Commercial Tax Department vs Shailendra Ajmera & Anr

Commercial Tax Department ...Appellant(s)

Versus

Shailendra Ajmera & Anr. ...Respondent(s) Present: For Appellant : Mr. Shashwat Parihar, Mr. Rishabh Kumar, Mr. Deepanshu Badiwal, Ms. Mrinal Elkar Mazumdar, Advocates. For Respondents : Mr. Arjun Asthana, Mr. Sidhartha Sharma, Ms. Shalini Basu, Mr. Nachiket Chawla, Ms. Suteeksha Dubey, Ms. Shubhangi Gupta, Mr. Aditya Mishra, Advocates.

ORDER

(Hybrid Mode) 28.03.2025: Heard Counsel for the Appellant as well as Counsel for

the Respondent.

2. This appeal is filed by the CTD challenging the order dated

18.10.2023 passed by National Company Law Tribunal, Mumbai Bench,

Court-II by which an application filed by the Resolution Professional for

approval of the plan under Section 30 (6) has been allowed.

3. Ld. Counsel for the Appellant challenging the order submits that

appellant had their statutory dues and the appellant under Section 33 of the

MPVAT Act had charge on the assets and appellant ought to have been

treated as secured creditor hence the approval of the plan where appellant

has been treated only as an operational creditor need to be interfered with.

4. Ld. Counsel for the Respondent refuting the submission of the

appellant submits that in an appeal filed by the CTD claiming that CTD is

secured creditor by the Judgment of the coordinate Bench of this Tribunal

in CA (AT) (Ins) No. 1265 of 2022 'Commercial Tax Department vs. Mrs. Teena

Saraswat Pandey & Anr.' The appeal was dismissed and the arguments

advanced by the appellant were reject.

5. We have considered the submissions of the Counsels for parties and

perused the record.

6. There is no dispute with regard to facts between the parties. The

submission which has been made by the appellant is that appellant has

been treated only as an operational creditor in the resolution plan whereas

appellant ought to have been treated as secured creditor.

7. Ld. Counsel for the Appellant has relied on Section 33 of the MPVAT

Act 2002.

8. The Judgment which has been relied by the Counsel for the

Respondent had occasion to consider Section 37 of Maharashtra VAT Act

2002, which has been referred to paragraph 22. Section 33 MPVAT Act,

2002 came to considered, the Section 33 of the MPVAT Act, 2002 is pari

material to the Section 33 relied by the appellant. It is useful to extract

paragraph 18 of the Judgment which is as follows:

"18. At the same time, it would be relevant to refer to Section 33 of the MPVAT Act under which the claim submitted by the Appellant alleging it to be pari materia with Section 48 of the GVAT Act. Section 33 MPVAT Act is also reproduced as under: -

33. Tax to be first charge.

Notwithstanding anything to the contrary, contained in any law for the time being in force and subject to the provisions of Section 530 of the Companies Act, 1956 (No. I of 1956), any amount of tax and/or penalty or interest, if any, payable by a dealer or other person under this Act shall be first charge on the property of the dealer or such person".

9. Considering the pari material provisions this Tribunal has upheld the

approval of the resolution plan treating the CTD as an operational creditor.

It is useful to extract paragraph 21 and 22 of the Judgment of the Tribunal

which are as follows:

21. In the case of Commissioner of Income Tax Vs. KTC Tyres (India) Ltd. (Supra), the argument raised was that the capital gain tax which was payable by the company must be treated as liquidation expenses and therefore, must be paid first even before the dues of the workmen and secured creditors are discharged. This contention was totally rejected by the Hon'ble Supreme Court in the aforesaid case KTC Tyres (Supra) holding that "reading sections 529A and 530 together, there is no escape from the conclusion that the liability towards workmen's dues and debts due to secured creditors as provided under clause (b) of Section 529A(1) has to be paid in priority to all other debts including tax dues to the revenue."

22. In the case of Zicom Saas Pvt. Ltd. (Supra), the Department of State Tax of Maharashtra filed the claim before the RP of an amount of Rs. 43,72,97,479/- out of which Resolution Professional accepted the claim of Rs.

36,68,12,729/-and in the plan they were allotted only 1% of the admitted claim. In this case also reliance has been placed upon in the case of Rainbow Papers (Supra) alleging that the claim of the State Tax Maharashtra has to be treated as secured charge in terms of Section 37 of the MVAT Act, however, while interpreting Section 48 of the GVAT Act vis a vis Section 37 of the MVAT Act, this Court has found that Section 37 was made subject to any provision regarding creation of first charge in any central act, the provisions of Section 48 of the GVAT Act and Section 37 of the MPVAT Act were not pari materia and therefore, it was held that "9. When we compare the provisions of Section 48 of the provision of Gujarat Values Added Tax which was relied in "Rainbow Papers Limited"

and the Provisions of Section 37 which is sought to be relied on in the present Appeal, distinction between the provisions is clear. Section 37 specifically uses the expression "subject to any provision regarding creation of first charge in any central act". The provision itself contemplated thus that Section 37 was subject to any provision in Central Act. The IBC Section 53 itself provides waterfall mechanism which may be treated to be law which has been contemplated under Section 37 of the MVAT Act, 2002. 10. We thus are of the view that the Judgement of the Hon'ble Supreme Court in "Rainbow Paper Limited" relied by Learned Counsel for the Appellant is distinguishable. The Appellant having been treated as Operational Creditor allocation of amount in the Resolution Plan cannot be said to be in violation of Section 30 (2)(b). We thus are of the view that no ground has been made to interfere with the Impugned Order. The Appeal is dismissed."

10. We are of the view that the issue raised in the present appeal is fully

covered by judgment of this Tribunal 'Commercial Tax Department vs. Mrs.

Teena Saraswat Pandey & Anr.' decided on 09.09.2024, following the said

Judgment, this appeal is dismissed.

[Justice Ashok Bhushan] Chairperson

[Barun Mitra] Member (Technical) sr/nn