Authority: High Court at Calcutta (Constitutional Writ Jurisdiction)

Order Date: 01 Oct 2026

Case Overview

  • Parties: appellant SREI Equipment Finance Limited (an NBFC) vs. Union of India & Central Goods and Services Tax (CGST) Authority.
  • Nature of proceedings: Writ petition (WPA No. 6268 of 2026) challenging a Show‑Cause‑cum‑Demand Notice dated 26 Sep 2025 and the subsequent Order‑in‑Original dated 29 Dec 2025, which demanded IGST of Rs 1,68,78,057 plus penalty of Rs 16,87,806 (total Rs 1,85,65,863) for FY 2021‑22, and a separate interest notice dated 13 Jan 2026 under Section 50 of the CGST Act.
  • Background: The petitioner entered Corporate Insolvency Resolution Process (CIRP) on 8 Oct 2021; the resolution plan submitted by National Asset Reconstruction Company Limited was approved by the Committee of Creditors and the Adjudicating Authority on 11 Aug 2023 (Effective Date). Clause 3.2.9 of the plan extinguishes all pre‑Effective‑Date claims of Government authorities unless specifically provided.
  • Key legal provisions cited: Section 31(1) & 238 of the Insolvency and Bankruptcy Code, 2016; Section 73(9), 50, 73 & 75 of the CGST Act; Supreme Court precedents (e.g., Ghanashyam Mishra, Essar Steel, Ultra Tech Cement, Vaibhav Goel). The Court noted that the CGST authorities did not lodge any claim before the Resolution Professional during the CIRP.
  • Arguments: Petitioner's counsel relied on the binding effect of an approved resolution plan under Section 31(1) and the overriding nature of Section 238, citing multiple Supreme Court judgments that extinguish statutory dues not included in the plan. CGST authorities argued that adjudication of tax liability is distinct from recovery, relying on Sundaresh Bhatt (2023).
  • Court’s reasoning: The Court held that the extinguishment principle covers both determination and recovery; the distinction advanced by the CGST authorities is untenable. Section 88 of the CGST Act does not apply as the corporate debtor was not liquidated. The Board’s own Circular No. 134/04/2020‑GST and Instruction No. 1083/02/2022‑CX8 confirm that unfiled or belated claims are extinguished upon plan approval. The Court rejected the contention that the cause of action arose after the moratorium, emphasizing that the tax period (FY 2021‑22) falls wholly before the Effective Date.

Final Outcome

  • The Show‑Cause‑cum‑Demand Notice (26 Sep 2025) and the Order‑in‑Original (29 Dec 2025) demanding IGST, interest and penalty are quashed and set aside.
  • The interest notice dated 13 Jan 2026 under Section 50 for July‑August 2021 is also quashed.
  • No order as to costs was made.
  • The judgment expressly states that it does not express any opinion on any subsequent liability of the petitioner, if any.

Topics: GST Demand, Insolvency Resolution