Service Tax Appeal Not Maintainable After NCLT Approval of Resolution Plan Under IBC: CESTAT

The Chennai Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has disposed of a service tax appeal filed by Aircel Limited, holding that once a resolution plan is approved under Section 31(1) of the Insolvency and Bankruptcy Code, 2016 (IBC), pending proceedings relating to claims not forming part of the plan cannot continue. The CESTAT Bench, comprising Member (Judicial) Ajayan T.V. and Member (Technical) M. Ajit Kumar, relied heavily on the Supreme Court’s landmark decision in Ghanashyam Mishra and Sons Pvt. Ltd. v. Edelweiss Asset Reconstruction Company Ltd. The Supreme Court clarified that once a resolution plan is approved by the adjudicating authority under Section 31(1) of the IBC. All claims not forming part of the approved resolution plan stand extinguished. No creditor, including the Central Government, State Government, or any local authority, can initiate or continue proceedings in respect of such claims. The 2019 amendment to Section 31 of the IBC is clarificatory and declaratory in nature and applies retrospectively from the inception of the Code. The appellant/assessee, Aircel submitted that in Company Petition (IB) No. 298/2018, the common Resolution Professional had filed an interlocutory application before the National Company Law Tribunal (NCLT), Mumbai Bench-II, seeking approval of a resolution plan. The NCLT approved the resolution plan on June 9, 2020. The plan covered three corporate entities—Aircel Limited, Dishnet Wireless Limited, and Aircel Cellular Limited—and was submitted by UV Asset Reconstruction Company Limited. The NCLT’s order made the resolution plan binding on the corporate applicants, their members, creditors, guarantors, employees, stakeholders, and the resolution applicant. The appellant requested that the pending service tax appeal be treated as disposed of. The Revenue did not object to this submission. The Tribunal observed that even though neither party had clarified whether the disputed statutory dues formed part of the approved resolution plan, the Supreme Court’s ratio made it clear that proceedings relating to claims not included in the plan could not continue. Accordingly, the Bench held that the present appeal could not be proceeded with and disposed of it in those terms. Separate Opinion on Jurisdiction and IBC Supremacy In a detailed concurring opinion, Member (Technical) M. Ajit Kumar elaborated on the legal position governing tax appeals during and after insolvency proceedings. He noted that once insolvency proceedings are admitted under Sections 7, 9, or 10 of the IBC and a moratorium is declared under Section 14, all pending suits and proceedings against the corporate debtor are stayed. The objective of the Code is to comprehensively deal with all claims within the insolvency framework. He referred to the Supreme Court’s judgment in Sundaresh Bhatt, Liquidator of ABG Shipyard v. Central Board of Indirect Taxes and Customs, which affirmed that the IBC, being a later and special statute, overrides inconsistent provisions of other laws by virtue of Section 238 of the Code. The Member emphasized that once a resolution plan is approved it becomes binding on all stakeholders. The appellate tribunal becomes functus officio (its authority ceases) unless the resolution plan expressly permits continuation of the appeal. The Tribunal cannot examine whether statutory dues survive or interpret the NCLT’s order in a manner inconsistent with the IBC framework. He clarified that if a resolution plan specifically allows the continuation of a pending tax appeal—such as in cases where a refund claim may benefit the corporate debtor—the appellate proceedings may continue. However, in the present case, the resolution plan did not provide for such continuation. Taking note of an earlier coordinate bench decision in similar circumstances, the Tribunal concluded that since the resolution plan did not specifically preserve the pending appeal, it stood concluded by operation of law under the IBC. Case Details Case Title: Aircel Limited Versus Commissioner of GST and Central Excise Case No.: Service Tax Appeal No. 41263 of 2017 Date: 16.02.2026 Counsel For Appellant: G. Sheerabdhinath, Advocate Counsel For Respondent: N. Satyanarayana, Authorised Representative Click Here To Read Order Read More: Gold Baggage Seizure | Tribunal Lacks Jurisdiction To Entertain Appeals In Baggage Cases: CESTAT

Service Tax Appeal Not Maintainable After NCLT Approval of Resolution Plan Under IBC: CESTAT

Membership Required

Latest articles

Assessee Must Show “Substantial Question of Law” to Maintain Income Tax Appeal U/s 260A: Calcutta HC

Refund Can’t Be Denied Merely for Not Challenging Bill of Entry When Exempt Duty Was Paid Inadvertently: Punjab & Haryana HC

Can GST Dept. Reject Taxpayer’s Inverted-Duty Refund Claim Without Properly Considering Supporting Documents? No Says Calcutta HC

GST Registration Restoration Allowed After Taxpayer Clears Pending Returns and Dues: Gauhati High Court

More like this

Assessee Must Show “Substantial Question of Law” to Maintain Income Tax Appeal U/s 260A: Calcutta HC

Refund Can’t Be Denied Merely for Not Challenging Bill of Entry When Exempt Duty Was Paid Inadvertently: Punjab & Haryana HC

Can GST Dept. Reject Taxpayer’s Inverted-Duty Refund Claim Without Properly Considering Supporting Documents? No Says Calcutta HC

About us

Company

Categories