Facts of the Case: The petitioner-company had undergone Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code, 2016 (IBC).

A Resolution Plan was approved by the National Company Law Tribunal (NCLT) under Section 31 of the IBC, which binds all stakeholders, including statutory authorities. Despite the approval, the State GST department issued an assessment order under the GST Act demanding tax dues for the pre-CIRP period.

The petitioner challenged this order before the Allahabad High Court, contending that all prior claims stood extinguished upon approval of the Resolution Plan.

Issue: Whether the GST authorities can raise demands for pre-CIRP tax liabilities after approval of a Resolution Plan under Section 31 of the IBC.

Held that: The High Court held that the approval of a Resolution Plan by NCLT under Section 31 of IBC is binding on all stakeholders, including government authorities. Any claims, including statutory dues like GST, not included in the Resolution Plan stand extinguished.

The Court relied on the Supreme Court’s rulings in Ghanashyam Mishra and Sons v. Edelweiss Asset Reconstruction Co. Ltd. and Essar Steel India Ltd. v. Satish Kumar Gupta, which affirm that post-approval, the corporate debtor gets a “clean slate” and no fresh demands for pre-CIRP dues can be made.

Consequently, the impugned assessment order dated 23.12.2024 was quashed.

Case Name: M/s K.V. Aromatics Pvt. Ltd. Versus State of U.P. And 2 Others dated 07.08.2025

To read the complete judgment 2025 Taxo.online 1826