Gujarat High Court
Technovaa Plastic Industries Pvt. Ltd vs Assistant Commissioner Of Income Tax, ... on 9 April, 2025
Author: Bhargav D. Karia
Bench: Bhargav D. Karia
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 21289 of 2022
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE BHARGAV D. KARIA
and
HONOURABLE MR.JUSTICE D.N.RAY
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Approved for Reporting Yes No
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TECHNOVAA PLASTIC INDUSTRIES PVT. LTD.
Versus
ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE, GANDHINAGAR
& ORS.
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Appearance:
MR. M.R.BHATT, SR.ADVOCATE WITH MS SHAILEE S JOSHI(11582) for
the Petitioner(s) No. 1
MR.VARUN K.PATEL(3802) for the Respondent(s) No. 3,4
MS MAITHILI D MEHTA(3206) for the Respondent(s) No. 1,2
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CORAM:HONOURABLE MR. JUSTICE BHARGAV D. KARIA
and
HONOURABLE MR.JUSTICE D.N.RAY
Date : 09/04/2025
ORAL JUDGMENT
(PER : HONOURABLE MR.JUSTICE D.N.RAY)
1. Heard learned Senior advocate Mr.M.R.Bhatt with Ms. Shailee
S. Joshi appearing on behalf of the Petitioner; learned Senior
Standing Counsel Ms. Maithili D. Mehta for the Respondent No. 1
& 2 and learned Senior Standing Counsel Mr. Varun K. Patel for the
Respondent No. 3 & 4.
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2. Rule returnable forthwith. Learned Senior Standing Counsel
Ms. Maithili D. Mehta waives service of notice of rule for the
Respondent Nos.1 & 2, and learned Senior Standing Counsel
Mr.Varun K. Patel waives service of notice of rule for the
Respondent No. 3 & 4. With the consent of the learned advocates for
the respective parties, the matter is taken up for hearing, as the issue
involved is quite brief.
3. The brief facts of the case are as follows:
3.1 The Petitioner is a company engaged in the business of
manufacturing plastic film. Rassendra Chem Export Private Limited,
acting as an operational creditor, filed an application [CP (IB) 189 of
2018] under Section 9 of the Insolvency and Bankruptcy Code, 2016
("IBC"), seeking initiation of the Corporate Insolvency Resolution
Process ("CIRP") against the Petitioner-Corporate Debtor before the
National Company Law Tribunal ("NCLT"), Ahmedabad.
3.2 The NCLT, by an order dated 12.11.2018, admitted the said
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application and imposed a moratorium in terms of Section 14 of the
IBC. Consequently, CIRP was initiated against the Petitioner
company.
3.3 By the order dated 12.11.2018, Mr. Narayan Gajanan Vidvan
was appointed as the Interim Resolution Professional ("IRP"). The
IRP, in accordance with Section 15 of the IBC, issued a public
announcement and collated the claims submitted by the creditors.
3.4 In compliance with Section 21 of the IBC, the Committee of
Creditors ("CoC") was constituted on 07.12.2018, consisting of a
sole financial creditor, namely, Bank of Baroda. Thereafter, the IRP
was replaced, and Mr. Vijay P. Lulla was appointed as the
Resolution Professional ("RP") by way of an order passed by the
NCLT on 13.06.2019.
3.5 The RP subsequently issued an invitation for Expression of
Interest ("EOI") from eligible prospective resolution applicants for
submission of resolution plans. In response, four EOIs were
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received. After due deliberations, the CoC, in its meeting held on
19.09.2019, approved the resolution plan submitted by Kankriya
Enterprises Private Limited with 100% voting in its favor.
3.6. Upon approval of the resolution plan by the CoC, the RP filed
Interlocutory Application No. 617 of 2019 in CP(IB) No. 189 of
2018 before the NCLT, seeking approval of the resolution plan
under Section 31 of the IBC. The NCLT, by an order dated
04.09.2020, after a detailed consideration, approved the resolution
plan, rendering it effective from the said date.
3.7 The NCLT, in its order, recorded that the resolution plan
provided for the settlement of claims of various stakeholders,
including statutory authorities. In paragraph 12 of its order, the
NCLT held as follows:
"12. In view of the above, the revised 'Resolution Plan'
annexed in IA 617 of 2019 filed in CP(IB) no. 189 of 2018 is
hereby approved, which shall be binding on the Corporate
Debtor and its employees, members, creditors, guarantors
and other stakeholders involved in the Resolution Plan
including Resolution Applicant."
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3.8. The Respondent No. 4, namely, the National Faceless
Assessment Centre, issued penalty orders under various provisions
of the Income Tax Act, 1961, as follows:
Under Section 270A for the Assessment Year 2017-18,
dated 01.04.2022;
Under Section 271(1)(c) for the Assessment Year 2016-
17, dated 01.04.2022; and
Under Section 271AAC(1) for the Assessment Year
2017-18, dated 01.04.2022.
3.9 Aggrieved by the demand notices issued by the Respondents
in respect of the period prior to 04.09.2020, the Petitioner has filed
the present Writ Petition under Article 226 of the Constitution of
India, seeking the following reliefs:
"a) Issue a writ, order or direction in the nature of
certiorari or any other appropriate writ quashing and
setting-aside the impugned demand notices raised pursuant
to passing of Assessment Orders and penalty orders
[(Annexure-A (Colly)] and any other demand raised or to be
raised for the period prior to 04.09.2020;
(b) Issue a writ, order or direction in the nature of
mandamus or any other appropriate writ quashing and
setting aside all proceedings including but not limited to
Assessment Orders, Penalty Orders and Demand Notices
over and above the Demand Notices annexed as Annexure-A
(Colly), initiated or to be initiated by the Respondents
pertaining to the period prior to 04.09.2020;
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(c) Pending final hearing and admission of the matter, pass
an order restraining the Respondents from enforcing
demand and be further pleased to stay the proceedings
initiated in relation to the period prior to 04.09.2020;
(d) Pass any such other writ or order(s) as it may deem fit
and proper in the interest of justice."
4. Learned Senior Advocate Mr. M.R.Bhatt with learned
advocate Ms.Shailee S.Joshi for the Petitioner submitted that notices
have been issued by the Department to the Petitioner for the period
prior to 04.09.2020. whereas, the NCLT by virtue of the order dated
04.09.2020 has approved the Resolution Plan of one, Kankariya
Enteprises Pvt. Ltd. under Section 31 of the IBC. Mr. Bhatt, learned
Senior Advocate, submitted that in view of the settled law in the
subject as held by the Hon'ble Supreme Court of India in the case of
Ghanshyam Mishra and Sons Pvt. Ltd. Vs. Edelweiss Asset
Reconstruction Company reported in (2021) 9 SCC 657, the tax
dues of the Department, unless futuring in the Resolution Plan as
due and payable, shall be extinguished and no demand can be raised
for the period prior to 04.09.2020, i.e. the date of NCLT order
approving the Resolution Plan.
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5. Ms.Maithili Mehta and Mr.Varun Patel, learned Senior
Standing Counsels for the respective Respondents are unable to
controvert the aforesaid facts and the applicability of the ratio of
Edelweiss (Supra) to the facts of the case.
6. DISCUSSION & FINDINGS :-
6.1 Regarding settlement of existing claims, Clause 3.8 of
the Resolution Plan reads as under:-
Action Time line
Capital Reduction of the existing The existing capital shall be treated
equity share capital to ZERO as Zero on the date of approval of
the resolution plan and shares
allotted in the name of erstwhile
shareholders shall stand cancelled
upon approval of resolution plan
without any consideration.
Subscribing to equity shares and Within 60 Days of the approval of
optionally convertible debentures by NCLT Order
to be issued by the Corporate
Debtor and Intercorporate
Deposits
Payment of Workmen Dues Within 60 Days of the approval of
by NCLT Order
Payment to CIRP Cost Within 60 Days of the approval of
by NCLT Order
Payment to Financial Creditors Within 60 Days of the approval of
by NCLT Order
Tranche 1: 30% of Financial
Outlay of Rs. 41,59,40,000 (after Within 120 days of the approval of
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adjustment for bid security already by NCLT Order
deposited) i.e. Rs. 8,17,82,000/-
plus Bid security of Rs. Within 180 days of the approval of
4,30,00,000/- Total 12,47,82,000/- by NCLT Order
Tranche 2:30% of Financial
Outlay of Rs.41,59,40,000 i.e. Rs.
12,47,82,000/-
Tranche 3: 40% of Financial
Outlay of Rs. 41,59,49,000 i.e. Rs.
16,63,76,000/-
Payment of Statutory Dues and Within 60 days of the approval of
Operational Creditors by the NCLT Holders.
Note: The period of lockdown in any form, if any, as may be
announced by the Government of India or the National
Disaster Management Authority or the State Authorities, as
the case may be, shall stand excluded for computation of the
60, 120 and 180 day time periods mentioned in the Table.
STRUCTURE FOR ACQUISITION OF CONTROL OVER
THE CORPORATE DEBTOR BY THE RESOLUTION
APPLICANTS
The present equity capital is envisaged to be written down to
zero. Post such write off, the Resolution Applicant propose to
infuse Rs. 17,72,80,000/- as equity and control 100% stake in
the Corporate Debtor.
6.2 Further, Annexure- 4 to the Resolution Plan which has
been approved by the NCLT pertains to "Extinguishment of
Claims". Clause 9 thereof reads as under:-
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"9. Any and all other claims (whether contingent or
crystallised, known and unknown, disputed or undisputed,
asserted or unasserted, present or future and whether or not
filed) of Governmental Authorities in relation to all Taxes,
duty, penalties, interest, fines, cesses, unpaid TDS/TCS which
the Corporate Debtor was or may be liable to pay, the period
prior to the Effective Date shall stand extinguished on the
Effective Date by virtue of the order of the NCLT approving
the Resolution Plan and the Corporate Debtor should not be
liable to pay any amount against such demand, but for the
provision made in Annexure-2 (Financial Plan). All
assessment/appellate or other proceedings pending on the
Effective Date relating to period prior to the Effective date,
shall stand terminated and all consequential liabilities, if any
should be deleted and waived off and should be considered to
be not payable by the Corporate Debtor by virtue of the order
of the NCLT. All notices proposing to initiate any proceedings
against the Corporate Debtor in relation to any period prior
to the Effective Date and pending on that date, shall be
considered deleted and should not be proceeded against the
Corporate Debtor. Post Effective Date, no
re-assessment/revision or any other proceedings under the
provisions of Income-tax Act, 1961 should be initiated on the
Corporate Debtor in relation to the period prior to Effective
Date and any consequential demand should be considered
non-existing as deleted and waived and not payable by the
Corporate Debtor. Any proceedings which were kept in
abeyance in view of IB process or otherwise should not be
revived post the Effective Date.
6.3 From the aforesaid, it is crystal clear that after approval of the
Resolution Plan by the NCLT through its order dated 04.09.2020, no
claim other than what subsists under the Resolution Plan itself is
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required to be honored by the successful resolution applicant and all
such statutory claims which are not part of the Resolution Plan
stands extinguished and no proceedings in respect of due can be
continued in view of Section 31 of the IBC. In the recent judgment
of the Hon'ble Apex Court in the case of Vaibhav Goel and Anr.
Vs. Deputy Commissioner of Income Tax & Anr. reported in
2025 INSC 375, it has been held as under :-
"7. Section 31(1) of the IB Code provides for the legal effect of
approval of the Resolution Plan. Section 31(1) reads thus:
"(1) If the Adjudicating Authority is satisfied that the
resolution plan as approved by the committee of creditors
under sub-section (4) of section 30 meets the requirements
as referred to in sub-section (2) of section 30, it shall by
order approve the resolution plan which shall be binding
on the corporate debtor and its employees, members,
creditors, [including the Central Government, any State
Government or any local authority to whom a debt in
respect of the payment of dues arising under any law for
the time being in force, such as authorities to whom
statutory dues are owed] guarantors and other
stakeholders involved in the resolution plan.
Provided that the Adjudicating Authority shall, before
passing an order for approval of resolution plan under this
sub-section, satisfy that the resolution plan has provisions
for its effective implementation."
(emphasis added)
The words starting from 'including' and ending with 'owed' were
incorporated in the IB Code with effect from 16th August 2019.
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Section 31(1), as it stood before the amendment mentioned above
and after the amendment, came for consideration in the decision of
this Court in the case of Ghanashyam Mishra and Sons Pvt. Ltd.
Paragraph 102 of the said decision reads thus:
"102. In the result, we answer the questions framed by us as
under:
102.1. That once a resolution plan is duly approved by the
adjudicating authority under sub-section (1) of Section 31,
the claims as provided in the resolution plan shall stand
frozen and will be binding on the corporate debtor and its
employees, members, creditors, including the Central
Government, any State Government or any local authority,
guarantors and other stakeholders. On the date of approval
of resolution plan by the adjudicating authority, all such
claims, which are not a part of resolution plan, shall stand
extinguished and no person will be entitled to initiate or
continue any proceedings in respect to a claim, which is
not part of the resolution plan.
102.2. The 2019 Amendment to Section 31 of the I&B Code
is clarificatory and declaratory in nature and therefore will
be effective from the date on which the I&B Code has come
into effect.
102.3. Consequently, all the dues including the statutory
dues owed to the Central Government, any State
Government or any local authority, if not part of the
resolution plan, shall stand extinguished and no
proceedings in respect of such dues for the period prior to
the date on which the adjudicating authority grants its
approval under Section 31 could be continued."
(emphasis added)
8. In view of the declaration of law made by this Court, all the
dues including the statutory dues owed to the Central Government,
if not a part of the Resolution Plan, shall stand extinguished and
no proceedings could be continued in respect of such dues for the
period prior to the date on which the adjudicating authority grants
its approval under Section 31 of the IB Code. In this case, the
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income tax dues of the CD for the assessment years 2012-13 and
2013-14 were not part of the approved Resolution Plan. Therefore,
in view of sub-section (1) of Section 31, as interpreted by this
Court in the above decision, the dues of the first respondent owed
by the CD for the assessment years 2012-13 and 2013-14 stand
extinguished.
12. Once the Resolution Plan is approved by the NCLT, no belated
claim can be included therein that was not made earlier. If such
demands are taken into consideration, the appellants will not be in
a position to recommence the business of the CD on a clean slate.
On this aspect, we may note what is held in paragraph 107 of the
decision of this Court in the case of Committee of Creditors of
Essar Steel India Ltd. Paragraph 107 reads thus:
"107. For the same reason, the impugned NCLAT judgment
[Standard Chartered Bank v. Satish Kumar Gupta, 2019 SCC
OnLine NCLAT 388] in holding that claims that may exist apart
from those decided on merits by the resolution professional and by
the Adjudicating Authority/Appellate Tribunal can now be decided
by an appropriate forum in terms of Section 60(6) of the Code,
also militates against the rationale of Section 31 of the Code. A
successful resolution applicant cannot suddenly be faced with
"undecided" claims after the resolution plan submitted by him
has been accepted as this would amount to a hydra head popping
up which would throw into uncertainty amounts payable by a
prospective resolution applicant who would successfully take
over the business of the corporate debtor. All claims must be
submitted to and decided by the resolution professional so that a
prospective resolution applicant knows exactly what has to be
paid in order that it may then take over and run the business of
the corporate debtor. This the successful resolution applicant
does on a fresh slate, as has been pointed out by us hereinabove.
For these reasons, NCLAT judgment must also be set aside on this
count."
(emphasis added)
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7. In view of the binding ratio of the aforesaid decisions of the
Hon'ble Supreme Court which are squarely applicable to the facts of
the present case, the impugned Demand Notices raised pursuant to
the Assessment Orders and Penalty Orders (Annexure "A" Colly to
the present petition) are hereby quashed and set aside. Rule is made
absolute to the aforesaid extent. No order as to costs.
(BHARGAV D. KARIA, J)
(D.N.RAY,J)
BINA SHAH
