Ultra Tech Nathdwara Cement LTD. vs. Union Of INDIA

Held

The Court held that the demands raised by the GST authorities were illegal and arbitrary. It reasoned that the Insolvency and Bankruptcy Code, 2016 (IBC), being a special law, aims to provide a fresh slate for distressed companies. The resolution plan, having been approved by the Committee of Creditors and affirmed by the Supreme Court, attained finality. The Court emphasized that the resolution professional's assessment of claims, including that of the GST Department, was within their domain and approved by the highest judicial forums. The operational creditors, including the GST Department, had their claims considered and a significant amount (Rs. 72.85 crores) was paid as per the plan, which was already deposited by the petitioner. The Court found that persistence with demands for the pre-resolution period, despite the pronouncements of the Finance Minister and amendments to the IBC, was contrary to the spirit of the Code and the judicial pronouncements. The demands were quashed and struck down. The Court expressed strong reservations about the GST officers' approach in persisting with these demands.

Facts

The petitioner, Ultra Tech Nathdwara Cement Ltd., filed a writ petition challenging demands raised by the Central Goods and Service Tax Department for the period prior to its takeover of M/s. Binani Cements Ltd. Binani Cements had undergone Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code, 2016 (IBC). The petitioner's resolution plan was approved by the Committee of Creditors, the National Company Law Tribunal, the National Company Law Appellate Tribunal, and the Supreme Court. The resolution plan included a provision for statutory creditors, with the GST Department's claim assessed at Rs. 72.85 crores. Despite the resolution plan's finality and implementation, the GST authorities issued fresh demands. The petitioner argued that these demands were extinguished by the approved resolution plan.

Key Issues

1. Whether the demands raised by the GST authorities for the period prior to the finalization of the resolution plan under the IBC are legally sustainable, given that the resolution plan was approved by the Supreme Court and implemented by the petitioner? (Section 31 of IBC, Section 226 of the Constitution of India) Petitioner's Arguments: - The IBC is a special law designed to revive distressed industries and its approved resolution plan, once finalized and affirmed by the Supreme Court, cannot be questioned by tax authorities. - Financial creditors have precedence in resolution plans, and statutory/operational creditors must make sacrifices. - The GST authorities had no jurisdiction to raise demands for the period covered by the resolution plan, as all claims were meant to be settled through it. - The payment of Rs. 72.85 crores to the GST Department as per the resolution plan extinguishes all prior liabilities. Revenue's Arguments: - The judgment does not explicitly record arguments made by the revenue authorities.