VAIBHAV GOEL & ANR. vs. DEPUTY COMMISSIONER OF INCOME TAX & ANR.

CIVIL APPEAL No. 49/2022Supreme Court[2025] 3 S.C.R. 84120 March 2025Bench: 2 JudgesAuthor: ABHAY S. OKA, UJJAL BHUYAN9 pages
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What were the facts?

The appellants, as Joint Resolution Applicants, had their Resolution Plan approved by the NCLT for the corporate debtor, M/s. Tehri Iron and Steel Casting Ltd., on May 21, 2019. The plan included a contingent liability for income tax for assessment year 2014-15. However, the Income Tax Department (first respondent) issued demand notices on December 26 and 28, 2019, for assessment years 2012-13 and 2013-14, despite no claim being filed for these years before the Resolution Professional. The Monitoring Professional (second respondent) challenged these demands, arguing they were unsustainable as no claim was submitted before the Resolution Plan's approval. The NCLT dismissed the application and imposed costs, which was upheld by the NCLAT. The appeal is against the NCLAT's order.

What did the Supreme Court hold?

The Supreme Court held that all dues, including statutory dues owed to the Central Government, if not part of the Resolution Plan, stand extinguished upon the approval of the Resolution Plan by the adjudicating authority under Section 31 of the IB Code. The Court found that the income tax dues for assessment years 2012-13 and 2013-14 were not part of the approved Resolution Plan. Therefore, in view of Section 31(1) of the IB Code, as interpreted by the Supreme Court in Ghanashyam Mishra and Sons Pvt. Ltd., these dues stand extinguished. The Court criticized the NCLAT for brushing aside the binding precedent and the NCLT for dismissing the application without reasons and imposing costs. The Court emphasized that allowing such demands would create roadblocks in implementing the Resolution Plan and prevent the appellants from restarting the CD's operations on a clean slate. Consequently, the demands raised by the Income Tax Department for assessment years 2012-13 and 2013-14 were declared invalid and unenforceable. The impugned orders of the NCLT and NCLAT were set aside.

What were the issues?

1. Whether the income tax dues of the Corporate Debtor (CD) for assessment years 2012-13 and 2013-14, for which no claim was submitted before the Resolution Professional, stand extinguished upon the approval of the Resolution Plan under Section 31(1) of the Insolvency and Bankruptcy Code, 2016 (IB Code)? Assessee's Arguments: The appellants argued that the NCLT dismissed their application without reasons and that the NCLAT wrongly disregarded the Supreme Court's binding decision in Ghanashyam Mishra and Sons Pvt. Ltd. v. Edelweiss Asset Reconstruction Company Ltd. They contended that the Resolution Plan, once approved, is binding on all creditors, including the Income Tax Department, and that subsequent demands for periods prior to approval, if not part of the plan, should be extinguished. Revenue's Arguments: The first respondent (Income Tax Department) supported the impugned orders. They relied on paragraph 44 of the NCLT's order dated May 21, 2019, which purportedly rejected requests for relief regarding statutory dues, leaving such issues to be decided by respective government departments. They argued that the NCLAT had rightly dismissed the appeal.

Which sections of the Income-tax Act were involved?

Section 31,Section 62,Section 61,Section 154

AI-generated summary — verify with the full judgment below

[2025] 3 S.C.R. 841 : 2025 INSC 375 Vaibhav Goel & Anr. v.

Deputy Commissioner of Income Tax & Anr. (Civil Appeal No. 49 of 2022) 20 March 2025 [Abhay S. Oka* and Ujjal Bhuyan, JJ.] Issue for Consideration Matter pertains to the validity of the income tax dues of the corporate debtor owed to the Central Government, when not a part of the approved Resolution Plan.

Headnotes† Insolvency and Bankruptcy Code, 2016 – s.31(1) – Legal effect of approval of a Resolution Plan – After approval of resolution plan, issuance of demand notices by the Income Tax Department for assessment years 2012-13 and 2013-14 in respect of the Corporate Debtor-CD, however no claim about the demands submitted before the Resolution Professional – Application by the second respondent-Monitoring Professional challenging the demands – NCLT dismissed the application without assigning reasons and imposed costs – Said order upheld by the NCLAT – Correctness: Held: All the dues including the statutory dues owed to the Central Government, if not a part of the Resolution Plan, shall stand extinguished and no proceedings could be continued in respect of such dues for the period prior to the date on which

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