Pre-CIRP GST Dues Stand Extinguished Post-Plan Approval, but Assessee Remains Liable for Post-CIRP Liabilities

By | August 29, 2026
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Pre-CIRP GST Dues Stand Extinguished Post-Plan Approval, but Assessee Remains Liable for Post-CIRP Liabilities
Issue
Whether GST demand orders covering both pre-CIRP and post-CIRP periods (April 2018 to March 2020) are legally sustainable after the approval of an IBC Resolution Plan, and whether pre-CIRP tax liabilities stand extinguished while post-CIRP tax liabilities remain enforceable.
Facts
  • Period of Dispute: The Show Cause Notice (SCN) and impugned order proposed and confirmed GST demands for the period from April 2018 to March 2020.
  • CIRP Initiation & Moratorium: Corporate Insolvency Resolution Process (CIRP) was initiated against the petitioner company before NCLT Kolkata on 21.11.2019, with a moratorium coming into force on the same date.
  • Resolution Plan Approval: A Resolution Plan was subsequently sanctioned by the NCLT, and the management of the corporate debtor was handed over to the Successful Resolution Applicant.
  • Department Action: The respondent authority passed an order confirming GST proposals fastening tax liabilities for both the pre-CIRP period (April 2018 to 20.11.2019) and the post-CIRP period (21.11.2019 to March 2020).
  • Writ Petition: The petitioner challenged the impugned demand order in writ jurisdiction on the ground that pre-CIRP dues were extinguished under the IBC.
Decision
  • Pre-CIRP Dues (In favour of assessee / Matter remanded): Statutory dues pertaining to the pre-CIRP period (prior to 21.11.2019) stood completely extinguished upon NCLT approval of the Resolution Plan under Section 31 of the IBC. Fastening pre-CIRP liabilities on the new management could not stand in law, and the order to that extent was set aside.
  • Post-CIRP Dues (In favour of revenue / Matter remanded): The petitioner remains fully liable to discharge GST liabilities for the period after the initiation of CIRP (21.11.2019 onwards), notwithstanding the approval of the Resolution Plan.
  • Directions: The petitioner was directed to pay the confirmed post-CIRP GST liability within a stipulated timeframe. Upon such compliance, the respondent authority was directed to examine the remaining issues afresh and pass an order on merits in accordance with law.
Key Takeaways
  • Extinguishment of Pre-CIRP Statutory Claims: Once a Resolution Plan is approved by the NCLT under Section 31 of the IBC, all pre-CIRP tax dues stand permanently extinguished and cannot be recovered from the corporate debtor or the resolution applicant.
  • Survival of Post-CIRP Liabilities: Resolution plan approval does not grant immunity for tax dues accruing after the commencement of CIRP (i.e., during or after the moratorium period); post-CIRP GST liabilities must be duly discharged.
  • Bifurcated Adjudication Mandate: Tax authorities cannot issue composite demand orders combining pre-CIRP and post-CIRP periods without segregating extinguished prior liabilities from actionable post-commencement tax obligations.
HIGH COURT OF MADRAS
Transafe Services Ltd.
v.
Superintendent of Central GST and Central Excise
C. Saravanan, J.
WP No. 14266 of 2026
WMP Nos.15512 and 15513 of 2026
APRIL  10, 2026
Aparna Nandakumar, J. Nandakumar, Kumudhaa.G, Shridevi.H, Vijaya Dharshini.A and Srinidhi .S for the Petitioner. Sai Srujan Tayi, Senior Standing counsel and Mrs. P. Selvi, Government Adv. for the Respondent.
ORDER
1. Mrs.P.Selvi, Government Advocate takes notice on behalf of the Respondent.
2. This Writ Petition is being disposed of at the stage of admission itself with the consent of the learned counsel for the Petitioner and the learned Government Advocate for the Respondent.
3. The petitioner is before this Court against the impugned order in Original SI.No.33/2025 dated 26.12.2025 in Reference No. ZD331225397442D. By the impugned order the proposal in the Show Cause Notice No.20/2024 dated 02.12.2022 in Ref No. ZD331224001015B has been confirmed for the tax period between April 2018 to March 2020. The petitioner has replied to the aforesaid notice vide his reply dated 20.02.2025.
4. The facts on record reveal that a Corporate Insolvency Resolution Proceeding had been initiated against the petitioner on 21.11.2019 before the NCLT Kolkata and a Moratorium was in force with effect from the said date. Eventually, the resolution plan filed by the resolution applicant was sanctioned pursuant to the petitioner company being taken over by the Management of Resolution Applicant (M/s Om Logistis Ltd). Prima facie the petitioner cannot be imposed with the tax liability for the period prior to initiation of the Corporate insolvency resolution proceedings before the NCLT in the case of Committee of Creditors of Essar Steel India Ltd. v. Satish Kumar Gupta   (SC)/(2020) 8 SCC 531 and in view of the decision of Ghanashyam Mishra and Sons Private Limited v. Edelweiss Asset Reconstruction Company Limited and Others. In other words for the period prior to order of the NCLT dated 21.11.2019 cannot be fastened on the petitioner. Since the impact decision of the Supreme Court has not been fully considered while passing the impugned order, I am inclined to remit the case back to the respondent to pass a fresh order.
5. The petitioner shall however discharge the tax liability for the tax period confirmed vide the impugned order for the period after the initiation of the Corporate insolvency resolution proceedings against the petitioner’s company under the provisions of Insolvency and Bankruptcy Code, 2016 within a period of 30 days from the date of receipt of a copy of this order. Thereafter, subject to the petitioner complying with the other stipulations, the respondent shall proceed to pass a fresh orders on merits and in accordance with law after examining the issue a fresh.
6. This Writ Petition stands disposed of with the above observations. No costs. Connected Writ Miscellaneous Petitions are closed.