M/s. Adhunik Metaliks Ltd vs Commissioner Of Sales Tax And Another

The prayer in the present petitions is that in the light of the orders already passed by this Court involving this very Petitioner i.e. the order dated 8th December, 2022 in W.P.(C) No.1553 of 2022 and batch, the impugned demands raised by the Opposite Party i.e. the Commissioner of Sales Tax, Odisha for the tax periods 1st April, 2007 to 30th September, 2010 in W.P.(C) No.7086 to 7088 of 2016 under the Central Sales Tax Act (CST Act), Orissa Entry Tax Act (OET Act) and Orissa Value Added Tax Act (OVAT Act) should be quashed.

The fact of the matter is that similar demands under these very statutes for different periods have already been quashed by this Court by the aforementioned order.

Today, Mr. S.S. Padhy, learned Additional Standing Counsel appearing for the Opposite Parties-Department referred to the decision of the Supreme Court in State Tax Officer v. Rainbow Papers Ltd. 2002 SCC Online SC 1162 and submitted that inasmuch as claims were invited in the present case prior to 5th October, 2017 when there was no notification in terms of which the Department had to compulsorily file a claim, the statutory dues owed to the Department ought to be covered by the Corporate Insolvency Resolution Plan (CIRP) that has been approved and finalized for the Petitioner company.

Mr. S.K. Acharya, learned counsel appearing for the Petitioner points out that unlike the facts of State Tax Officer v. Rainbow Papers Ltd. (supra) where the tax authorities in Gujarat had in fact filed the claim which was belated, in the present case admittedly no claim has been filed by the Department. He submits that in terms of the CIRP finalized for the Petitioner, a sum of Rs.30.00 crores was reserved to be paid by the Petitioner for discharging the dues owed to operational creditors. He further states that the said sum of Rs.30.00 crores has already been paid by the Petitioner in terms of the CIRP thereby satisfying the dues of all operational creditors of the Petitioner.

The CIRP will obviously apply only where there is a claim by an operational creditor. If there is no claim filed, then the creditors cannot possibly contend that the CIRP covers such creditors.

If the Department wants to take advantage of the pronouncement of State Tax Officer v. Rainbow Papers Ltd. they should have challenged the CIRP before it was fully worked out. In the process of such challenge, reliance could have been placed on the decision in State Tax Officer v. Rainbow Papers Ltd. (supra) to contend that the Department’s claim should also be taken to be covered by the CIRP. With the Department not having till date come forward to challenge the CIRP, the question of this Court directing that the CIRP already finalized and approved for the Petitioner company should be taken to cover the statutory dues owed to the Department does not arise.

In that view of the matter, following the order already passed by this Court on 8th December, 2022 in W.P.(C) No.1553 of 2022 and batch, the Court quashes the impugned assessment orders and demands challenged in these petitions. The petitions are accordingly allowed. No order as to costs.

An urgent certified copy of this order be issued as per rules..

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