2025-VIL-1178-CAL
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SGST High Court Cases

GST - Corporate Insolvency Resolution Process (CIRP), Corporate Debtor Sold as Going Concern, Extinguishment of Past Dues – During the liquidation process, the petitioner company was sold as a going concern. The NCLT confirmed the sale and observed that the sale of the corporate debtor as a going concern is akin to a de-facto CIRP. Subsequent to the sale, the CGST authorities issued a demand notice to the petitioner company for tax dues - Whether the petitioner company, having been sold as a going concern in liquidation, can be held liable for the past tax dues (prior to the date of sale) or whether such past dues stand extinguished - HELD - Upon successful completion of a CIRP or upon a corporate debtor being sold in liquidation as a going concern on a "clean state" basis, all the past dues of the corporate debtor shall stand frozen and extinguished - The order of priority for distribution of assets in liquidation under Section 53 of the Insolvency and Bankruptcy Code, 2016 cannot be overridden, and the operational creditors, such as the CGST authorities in the present case, cannot jump the queue in contravention of the priorities enumerated in Section 53 - The promotion of corporate revival is the avowed object of the Insolvency and Bankruptcy Code, 2016, and a buyer of a corporate debtor as a going concern should not be saddled with past dues. Accordingly, the order passed by the CGST authorities demanding tax dues from the petitioner company is quashed - The writ petition is allowed
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