The NCLT, Chandigarh Bench observed that the Taxation Department is not obliged to lodge a claim in respect of statutory dues. The claim must be treated as a debt owed to a secured creditor as security interest has been created by the operation of law.
The Department in respect of the claim created a charge on the Input Tax Credit of the Corporate Debtor. About this, the Tribunal noted that since the claims of the Excise and Taxation Department are already directed to be considered by the Liquidator, there is no need to attach the Input Tax Credit of the Corporate Debtor as this would affect the business of the Corporate Debtor and would be in the teeth of the objectives of the Insolvency and Bankruptcy Code, 2016.
IA No. 232/ 2022
Brief Facts:
The present appeal is preferred against the order of the Respondent-Liquidator vide which the claims of the Appellant were rejected. The Appellant also sought condonation of delay in submitting the claim with the Respondent-Liquidator.
Contentions of the Appellant:
The Appellant contended that the claim of the Appellant was rejected solely on the ground that it was filed before the due date and that the Respondent did not even go into the merits of the claim.
Contentions of the Respondent:
The Respondent argued that the Appellant submitted its claims much after the last date of the submission of the claims. It was contended that the alleged demand arose and was raised much after the liquidation commencement date and therefore, the claim was misconceived and untenable. The Appellant was informed as well that the claim could only be considered if NCLT directs.
Observations of the Tribunal:
The Tribunal observed that the Taxation Department is not obliged to lodge a claim in respect of statutory dues. The claim must be treated as a debt owed to a secured creditor as security interest has been created by the operation of law.
The decision of the Tribunal:
The Liquidator was thus directed to consider the claim of the Appellant. Accordingly, the appeal was allowed.
IA No. 909/2022
Brief Facts:
The Application has been preferred against the assessment order and notice of demand after the assessment order.
A Corporate Insolvency Resolution Process (hereinafter referred to as “CIRP”) was initiated. Thereafter, NCLT directed for the liquidation process to be started, and subsequently, the Applicant was appointed as the Liquidator.
Contentions of the Applicant:
It was submitted that a Notice of Demand was received by the Corporate Debtor by the Respondent for a certain sum under Haryana Value Added Tax Act, 2003. The Respondent for this claim blocked the Input Tax Credit. The Applicant wrote several emails to the Respondent requesting to release the charge over Input Tax Credit. The Applicant has filed the application to seek release of the charge.
Contentions of the Respondent:
The Respondent contended that Section 26 of the Haryana Value Added Tax Act, 2003 creates the first charge on the property of the defaulter assessee. Further, Section 142(8) of the Goods and Services Act, 2017 empowers the deponent to take steps necessary for the recovery of Tax.
Observations of the Tribunal:
It was noted that the Excise and Taxation Department did not clarify the Section under which the charge has been created on the Input Tax Credit of the Corporate Debtor. But, Section 142(8) of the Goods and Services Act, 2017 does empower Authorities to take steps for the recovery of taxes.
The Tribunal noted that since the claims of the Excise and Taxation Department are already directed to be considered by the Liquidator, there is no need to attach the Input Tax Credit of the Corporate Debtor as this would affect the business of the Corporate Debtor and would be in the teeth of the objectives of the Insolvency and Bankruptcy Code, 2016.
The decision of the Tribunal:
Accordingly, the Respondent was asked to remove the charge and the Application was allowed.
Case Title: Excise and Taxation Commissioner, Haryana Sales Tax Department v. Hitesh Goel, Liquidator With
Hitesh Goel, Liquidator v. Excise and Taxation Commissioner, Haryana Sales Tax Department
Coram: Hon’ble Mr. Harnam Singh Thakur (Judicial Member), Hon’ble Mr. Subrata Kumar Dash (Technical Member)
Case No.: IA No. 232/ 2022 in CP(IB) No. 152/Chd/Hry/2018 With
IA No. 909/2022
Advocates for Applicants: Advs. Mr. Piyush Bansal, Mr. Karan Kohli
Advocate for Respondent: Adv. Mr. Sanjay Bhatt
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