The New Delhi Bench of the National Company Law Appellate Tribunal (NCLAT) held that the absence of GST Refund/ITC Claim in the demand notice or Form 5 not the ground of default for the Corporate Insolvency Resolution Process (CIRP) under Section 9 of the Insolvency and Bankruptcy Code, 2016 (IBC).
The present appeal filed under Section 61 of Insolvency and Bankruptcy Code 2016 (‘IBC’) by the Appellant arises out of the Order passed by the Adjudicating Authority (National Company Law Tribunal, Cuttack Bench). By the impugned order, the Adjudicating Authority has allowed the Section 9 petition filed by the Rashmi Cement Limited for initiating Corporate Insolvency Resolution Process (‘CIRP’) of the Bhilai Jaypee Cement Limited – Corporate Debtor. Aggrieved by this order, the present appeal has been preferred by the Appellant/Corporate Debtor.
Senior Counsel for the Appellant submitted that the entire outstanding amount of Rs.1.96 cr as claimed in the Section 9 application was paid by BJCL into the bank account of RCL on 10.08.2023 by RTGS. It was further pointed out that BJCL had filed two I.A.s before the Adjudicating Authority on 11.08.2023 to place on record all subsequent developments post reserving of orders by the Adjudicating Authority on 07.08.2023. While one I.A. was filed to apprise the Adjudicating Authority that BJCL had agreed to refund the amount of Rs.1.96 crores to RCL towards clearing outstanding dues, the second I.A. was filed for the purpose of seeking urgent listing and disposal of the I.A.s.
Refuting the contentions of the Appellant, the Learned Counsel for the Respondent No.1 submitted that the claim made by the BJCL that they had settled the entire outstanding dues of RCL on 10.08.2023 is not based on correct facts. Submitting that such unilateral settlement of outstanding dues by BJCL was not acceptable to RCL, it is also contended that BJCL cannot shy away from the fact that they had been clearly informed by RCL that GST credit could not be availed by RCL because of belated filing of GST return by BJCL.
A Three-Member Bench comprising Justice Ashok Bhushan, Chairperson, Barun Mitra, Member (Technical) and Arun Baroka, Member (Technical) observed that “RCL has of course clarified that this amount could not be reflected in Form 3 and Form 5 since the GST Return had been filed belatedly by the Corporate Debtor. Be that as it may, we need not go into the reasons adduced by RCL as to why they failed to demand payment of unpaid return on GST in the Section 9 application. It only suffices to note that no such GST refund and ITC claim was included in the Section 8 Demand Notice or the Section 9 application by the RCL and hence it cannot become a ground of default on which CIRP can be initiated.”
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