Bombay High Court on GST Demands After Approval of Resolution Plan: Scope and Limitations

Background and Context

When a corporate debtor undergoes insolvency proceedings and a resolution plan is approved by the Adjudicating Authority/National Company Law Tribunal (NCLT), a key issue arises regarding the fate of statutory dues, particularly indirect tax liabilities such as GST.

The decision of the Bombay High Court in Patanjali Foods Ltd. Vs Joint Commissioner addresses this issue in the context of a GST demand that covered periods both before and after the approval of a resolution plan. The Court applied binding precedent of the Hon’ble Supreme Court and aligned itself with a prior ruling of the Andhra Pradesh High Court involving the same assessee and a similar controversy.

This order reaffirms the well-settled principle that once a resolution plan is approved under the Insolvency and Bankruptcy framework, all prior statutory claims, including GST dues relating to the period before such approval, stand extinguished unless specifically provided for in the approved plan. At the same time, it preserves the right of the GST department to proceed for periods after the resolution plan approval.

Facts in Brief

  • The assessee, Patanjali Foods Ltd., was subjected to a demand notice under GST.
  • The impugned demand notice was issued on 13/01/2025.
  • The demand covered a composite period, including:
    • GST dues prior to the approval of a resolution plan (RP), and
    • GST dues subsequent to the approval of the same resolution plan.
  • The resolution plan had been approved by the Adjudicating Authority/NCLT, Mumbai on 04/09/2019 (as reflected at Pg.153 in the record).
  • The assessee challenged the demand notice before the Bombay High Court under writ jurisdiction.

Stand of the Revenue Authorities

Reply of the Department

The learned counsel for the respondents, Mr. Nalamwar, tendered a reply dated 23/04/2025 during the hearing. The crux of this reply was that:

  • An alternate remedy was available to the assessee under the GST law, and therefore,
  • The writ petition ought not to be entertained by the High Court.

However, the reply failed to deal with or clarify the specific legal issue that had already been framed by the Court in its earlier order dated 22/04/2025.

Importantly, counsel for the revenue did not contest this deficiency during the hearing.

Objection on Maintainability

The revenue’s primary objection focused on maintainability, i.e., the availability of statutory appellate/alternate remedies under the GST framework as a bar to writ jurisdiction.
The Bombay High Court, however, considered this objection inadequate once it was clear that the reply did not engage with the core legal principle involved, namely, the effect of an approved resolution plan on pre-resolution tax dues.

Submissions on Behalf of the Assessee

Reliance on Andhra Pradesh High Court Judgment

Counsel for the assessee, Mr. Bhangde, pointed out that: