GST Demand Post-Resolution Plan Quashed by Allahabad High Court

Case Title: M/s Arena Superstructures Private Limited v. Union of India & Others
Court: High Court of Judicature at Allahabad
Petition Number: Writ Tax No. 1716 of 2025
Category of Dispute: GST Demand Post-CIRP – Assessment Order under Section 74 CGST/UPGST Act
Date of Judgment: 21.04.2025
Relevant Sections: Section 74(9) CGST/UPGST Act, 2017; Section 31 IBC, 2016; Section 14 IBC, 2016

Facts of the Case (Paras 2–6)

• The petitioner company entered Corporate Insolvency Resolution Process (CIRP) on 10.10.2020. A Resolution Professional invited claims, including from the GST Department (Para 3).

• A Resolution Plan was duly approved by NCLT on 19.07.2022 (Para 3).

• Despite this, the Deputy Commissioner passed an Assessment Order dated 04.02.2025 under Section 74(9) of CGST/UPGST Act for FY 2017–18, along with a demand notice (Paras 2, 5).

• The petitioner argued that once the Resolution Plan was approved, no further tax liability could be created for the pre-CIRP period (Para 6).

Question(s) in Consideration (Paras 7–9)

• Whether the GST Department can pass a fresh demand/assessment order under Section 74 after approval of a Resolution Plan by NCLT?

• Does Section 31 of IBC extinguish statutory dues like GST not included in the approved Resolution Plan?

Observations of Court (Paras 11–15, 8–14 of SC cases quoted)

• Citing Ghanshyam Mishra & Sons v. Edelweiss ARC (SC, 2021), Essar Steel India Ltd. (SC, 2019), N.S. Papers Ltd. v. UOI (Allahabad HC, 2024), and Vaibhav Goyal v. DCIT (SC, 2025), the Court reiterated that approval of a Resolution Plan bars all subsequent claims (Paras 11–15).

• The Court held that any liability created post-approval amounts to an illegal burden on the successful Resolution Applicant, contrary to IBC principles (Para 14).

• It emphasized that statutory dues not included in the Resolution Plan stand extinguished (Para 8–12 of SC ruling in Vaibhav Goyal).

Judgment of the Court (Para 16)

• The Impugned Assessment Order dated 04.02.2025 and the consequent Demand Notice issued under Section 74 CGST/UPGST Act for FY 2017–18 were quashed.

• The writ petition was allowed in favor of the petitioner.

Between Fine Lines

• Once a Resolution Plan is approved under IBC, all past claims, including tax dues, stand extinguished.

• The GST Department cannot raise new demands for pre-CIRP periods after approval.

• Any such action violates Section 31 of IBC and the moratorium intent under Section 14.

• Successful Resolution Applicants must get a clean slate for revival of business.

• Post-Resolution Plan demands are illegal and unsustainable.

Summary of Referred Cases

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