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TMI Blog2019 (6) TMI 849X X X X Extracts X X X X X X X X Extracts X X X X ..... hich are ascertained and crystalized as on the date when the CIRP commenced. On commencement of CIRP due to pronouncement of moratorium if any tax is levied, the same requires waiver. For rest of the tax demand a reliance is placed on a decision of NCLT, Chandigarh Bench in the case of "State Bank of India vs. Mor Farms Pvt. Ltd." dated 15.06.2018 in CA Nos. 71/2018 & 171/2018 in CP(IB) - 51/Chd/Hry/2017 wherein waiver is granted in respect of tax dues. Although the question of waiver has been dealt with in this order by the respected Coordinate Bench, NCLT, Chandigarh. However, an important aspect is to be kept in mind that the petition in this case has moved u/s 10 of the Insolvency Code to declare itself insolvent. In other words, the petitioner is seeking waiver in respect of all the statutory taxes & liabilities for the period during which the same management was at the helm of the affairs and liable for statutory compliances. The important point which requires due consideration is that the Resolution Plan is also now submitted by the entity/ resolution applicant who has nexus with the Corporate Debtor. Therefore, while placing reliance on the decision of respected Coordinate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Government or Local Authority is 'Operational Debt', relevant of which reads as follows: "28. From the plain reading of sub-section (21) of Section 5, we find that there is no ambiguity in the said provision and the legislature has not used the word 'and' but chose the word 'or' between 'goods or services' including employment and before 'a debt in respect of the payment of dues arising under any law for the time being in force and payable to the Central Government, and State Government or any local authority'. 29. 'Operational Debt' in normal course means a debt arising during the operation of the Company ('Corporate Debtor'). The 'goods' and 'services' including employment are required to keep the Company ('Corporate Debtor') operational as a going concern. If the Company ('Corporate Debtor') is operational and remains a going concern, only in such case, the statutory liability, such as payment of Income Tax, Value Added Tax etc., will arise. As the 'Income Tax', 'Value Added Tax' and other statutory dues arising out of the existing law, arises when the Company is operational, we hold such statutory dues has direct nexus with operation of the Company. For the said reason also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... annot be arbitrary or discriminatory amongst class of such 'Operational Creditors'. Only the same treatment is to be made. 9. The original 'distribution chart' of the 'Resolution Applicant' showing the distribution is as under: TABLE-1 (a) Distribution Chart of the Resolution Applicant as proposed in the Resolution Plan Sr. No. Particulars Amount Admitted by RP Amount Proposed by RA % to the Admitted dues 1. CIRP Cost 62.00 62.00 100 2. Workmen dues Admitted claim 221.76 221.76 100 Workmen dues as mentioned by RP from Books of accounts in IM 12.43 12.43 100 234.19 234.19 3. Employee dues Admitted claim 56.42 56.42 100 Employee dues as mentioned by RP from Books of accounts in IM 9.25 9.25 100 65.67 65.67 4. Secured Financial Creditor - SBI 465.26 465.26 100 5. Unsecured Financial Creditor - Promoter Group 505.85 505.85 100 6. Operational Creditors - Trade Payables 233.56 233.56 100 7. Operational Creditors and Other Credi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0.00 10 Grand Total (1to 9) 2125.00 2151.00 b) Detailed breakup of Operational Creditors - Government Dues as mentioned in Sr. No. 8 Sr. No. Particulars Amount claimed/ Demanded (Post NCLT approval) Amount earlier proposed to be paid by RA Redistributed Amount now proposed to be paid % of redistributed Payment A Government Dues related to Workmen and Employee Dues 1 Provident Fund 62.43 44.77 62.43 100 2 Projected Interest and Damages on PF Liability 50.00 0 50.00 100 3 Maharashtra Labour Welfare Fund 0.24 0.24 0.24 100 4 Employee State Insurance Corporation 9.33 9.33 9.33 100 5 Profession Tax 21.53 21.53 21.53 100 Subtotal 143.54 75.87 143.54 B Other Government Dues 1 Customs 384.84 0 116.29 30.22 2 Tax deducted at Source 15.85 10.94 4.79 30.22 3 Value added Tax & Central State Tax 736.29 12.19 222.5 30.22 4 Excise 353.4 78.84 106.79 30.22 5 The Rubber Board 0.82 0.61 0.25 30.22 6 Goods & Service Tax 3.1 3.1 0.94 30.22 7 Service Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fall within any of the clause as mentioned therein (Clause (a) and (j) ) are ineligible to file 'resolution plan'. It is not the case that the 'Resolution Professional' or the 'Committee of Creditors' or that the Adjudicating Authority found the 'Resolution Applicant' to be ineligible under Section 29A. In absence of any such evidence, it was not open to the Adjudicating Authority to observe that the Appellant has a nexus with the 'Corporate Debtor'. 12. For the reasons aforesaid, we set aside the aforesaid part of the observation as made by the Adjudicating Authority at Paragraph 17 of the impugned order dated 19th February, 2019 and modify the impugned order by substituting the revised manner of distribution as quoted above. However, the other terms & conditions of the related plan will remain same including the period for upfront payment etc. 13. For the reasons aforesaid, we modify the impugned order dated 19th February, 2019 and substitute the manner of distribution as shown in the 'Resolution Plan' with the 'Revised distribution' as noted above. All the stakeholders will be bound by the 'Revised distribution' and other terms and condition of the 'Resolution plan'. The appe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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