NCLT Ahmedabad (13.01.2023) In Office of the Deputy/Assistant Commissioner of Central Tax, Vs. Mr. Anuj Bajpai, [IA No. 191 of 2022 in CP (IB) 20/9/NCLT/AHM/2020] held that;
Therefore, we are of the view that statute itself provides under section 29(3) of the CGST Act, 2017 that mere cancellation of the GST will not affect the existing liability of the person to pay tax and other dues under this Act.
Excerpts of the order;
# 1. The instant Application is filed by Office of the Deputy/Assistant Commissioner of Central Tax (‘Applicant’) through Deputy Commissioner Mr. Subrato Dutta, under section 60(5) of the Insolvency and Bankruptcy Code, 2016 read with Regulation 14 Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, seeking following directions against Mr. Anuj Bajpai, Resolution Professional of M/s. Ainwesha Engineering & Project Limited:
i. Your Lordships may be pleased to allow the present Application;
ii. Your Lordships may be pleased to direct the respondent herein to accept the claim of the applicant herein amounting to Rs. 1,90,71,300/-;
iii. Your Lordships may be pleased to grant any other/further relief(s) as may be deem fit in the interest of justice.
# 2.The brief facts of the case are as under-: a) An Operational Creditor (M/s. Continental Piling & Excavation Private Limited) had filed the application under section 9 of the Code for initiation of Corporate Insolvency Resolution Process (hereinafter referred to as “CIRP”) of M/s. Ainwesha Engineering & Project Limited which was admitted vide order dated 25.01.2021, and Mr. Sachin Bhattbhatt was appointed as Interim Resolution Professional. b) In the 1st CoC meeting held on 25.02.2021, it was resolved to replace the IRP Mr. Sachin Bhattbhatt and to appoint resolution professional Mr. Anuj Bajpai, which was confirmed by this Adjudicating Authority vide order dated 20.04.2021.
# 3. The applicant submitted that the Deputy Director, O/o of the Directory General of GST Intelligence, Vadodara Regional Unit, Vadodara issued the show cause notice bearing reference No. DGGI/BRU/36-50/2020-21 dated 29.12.2020 towards demand of GST along with interest, penalty and late fee towards non-payment of GST dues to the Government for the liability resting on the Warangal Unit of the respondent corporate debtor. Copy of the show cause annexed with the application.
# 4. The applicant submitted that after issuance of show cause notice on 29.12.2020, intimation was sent to the respondent vide letter bearing reference C.NO. IV/09/34/2020-Adjn (AC) dated 23.09.2021, through post and mail for personal hearing scheduled on 05.10.2021. The Resolution Professional vide mail dated 29.09.2021 forwarded a letter bearing reference No. AEPL/DGGI/Telangana/2122/2909 dated 29.09.2021 informed that the respondent company is undergoing Corporate Insolvency Resolution Process (CIRP) and as a result of the effect of cancellation of GST registration, without raising any demand, there is no liability towards GST and requested to withdraw the notice as the company is under CIRP vide order dated 25.01.2021. The respondent company also informed through Resolution Professional that even if any liability is determined, claim may be submitted before the Resolution Professional. The Resolution Professional of the corporate debtor also forwarded a statement indicating calculation of GST due/paid and indicated that company had arrived at GST dues of Rs. 1,37,861/- only. Copies of the said letter dated 16.12.2021, order of CIRP dated 25.01.2021, GST registration cancellation letter dated 09.09.2021 (effective date of cancellation 31.08.2021) and calculation of GST due/paid was also annexed with the application.
# 5. The applicant further submitted that applicant filed the claim for government dues in Form-B of Rs. 1,90,71,300/- before the Resolution Professional on 26.10.2021. A copy of said claim form is annexed with application. Resolution Professional mailed to applicant on 24.11.2021, stating that the claim is under process and sought for certain correction serial number 1 and 3 in Form-B. Copy of said mail is also annexed with the application. applicant vide letter bearing No. C.NO.IV/09/34/2020-Adjn(AC) dated 30.11.2021 had filed the revised form-B after making the correction. Copy of the said revised claim is also annexed with application.
# 6. It is submitted by the applicant that the Resolution Professional (‘herein respondent’) informed to the applicant vide mail dated 01.12.2021 forwarded letter bearing reference No. AEPL/DGGI/Telangana/2122/3011 dated 30.11.2021, that the demand under the show cause notice has been raised erroneously and there is no liability and GST as registration of the corporate debtor had been cancelled on 31.08.2021 without any demand. Thus, the claim of the applicant was rejected. Copy of the mail is annexed with application.
# 7. After receipt of the claim rejection mail from the Resolution Professional on 01.12.2021, the applicant raised the objection against the rejection of said claim vide mail dated 02.12.2021 and subsequently vide letter bearing reference C.No.IV/09/34/2020-Adjn(AC) dated 07.12.2021, the applicant stated that cancellation of GST registration of any company does not affect the existing liability in terms section 29(3) of the CGST Act, 2017. For reference section 29(3) of the CGST Act, 2017 is produced below:
Section 29 : Cancellation or Suspension of Registration
29(3) cancellation of registration under this section shall not affect the liability of the person to pay tax and other dues under this Act or to discharge any obligation under this Act or the rules made thereunder for any period prior to the date of cancellation whether or not such tax and other dues are determined before or after the date of cancellation. And copy of the said letter is annexed with the application.
# 8. The applicant submitted that the claim of Rs. 1,90,71,300/- is wrongly rejected by the Resolution Professional and instead only paltry amount of Rs. 1,37,861/- is admitted. The calculation sheet for the dues arrived at, as on the date of filing of claim before the Resolution Professional is annexed with the application. Which includes interest amount on dues at Rs. 41,01,330/-.
# 9. It is submitted by the applicant that investigation was initiated against the corporate debtor on 30.08.2018 based upon specific intelligence of GST department that the corporate debtor had provided taxable services, collected GST from their customers but not paid the same to the Government. Vide summon dated 20.09.2018, the CEO (Mr. Dipak Kumar Sarkar) of the corporate debtor presented before the senior Intelligence Officer, Directorate General of Goods and Services Tax Intelligence, Regional Unit, Vadodara on 25.09.2018 and his statement was recorded that they have charged and collected GST from their customers, that payment of GST for registration except Gujarat is due. The copy of statement recorded on 25.09.2018 annexed with the application.
# 10. The applicant alleged that the corporate debtor had neither filed the monthly statutory returns nor made payment of the tax within due date. The corporate debtor filed the returns belatedly during the course of investigation. Without reflecting the correct taxable values.
# 11.The applicant stated that Resolution Professional of the corporate debtor had not disputed the show cause notice, instead had taken a stand that as per calculation of their books of Account outstanding demand is Rs. 1,37,861/- only. It was submitted that the respondent Resolution Professional is not authorized to reduce the claim and the action of limiting the claim of the applicant to Rs. 1,37,861/- is completely illegal and without jurisdiction.
# 12. The respondent Resolution Professional filed the reply and stated as follows:
i. That prior to filing any claim with respondent, the applicant cancelled the corporate debtor’s GST Number 36AABCA9599A1ZK vide cancellation order dated 09.09.2021 with effect from 31.08.2021 and applicant did not raise any claims under the said cancellation order.
ii. That the applicant issued a show cause notice under section 73 of Telangana State Goods and Services Tax Act, 2017 dated 12.11.2021 under reference No. ZD361121006659K for the financial year 2018-19 wherein the applicant raised a demand of Rs. 5,20,846/- (CGST + SGST) towards additional liability.
iii. In response to the show cause notice, the respondent informed vide letter dated 16.11.2021 to the applicant that the corporate debtor is undergoing CIRP and that the applicant may file a claim before the Resolution Professional.
iv. That the applicant filed their claim under Form-B dated 30.11.2021 for an amount of Rs. 1,90,71,300/-.
v. That amount of Rs. 1,90,71,300/- does not reflect either in the cancellation order dated 09.09.2021 and/or in the Show Cause Notice dated 12.11.2021. The Applicant raised no demand for pending dues while cancelling the Corporate Debtor's GST Number. Immediately thereafter, the Applicant demanded an amount of Rs. 5,20,846/- towards additional liability and whereas subsequently, the Applicant filed a claim for Rs. 1,90,71,300/- under Form-B as differential amount due and payable. As such, it appears that the Applicant has referred to two different sets of statements for computing their claim and therefore, at the outset, the claim of the Applicant is ineligible.
vi. Upon verification of the claim form filed by the applicant, it is seen that the applicant has erroneously double counted one invoice being AEPL1819-36009 wherein the total tax amount under the said invoice was Rs. 24,14,597/-. Copy of the said invoice is annexed with the reply.
vii. That there is an erroneous double counting of invoice on the part of the applicant which are as follows:
a) That the total tax payable under the said sales bill register being Rs. 38,51,623/-(which includes an amount of Rs. 24,14,597/-) is already paid by the corporate debtor as per the statement of dues provided by the applicant in its claim Form.
b) That when the base amount of Rs. 24,14,597/- claimed by the applicant itself is flawed, the interests and penalties arising thereof are also not maintainable and therefore only an amount of Rs. 1,37,861/- was admitted as the amount due and payable.
viii. That under the regulation 13 and 14 of the CIRP Regulation, 2016, Resolution Professional is entrusted with power to merely verify claims and such a claim can be verified on the basis of the information available with the Resolution Professional and does not have the power to adjudicate upon the same.
# 13. The applicant filed the rejoinder on 17.08.2022, against the reply of the respondent and stated as follows:
i. The applicant vide letter bearing reference C.No. IV/09/34/2020Adjn(AC) dated 07.12.2021 formally lodged a contest with Resolution Professional that cancellation of GST registration of any company does not affect the existing liability in terms of section 29(3) of the CGST Act, 2017.
ii. That the GST registration of the corporate debtor is cancelled on application of the corporate debtor, as information available in the GST common portal. Therefore, the applicant had no role in cancelling the registration and subsequent raising of any demand at the time of cancellation of the registration. Section 6 of the TGST Act, 2017 empowered and authorized to the applicant for recovery of tax. Thereby, the SCN was issued by the DGGI, Vadodara regional unit to recover the tax along with penalties and applicable interest under the TGST Act and CGST Act.
iii. That the applicant vide C.No. VI/09/34/2020-Adjn(AC) dated 26.10.2021 filed the claim under the Form-B and submitted revised Form-B dated 30.11.2021 on the correction sought by the Resolution Professional vide mail dated 24.11.2021. The said claim was filed after the reply by the corporate debtor vide mail dated 29.09.2021 in reply to the physical hearing intimation given by the applicant with respect to adjudication of the SCN dated 29.12.2020 issued by Deputy Director, DGGI, Vadodara Regional Unit.
iv. On the response of para 9 of the reply, that the cancellation order and the SCN are issued by the Deputy Commissioner of State Tax, Telangana State Government and whereas the amount claimed by applicant in Form-B is based on the show cause notice dated 29.12.2020 issued by the Deputy Director, DGGI, Vadodara Regional Unit.
v. On the response of para 10 and 11 of the reply, the applicant submitted that During the Inspection of the premises of the corporate debtor located in Gujarat on 30.08.2018 by the DGGI, Vadodara Regional Unit, it was found that the corporate debtor had not filed GSTR-1M and GSTR-3B for their unit located in Telangana state from May 2018 to July 2018 even after the lapse of the due date of filing the returns. Thereafter, during the course of an investigation, the corporate debtor filed the GSTR-1M & GSTR-3B for a period of May 2018 to June 2018 and GST liability had been calculated for the said period based on GSTR-1M & GSTR-3B & sheets submitted during the course of the investigation. The total GST liability calculated for the said period is based on the highest value reflected in the sheets for outward supply and GSTR-1M/3B for the month.
vi. That respondent had not disputed the show cause notice, instead had taken a stand that as per the calculation of their books of accounts outstanding demand is Rs. 1,37,861/- only.
# 14.The applicant filed the written submission and reiterated the same averment which are made in the application and rejoinder but the respondent has not filed the written submission.
# 15.Heard submissions and perused the documents on record. It is seen from the record that the applicant issued the show cause cum demand notice on 29.12.2020, and no documents were produced by the applicant as to whether the respondent replied to the said notice or not. The applicant only relied and filed the recorded statement of the Chief Executive Officer (CEO) Mr. Dipak Kumar Sarkar of the corporate debtor, which was recorded on 25.09.2018 before the Senior Intelligence Officer, DDGI, Regional Unit, Vadodara. Aforesaid, statement was recorded pursuant to the summons dated 20.09.2018. Further, another show cause notice was issued by the applicant on 23.09.2021, and the respondent replied/informed on 29.09.2021 to the applicant that the corporate debtor is under CIRP vide order dated 25.01.2021. The applicant filed the claim before Resolution Professional with supporting documents. Resolution Professional verified the claims with books of accounts of corporate debtor and only admitted claims of Rs. 1,37,861/- and Resolution Professional also relied upon the order for cancellation of registration issued on 09.09.2021, wherein, no demand was raised by the applicant. Applicant also relied upon the section 29(3) of CGST Act, 2017, to support his contention that cancellation of GST registration of any company does not affect the existing liability. Therefore, we are of the view that statute itself provides under section 29(3) of the CGST Act, 2017 that mere cancellation of the GST will not affect the existing liability of the person to pay tax and other dues under this Act. So, the cancellation of GST will not affect the claim amount of applicant.
# 16. It is noted that on passing of resolution by CoC for liquidation for the corporate debtor, an application bearing IA No. 373 of 2022, has been filed by resolution professional for approving of liquidation of the corporate debtor. Considering the commercial wisdom of CoC, the said application seeking liquidation of the corporate debtor was allowed and disposed of vide order dated 13.01.2023 and resolution professional was appointed as the liquidator of the corporate debtor. In view thereof, the applicant in instant application i.e., office of the Deputy/Assistant Commissioner of Central Tax, Warangal GST Division has an option to file a fresh claim before the liquidator with supporting documents as per provisions of Code.
# 17.Since, Resolution Professional become functus officio, this application has become redundant and is disposed of with liberty as mentioned above.
# 18.Registry is directed to communicate a copy of this order to the parties.
# 19.The application is disposed of.
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