The Mumbai Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that appeal before CESTAT is not valid when National Company Law Tribunal (NCLT) approved a resolution plan on insolvency proceedings and dismissed the Jet Airways (India) Limited
A show cause notice proceedings initiated under Section 73(1A) of the Finance Act, 1994 for recovery of service tax on codeshare charges and inter airline service charges, the Commissioner of Service Tax-V, Mumbai had adjudged the case confirming the demands for Rs.20,28,56,543/- along with applicable interest, besides imposition of penalty under Section 78 of the said Act vide the impugned order.
During the pendency of these appeals, the appellant-assessee faced financial difficulties and an application was filed by one of the financial creditors under Section 7 of the Insolvency and Bankruptcy Code, 2016 for recovering debts owned by the appellant-assessee company.
The NCLT issued an order dated 20.06.2019 for initiating a Corporate Insolvency Resolution Process (CIRP) regarding the appellant-assessee company under Section 13 of IBC. The Resolution Plan submitted before NCLT was approved by NCLT vide order dated 22.06.2021 and the Resolution Plan is effective from this date, i.e., the NCLT Approval Date.
It was observed that once a resolution plan is duly approved by the Adjudicating Authority under subsection (1) of Section 31, the claims as provided in the resolution plan shall stand frozen and will be binding on the Corporate Debtor and its employees, members, creditors, including the Central Government, any State Government or any local authority, guarantors and other stakeholders.
On the date of approval of the resolution plan by the Adjudicating Authority, all such claims, which are not a part of the resolution plan, shall stand extinguished and no person will be entitled to initiate or continue any proceedings in respect to a claim, which is not part of the resolution plan;
The bench of S.K. Mohanty (Judicial Member) and M.M. Parthiban (Technical Member) has observed that Since the NCLT has approved the resolution plan in the insolvency proceedings about the corporate debtor of the appellant-assessee company, the appeals before CESTAT are abated.
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