No Fresh Tax Demands After IBC Resolution Plan Approval : Supreme Court
Case Name: Vaibhav Goel & Anr. v Deputy Commissioner of Income Tax & Anr
The Supreme Court criticized the NCLAT for permitting fresh tax demands after a company’s resolution plan was approved under the IBC.
The case involved Tehri Iron and Steel Casting Ltd, whose resolution plan was approved in May 2019, settling all liabilities, including ₹16.85 crore in taxes. However, the Income Tax Department later issued fresh tax demands for previous years, despite not raising them during insolvency proceedings.
The Court ruled that under Section 31(1) of IBC, once a resolution plan is approved, all past claims not included in it are canceled, ensuring the company can restart without old liabilities.
It also slammed NCLAT for ignoring past SC judgments, calling its move "perverse."
