NCLAT Chennai: GST Best Judgment Demand Not Crystallised Cannot Earn Secured Creditor Status in CIRP
The NCLAT Chennai Bench, in Assistant Commissioner of Commercial Taxes LGSTO Vs Alok Kailash Saksena & Ors. (NCLAT Chennai), dismissed the Department's Company Appeal (AT) (CH) (Ins) No. 302/2023 against the NCLT Bengaluru order dated 28.06.2023 in IA No. 393/2022 in CP (IB) No. 51/BB/2018, concerning the insolvency of Associate Décor Limited.
The Claim and the Application
The Assistant Commissioner of Commercial Taxes, LGSTO, Bangalore, filed a claim in Form-F for Rs. 54,46,13,819 as GST dues (after adjusting receipts) on 21.12.2018. The Resolution Professional rejected it because it rested on estimates and best judgment assessments under Section 62 of the Karnataka GST Act, 2017. The Department asked the NCLT under Section 60(5) of the IBC read with Rule 11 of the NCLT Rules, 2016 to declare the Information Memorandum and the Committee of Creditors-approved Resolution Plan null and void, arguing statutory dues had been wrongly excluded. The NCLT dismissed the application, and the Department appealed.