Section 238 of the Income Tax Act

Once a resolution plan is approved by the NCLT under Section 31(1) of the IBC, all claims, including statutory dues owed to the Central or State Government, are frozen and become binding on all stakeholders. This extinguishes any prior tax demands, such as those under Section 178(6) of the Income Tax Act, if not part of the approved plan.

The case upholds the legal maxim "Lex Non Cogit ad impossibilia", meaning one is not required under the law to perform what is impossible. This principle applies when compliance with a legal requirement is practically impossible.

The Insolvency and Bankruptcy Code, 2016 overrides any other enactment, including the Income Tax Act, when an NCLT has declared a moratorium under Section 14 of the IBC. Proceedings against the assessee are barred during the moratorium.

All claims, including statutory dues, that predate the approval of a resolution plan under the IBC stand extinguished by operation of law. No proceedings can be initiated or continued for such claims if they are not part of the approved plan.