HP High Court Strikes Down GST Demand and Orders ITC Unblocking Due to Tax Department's Inaction During CIRP

In a landmark judicial intervention, the Himachal Pradesh High Court has provided substantial relief to an assessee by invalidating a GST demand notice and ordering the immediate release of blocked Input Tax Credit (ITC). The ruling in the matter of Radiant Castings Private Limited Vs Joint Commissioner of State Taxes & Excise underscores a critical intersection between the Goods and Services Tax framework and insolvency laws, specifically highlighting the consequences when tax authorities fail to lodge their claims during the Corporate Insolvency Resolution Process (CIRP).

Background of the Dispute

The assessee, M/s Radiant Castings Private Limited, approached the High Court seeking judicial intervention to quash a demand notice issued on 22.08.2022 by the Joint Commissioner of State Taxes & Excise, South Enforcement Zone, Parwanoo. Furthermore, the assessee challenged the department's coercive action of blocking their legitimate ITC, which amounted to a substantial Rs. 4,27,11,970/-.

The core argument presented by the assessee rested on the completion of their CIRP. They contended that any past demands or liabilities stood extinguished upon the successful approval of a resolution plan, thereby rendering the subsequent blocking of ITC and the issuance of the demand notice legally untenable.