NCLT | Patanjali’s Liabilities Under VAT, GST: HC- Jurishour

The Andhra Pradesh High Court, Amravati Bench has held that Patanjali’s liabilities under VAT/GST Act stands extinguished after the approval of Resolution Plan (RP).

The division bench of Justice R Raghunandan Rao and Justice Harinath.N has observed that both the Writ Petitions are allowed by setting aside the Demand-cum-Adjudication orders issued by the Assistant Commissioner (ST)(FAC) and the order passed by the Deputy Commissioner (ST), Vijayawada. However, since these proceedings have covered the period 05.09.2019 to 31.03.2020, which would not be affected by the orders of the NCLT, Mumbai Bench dated 04.09.2019, it would be open to the Assessing Authorities to issue fresh notice for quantifying the taxes and other dues arising for the period 05.09.2019 to 31.03.2020.

Background

The petitioner/assessee, M/s.Patanjali Foods Limited on account of its financial difficulties, had been subjected to insolvency proceedings under Insolvency and Bankruptcy Code 2016.

In the course of these proceedings, a resolution plan was prepared by the committee of creditors and the same was approved by the National Company Law Tribunal. The resolution plan which had been approved by the NCLT provided that all dues of the creditors, including the dues of the State were to be adjusted out of amounts paid by the successful applicants in the resolution process.

The order of the NCLT was challenged before the National Company Law Appellate Tribunal (NCLAT), by way of Appeal No.1068 of 2019. The said appeal was dismissed on 09.12.2019 and the order of NCLT had become final.

The petitioner-company was put under new management and recommenced its operations. It may also be mentioned that the petitioner had earlier obtained registration for its Kakinada plant, under the AP VAT Act and a separate registration under the AP VAT Act for its Ampapuram Plant. These two registrations were carried over under the GST regime and the petitioner was operating under two separate GST registrations for its Kakinada plant and Ampapuram Plant.

The petitioner received two separate Demand-cum-Adjudication orders being the order, dated 03.06.2023, issued by the Assistant Commissioner (ST)(FAC), Kakinada and the order was passed by the Deputy Commissioner (ST), Vijayawada. Under these Demand-cum- Adjudication orders, the petitioner was called upon to pay tax interest and penalty for the period July 2017 to March 2020 in the orders issued by the Assistant Commissioner, Kakinada and tax, interest and penalty in the order issued by the Deputy Commissioner, Vijayawada for the period July 2017 to March 2020.

The petitioner has approached the Court, by way of two writ petitions. Both these writ petitions are being disposed of, by way of a common order as a common issue arises in both the cases.

Arguments

The petitioner contended that the petitioner is not liable to pay any of the amounts in view of the order of the National Company law Tribunal dated 04.09.2019. The resolution plan, which was approved by the NCLT, on 04.09.2019, provided for payment of Rs.25 crores towards clearing all the statutory dues, including claims by all Government authorities. Upon approval of this offer, the petitioner would not be liable to clear any of such statutory duties set out in the scheme.

The department contended that the order of NCLT would not be binding upon the State of A.P as no notice of any nature was issued to the State of Andhra Pradesh in relation to the insolvency proceedings pending before the NCLT. Though publication of notice or proceedings before NCLT, Mumbai Bench had been published in the newspapers circulating all over the country, no such publication was made in any of the newspapers circulating in the State of Andhra Pradesh.

The department relied upon Regulation No.6 of the Insolvency and Penalty Board of India, Fast track Insolvency Resolution Process for Corporate Persons Regulations, 2017 and Section 88 of the GST Act to contend that the order would not be applicable as no notice required to be issued under Section 88 of the GST Act had been served on the assessing authorities.

The department argued that the order of NCLT is not binding on the State of Andhra Pradesh in view of Section 88 of the GST Act would have to be negatived in as much as Section 238 of the Insolvency and Bankruptcy Code provides for a non-obstante clause overriding all other laws.