The Jharkhand High Court dismissed ESL Steel’s GST Input Tax Credit (ITC) claim before the permission of the resolution plan by the National Company Law Tribunal (NCLT).
The bench of Justice Rongon Mukhopadhyay and Justice Deepak Roshan witnessed, the obligation of the earlier management might not get transferred to the present management however at that time the credit available to the former management shall not be available to the present management as the present management was not the assessee in the duration of the procurement of the inputs or capital goods as claimed in GST TRAN-1 filed dated 30th Nov 2012.
The State Bank of India, as a major financial institution of the applicant, would furnish a Company Petition to the National Company Law Tribunal, Kolkata, beneath the provisions of the Insolvency and Bankruptcy Code, 2016, for starting the corporate insolvency resolution procedure of the applicant.
The SBI application was recognized, and a Resolution Professional was designated as the Interim Insolvency Resolution Professional (IRP). at the time of the course of its proceedings, the Resolution Professional filed a Resolution plan, which was NCLT authorized.
At the time of the due IBC proceedings, the former management of the applicant company would file the original TRAN-1 dated 27th September 2017. On the other hand, Filing the Form TRAN-1, the GST portal does not permit the applicant to show and transition the CENVAT credit on the capital goods obtained in the months of July and August 2017, which stands with the amount of Rs 92,13,412.
The respondent department approved the demand of Rs. 6,02,34,616 on the basis of an irregular claim of transitional credit in the duration of the period 2017–18, which contains the transitional credit of Rs. 5,10,21,204 claimed through the applicant before April 17, 2018, and the balance amount of Rs. 92,13,412 claimed via the applicant as Transitional credit by filing a new TRAN-1.
The petitioner argued that no recovery or proceeding against the petitioner for any alleged dues prior to April 17, 2018, the date on which the NCLT authorized the petitioner’s settlement plan, may be resumed.
Read Also: Easy Procedure to Revise Filed GST TRAN-1 & TRAN-2 Forms
The petitioner argued that only past commitments from the previous period are cancelled whenever new management takes over the Company as part of the Resolution Plan. There is no regulation or ruling that states that the company’s former credit is erased.
The court noted that the present management had not been a taxpayer before June 4, 2018. In other words, the responsibility of the previous management should not be transferred to the present management regardless of the date of the management transition. The present management will not be able to take advantage of the credit that was available to the previous management since it is not a taxpayer.
| Case Title | M/s ESL Steel Limited Versus Principal Commissioner |
| Citation | W.P.(T) No. 1995 of 2023 |
| Date | 11.07.2023 |
| Petitioner | Mr. Biren Poddar, Sr. Adv Mr. Piyush Poddar, Adv |
| Respondent CGST | Mr. P.A.S. Pati, Adv |
| Jharkhand High Court | Read Order |
