Insolvency Extinguished Tax Dues: Calcutta High Court Upholds CESTAT Order Declaring Tata Steel’s Appeals ‘Abated’

The Calcutta High Court has upheld a common order of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Kolkata, which had declared multiple appeals filed by Tata Steel Limited (formerly Tata Steel BSL Limited) as “abated” following the insolvency of its erstwhile entity, Bhushan Steel Ltd (BSL). and held that insolvency extinguished tax dues. The bench of Justice Raja Basu Chowdhury has observed that the CESTAT had “failed to exercise jurisdiction” by declining to adjudicate Tata Steel’s plea for refund of CENVAT credit of over Rs. 140 crore reversed under protest by Bhushan Steel prior to its takeover under the Insolvency and Bankruptcy Code (IBC), 2016. The appellant, Bhushan Steel had set up a large integrated steel plant and availed CENVAT credit on items such as steel structures, parts, accessories, and cement, treating them as “capital goods.” Between 2005 and 2009, five show-cause notices were issued disallowing credit totaling over ₹150 crore, alleging that such items were merely “supporting structures.” The adjudicating authority confirmed the disallowances through four separate orders in 2011 and 2012. Bhushan Steel, while reversing the credit “under protest,” filed appeals before the CESTAT, which granted waiver of pre-deposit and stay on recovery. However, in 2017, the State Bank of India initiated corporate insolvency proceedings against Bhushan Steel under the IBC. Tata Steel later submitted a resolution plan, which was approved by the NCLT on 15 May 2018 and upheld by the NCLAT. Under the plan, all pre-insolvency government dues—whether claimed or unclaimed—stood extinguished. After acquiring BSL and merging it into Tata Steel, the company filed applications before CESTAT seeking refund of ₹140.46 crore and associated amounts reversed under protest, contending that these were uncrystallised operational claims extinguished by the resolution plan. Tata Steel argued that under Clauses 8.2.6 and 8.6.10 of the approved plan, all government and tax claims relating to the pre-effective period stood “fully and finally discharged.” In April 2024, the CESTAT dismissed the applications, holding that the appeals had abated under Rule 22 of the CESTAT (Procedure) Rules, 1982 following BSL’s dissolution, and that the tribunal had become functus officio (i.e., without authority to act further). Challenging this, Tata Steel moved the Calcutta High Court under Articles 226 and 227 of the Constitution, contending that CESTAT’s refusal to decide the refund plea amounted to a “failure to exercise jurisdiction.” The department argued that since the original adjudication emanated from Odisha, the Calcutta High Court lacked territorial jurisdiction, and that the CESTAT order was appealable under Section 35G of the Central Excise Act, 1944. They relied on the Supreme Court’s ruling in Ambica Industries (2007) 6 SCC 769. The court rejected the jurisdictional objection, observing that a High Court could exercise supervisory jurisdiction under Article 227 over tribunals located within its territory to correct jurisdictional errors—even if the underlying adjudication arose elsewhere. He cited Hari Vishnu Kamath v. Syed Ahmed Ishaque (1954) and Surya Devi Rai v. Ram Chander Rai (2003) to hold that certiorari can issue to keep tribunals within their lawful bounds. On merits, the Court found that the reversal of CENVAT credit was voluntary, not a statutory pre-deposit, as pre-deposit requirements under Section 35F were introduced only after 2014. Thus, the amount could not be treated as a pre-deposit but represented an operational claim extinguished by the IBC resolution plan. Quoting the Supreme Court’s judgment in Ghanashyam Mishra & Sons Pvt. Ltd. v. Edelweiss ARC (2021) 9 SCC 657, the Court reiterated that once a resolution plan is approved, all government dues not part of the plan stand extinguished, and no proceedings can continue for the prior period. “The Tribunal, being the creature of statute, was nevertheless required to determine whether the payments made in relation to adjudication orders could constitute a claim extinguished by the approved resolution plan. Its refusal to do so amounted to failure to exercise jurisdiction,” the court said. Case Details Case Title: M/s Tata Steel Limited (formerly Tata Steel BSL Limited) vs Union of India & Ors. Case No.: WPA 20381 of 2024 Date: 12/11/2025 Counsel For Petitioner: Sujit Ghosh, Sr. Adv. Counsel For Respondent: P.K.Bhowmik Click Here To Read Order Read More: Possession Of Gold Within These CBDT Limits: ITAT Deletes Addition on Gold Jewellery Belonging to Assessee’s Wife and Mother

Insolvency Extinguished Tax Dues: Calcutta High Court Upholds CESTAT Order Declaring Tata Steel’s Appeals ‘Abated’

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