Statutory Dues Not in Approved Resolution Plan Stand Extinguished: CESTAT Dismisses Appeal, Ruling Dept. Participated in NCLT Proceedings [Read Order]

The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has dismissed the revenue department’s appeal and held that statutory dues that are not included in an approved resolution plan under the Insolvency and Bankruptcy Code (IBC), 2016 stand extinguished.

PSL Limited (appellant) for whom the revenue sought to recover outstanding excise dues despite the fact that an approved resolution plan for the corporate debtor had already been sanctioned by the NCLT on 16.05.2025.

The Department had filed its claim and participated in the CIRP proceedings. During the hearing, the Authorized Representative placed on record the NCLT order approving the resolution plan.

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The two-member bench comprising Vasa Seshagiri Rao (Technical Member) and P. Dinesha (Judicial Member) relying on the landmark Supreme Court ruling in Ghanashyam Mishra & Sons Pvt. Ltd. v. Edelweiss Asset Reconstruction Co. Ltd., held the legal position that all claims not forming part of the resolution plan stand extinguished upon approval under Section 31(1) of the IBC.

The Tribunal noted from the Apex Court judgment, which clarified that statutory dues including those owed to the Central and State Governments or local authorities cannot be enforced if not incorporated into the resolution plan.

The tribunal observed that once the plan was approved, no proceedings for recovery of past claims can be initiated or continued against the corporate debtor.

The Tribunal observed that once the Department participates in the Corporate Insolvency Resolution Process (CIRP) before the National Company Law Tribunal (NCLT), it is bound by the final approved plan and cannot initiate or continue recovery proceedings thereafter.

The Bench observed “From the above judgment, Hon’ble Apex Court has held that no recoveries could be made when the claim is not part of the approved resolution plan… It is also clear that if the respondent has staked its claim and participated in the proceedings before the NCLT, then the resolution plan would be binding on it.”

Since the demand itself was rendered non-recoverable under the IBC framework, the Tribunal held that continuation of the present appeal served no purpose. Accordingly, the appeal filed by the appellant was dismissed.

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