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The document discusses disputing a tax claim against a corporate debtor undergoing insolvency proceedings. It argues that the tax claim is disputed and should be rejected for several reasons, including that no demand notice was sent as required by law and the claim is in violation of the Insolvency and Bankruptcy Code.

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Satyam Singh
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25 views

Appellant Side

The document discusses disputing a tax claim against a corporate debtor undergoing insolvency proceedings. It argues that the tax claim is disputed and should be rejected for several reasons, including that no demand notice was sent as required by law and the claim is in violation of the Insolvency and Bankruptcy Code.

Uploaded by

Satyam Singh
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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The RP most humbly submits that,

I. The claim raised by Tax Department is disputed and cannot be classified as debt.
 A dispute may exist if there is no time to approach the court.
The demand order issued by proper officer on 1st May 2021 was issued under the
provisions of Central Goods and Services Act, 2017.
An appeal to that order was intended by the Corporate Debtor but as the
moratorium period had started from 15 th May 2021, any pending or institution of
proceedings related to corporate debtor became impermissible
 A demand notice has not been sent.
There is a distinction between demand order and demand notice.
As the demand order was sent in accordance with the provisions of CGST Act, 2017,
the CD was not bound to reply at all to bring a notice of existing dispute to the Tax
authorities.
The content and procedural adherence of demand notice and demand order is
different. It can be made clear from the fact that, there is a statutory limit of 1o days
to reply to the demand notice under the code while in the act an appeal is
provisioned to the appellate authority within 3 months from the date of receipt of
such order.
Under the CGST Act, procedural adherence is as much of importance as it is in the I
& B code. In order to have a legitimate claim, a demand order has to be preceded by
a show cause notice and a show cause notice is to be presided by FORM GST DRC-
01A and FORM GST DRC- 03. None of which had been sent. Thus it renders the
whole proceedings dubious and void of merit.
In the present case, the CD have been directly attacked with a demand order not
giving enough opportunity of defense. This tantamount to trampling rights of CD.
Not only proper officer disregarded the procedural requirements causing prejudice
to CD but also attempted to disturb the insolvency proceedings time and again
frustrating the revival of the company and causing uncertainty regarding the burden
of liabilities.
As no demand notice was sent, an expectation of availing statutory remedy of a
issuing a notice of dispute to claimant becomes hollow and thus RP was right in
rejecting the claim and recognizing an element of dispute.
And hence the claim raised by tax authorities both through the code and the act is
justified to be rejected.
 Overriding effect of the insolvency and bankruptcy code on circular.
The circular itself in its first proviso recognizes the overriding effect of IBC. The
circular does not provide that even disputed claims are also to be accepted but it
simple provides that in accordance with the provisions of IBC, the claims made by
Tax authorities are to be accepted as an operational creditor. The prerequisite is
adherence to the provisions of IBC and verification of the claims on the footing of
criteria provided under the code which very much includes the enquiry as to the
existence of dispute and a decision as to its inclusion. The moment there is an
existence of dispute detected, the operational creditor gets out of the clutches of
the code.
The NCLT order did not recognize this element and ruled only on the basis of the
circular. Therefore, it is pleaded before this Hon’ble court that the order passed by
NCLAT needs to be set aside and the claim of tax department is to be rejected.

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