Assistant Commissioner of Central Tax VS Sreenivasa Rao Ravinuthala
CA (AT) (Ins) CHN 346 of 2021
Facts:
1.Appellant is challenging the Order dated 13/08/2020 passed in IA 1094/2020 in CP(IB)153/07/HDB/2019 by National Company Law Appellate Tribunal, Hyderabad Bench, allowing the Application 1094/2020 preferred by the Resolution Professional of the Corporate Debtor Company, seeking approval of the Resolution Plan of ‘M/s Renganayaki Agencies’.
2.Challenge is on the ground that Corporate Debtor owes Rs. 22,60,32,948/- towards default in payment of Central Excise Duty, interest and penalty as per Central Excise Returns filed with the Appellant Department. As per the Resolution Plan, only 0.13% has been earmarked towards Government dues, and the Financial Creditor is getting 44.5% of the Claim amounts and the other Operational Creditors are getting 0.51% of their Claim amounts, which is stated to be unfair.
Issue: Whether the order approving the Resolution Plan is tenable ?
Arguments:
For Appellant:
1.Counsel for the Appellant argued that in view of the attachment on the Property of the Corporate Debtor, the Appellant could fall within the definition of ‘Secured Creditor’.
2.Counsel for the Appellant placed reliance on the letter issued by the Successful Resolution Applicant on 13/09/2021 that out of the total amount, Government dues would be Rs. 1,38,00,000/- and that the Claim may go up, subject to the rejection of the Application filed under SABHKA VISWAS SCHEME. The Demand Draft totaling of Rs. 2,93,843/- was enclosed with the said letter. It is submitted by the Learned Counsel for the Appellant that the said amount was accepted ‘under protest’.
For Respondent:
1.Counsel for the Respondent submitted that the Appellant is challenging the approval of the Plan dated 13/08/2021 which was already implemented on 08/02/2022 and that an amount of Rs. 68,98,00,000/- was spent by the Successful Resolution Applicant, pursuant to the approval of the Plan. It is the case of the Respondent that there was no objection made by the Appellant when the Claim amount was intimated.
Decision: NCLAT upheld the decision of NCLT.
Rationale:
1.NCLAT noted that in the instant case, the Demand orders were issued to the Corporate Debtor under the ‘Central Excise Act, 1944’. Section 11E of the ‘Central Excise Act, 1944’ is distinct from the provisions of ‘GVAT Act, 2003.
2.From the usage of the words ‘save as provided in’ in Section 11E is in the nature of an exception intended to exclude the class of cases, mentioned in Companies Act, 1956, ‘The Recovery of Debts due to Banks and the Financial Institutions Act, 1993’, ‘SARFAESI Act, 2002’ and ‘I & B Code, 2016’.
3.NCLAT also relied on Master Circular No.1053/02/2017-CX, issued by the Ministry of Finance, Department of Revenue, Central Board of Excise and Customs specifies that dues under ‘Central Excise Act, 1944’ would have first charge only after the dues under the Provisions of the Code are recovered.
Order:
