M/S Ultratech Nathdwara Cement Limited vs. Commissioner Of Commercial Taxes

Held

The Court allowed the revision petition. It found substance in the applicant's submission that a pure legal issue involving the overriding effect of the IBC was involved and that the first appellate authority had not applied its mind to the applicant's case. The Court noted that a prima facie case was established by the applicant. Citing the judgment in ITC Ltd. vs. Commissioner (Appeals), the Court emphasized that interim relief should not be granted without considering the merits and potential hardship, and that appellate authorities must show they have applied their mind to the issues raised. The Court also referred to the Supreme Court's decision in Principal Commissioner of Income Tax vs. Monat Ispat and Energy Ltd., which affirmed the overriding nature of the IBC. Consequently, the orders of the first appellate authority and the Tribunal were set aside. The Court directed the first appellate authority to decide the pending appeal expeditiously, preferably within three months, and ordered the applicant to furnish security to the extent of 20% of the disputed amount, other than cash or bank guarantee, to the satisfaction of the assessing authority, by June 10, 2019.

Facts

The applicant, M/s Ultratech Nathdwara Cement Limited, filed a revision petition challenging an order by the Commercial Tax Tribunal, Ghaziabad. The Tribunal had granted a conditional stay of 80% of the disputed tax amount for the assessment year 2015-16, pending the first appeal. The applicant's contention was that they were not liable for any tax due to the overriding provisions of the Insolvency and Bankruptcy Code, 2016 (IBC). The applicant acquired Binani Cement Ltd. (BCL), which had ceased business operations from April 1, 2015, and surrendered its registration. Despite this, the assessing authority issued a demand of Rs. 2,32,60,000/-. The first appellate authority stayed 50% of the demand, and the Tribunal reduced the stay to 20%. The applicant argued that both appellate authorities failed to consider the IBC's overriding effect and the applicant's prima facie case.

Key Issues

1. Whether the orders of the first appellate authority and the Commercial Tax Tribunal, granting conditional stay of recovery of tax, were passed without applying their mind to the issues raised by the applicant, particularly in light of the Insolvency and Bankruptcy Code, 2016? (Question of law) Contentions: Petitioner/Appellant (M/s Ultratech Nathdwara Cement Limited): Argued that the IBC, specifically Section 238, overrides other laws, including the U.P. VAT Act, 2008. They contended that the resolution plan approved under the IBC, which made the applicant the owner of BCL, stipulated that all litigations pending before the transfer date would stand withdrawn. Therefore, no assessment or demand could be created against BCL for the period prior to the transfer. They relied on the Supreme Court's decision in Principal Commissioner of Income Tax vs. Monat Ispat and Energy Ltd. and a Division Bench judgment of the High Court in ITC Ltd. vs. Commissioner (Appeals) to argue that interim relief should not be granted without considering the merits and potential hardship, and that the authorities below failed to apply their mind to these crucial legal aspects. Revenue/State (Commissioner of Commercial Taxes): The judgment does not record any specific arguments made by the Revenue/State regarding the issues raised by the applicant.