The Himachal Pradesh High Court has rejected a GST notice and ordered the unblocking of Input Tax Credit (ITC) of Rs 4.27 crores. The court ruled that claims not filed during the insolvency process cannot be enforced afterwards, emphasising that the IBC law takes precedence over GST laws.
The bench comprising Justice Vivek Singh Thakur and Justice Ranjan Sharma has noted that once a resolution plan is approved under the IBC, any claims not included in the plan are considered extinguished. Since the State did not submit its claim during the CIRP, it cannot later enforce its demand by blocking the ITC.
Under the Insolvency and Bankruptcy Code, 2016, the applicant company had undergone the Corporate Insolvency Resolution Process (CIRP). The National Company Law Tribunal has approved a resolution plan on August 30, 2023.
However, at the time of CIRP, the State tax authorities did not submit their claim to NCLT. Consequently, their claim was neither regarded nor admitted in the resolution plan.
Afterwards, the State tried to revive its claim by filing recall and appellate proceedings before the National Company Law Appellate Tribunal and later before the Supreme Court, but all these attempts were dismissed.
The Court clearly stated that the authorities did not have the authority to block the Input Tax Credit (ITC) or continue legal proceedings founded on the previous notice, particularly since the resolution plan had reached finality after appeals were dismissed up to the Supreme Court.
In allowing the writ petition, the High Court rejected the GST notice dated August 22, 2022. It ordered the authorities to unblock the ITC amounting to ₹4.27 crore and instructed that the admissible amount be released within two months.
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Additionally, the Court clarified that the State is not prohibited from taking any legally permissible actions to recover outstanding dues, provided those actions are legally sustainable.
| Case Title | M/s Radiant Castings Private Limited vs Joint Commissioner of State Taxes & Excise, (SEZ) Parwanoo |
| Case No. | CWP No.484 of 2024 |
| For Petitioner | Mr. Vikarm Singh Baid, Advocate |
| For Respondent | Mr. Anup Rattan, Advocate |
| Himachal Pradesh High Court | Read Order |
