The High Court of Rajasthan today struck down the tax demand by the Goods and Service Tax (GST) Department of Rajasthan against UltraTech Cement for old unpaid dues of Binani Cement.
The assessee, Binani Cement suffered huge losses and was unable to pay the debts to the Financial Creditor i.e. Bank of Baroda. Consequently, The Binani Cements was acquired by the Aditya Birla Group-owned cement company through Corporate Insolvency Resolution Process (CIRP) in 2018 for Rs 7,900 crore. After the acquisition the company was renamed as UltraTech Nathdwara Cement.
The primary issue in the dispute lies in several notices issued by the Goods and Service Tax (GST) Department of Rajasthan for all the old unpaid dues of Binani Cement.
The Goods and Service Tax (GST) Department of Rajasthan contended that it was not heard by the committee of creditors (CoC) before finalizing the resolution plan and as such, it is not bound by it.
On the other hand the UltraTech Cement contended that the Insolvency and Bankruptcy Code (IBC) is a special law, which has been ordained for the purpose of bringing out an industry from distress and to ensure that its assets do not go to waste through liquidation.
The division bench consisting of Justice Vijay Bishnoi and Justice Sandeep Mehta allowed the petition of UltraTech Cement, the court ruled that the purpose of the statute is to revive the dying industry by providing an opportunity for a resolution applicant to take over the same and begin the operation on a clean slate.
“We are of the firm view that the authorities should have adopted a pragmatic approach and immediately withdrawn the demands rather than indulging in totally frivolous litigation, thereby unnecessarily adding to the overflowing dockets of cases in the courts,” said the division bench of the High Court of Rajasthan.
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