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IN THE HIGH COURT OF JHARKHAND AT RANCHI
HON’BLE MR. JUSTICE RONGON MUKHOPADHYAY, HON’BLE MR. JUSTICE DEEPAK ROSHAN, JJ.
Orissa Manganese and Minerals Limited, through its authorised signatory Niraj Kumar Gupta - Petitioner
Versus
Commissioner, Central Goods and Service Tax and Central Excise, Jamshedpur and Ors. - Respondents
W.P. (T) No. 2786 of 2023
Decided On : 20-02-2024
[INCOME TAX] - [REFUND OF PRE-DEPOSIT] - [Central Excise Act, 1944 - Section 35F, Section 35FF; Insolvency & Bankruptcy Code, 2016 - Section 7, Section 31] - The court discussed the provisions of Section 35F and 35FF of the Central Excise Act, which govern the requirement of pre-deposit for appeals and the entitlement to refunds with interest. It emphasized that claims not filed during the insolvency resolution process are extinguished, referencing the Supreme Court's ruling in Ghanashyam Mishra & Sons Pvt. Ltd. v. Edelweiss Asset Reconstruction Company Ltd. The court concluded that the Revenue's rejection of the refund application was legally erroneous, as the tax liability had been extinguished, thus mandating the refund of the pre-deposit amount along with interest.
Fact of the Case:
The petitioner sought to quash an order rejecting their refund application for a pre-deposit made during appeals against Orders-in-Original. The petitioner had made a total pre-deposit of Rs. 2,06,31,698 while appealing against excise demands. During the appeal process, the petitioner entered insolvency, and the Revenue did not file any claims during the insolvency proceedings, leading to the extinguishment of their claims.
Finding of the Court:
The court found that the Revenue's claims against the petitioner were extinguished due to the approval of the resolution plan under the IBC, and thus the rejection of the refund application was based on a misinterpretation of the law. The court held that the Revenue's failure to file claims during the insolvency process barred them from contesting the refund of the pre-deposit.
Issues: Whether the Revenue's rejection of the refund application for the pre-deposit was valid given the extinguishment of claims during the insolvency resolution process.
Ratio Decidendi: The court established that once a resolution plan is approved under the IBC, claims not included in the plan are extinguished, and the Revenue's claims against the petitioner did not survive. The court reiterated that the pre-deposit made for appeals is refundable when the underlying tax liability is extinguished.
Final Decision: The court quashed the order rejecting the refund application and directed the Revenue to refund the pre-deposit amount of Rs. 2,06,31,698 along with applicable statutory interest within six weeks.
JUDGMENT :
Deepak Roshan, J.
Heard learned counsel for the parties.
2. The petitioner has preferred the instant writ application for the following reliefs:
(b) Upon quashing the aforesaid order dated 25.04.2023, for a direction upon the Respondents to immediately and forthwith refund the aforesaid pre-deposit amount of Rs. 2,06,31,698 to the Petitioner together with applicable statutory interest;
3. The brief facts of the case are that the petitioner has preferred four appeals before the CESTAT against the aforesaid Orders-in-Original. On 10.03.2015, the petitioner made a pre-deposit of Rs. 1,56,31,698/- in CESTAT. Further, the Petitioner also made a pre-deposit of Rs. 50,00,000/- in CESTAT.
In the meantime, a petition against the Petitioner under section 7 of the Insolvency & Bankruptcy Code, 2016 was admitted by the NCLT, Kolkata. The resolution professional issued a specific notice to the Respondent No. 1 to file its claims. The resolution plan of Ghanshyam Mishra & Sons Pvt. Ltd. (GMSPL) was approved by the NCLT, Kolkata.
Further, the petitioner applied before NCLT Cuttack, praying for the extinguishment of claims/ demands of Revenue against the Petitioner. NCLT Cuttack allowed the said application and passed an order that the claims of Revenue cannot be entertained and further, the typographical errors in this order were corrected vide order dated 11.05.2022.
Thereafter, the petitioner filed an application before CESTAT for withdrawal of its pending appeals and the CESTAT dismissed the Petitioner’s appeals as withdrawn. Thereafter, Petitioner preferred another application before Respondent No. 1 seeking a refund of pre-deposit as per section 35-F of the Central Excise Act but Petitioner’s application was rejected vide order passed by Respondent No. 3.
4. Mr. Indrajit Sinha, learned counsel for the petitioner submits that the petitioner was served with the show cause notices by the Revenue, raising a demand alleging wrongful availment of CENVAT credit by the Petitioner. The petitioner replied to the same and thereafter Orders-in-Original were passed demanding tax from the petitioner. Against the Orders-in-Original, the Petitioner preferred appeals before the CESTAT Kolkata. He further submits that in terms of section 35F of the Central Excise Act, 1944, the Petitioner had also made pre-deposits in the aforesaid appeals totalling to an amount of Rs. 2,06,31,608/-.
During the pendency of the aforesaid appeals before the CESTAT, Kolkata, a petition under section 7 of the Insolvency & Bankruptcy Code, 2016 (the "IBC") was filed against the Petitioner by its financial creditor State Bank of India, before the National Company Law Tribunal, Kolkata (the "NCLT, Kolkata"). The said petition was admitted vide order dated 03.08.2017. He further submits that the resolution professional, vide its letter dated 10.08.2017 specifically informed the Respondent-Revenue of the corporate insolvency resolution process of the Petitioner and also requested the Respondent-Revenue to file its claim against the Petitioner as per the provisions of the IBC. Despite being put to specific notice of the insolvency resolution process of the Petitioner, the Respondent-Revenue did not file any claim against the Petitioner-Company during the corporate insolvency resolution process. Since no claim was filed by the Respondent-Revenue, the same did not form part of the approved resolution plan of the Petitioner-Company and hence the same stood extinguished as per the approved resolution plan.
He further submits that vide order dated 22.06.2018, the NCLT, Kolkata approved the resolution plan fil
The approval of a resolution plan under the IBC extinguishes all claims not included in the plan, thereby entitling the petitioner to a refund of pre-deposits made during appeals against extinguished....
There is always peril in treating the words of a speech or judgment as though they are words in a legislative enactment, and it is to be remembered that judicial utterances made in the setting of the....
Claims not filed before Resolution Professional are extinguished post-approval of a Resolution Plan under the Insolvency and Bankruptcy Code.
The court ruled that interest is payable on delayed refund of pre-deposit after three months from the application date, as pre-deposits do not equate to duty or penalty payments.
The court held that claims involving CENVAT credits were extinguished post-approval of the resolution plan under the Insolvency and Bankruptcy Code, reaffirming jurisdictional limits of the High Cour....
Claims not part of an approved resolution plan under the IBC are extinguished, and appeals cannot abate under Rule 22 when a resolution plan allows for business continuity.
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