Claims Of GST Department Are Barred Once Resolution Plan Is Approved: Allahabad High Court

Relying on the judgments of the Supreme Court in Vaibhav Goyal & Another Vs. Deputy Commissioner of Income Tax & Another, the Allahabad High Courthas held that the claims of Goods and Service Tax Department are barred after the aproval of resolution plan by the National Company Law Tribunal.

In Vaibhav Goyal & Another Vs. Deputy Commissioner of Income Tax & Another, the Apex Court has held that if the statutory dues owed to the Government do not form a part of the Resolution Plan on the date of its approval, then such dues shall extinguished as reviving such claims after the approval of resolution plan will hamper the process of recommencement of business of the corporate debtor.

The bench of Justice  Shekhar B. Saraf and Justice Dr. Yogendra Kumar Srivastava held

“In view of the above law laid down by the Supreme Court, we are of the view that the principle is crystal clear that once Resolution Plan has been approved by the NCLT, all other creditors are barred from raising their claims subsequently, as the same would disrupt the entire resolution process. The Supreme Court has categorically held the same as indicated above.”

Petitioner was admitted in Corporate Insolvency Resolution Process on October 10, 2020 and a Resolution Professional was appointed. While creditors were being asked to submit their claims regarding the petitioner, specific notice was sent to the GST Department. The Resolution Plan was approved by the NCLT on 19.07.2022.

On 04.02.2025, GST Department passed order under Section 74(9) of the Goods and Service Tax Act, 2017 for Assessment Year 2017-18. Petitioner approached the High Court for quashing of order dated 04.02.2025 and subsequent demand notice.

The Court relied on its judgment in M/S NS Papers Limited And Another Vs. Union of India Through Secretary and Others where it had held that

“The law cannot be read in a manner wherein the basic structure of the Code is breached by hindering the flow of the same by creation of roadblocks and dams – the underlying principle of the Code is to give a fresh start to the Resolution Applicant. Any new liability being fastened after the approval of the Resolution Plan would inherently and palpably be illegal and go beyond the Lakshman Rekha of the Code.”

Accordingly, the Court quashed the impugned order and the subsequent demand notice.

Case Title: M/S Arena Superstructures Private Limited v. Union Of India And 4 Others 2025 LiveLaw (AB) 146 [WRIT TAX No. - 1716 of 2025]

Case Citation: 2025 LiveLaw (AB) 146

Counsel for Petitioner :- Ami Tandon, Rahul Agarwal, Saumya Srivastava