Once NCLT Approves Resolution Plan under IBC, Appeal Serves No Purpose: CESTAT disposes Aircel Ltd’s Service Tax Appeal [Read Order]

The Customs, Excise and Service Tax Appellate Tribunal[CESTAT] Chennai Bench has disposed of the Service Tax appeal filed by Aircel Limited after taking note of the approval of the company’s Resolution Plan by the National Company Law Tribunal (NCLT) under the Insolvency and Bankruptcy Code, 2016 (IBC).

The appeal was filed by Aircel Limited as a result of the passing of the Order in Appeal by the Commissioner of Customs, Central Excise and Service Tax (Appeals), Coimbatore. During the hearing of the appeal by the Tribunal the counsel appearing for Aircel Limited stated that the company had undergone the Corporate Insolvency Resolution Process (CIRP).

Further,It was stated by the counsel for the company that the National Company Law Tribunal Mumbai Bench approved the resolution plan submitted by UV Asset Reconstruction Company Limited on June 9, 2020 for the insolvency proceedings of Aircel Limited and its group companies.

However, it was stated by the counsel for the company that the appeal for service tax may be disposed of as the resolution plan has already been approved. No objection to the same was taken by the Departmental Representative.

The argument of the appellant was that once the resolution plan is approved, as provided for in Section 31 of the IBC it becomes binding on all stakeholders including government authorities.

Therefore, proceedings relating to the claims that were not included in the approved resolution plan cannot proceed or continue at the appellate forums.

The Tribunal comprising Ajayan T. V. (Judicial Member) and M. Ajit Kumar (Technical Member) relied on the judgment of the Supreme Court of India in the case of Ghanashyam Mishra and Sons Pvt. Ltd. v. Edelweiss Asset Reconstruction Company Ltd, where it held that once the resolution plan is approved, all other claims excluded from the plan would stand extinguished, and no proceedings would continue or be initiated relating to the same.

Further, the Bench noted that since the resolution plan had already been approved by the NCLT and did not provide for the continuation of the present appeal hence the Tribunal could not proceed further.

Accordingly, the Tribunal held that in the context of the approved resolution plan under the IBC, the present proceedings of the Service Tax appeal could not be continued and the appeal stood disposed of.

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