Srei Equipment Finance Limited vs. Department Of Trade And Taxes & Anr.

Facts

The petitioner, SREI Equipment Finance Limited, filed a writ petition challenging notices of default assessment of tax and interest dated July 4, 2019, and November 14, 2018, issued by the Department of Trade and Taxes, Government of NCT of Delhi. These notices demanded payment of Rs. 50,04,910/- for tax periods including the second and third quarters of 2015-16, second, third, and fourth quarters of 2016-17, and the first quarter of 2017-18. The petitioner also challenged a letter dated January 20, 2022, issued by the Assistant Collector, GST Officer, directing ICICI Bank to attach the petitioner's account to the extent of Rs. 70,24,232/-. The petitioner stated it had undergone Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code, 2016, and its resolution plan was approved by the National Company Law Tribunal on August 11, 2023. The petitioner argued that since the Department did not file any claim, all prior claims stand extinguished.

Held

The Court held that the issue was covered in favor of the petitioner by the Supreme Court's decision in Ghanshyam Mishra & Sons v. Edelweiss Asset Reconstruction Company Ltd. This precedent establishes that once a resolution plan is approved by the National Company Law Tribunal, all prior claims against the corporate debtor stand extinguished, provided the creditor did not file a claim during the CIRP. The Court found that the Department had not preferred any claim. Consequently, the notices of default assessment and the letter directing attachment of the bank account were deemed invalid. The Court allowed the petition, setting aside the impugned notices and the letter. Respondent No. 2 was directed to take necessary steps for the implementation of the order. No issue was expressly left undecided.

Key Issues

1. Whether the notices of default assessment of tax and interest dated July 4, 2019, and November 14, 2018, and the subsequent letter dated January 20, 2022, directing attachment of the petitioner's bank account, are liable to be quashed in light of the petitioner undergoing Corporate Insolvency Resolution Process (CIRP) and the approval of its resolution plan by the National Company Law Tribunal. Petitioner's Contention: The petitioner argued that it had undergone CIRP, and its resolution plan was approved by the adjudicating authority. It contended that as the Department had not filed any claim during the CIRP, all prior claims against the petitioner stand extinguished. The petitioner relied on the Supreme Court's decision in Ghanshyam Mishra & Sons v. Edelweiss Asset Reconstruction Company Ltd. Revenue's Contention: The judgment does not record any specific arguments or contentions made by the respondents (Department of Trade and Taxes & Anr.).