The Bombay High Court has declined to entertain a writ petition filed by Gujarat’s State tax department and held that the state tax dept. cannot bypass Insolvency and Bankruptcy Code (IBC) appeal by claiming NCLT lacked jurisdiction over tax claims.
The bench of Justice Manish Pitale and Justice Shreeram V. Shirsat rejected the authorities’ contention that the disputed observations were beyond the NCLT’s jurisdiction. It held that the authorities could pursue the statutory appeal available under Section 61 of the Insolvency and Bankruptcy Code, 2016 (IBC), strictly in accordance with law.
Buy Now: 90+ Supreme Court Judgments – September 2026
The State Tax Officer and the Assistant Commissioner of State Tax, Gujarat, approached the High Court against an NCLT Mumbai order dated November 8, 2023. That order had been passed in interlocutory applications concerning certain statutory notices issued by the tax authorities.
The authorities were particularly aggrieved by the observations in paragraphs 6.4 and 6.5 of the NCLT’s order.
The High Court questioned why it should entertain the writ petition when Section 61 of the IBC provided a statutory remedy of appeal before the National Company Law Appellate Tribunal (NCLAT).
The department argued that the challenged portions of the NCLT order were without jurisdiction. They submitted that a writ court could entertain a challenge in such circumstances despite the availability of a statutory appeal.
To support this argument, they relied on the Supreme Court’s decision in S. Rajendra v. Deputy Commissioner of Income Tax (Benami Prohibition and Others), reported at (2026) 5 SCC 563.
After examining the relevant portions of the NCLT order, the High Court noted that the tribunal had proceeded on the settled legal position concerning the extinguishment of claims relating to the period before approval of a resolution plan.
The bench concluded that the adverse observations challenged by the authorities were made within the jurisdiction available to the NCLT under the IBC.
The High Court found the reliance on S. Rajendra misplaced. It explained that the Supreme Court’s decision concerned a conflict between two special statutes—the IBC and the Prohibition of Benami Property Transactions Act, 1988.
The Supreme Court had held that the IBC could not be interpreted so expansively as to enter a field exclusively governed by another special statute.
The bench held that the same reasoning could not be applied to the present dispute, where the authorities sought to raise statutory claims under Gujarat’s State legislation.
The court reasoned that accepting the authorities’ contention would enable State tax authorities to avoid the effect of the IBC and the procedure governing the Corporate Insolvency Resolution Process.
Authorities could then invoke a conflict between State tax legislation and the IBC, or rely on the separate hierarchy of remedies under State legislation, to resist the legal consequences of an approved resolution plan.
The bench observed that such an approach would undermine the settled position regarding extinguishment of claims upon approval of a resolution plan and could not be countenanced.
It consequently rejected the argument that the Supreme Court’s ruling in S. Rajendra established that the NCLT had acted without jurisdiction in this case.
Membership Required to Access Case Details & Order Copy
To view the complete Case Details and Download Order Copy, you must have an active membership. Please subscribe to continue.
Read More: GST Dues Omitted From Approved Insolvency Plan Can’t Be Revived: Calcutta High Court
