AO rightfully rejected the claim that CIRP proceeding could be a ground to file a belated claim: NCLAT

Case Details: Assistant Commissioner of Commercial Taxes v. Right Engineers & Equipment India (P.) Ltd. (in liquidation) - [2022] 134 taxmann.com 179 (NCLAT - Chennai)

Judiciary and Counsel Detail

• • M. Venugopal, Judicial Member and Kanthi Narahari, Technical Member
  • Sandeep Huilgol, Adv. for the Appellant.

Facts of the Case

In the instant case, the Adjudicating Authority had passed an order directing the initiation of liquidation proceeding against the respondent (corporate debtor). The public announcement was issued by Liquidator on 11-2-2020 announcing the liquidation of the corporate debtor as per which the last date of submission of claim was on 11-1-2021.

Appellant passed reassessment order in terms of Karnataka Value Added Tax by which corporate debtor was liable to pay tax interest and penalty. On 4-3-2021, the statement of claim was filed by the appellant before the Liquidator covering the dues payable by the corporate debtor to the appellant. The Liquidator rejected the claim for the reason that it was filed belatedly.

Appellant applied section 42 before NCLT sought to set aside order passed by Liquidator. Appellant also sought condonation of delay of 52 days for submission of claim before the Liquidator.

Adjudicating Authority by impugned order dismissed the application on the ground that the reasons mentioned for condonation of delay that appellant was unaware of CIRP of the corporate debtor were untenable and that CIRP is the time-bound manner and it cannot be put on hold continuously on receiving belated claims.

NCLAT Held

NCLAT held that it couldn’t be forgotten that the Liquidator by adverting to regulation 16(A) of Regulations, 2016 (Liquidation Process) had rejected the claim through his letter on 17-3-2021 mentioning that the claims required to be furnished on or before 11-1-2021.

The Appellant had submitted its claim only on 4-3-2021 and to come out with the reason that the appellant was not aware of the CIRP and liquidation process of the corporate debtor are unworthy of acceptance and the said reason was rightly rejected by the Adjudicating Authority. Thus, the appeal was dismissed by NCLAT.

Case Review

• • Assistant Commissioner of Commercial Tax v. Right Engineers & Equipment India (P.) Ltd. [2022] 134 taxmann.com 178 (NCLT – Beng.) (para 18) affirmed [See Annex].

List of Cases Referred to

• • N. Balakrishnan v. M. Krishnamurthy [1998] 7 SCC 123 (para 8).