Auto’s Service Tax Appeal Abates After NCLT Approval of Resolution Plan: CESTAT

The Delhi Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT has held that the service tax appeal stands abated following the approval of its Resolution Plan by the National Company Law Tribunal (NCLT). The bench of Binu Tamta (Judicial Member) and Hemambika R. Priya (Technical Member) while referring to Rule 22 of the CESTAT Procedure Rules, 1982 observed that upon approval of the resolution plan, the Tribunal becomes functus officio in respect of such matters. Since the resolution plan was approved on July 25, 2018, and the statutory dues in question were not part of the approved plan, the proceedings could not continue. The appellant/assessee, M/s. Amtek Auto Ltd., a public limited company engaged in manufacturing automotive components, had challenged the confirmation of service tax demand under the categories of Banking and Other Financial Services, and Management or Business Consultant Service, invoked under the Reverse Charge Mechanism (RCM). The dispute pertained to the period 2004–05 to 2006–07. The department alleged that the company had received services from overseas entities in relation to Global Depository Receipts (GDR), External Commercial Borrowings (ECB), Foreign Currency Convertible Bonds (FCCB), and Acquisition of industries. The foreign service providers included entities such as Barclays Bank Plc, Citigroup Global Markets Ltd., and Merrill Lynch International. Since these entities were located outside India, the department invoked Section 66A of the Finance Act, 1994, along with Rule 2(1)(d)(iv) of the Service Tax Rules, 1994, to fasten liability on the recipient under reverse charge. A show cause notice proposed a demand of ₹6.39 crore along with interest and penalties. The Adjudicating Authority ultimately confirmed a reduced demand of ₹3.01 crore with interest, imposed a penalty of ₹1,000 under Section 77, and ₹3.10 crore under Section 78. During the pendency of the appeal, insolvency proceedings were initiated against the company. The NCLT, Chandigarh Bench, approved the Resolution Plan on July 25, 2018. The appellant relied on the landmark judgment of the Supreme Court in Ghanashyam Mishra & Sons Pvt. Ltd. v. Edelweiss Asset Reconstruction Co. Ltd., which held that once a resolution plan is approved under Section 31 of the Insolvency and Bankruptcy Code (IBC), all claims not forming part of the resolution plan stand extinguished. No proceedings can continue in respect of such claims. The Tribunal also referred to its earlier ruling in Monnet Ispat & Energy Ltd. v. Commissioner of Central Excise, Raipur, along with several other decisions, where appeals were held to have abated following approval of resolution plans. The Department relied on the Tribunal’s earlier decision in G.V. Films Ltd. v. Commissioner of GST and Central Excise, Chennai, where it was held that services received from overseas agents in connection with GDR/FCCB issues fall under “Merchant Banking Services” and are taxable as “Banking and Other Financial Services” under Section 65(12) read with Section 65(105)(zm) of the Finance Act, 1994. The Tribunal acknowledged that such services are indeed taxable and would ordinarily attract service tax under reverse charge when received in India for business purposes. The CESTAT held that once the Resolution Plan had been approved by the NCLT, the appeal itself stood abated. Holding that the issue was squarely covered by the Supreme Court’s ruling and subsequent Tribunal precedents, CESTAT concluded that the present appeal stood abated from the date of approval of the Resolution Plan. Case Details Case Title: M/s. Amtek Auto Ltd. Versus Commissioner of Service Tax Citation: JURISHOUR-145-CESTAT-2026(Del) Case No.: Service Tax Appeal No.50262 of 2015 Date: 27.02.2026 Counsel For Appellant: None Counsel For Respondent: Mahboob Ur Rehman Click Here To Read Order Read More: Simultaneous CIRP Against Principal Borrower & Guarantor Maintainable: Supreme Court Clarifies Scope of IBC

Auto’s Service Tax Appeal Abates After NCLT Approval of Resolution Plan: CESTAT

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