequcntly, miscellaneous petitions pending, if any, shall stand closed M.VIJAYA BHASI4!iR JOINT REGI$TRAR SECTI&OFFICER To, //// The Central Excise and Service Tax Appellate Tribunal' South Zonal 1 2 3 4 5 Bench, Bangalore The Commissioner of Com m tss io n erate, HYdera One CC to Mr B. NARAYANA REDDY' Advocate [OPUCI One CC to Mr VEDULA SRINIVAS' Advocate [OPUC] Customs & Central Excise' Hyderabad-l bad karw gh Two CD CoPies \tv-
HIGH COURT DATED:21 10212024 JUDGMENT CEA.No.45 of 2006 DISPOSING OF THE APPEAL )?, 19 APR zozl {HE SI4 16' ( $( z& l. ] P.\.tlL\ U)r' l e j --:--'
Reproduced from the public record of the Telangana High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.