High Court allows Ultra Tech Cement's plea, terms GST Dep's demand illegal and arbitrary

In a major relief for UltraTech CementNSE 0.64 %, the Rajasthan High Court has struck down the demand raised by the Goods and Services Tax (GST) Department against the company for unpaid dues of Binani Cement. The court termed the demand illegal and arbitrary.

Binani Cement was acquired by the Aditya BirlaNSE 3.44 % Group cement company through corporate insolvency resolution process (CIRP) in 2018 for ₹7,900 crore. Later, it was renamed UltraTech Nathdwara Cement.

On Tuesday, a division bench of Rajasthan High Court comprising Justices Sandeep Mehta and Vijay Bishnoi, while allowing the plea filed by UltraTech, observed that the demand notices are ex-facie illegal, arbitrary and per se cannot be sustained since that was already accounted for at the time of the revival plan approved by the lenders.

“We are of the firm view that authorities should have adopted a pragmatic approach and immediately withdrawn demands rather than indulging in totally frivolous litigation, thereby unnecessarily adding to overflowing dockets of cases in courts,” said the Jodhpur division bench in its order.

“This judgment re-emphasises the amendment in the code and will impact the revenue departments of both state and centre,” said Ashish Pyasi, associate partner at law firm Dhir & Dhir Associates. “Now they will not be able to push for their dues as a priority over other payments under the resolution plan." 

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