CESTAT

The Ahmedabad bench of CESTAT while giving its ruling in the Ultratech Nathdwara Cement Ltd case, observed that no proper guideline exists in the revenue department. The tribunal noted that the CESTAT is approached by the assessee against whom the IBC proceedings are initiated to dispose of the appeals considering NCLT’s orders. But due to lack of any guideline by the CBIC, the tax officers are clueless toward taking stand in such cases

The Indirect tax appellate tribunal Customs Excise and Service Tax Appellate Tribunal (CESTAT) asked Central Board of Indirect Taxes and Customs (CBIC) to make guidelines in order to deal with outstanding tax demands for the companies going through insolvency proceedings.

The Ahmedabad bench of CESTAT while giving its ruling in the Ultratech Nathdwara Cement Ltd case, observed that no proper guideline exists in the revenue department. It lacks a stand in a case where the proceedings under the Insolvency and Bankruptcy Code (IBC) is in progress before NCLT/NCLAT or at higher forum.

The tribunal noted that the CESTAT is approached by the assessee against whom the IBC proceedings are initiated to dispose of the appeals considering NCLT’s orders. But due to lack of any guideline by the CBIC, the tax officers are clueless toward taking stand in such cases.

“Therefore, we are of the view that the Central Board of Indirect Taxes & Customs (CBIC) may consider issuing guideline/procedure for dealing with the case before this tribunal wherein, against the assessee’s company IBC proceeding has been initiated,” said the CESTAT in an order dated 20 October.

According to experts, India’s insolvency and bankruptcy law overrides any other law and stipulates that recovery proceedings including tax recovery cannot started after the resolution plan gets approval. The Supreme Court of India too affirmed this in the Ghanashyam Mishra & Sons case.