VAIBHAV GOEL & ANR.versusDEPUTY COMMISSIONER OF INCOME TAX & ANR.

                  [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 the
       adjudicating authority grants its approval u/s.31 – On facts, the
       income tax dues of the CD for the assessment years 2012-13 and
       2013-14 not part of the approved Resolution Plan – Thus, in view
       of sub-section (1) of s.31, the dues of the Income Tax Department-
       first respondent owed by the CD for the said assessment years
       stands extinguished – Resolution plan approved, binding on the IT
       Department – Thus, subsequent demands raised by Income Tax
       Department for assessment years 2012-13 and 2013-14 invalid



* Author
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       and cannot be enforced – Approach of NCLT in dismissing the
       application without reasons and imposing costs unwarranted –
       Additional demands made by the IT Department in respect of
       the assessment years 2012-13 and 2013-14 will operate as
       roadblocks in implementing the approved Resolution Plan, and
       appellants will not be able to restart the operations of the CD on
       a clean slate – Impugned orders of NCLT and NCLAT set aside.
       [Paras 8, 10, 11, 13, 14]

                               Case Law Cited
       Committee of Creditors of Essar Steel India Ltd. v. Satish Kumar
       Gupta & Ors. [2019] 16 SCR 275 : (2020) 8 SCC 531; Ghanashyam
       Mishra and Sons Pvt. Ltd. through the Authorised Signatory v.
       Edelweiss Asset Reconstruction Company Ltd. through the Directors
       & Ors. [2021] 13 SCR 737 : (2021) 9 SCC 657 – referred to.

                                 List of Acts
       Insolvency and Bankruptcy Code, 2016; Income Tax Act, 1961.

                              List of Keywords
       Resolution Plan; Corporate Insolvency Resolution Process;
       Statutory dues; Contingent liabilities; Clean slate principle;
       Additional demands; Income tax dues; Corpoate Debtor; Approval
       of Resolution Plan.

                             Case Arising From
       CIVIL APPELLATE JURISDICTION: Civil Appeal No. 49 of 2022
       From the Judgment and Order dated 25.11.2021 of the National
       Company Law Appellate Tribunal in CAAT (I) No. 956 of 2020

                          Appearances for Parties
       Advs. for the Appellants:
       Nikhil Nayyar, Sr. Adv., Ms. Charchika Yadav, Devashish Chauhan,
       Ms. Charu Ambwani.
       Advs. for the Respondents:
       N Venkatraman, A.S.G., Raj Bahadur Yadav, Rajat Nair, H R Rao,
       Ishaan Sharma, Sachin Sharma, Sarthak Karol.
[2025] 3 S.C.R.                                                           843

     Vaibhav Goel & Anr. v. Deputy Commissioner of Income Tax & Anr.


                  Judgment / Order of the Supreme Court

                                  Judgment

       Abhay S. Oka, J.

       FACTUAL DETAILS
1.     This appeal under Section 62 of Insolvency and Bankruptcy Code,
       2016 (for short, ‘the IB Code’) takes an exception to the judgment and
       order dated 25th November 2021 passed by the National Company
       Law Appellate Tribunal (‘the NCLAT’). The Corporate Insolvency
       Resolution Process (CIRP) was initiated concerning the corporate
       debtor M/s. Tehri Iron and Steel Casting Ltd. (‘the CD’). The appellants
       are the Joint Resolution Applicants. They submitted a Resolution Plan
       dated 21st January 2019. The National Company Law Tribunal (‘the
       NCLT’), vide its order dated 21st May 2019, approved the Resolution
       Plan submitted by the appellants.
2.     The Resolution Plan had referred to the liability of Rs.16,85,79,469/-
       (Rupees Sixteen-crores, eighty-five lakhs, seventy-nine thousand,
       four-hundred and sixty-nine only) of the first respondent (Income Tax
       Department) for the assessment year 2014-15 based on the demand
       dated 18th December 2017 which was rectified under section 154 of
       the Income Tax Act, 1961 (for short, ‘the IT Act’). The liability was
       shown in the Resolution Plan under the heading “Contingent liabilities”.
       After the approval of the Resolution Plan, the first respondent issued
       demand notices dated 26th December 2019 and 28th December
       2019 under the IT Act concerning assessment years 2012-13 and
       2013-14, respectively, in respect of the CD. However, admittedly, no
       claim about the demands for the two assessment years was submitted
       before the Resolution Professional. The second respondent, the
       Monitoring Professional, addressed a letter to the first respondent,
       contending that the demands for the two aforesaid assessment
       years were unsustainable in law. As the first respondent issued a
       letter dated 2nd June 2020 asserting the said demands, the second
       respondent applied to the NCLT for declaring that the demands
       made by the first respondent pertaining to assessment years 2012-
       13 and 2013-14 were invalid. It was urged that the said demands
       were invalid as no claim in respect thereof was made before the
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       Resolution Professional until the Resolution Plan was approved by the
       order dated 21st May 2019. By the order dated 17th September 2020,
       the NCLT dismissed the application, holding it to be frivolous. The
       costs of Rs.1 lakh were made payable by the appellants and the
       second respondent. Being aggrieved by the said order, an appeal
       under Section 61 of the IB Code was preferred before the NCLAT.
       By the impugned judgment and order dated 25th November, 2021,
       the NCLAT dismissed the said appeal.

       SUBMISSIONS
3.     The learned senior counsel appearing for the appellants submitted
       that the NCLT dismissed the application made by the second
       respondent without assigning any reasons. He pointed out that though
       no claim was received from the first respondent pertaining to the
       assessment year 2014-15 till the submission of the Resolution Plan,
       the Resolution Professional by itself admitted the liability of payment
       of income tax for the assessment year 2014-15, which was pending
       as a contingent liability of the CD. He relied upon a decision of this
       Court in the case of Committee of Creditors of Essar Steel India
       Ltd. vs. Satish Kumar Gupta & Ors.1. He submitted that the issue
       was squarely covered by a decision of a Bench of three Hon’ble
       Judges of this court in the case of Ghanashyam Mishra and Sons
       Pvt. Ltd. through the authorised signatory v. Edelweiss Asset
       Reconstruction Company Ltd. through the Directors & Ors.2.
       However, the NCLAT has brushed aside the said binding decision.
       He, therefore, submitted that the impugned orders of NCLT and
       NCLAT deserve to be quashed and set aside.
4.     Learned ASG appearing for the first respondent supported the
       impugned orders. He relied upon paragraph 44 of the order dated
       21st May 2019 passed by the NCLT, which rejected the request for
       relief and concession with respect to statutory dues and observed
       that the issues are left to be decided by respective government
       departments. He, therefore, submitted that the NCLAT had rightly
       dismissed the appeal.



1    (2020) 8 SCC 531
2    (2021) 9 SCC 657
[2025] 3 S.C.R.                                                          845

     Vaibhav Goel & Anr. v. Deputy Commissioner of Income Tax & Anr.


       CONSIDERATION OF SUBMISSIONS
5.     It is an admitted position that the first respondent did not make any
       claim regarding income tax dues of the CD for the assessment years
       2012-13 and 2013-14. In sub-clause (e) of Clause 2 of the approved
       Resolution Plan, under the heading ‘Settlement of Outstanding
       Liabilities’, it was provided thus:

            “....     ..      ..     ..      ..      ..
            The Resolution Applicant however understands from the
            information made available, all does (sic dues) pertaining
            to the Statutory Liabilities being paid on time. Therefore,
            the Resolution Applicant proposes to pay all Statutory
            Liabilities as appearing in the balance sheet of CIRP
            commencement date i.e. 31.05.2018 in the normal
            course of business.
            Post payment as stated above, the entire Statutory due
            shall stand satisfied, settled and extinguished, and
            no claims whatsoever, of any nature, shall subsist.”
                                                    (emphasis added)

       In sub-clause (g) of Clause 2 of the Resolution Plan, contingent
       liabilities have been mentioned. One of the contingent liabilities
       mentioned is Income-tax liability as regards the assessment year
       2014-15 in the sum of Rs.16,85,79,165/- (Rupees Sixteen-crores,
       eighty-five lakhs, seventy-nine thousand, one-hundred and sixty-five
       only). The Resolution Plan provides for the manner of resolution
       regarding the said contingent liabilities.
6.     We have perused NCLT’s order dated 21st May 2019, which approved
       the Resolution Plan. Paragraph 46 of the said order reads thus:
            “It is hereby declared that the Resolution Plan is binding
            on the corporate debtor, members, employees of the
            corporate debtor, creditors of the corporate debtor and
            other stakeholders involved in the Resolution Plan.”
       The first respondent has relied upon paragraph 44 of the said order,
       which read thus:
            “In the resolution plan, relief and concession has been
            sought in respect of statutory dues for making payment
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            in instalments, no coercive action, waiver of requirement
            of pre-deposit for filing appeals, waiver of interest, penal
            interest or damages. These are issues to be decided by
            the respective government department and appropriate
            application may be moved before them.”
       Now, the question is whether paragraph 44 has any relevance to the
       demands for income tax that were raised after the date of approval
       of the Resolution Plan. Sub-clause (g) of clause 2 of the Resolution
       Plan seeks relief and concessions referred to in paragraph 44
       referred above. The sub-clause (g) relates to the contingent liabilities
       mentioned in clause 2. The income-tax liabilities for the assessment
       years 2012-13 and 2013-14 have not been shown as contingent
       liabilities under the Resolution Plan. Hence, what is observed in
       paragraph 44 is not relevant at all.
7.     Section 31(1) of the IB Code provides for the legal effect of approval
       of the Resolution Plan. Section 31(1) reads thus:
            “(1) If the Adjudicating Authority is satisfied that the
            resolution plan as approved by the committee of creditors
            under sub-section (4) of section 30 meets the requirements
            as referred to in sub-section (2) of section 30, it shall
            by order approve the resolution plan which shall be
            binding on the corporate debtor and its employees,
            members, creditors, [including the Central Government,
            any State Government or any local authority to whom
            a debt in respect of the payment of dues arising under
            any law for the time being in force, such as authorities
            to whom statutory dues are owed] guarantors and
            other stakeholders involved in the resolution plan.
            Provided that the Adjudicating Authority shall, before
            passing an order for approval of resolution plan under this
            sub-section, satisfy that the resolution plan has provisions
            for its effective implementation.”
                                                      (emphasis added)

       The words starting from ‘including’ and ending with ‘owed’ were
       incorporated in the IB Code with effect from 16th August 2019.
       Section 31(1), as it stood before the amendment mentioned above
[2025] 3 S.C.R.                                                            847

     Vaibhav Goel & Anr. v. Deputy Commissioner of Income Tax & Anr.


       and after the amendment, came for consideration in the decision of
       this Court in the case of Ghanashyam Mishra and Sons Pvt. Ltd.2
       Paragraph 102 of the said decision reads thus:
            “102. In the result, we answer the questions framed by
            us as under:
            102.1. That once a resolution plan is duly approved
            by the adjudicating authority under sub-section (1) of
            Section 31, the claims as provided in the resolution
            plan shall stand frozen and will be binding on the
            corporate debtor and its employees, members,
            creditors, including the Central Government, any
            State Government or any local authority, guarantors
            and other stakeholders. On the date of approval of
            resolution plan by the adjudicating authority, all such
            claims, which are not a part of resolution plan, shall
            stand extinguished and no person will be entitled to
            initiate or continue any proceedings in respect to a
            claim, which is not part of the resolution plan.
            102.2. The 2019 Amendment to Section 31 of the I&B
            Code is clarificatory and declaratory in nature and therefore
            will be effective from the date on which the I&B Code has
            come into effect.
            102.3. Consequently, all the dues including the
            statutory dues owed to the Central Government, any
            State Government or any local authority, if not part of
            the resolution plan, shall stand extinguished and no
            proceedings in respect of such dues for the period prior
            to the date on which the adjudicating authority grants
            its approval under Section 31 could be continued.”
                                                     (emphasis added)

8.     In view of the declaration of law made by this Court, 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 the adjudicating authority grants its
       approval under Section 31 of the IB Code. In this case, the income
       tax dues of the CD for the assessment years 2012-13 and 2013-14
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       were not part of the approved Resolution Plan. Therefore, in view
       of sub-section (1) of Section 31, as interpreted by this Court in the
       above decision, the dues of the first respondent owed by the CD
       for the assessment years 2012-13 and 2013-14 stand extinguished.
9.     We may note here that the decision of this Court in the case of
       Ghanashyam Mishra and Sons Pvt. Ltd.2 was specifically relied
       upon before the NCLAT. The decision of this Court was brushed
       aside by the NCLAT, firstly on the ground that the said decision was
       not relied upon before NCLT and, secondly, on the ground that the
       appellants have not challenged the Resolution Plan. Unfortunately,
       the NCLAT has ignored the binding precedent and the legal effect
       of the approval of the Resolution Plan as laid down in paragraphs
       102.1 to 102.3 of the aforementioned decision. The reason given
       by NCLAT that the decision of this Court cannot be considered as
       it was not cited before the NCLT is perverse.
10. Before we part with this judgment, we may note that on the application
    made by the second respondent, the NCLT issued notice to the first
    respondent by order dated 27th August 2020. However, by the order
    dated 17th September 2020, which was impugned before the NCLAT,
    without considering the merits and without recording reasons, the NCLT
    held that the application was frivolous as the second respondent was
    seeking relief, which the Bench did not consider at the time of the
    approval of the Resolution Plan. The NCLT also imposed costs of
    Rs. one lakh on the appellants and the second respondent. We cannot
    approve NCLT’s approach of not considering the application on merits
    and dismissing the same without recording any reasons and also by
    imposing costs. The order of payment of costs was unwarranted.
11. In view of the above discussion, the Resolution Plan approved on
    21st May 2019 is binding on the first respondent. Therefore, the
    subsequent demand raised by the first respondent for the assessment
    years 2012-13 and 2013-14 is invalid.
12. Once the Resolution Plan is approved by the NCLT, no belated claim
    can be included therein that was not made earlier. If such demands
    are taken into consideration, the appellants will not be in a position
    to recommence the business of the CD on a clean slate. On this
    aspect, we may note what is held in paragraph 107 of the decision
    of this Court in the case of Committee of Creditors of Essar Steel
    India Ltd1. Paragraph 107 reads thus:
[2025] 3 S.C.R.                                                        849

  Vaibhav Goel & Anr. v. Deputy Commissioner of Income Tax & Anr.


           “107. For the same reason, the impugned NCLAT judgment
           [Standard Chartered Bank v. Satish Kumar Gupta, 2019
           SCC OnLine NCLAT 388] in holding that claims that may
           exist apart from those decided on merits by the resolution
           professional and by the Adjudicating Authority/Appellate
           Tribunal can now be decided by an appropriate forum in
           terms of Section 60(6) of the Code, also militates against
           the rationale of Section 31 of the Code. A successful
           resolution applicant cannot suddenly be faced with
           “undecided” claims after the resolution plan submitted
           by him has been accepted as this would amount
           to a hydra head popping up which would throw
           into uncertainty amounts payable by a prospective
           resolution applicant who would successfully take
           over the business of the corporate debtor. All claims
           must be submitted to and decided by the resolution
           professional so that a prospective resolution applicant
           knows exactly what has to be paid in order that it may
           then take over and run the business of the corporate
           debtor. This the successful resolution applicant
           does on a fresh slate, as has been pointed out by us
           hereinabove. For these reasons, NCLAT judgment must
           also be set aside on this count.”
                                                  (emphasis added)

13. The additional demands made by the first respondent in respect of the
    assessment years 2012-13 and 2013-14 will operate as roadblocks
    in implementing the approved Resolution Plan, and appellants will
    not be able to restart the operations of the CD on a clean slate.
14. We, therefore, hold that the demands raised by the first respondent
    against the CD in respect of assessment years 2012-13 and 2013-14
    are invalid and cannot be enforced. We set aside the impugned orders
    of NCLT and NCLAT and allow the appeal accordingly.

     Result of the case: Appeal allowed.




     Headnotes prepared by: Nidhi Jain