In a recent case before Andhra Pradesh High Court the Patanjali’s liabilities under Value-added Taxes (VAT)/ Goods and Services Tax ( GST ) were nullified following the approval of Resolution Plan by the National Company Law Tribunal’s ( NCLT ).
The petitioner Patanjali Foods Limited filed a writ petition against Deputy Commissioner State Tax and Others. The petitioner M/s Patanjali Foods Limited was earlier known as “Ruchi Soya Industries Limited.”
The petitioner owing to financial difficulties was subjected to insolvency proceedings under Insolvency and Bankruptcy Code 2016. During the proceedings, the committee of creditors had passed a resolution plan approved by National Company Law Tribunal, ( NCLT ) Mumbai Bench.
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The plan provided that all dues to creditors, including dues to State, should be adjusted out of amounts paid by the successful applicants in the resolution process. The order of NCLT was challenged before the National Company Law Appellate Tribunal (NCLAT). The appeal was dismissed, approving the order of the NCLT.
The petitioner-company was put under new management and recommenced its operations. The petitioner had obtained separate registration for its Kakinda plant and Ampapuram plant under the AP VAT Act.
The petitioner had received two separate Demand cum Adjudication orders issued by the Assistant Commission, Kakinada and the order passed by the Deputy Commissioner (ST), Vijayawada. Upon this the petitioner was called to pay tax interest and penalty amounting to Rs.20,21,420/- in the order issued by the Assistant Commissioner and tax, interest and penalty of Rs.2,87,15,819/- in the order issued by the Deputy Commissioner.
Aggrieved by the two orders the petitioner approached HC of Andhra Pradesh by way of 2 writ petitions. The writ petitions raised common issues, therefore they were both disposed of by a common order.
The petitioner contended that he is not liable to pay the amounts mentioned in the NCLT’s order , as the resolution plan approved by NCLT provided for payment of Rs.25 crores towards clearing all statutory dues including claims by all Government authorities. The petitioner was represented by Advocates Ashwarya Sharma and Kinjal Shrivastava along with S Vivek Chandra Sekhar.
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The respondent’s counsel submitted that the order of NCLT will not be binding upon State of A.P as no notice was issued to the state regarding the insolvency proceedings pending before NCLT. Though notice of such proceedings were published before Mumbai Bench, no such publication was made in any newspaper circulating in the state of Andhra Pradesh.
The High Court Bench of Andhra Pradesh comprising Justice R Raghunandan Rao and Justice Harinath.N allowed both the writ petitions, setting aside the Demand-cum-Adjudication orders issued by Assistant Commissioner, Kakinda and Deputy Commissioner (ST), Vijayawada.
However, since the proceedings had covered the period which would not be affected by orders of the NCLT, Mumbai Bench. It would be open to the Assessing Authorities to issue fresh notice for quantifying the taxes and other dues arising for the period 05.09.2019 to 31.03.2020.
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