NCLT Mumbai: Operational Creditors Must File GST Liability Claims Under CIRP On Time As No Claim Can Be Admitted After Resolution Plan Approved By CoC

The NCLT held that the RP had issued a public notice to inform all interested parties and stakeholders about the commencement of the CIRP. It highlighted that the Applicant failed to submit its claim within the stipulated timeframe as per Regulation 12(2) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (“IBBI Regulations”). Further, the claim cannot be accepted as the Resolution Plan has been approved by the Committee of Creditors (“CoC”).

Background Facts:

In July 2017, the Applicant purchased coils from the Corporate Debtor for Rs. 3.35 Crores with 18% GST of Rs. 60.34 Lakhs, totaling Rs. 3.95 Crores. The Applicant made full payment with GST which is evidenced in the Corporate Debtor's ledger in the Applicant's books and bank statements reflecting a payment of Rs. 3.95 Crores.

The Applicant claimed Input Tax Credit (ITC) of Rs. 60.34 Lakhs under Section 16(2) of the Central Goods and Service Tax Act, 2017. This ITC comprises 9% Central Goods and Service Tax (CGST) and 9% State Goods Service Tax (SGST).

As per Section 16(2) of the CGST Act, 2017, the supplier is responsible for paying the tax charged on goods/services to its customers. In case the supplier fails to pay the GST liability, the Applicant must pay it to the GST department, and the claimed ITC will be reversed.

The GST department issued a notice on 21.12.2020, instructing the applicant to undergo a GST audit and to reverse the ITC credit claimed. This notice alerted the Applicant to the fact that the Corporate Debtor had not paid its GST liability. The Applicant also reached out to the RP via an email dated 02.08.2022, requesting compliance with the filing of the GSTR 3B form and settlement of the GST liability mentioned in the invoice. However, no reply was received.

NCLAT Verdict:

The NCLT Mumbai dismissed the application and held that the RP had publicly announced the initiation of CIRP on the IBBI website on 09.04.2019, and also in widely circulated newspapers like the Free Press Journal and Navshakti on 10.04.2019. It highlighted that the primary purpose of issuing this public notice was to inform all interested parties and stakeholders about the commencement of the CIRP. Subsequently, an information memorandum was issued after collecting and collating claims from Operational and Financial Creditors, aiming to attract potential Resolution Applicants to propose a legally and financially viable Resolution Plan for the Corporate Debtor.

The Tribunal observed in the instant case, the Applicant failed to submit its claim within the timeframe specified in Regulation 12(2) of the IBBI Regulations which allows claim filing up to the 90th day from the insolvency commencement date.

The Resolution Plan was approved by the CoC on 04.12.2019 and subsequently submitted to NCLT Mumbai for necessary approval in accordance with Section 30 of the Insolvency and Bankruptcy Code, 2016. Any interruption in the CIRP process at this advanced stage by including the delayed claim would essentially reset the process and disrupt the established timelines.

Therefore, it is evident that a significant amount of time has passed since the issuance of the public notice, CoC approval of the Resolution Plan, and its submission for approval.

In conclusion, the NCLT rejected the application and upholded the overarching objectives of the Insolvency and Bankruptcy Code, 2016, primarily due to the substantial delay in filing the claim.

Case Title: Abnco Vie Win Ent Private Limited vs. Steamline Industries Limited

Case No.: IA. No. 1285/2023 in CP(IB)No. 3784/MB/C-II/2018

Click Here To Read/Download Order