NCLT Approval Impact on Service Tax Refund Appeal: CESTAT Chandigarh Ruling

In a significant decision, the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) Chandigarh addressed the case of Ballarpur Industries Ltd. vs. CCE & ST, Panchkula. The tribunal ruled that once a resolution plan has been approved by the National Company Law Tribunal (NCLT), any appeal pending for the refund of Service Tax stands abated.

The matter at hand involved Ballarpur Industries Ltd., which had filed an appeal seeking a refund of Service Tax. However, during the pendency of the appeal, the NCLT approved a resolution plan submitted by the company. Consequently, CESTAT Chandigarh determined that the appeal was rendered void, citing the legal principle of functus officio.

The concept of functus officio dictates that a tribunal or court’s authority ceases once its purpose has been fulfilled. In this case, the approval of the resolution plan by the NCLT brought about a significant change in the status of Ballarpur Industries Ltd., thereby nullifying the pending Service Tax refund appeal.

CESTAT Chandigarh’s ruling underscores the legal ramifications of NCLT’s approval of a resolution plan in the context of ongoing legal disputes related to taxation matters. It highlights the need for parties involved in such proceedings to be aware of the impact of corporate restructuring or resolution processes on pending appeals.

This decision serves as a reminder of the dynamic nature of corporate insolvency proceedings and their implications on associated legal matters. It emphasizes the importance of timely and thorough legal advice to navigate the complexities of corporate restructuring and taxation laws effectively.

Overall, the ruling by CESTAT Chandigarh provides clarity on the consequences of NCLT’s approval of resolution plans and reinforces the need for parties to adapt their legal strategies accordingly in the context of ongoing appeals.