STATE TAX OFFICER (1) versus RAINBOW PAPERS LIMITED

STATE TAX OFFICER (1) versus RAINBOW PAPERS LIMITED

The NCLAT and NCLT erred in holding that Section 53 of the IBC overrides Section 48 of the GVAT Act; Section 48 creates a statutory charge which can constitute a security interest under the IBC, making the State a secured creditor; a resolution plan that does not provide for statutory dues and does not meet Section 30(2) cannot bind the State and must be set aside; delay in filing a claim is not by itself a sufficient ground for rejection of the claim.

Parties
Appellant: State Tax Officer (1); Respondent: Rainbow Papers Limited
Jurisdiction
India
Judgment Date
06 September 2022
Procedural Posture
Civil Appeal Under Section 62 of the Insolvency and Bankruptcy Code, 2016 / Appeal Against NCLAT Judgment Dated 19.12.2019 Arising From NCLT Order Dated 27.02.2019 in Company Petition (ib) No.88 of 2017
Outcome
Appeal allowed
Legal Topics
Priority of Statutory Dues, Secured Creditor Under IBC, Resolution Plan Approval Under Section 30 and 31 IBC, Submission and Verification of Claims Under Regulations 2016, Interaction Between Section 48 GVAT and Section 53 IBC
Insolvency and Bankruptcy Taxation (gujarat Value Added Tax) Company Law Priority of Statutory Dues Secured Creditor Under IBC Resolution Plan Approval Under Section 30 and 31 IBC Submission and Verification of Claims Under Regulations 2016 Interaction Between Section 48 GVAT and Section 53 IBC

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Parties

State Tax Officer (1)

Appellant

Rainbow Papers Limited

Respondent

Procedural Posture

Civil Appeal Under Section 62 of the Insolvency and Bankruptcy Code, 2016 / Appeal Against NCLAT Judgment Dated 19.12.2019 Arising From NCLT Order Dated 27.02.2019 in Company Petition (ib) No.88 of 2017

Legal Issues

  1. 1 Whether Section 53 of the IBC overrides Section 48 of the Gujarat Value Added Tax Act, 2003
  2. 2 Whether the State (Tax Department) is a secured creditor under the IBC by virtue of Section 48 GVAT
  3. 3 Whether delay in filing a claim is a ground for rejection of the claim

Ratio Decidendi

The NCLAT and NCLT erred in holding that Section 53 of the IBC overrides Section 48 of the GVAT Act; Section 48 creates a statutory charge which can constitute a security interest under the IBC, making the State a secured creditor; a resolution plan that does not provide for statutory dues and does not meet Section 30(2) cannot bind the State and must be set aside; delay in filing a claim is not by itself a sufficient ground for rejection of the claim.

Court Disposition

Appeal allowed

Orders

  • Impugned orders of the Adjudicating Authority (NCLT) dated 27.02.2019 and Appellate Authority (NCLAT) dated 19.12.2019 set aside
  • Resolution plan approved by the Committee of Creditors is set aside