The Ahmedabad bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has asked the Central Board of Indirect Taxes and Customs to issue proper guidelines to its officials on cases where Insolvency and Bankruptcy Code (IBC) proceedings are in progress.
The CESTAT said that in the absence of any guideline, departmental representatives are unaware as to what stand is to be taken in such cases that are at the bankruptcy court or the appellate body.
The IBC overrides other laws and stipulates that recovery proceedings, including tax recovery, cannot be initiated after a company is admitted for debt resolution under the bankruptcy code, the tribunal noted.
The bench observed that the revenue department had no proper guideline as to what stand was to be taken in a case where IBC proceedings were in progress before the National Company Law Tribunal or the appellate body.
“We are of the view that the Central Board of Indirect Taxes & Customs may consider issuing guideline/ procedure for dealing with the case before this tribunal wherein, against the assesse’s company IBC proceeding has been initiated,” a division bench of judicial member Ramesh Nair and technical member Raju said last week.
The ruling was on a case where the revenue department had raised demand for tax from UltraTech Cement, after its plan to acquire Binani Cement, a bankrupt company, was approved by the NCLT.
UltraTech submitted that as per the resolution plan approved by the NCLT, no dues existed against the applicant and therefore, the tax demand was not recoverable by the revenue department.
The CESTAT, however, said even though the IBC had an overriding effect over all the other Acts, “in absence of any explicit provision under the Customs/Central Excise Act, this tribunal cannot decide finally whether the adjudged amount can be recovered by the department or otherwise”.
Source: Economic Times