More Stories

Informist, Monday, Oct. 21, 2024

 

NEW DELHI – The Supreme Court Monday agreed to consider the plea of Maharashtra's goods and services tax department to be treated as a secured creditor in the corporate insolvency resolution process of debt-ridden Siddheshwar Industries Pvt. Ltd. Issuing notice to Siddheshwar Industries and its resolution professional, the court listed the matter for hearing after six weeks.

 

The Mumbai bench of the National Company Law Tribunal had approved in November a resolution plan for Siddheshwar Industries. However, the state tax department was treated as an operational creditor and allowed only 1% of the amount due to it.

 

The department said Siddheshwar Industries was liable to pay sales tax to the tune of over INR 582.12 million, and it should have been treated as a secured creditor. However, the National Company Law Appellate Tribunal rejected the state tax department's plea.

 

The appellate tribunal relied on its own earlier judgment of February 2023, where similar issues came up for consideration pertaining to the Maharashtra Value Added Tax Act, 2002, and it was held that the state tax department cannot be considered a secured creditor. The appellate tribunal considered a Supreme Court judgment holding that by virtue of the 'security interest' created in favour of the government under the Gujarat Value Added Tax Act, 2003, the state is a 'secured creditor' as per the definition in the Insolvency and Bankruptcy Code, 2016, and said that matter was different from the Siddheshwar Industries case.

 

Challenging the appellate tribunal's order, the state tax department moved the Supreme Court. It said the appellate tribunal had relied incorrectly on its own previous judgment when the top court favoured the state tax body. Its petition argued that there is no contradiction or inconsistency between the insolvency law and the provisions of the Central Goods and Services Tax, 2017, and the Maharashtra Goods and Services Tax Act, 2017, in the present case. The insolvency law and the central and state GST laws can be harmoniously construed, it said. Since there exists no contradiction between the two statutes, there is no need for the insolvency law to prevail over the GST laws, it said.  End

 

Reported by Surya Tripathi

Edited by Rajeev Pai

 

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

 

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

 

Informist Media Tel +91 (11) 4220-1000

Send comments to feedback@informistmedia.com

 

© Informist Media Pvt. Ltd. 2024. All rights reserved.