Department Of State Tax vs Zicom Saas Pvt Ltd & Anr

IN THE MATTER OF: Department of State Tax, Through the Dy. Commissioner of State Tax ...Appellant

Versus Zicom Saas Pvt. Ltd. & Anr. ...Respondents

Present: For Appellant: Ms. Shwetal Shepal, Mr. Aaditya Pande, Mr. Rahul Chitnis. Advocates For Respondent: Mr. Mayur Khandeparkar, Mr. Vishesh Kalra, Mr. Kunal Kannya, Advocates for R-1 Mr. Aman Varma, Advocate for R-2

ORDER

07.02.2023: Heard Learned Counsel for the Appellant as well as Learned

Counsel for the Respondents.

2. This Appeal has been filed by the Department of State Tax challenging the

Order dated 16th December, 2021 passed by the Adjudicating Authority (National

Company Law Tribunal, Mumbai Bench, Court-III) by which Order, the

Adjudicating Authority has approved the Resolution Plan submitted by the

Resolution Professional.

3. The Appellant's case in the Appeal is that Appellant has filed a claim before

the Resolution Professional in 'Corporate Insolvency Resolution Process' (CIRP 2

in short) for an amount of Rs. 43,72,97,479/- out of which claim Resolution

Professional accepted the claim of Rs. 36,68,12,729/- and in the Resolution

Plan, they have been allotted only 1% of the admitted claim.

4. Learned Counsel for the Appellant submits that the Appellant's claim was

required to be treated as secured charge in view of the Judgement of the Hon'ble

Supreme Court in the matter of "State Tax Officer Vs. Rainbow Papers

Limited" [2022 SCC OnLine SC 1161]. It is submitted that the Adjudicating

Authority committed error in not accepting the entire claim of the Appellant

which was admitted. Learned Counsel for the Appellant has relied on the

provisions of Section 37 of the Maharashtra Value Added Tax Act, 2002.

5. Learned Counsel for the Respondent refuting the submissions of Learned

Counsel for the Appellant contends that with regard to the judgement of the

Hon'ble Supreme Court in "State Tax Officer Vs. Rainbow Papers Limited"

(supra), Review Petition (CIVIL) Diary No. 32268 of 2022 has been filed on which

Hon'ble Supreme Court has issued notice on 02.02.2023. It is further submitted

that in any view of the order, the Judgement in "Raibow Papers Limited" (supra)

is distinguishable from the facts of the present case.

6. We have heard the Learned Counsel for the parties and have perused the

record.

7. There are no dispute between the parties regarding the facts which took

place in the CIRP and the claim which was admitted in the CIRP. In "Rainbow

Company Appeal (AT) Ins. No. 246 of 2022 3

Paper Limited" (supra), Section 48 of the GVAT Act was relied, which has been

quoted in paragraph 2 of the Judgement which is to the following effect:

"The short question raised by the appellant in this appeal is, whether the provisions of the IBC and, in particular, Section 53 thereof, overrides Section 48 of the GVAT Act which is set out herein below for convenience:-

48. Tax to be first charge on property.-

Notwithstanding anything to the contrary contained in any law for the time being in force, any amount payable by a dealer or any other person on account of tax, interest or penalty for which he is liable to pay to the Government shall be a first charge on the property of such dealer, or as the case may be, such person"

8. The Provision of Section 37 of Maharashtra Value Added Tax, 2002 is to

the following effect:

"37. Notwithstanding anything contained in any contract to the contrary, but subject to any provision regarding creation of first charge in any Central Act for the time being in force, any amount of tax, penalty, interest, sum forfeited, fine or any other sum, payable by a dealer or any other person under this Act, shall be the first charge on the property of the dealer, or as the case may be, person."

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

Company Appeal (AT) Ins. No. 246 of 2022 4

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.

[Justice Ashok Bhushan] Chairperson

[Barun Mitra] Member (Technical)

Basant/nn

Company Appeal (AT) Ins. No. 246 of 2022