GST Department cannot appropriate Pre-deposit of Appeal towards Tax liability of the Corporate Debtor – Devendra Singh, RP Vs. Sanjay Rathi – NCLT Mumbai Bench
August 1, 2023
In this case, it is contended by Liquidator to direct the GST Department to refund the Pre-deposit amount of Rs. 1,00,00,000/- to the Corporate Debtor. The contention of the department is that the pre-deposit amount of Rs. 1,00,00,000/- can very well be appropriated towards the admitted liability of the Corporate Debtor of Rs. 4,44,32,282/-. NCLT Mumbai Bench held that the entire argument of the department in this regard is contrary to the provisions of the Code and contrary to their own departmental circular referred above. Since the IB Code has overriding effect over other laws and the remedy of the Government department and statutory authorities for recovering their pre CIRP dues is only by way of submitting their claim to the RP/Liquidator and not by retaining the amounts of Corporate Debtor lying with them towards their pre CIRP dues. In fact, the Liquidator also appears to have admitted the claim of the department to the extent of Rs. 4,44,32,282/-.