Hon’ble National Company Law Tribunal (NCLT) Ahmedabad has provided landmark judgement vide its order dated 30/04/2025 in the matter of Assistant Commissioner of State Tax V/s Mr. Sunil Kumar Kabra Liquidator of Archon Engicon Ltd. that Unpaid GST due by the Corporate Debtor to the state is not the debt owed to the secured creditor and claims are not covered in the category covered by Section 53(1)(b)(ii) of the IBC 2016.
Assistant Commissioner of State Tax has relied upon the judgement of Hon’ble Supreme Court of India in the matter of Rainbow Paper in which due of GVAT considered as Secured creditor. Further Assistant Commissioner of State Tax has also relied upon on Section 82 of the GST Act pursuant to which any amount payable by taxable person to the Government shall be a first charge on the property of such taxable person or such other person. Section 82 of GST Act reproduced as below;
Section 82 : Tax to be first charge on property
Notwithstanding anything to the contrary contained in any law for the time being in force, save as otherwise provided in the Insolvency and Bankruptcy Code, 2016 (31 of 2016), any amount payable by a taxable person or any other person on account of tax, interest or penalty which he is liable to pay to the Government shall be a first charge on the property of such taxable person or such person.
Hon’ble NCLT Ahmedabad held that provision of Section 82 of the Gujarat GST Act, 2017 contain an exception with regard to IBC. Further, Hon’ble NCLT Ahmedabad also relied upon judgement of Hon’ble National Company Law Appellate Tribunal (NCLAT) in the matter Department of State Tax vs. Ashish Chhawchharia RP of Jet Airways (India) Ltd. and others. where it was held that dues under Maharashtra GST Act shall not be secured creditor.
The provision of Section 82 of the Gujarat GST Act 2017 is the same as those of Section 82 of Maharashtra GST Act 2017 and therefore in view of specific exclusion of IBC under Section 82 and by following the decision of Hon’ble NCLAT it is held that the unpaid GST due to the state are not the debt owed to a secured creditor.
Further judgement of Hon’ble Supreme Court of India in the matter of Rainbow paper shall not apply in present case considering issue relating to the GST is not dealt in that judgements.