M/s. Shekhar Resorts Limited (Unit Hotel Orient Taj) Versus Union of India & Ors
M/s. Shekhar Resorts Limited (Unit Hotel Orient Taj) Versus Union of India & Ors
Landmark Cases of India / सुप्रीम कोर्ट के ऐतिहासिक फैसले
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.8957 OF 2022
M/s. Shekhar Resorts Limited
(Unit Hotel Orient Taj) …Appellant
Versus
Union of India & Ors. …Respondents
J U D G M E N T
M.R. SHAH, J.
1. Feeling aggrieved and dissatisfied with the impugned
judgment and order dated 24.06.2021 passed by the High
Court of Judicature at Allahabad in Writ Tax No.328 of 2021
by which the High Court has dismissed the said writ petition
preferred by the appellant herein seeking direction to the
respondents for consideration of the case of the petitioner
1
under the scheme “Sabka Vishwas (Legacy Dispute Resolution)
Scheme, 2019” (hereinafter referred to as the “Scheme of
2019”), the original writ petitioner has preferred the present
appeal.
2. The facts leading to the present appeal in nutshell are as
under:
That the appellant – company registered with the Service
Tax Department was a company engaged in providing
hospitality services. The Service Tax Department conducted
investigations as to the evasion of service tax by the appellant
and issued show cause notices demanding payment of service
tax under various categories such as Accommodation in
Hotels, Inn, Guest House, Restaurant Services, Mandap
Keeper services etc.
2.1 Proceedings under the Insolvency and Bankruptcy Code
(Amendment) Act, 2021 (hereinafter referred to as “IBC”) were
initiated against the appellant – Company. The NCLT, Delhi
2
vide order dated 11.09.2018 admitted the application filed by
the Financial Creditors of the appellant under Section 7 of the
IBC. Thus, on and from 11.09.2018 the corporate insolvency
resolution process against the appellant commenced and the
appellant was subjected to moratorium under Section 14 of
the IBC on and from 11.09.2018. The Committee of Creditors
constituted as per the provisions of the IBC, in its 15th
meeting, unanimously approved the resolution plan submitted
by NCJ Infrastructure Private Limited on 04.06.2019. That
thereafter the Scheme of 2019 came to be introduced on
01.09.2019 under Section 125 of the Finance Act, 2019 for
availing the benefit of “Sabka Vishwas (Legacy Dispute
Resolution) Scheme, 2019”. The appellant acting through its
Resolution professional submitted an application within the
period prescribed under the Scheme 2019. The applicant –
company was issued Form No.1 on 27.12.2019. At this stage,
it is required to be noted that the last date for making the
application under the Scheme 2019 was 31.12.2019. Thus,
Form No.1 was issued within the prescribed time limit and the
3
tax dues were computed by the appellant as per the Scheme,
2019. That thereafter Form No.3 was issued by the
Designated Committee on 25.02.2020 determining the amount
due and payable under the Scheme by the appellant. It
appears that as per the said statement for payment of tax
dues, the appellant was required to pay Rs.1,24,28,500/-.
Under the Scheme the appellant/assessee was required to
make the payment as per Form No. 3 within a time period of
30 days. However, in view of the COVID-19 Pandemic, the
time to make the payment was extended by the Government
upto 30.06.2020.
2.2 That the NCLT approved the Resolution Plan of the
successful Resolution applicant - NCJ Infrastructure Private
Limited vide order dated 24.07.2020. Thus, on approval of the
Resolution Plan by the NCLT the moratorium period came to
an end, with the closure of the insolvency proceedings on
24.07.2020. Subsequent to the acceptance of the Resolution
Plan by the NCLT, the appellant wrote to the successful
4
resolution applicant and the Commissioner, CGST and Central
Excise, Agra intimating them that the resolution process
under the IBC had come to an end and that the appellant is
ready and willing to make full amount of Rs.1,24,28,500/- as
ascertained by the Designated Committee in Form No.3. Vide
communication dated 09.10.2020 to the Assistant
Commissioner, the appellant explained that the settlement
amount under the Scheme, 2019 could not be paid by the
appellant before 30.06.2020 due to the legal moratorium
imposed upon the company and sought permission to pay the
due amount. The Joint Commissioner, Agra vide letter dated
19.10.2020 intimated the appellant that the last date for
payment under the Scheme was 30.06.2020, which could not
be extended. Consequently, the request of the appellant was
rejected. Since the appellant could not obtain permission for
payment of the dues post the lifting of the moratorium, the
appellant approached the High Court by way of Writ Tax
No.328 of 2021. By the impugned judgment and order the
High Court has dismissed the said writ petition on the
5
grounds that (i) the High Court shall not issue a direction
contrary to the Scheme; (ii) the relief sought cannot be granted
as the Designated Committee under the Scheme is not
existing.
2.3 Feeling aggrieved and dissatisfied with the impugned
judgment and order passed by the High Court, the original
writ petitioner – appellant has preferred the present appeal.
3. Ms. Charanya Lakshmikumaran, learned counsel
appearing on behalf of the appellant has vehemently
submitted that in the facts and circumstances of the case the
Hon’ble High Court has seriously erred in dismissing the writ
petition and not directing the authority to accept the amount
due and payable under the Scheme, 2019.
3.1 It is submitted that the Hon’ble High Court has erred in
holding that the Designated Committee does not exist. It is
submitted that the Designated Committee under the Scheme
6
was formed as per Rule 5 of the Scheme, 2019. The
Designated Committee consists of either the Principal
Commissioners, Commissioners, Additional Commissioners,
Joint Commissioners or Deputy Commissioners of the Central
Excise and Service Tax depending on the tax amount involved
in the matter. It is submitted that in the present case, the
Designated Committee comprised of the Joint Commissioner
and the Commissioner who are officers associated with the
offices of Respondent nos.3 and 4. That the Designated
Officers continue to act as the Designated Committee under
the Scheme till the completion of the proceedings under the
Scheme.
3.2 It is submitted that the Designated Committee under the
Scheme is being constituted on a need basis to comply with
the orders of the courts across the country. That in many
cases the Designated Committee rejected the applications
under the Scheme, 2019 erroneously and the different courts
set aside the decisions of the Designated Committee after
7
30.06.2020 and directed the Designated Committee to
consider the case of the respective applicants under the
Scheme, 2019. It is submitted that to reconsider the cases
pursuant to the orders passed by the courts/High Courts, the
CBEC issued the instructions dated 17.03.2021 allowing for
manual processing of declarations under the Scheme by the
respective Designated Committees. It is submitted that
therefore even after 30.06.2020 the respective Designated
Committees carried out their functions under the Scheme,
however by manual processing. It is submitted that therefore
the reasoning given by the Hon’ble High Court that the
Designated Committees are not in existence after 30.06.2020
and therefore the appellant is not entitled to any relief, may
not be accepted, as even after 30.06.2020 and even as per the
instructions issued by the CBEC, the respective Designated
Committees continued to function and process the
declarations manually.
8
3.3 It is further submitted by learned counsel appearing on
behalf of the appellant that in the instant case the Hon’ble
High Court has not properly appreciated the cause for which
the appellant could not deposit the amount under the Scheme
2019 on or before 30.06.2020. It is submitted that at the
relevant time and more particularly at the time when the Form
No.3 was issued and even during the period under the Scheme
2019, the appellant was subjected to the rigor of the
provisions of the IBC by virtue of the moratorium period which
ended on 24.07.2020 when the NCLT approved the Resolution
Plan. It is submitted that in the instant case, the appellant
bonafidely could not deposit the settlement due, on or before
30.06.2020 on account of operation of law. It is next
submitted that during the moratorium period, no payment
could have been made as per the provisions of the IBC. It is
contended that if any payment would have been made during
the mortarium period the same would have been in breach of
the provisions of the IBC. It is submitted that as per the
Resolution Plan accepted during the insolvency proceedings,
9
the Resolution Applicant was required to deposit all statutory
dues (including service tax dues) within 6 months from the
effective date into an escrow account. That as per the
Resolution Plan, payment to escrow account shall be treated
as effective payment to the relevant Operational Creditors. It
is further contended that in this case, effective date is
24.07.2020, the date on which the Resolution Plan was
approved by the NCLT. So, Service Tax dues along with other
statutory dues were deposited in an escrow account on
08.01.2021 before the expiry of the period of six months. It is
accrued that this Hon’ble Court in the case of Principal
Commissioner of Income Tax vs. Monnet Ispat & Energy
Ltd., (2018) 18 SCC 786 has held that once a moratorium
has been enforced, any existing proceeding against the debtor
shall stand prohibited. In this regard, it is submitted that the
IBC shall have precedence over any inconsistent statutes.
3.4 It is vehemently submitted that in any case, no person
can be left remediless due to operation of law. That in the
10
present case, the moratorium period under the IBC was
extended from 11.09.2018 to 24.07.2020 due to the COVID-19
pandemic and non-functioning of the NCLT. It is contended
that even otherwise, the appellant could not have made any
payment during the mortarium period by operation of law and
inability to make the payment was owning to the moratorium
imposed under the provisions of the IBC. It is urged that
therefore, the appellant may not be left remediless when the
application under the Scheme 2019 was submitted and
processed within time. In support of her above submissions
and the relief prayed, learned counsel appearing on behalf of
the appellant has heavily relied upon the decisions of this
Court in the case of Sunil Vasudeva vs. Sundar Gupta,
(2019) 17 SCC 385 (para 31), United Air Travel Services vs.
Union of India, (2018) 8 SCC 141 (para 13) and Union of
India vs. Asish Agarwak, (2022) SCC Online SC 543 (para
23).
11
3.5 It is reiterated submitted that the appellant could not
make the payment due to legal disability and no one can be
expected to do the impossible. Reliance is placed on the
decisions of this Court in the case of Gyanichand vs. State of
Andhra Pradesh, (2016) 15 SCC 164 (para 11) and Calcutta
Iron Merchants Association vs. Commissioner of
Commercial Taxes, (1997) 8 SCC 42 (para 5).
3.6 It is submitted that the appellant cannot be prejudiced
and/or made to suffer for no fault of the appellant. Reliance is
placed on the decision of this Court in Anmol Kumar Tiwari
& Ors. vs. State of Jharkhand reported in (2021) 5 SCC
424.
Making the above submissions it is prayed to allow the
present appeal and direct the respondents to appropriate the
payment of Rs.1,24,28,500/- towards settlement dues under
the Scheme 2019 and that discharge certificate be issued to
the appellant accordingly.
12
4. While opposing the present appeal, Shri Vikramjit
Banerji, learned ASG appearing on behalf of the Union of India
has vehemently submitted that in the facts and circumstances
of the case no error has been committed by the Hon’ble High
Court in dismissing the writ petition and refusing to direct the
respondents to accept the payment towards the settlement
dues under the Scheme, 2019.
4.1 It is submitted that admittedly the Scheme was valid
upto 30.06.2020 and the last date for payment of settlement
amount under the Scheme, 2019 was 30.06.2020. That
thereafter the Scheme was closed and even the Designated
Committees were also dissolved and therefore as rightly
observed by the Hon’ble High Court, the Hon’ble High Court
has no jurisdiction to extend the Scheme. It is submitted that
if the Scheme is extended it would create many complications.
4.2 It is further submitted that in the present case,
admittedly, no payment was made of settlement amount under
13
the Scheme prior to 30.06.2020 and therefore, the prayer of
the original petitioner to extend the time limit to make the
payment of settlement amount under the Scheme, 2019 was
rightly rejected by the Commissioner and the same has rightly
not been interfered with by the Hon’ble High Court.
Making above submissions it is prayed to dismiss the
present appeal.
5. We have heard the learned counsel appearing for the
respective parties at length.
6. At the outset, it is required to be noted and it is not in
dispute that the appellant is entitled to the benefit of the
settlement under the Scheme, 2019. The Scheme, 2019 came
to be introduced on 01.09.2019 and the last date for making
the application under the Scheme was 30.12.2019 and in fact,
the appellant submitted the application in Form No.1 on
27.12.2019 i.e. before the last date specified for making an
14
application. Under the Scheme, after the Form No.1 is
processed the Designated Committee was to scrutinize the
same and issue the Final Form No.3 determining the
settlement amount which the applicant was required to
deposit within a period of one month from the date of receipt
of the final determination – Form No.3. That the appellant
was issued the Form No.3 on 25.02.2020 and was required to
pay the settlement dues on or before 25.03.2020. However, in
view of the COVID-19 Pandemic the Government extended the
time upto 30.06.2020. Therefore, the appellant was required
to deposit the settlement dues on or before 30.06.2020.
However, even before the Scheme, 2019 came to be
introduced, the appellant was subjected to proceedings under
the IBC which commenced on 11.09.2018 when the NCLT
admitted the application under Section 7 of the IBC. Thus,
the moratorium under the IBC commenced on 11.09.2018.
The CoC approved the Resolution Plan on 04.06.2019, and the
same came to be approved by the NCLT by Order dated
24.07.2020. Therefore, the moratorium under the IBC
15
continued upto 24.07.2020. Under the provisions of the IBC
no payment could have been made during the period of
moratorium. Therefore, the appellant was statutorily
restrained/debarred from making any payment. There was
statutory disability on the part of the appellant in making the
payment during the moratorium. If the appellant had made
any payment during the period of moratorium, the appellant
would have committed breach of the provisions of the IBC.
Therefore, it was impossible for the appellant to make any
payment during the period of moratorium. Immediately on the
moratorium coming to an end, the appellant – Resolution
Professional / the successful Resolution applicant approached
the authority requesting them to accept the settlement amount
under the Scheme, 2019 as per the Form No.3. Such request
has been rejected by the Commissioner on the rejection has
been confirmed by the High Court.
7. Therefore, the short question which is posed for
consideration before this Court is, whether, when it was
16
impossible for the appellant to deposit the settlement amount
in view of the bar and/or the restrictions under the IBC, the
appellant can be punished for no fault of the appellant? In a
given case can the appellant be made to suffer for no fault of
its own, and be rendered remediless and denied the
benefit/relief though it was impossible for the appellant to
carry out certain acts, namely to deposit the settlement
amount during the moratorium.
7.1 As per the settled position of law, no party shall be left
remediless and whatever the grievance the parties had raised
before the court of law, has to be examined on its own merits
[Sunil Vasudeva (supra) (para 31)].
7.2 As observed and held by this Court in the case of
Calcutta Iron Merchants’ Association (supra), no law would
compel a person to do the impossible. [Calcutta Iron
Merchants’ Association (supra) (para 5)]
17
7.3 In the case of Gyanichand (supra) it was observed by
this Court that it would not be fair on the part of the Court to
give a direction to do something which is impossible and if a
person has been directed to do something which is impossible,
and if he fails to do so, he cannot be held guilty.
8. Applying the law laid down by this Court in the aforesaid
decisions to the facts of the case on hand, the appellant
cannot be punished for not doing something which was
impossible for it to do. There was a legal impediment in the
way of the appellant to make any payment during the
moratorium. Even if the appellant wanted to deposit
settlement amount within the stipulated period, it could not
do so in view of the bar under the IBC as, during the
moratorium, no payment could have been made. In that view
of the matter, the appellant cannot be rendered remediless
and should not be made to suffer due to a legal impediment
which was the reason for it and/or not doing the act within
the prescribed time.
18
8.1 Now so far as the observations made by the High Court to
the effect that the High Court cannot, in exercise of powers
under Article 226 of the Constitution of India extend the
period under the Scheme, 2019, to some extent the High Court
is right. The High Court while exercising the powers under
Article 226 of the Constitution of India cannot extend the
Scheme. However, in the present case it is not a case of
extension of the Scheme by the High Court; It is a case of
taking remedial measures. It is not a case where the appellant
did not make any application within the stipulated time under
the Scheme. This is not a case where the Form No.3
determining the settlement amount was not issued during the
validity of the Scheme. It is not a case where the appellant
deliberately did not deposit the settlement amount and/or
there was any negligence on the part of the appellant in not
depositing the settlement amount within the stipulated time.
As observed hereinabove it is a case where the appellant was
unable to make the payment due to the legal impediment and
the bar to make the payment during the period of moratorium
19
in view of the provisions of the IBC. In a given case it may
happen that a person who has applied under the Scheme and
who was supposed to make payment on or before 30.06.2020,
became seriously ill on 29.06.2020 and there was nobody to
look after his affairs and therefore he could not deposit the
amount; such inability was beyond his control and thereafter,
immediately on getting out of sickness he tried to deposit the
amount and/or approached the Court - can the Court close its
eyes and say that though there may be valid reasons and/or
causes for that person’s inability to make the payment, still no
relief can be granted to him? There may be extra ordinary
cases which are required to be considered on facts of each
case. The Courts are meant to do justice and cannot compel a
person to do something which was impossible for him to do.
8.2 Now so far as the other ground given by the High Court,
that the Designated Committees are not in existence, is
concerned, it is required to be noted that the CBCE has issued
a circular that in a case where the High Court/courts have
20
passed an order setting aside the rejection of the claim under
the Scheme after 30.06.2020, the applications can be
processed manually. In many cases the High Courts have
remanded the matter to the Designated Committees which
consist of the officers of the Department and the applications
thereafter are processed manually.
9. In view of the above, and under the circumstances and
for the reasons stated above, as the appellant was not in a
position to deposit the settlement amount at the relevant time,
more particularly on or before 30.06.2020 due to legal
impediment and the bar to make the payment of settlement
amount in view of the mortarium under the IBC, and as it is
found that the appellant was otherwise entitled to the benefit
under the Scheme as the Form No.1 submitted by the
appellant has been accepted, the Form No.3 determining the
settlement amount has been issued, the High Court has erred
in refusing to grant any relief to the appellant as prayed.
21
10. In view of the above and for the reasons stated above, the
present appeal is allowed. The impugned judgment and order
passed by the High Court is hereby quashed and set aside. It
is directed that the payment of Rs.1,24,28,500/- already
deposited by the appellant be appropriated towards settlement
dues under “Sabka Vishwas (Legacy Dispute Resolution)
Scheme, 2019” and the appellant be issued discharge
certificate. Present appeal is allowed accordingly.
However, in the facts and circumstances of the case there
shall be no order as to costs.
…………………………..J.
(M. R. SHAH)
.………………………...J.
(B.V. NAGARATHNA)
NEW DELHI;
JANUARY 5, 2023
22
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