The Goods & Services Tax (hereinafter referred to as “GST”) Appellate Tribunal in the case of DGAP V. Puma Realtors Pvt. Ltd. (NAPA/84/PB/2025) decided on on 26.08.25 under Section 171 of Central GST Act, 2017 rejected and closed the anti-profiteering proceedings and set aside the notice issued by the Directorate General of Anti-Profiteering (hereinafter referred to as “DGAP”)
FACTS
The DGAP (hereinafter referred to as “the Appellant”) commenced an investigation against M/S Puma Realtors Pvt. Ltd (hereinafter referred to as “the Respondent”) under Section 171 of CGST Act, 2017 for alleged profiteering by not passing Input Tax Credit (hereinafter referred to as “ITC”) to homebuyers. However during the pendency of investigation, the Respondent was declared insolvent and a consortium namely M/s. APM Infrastructure Pvt. Ltd. & M/s Once City Infrastructure Pvt. Ltd. took over as resolution applicants as per National Company Law Tribunal (hereinafter referred to as “NCLT”) approved resolution plan dated 01.06.2021. The Tribunal then asked the Appellant to seek clarity on whether claims under Section 171 of CGST Act, 2017 could be enforced against the resolution applicant.
ISSUES
1. Whether the due benefit of Input Tax Credit that had accrued consequent to introduction of GST Act, 2017 is to be passed on to the eligible recipients who are voiceless, unorganized and scattered will also come under the ambit of IBC as amended from time to time, which could not be quantified due to non-submission of requisite documents by noticee for completion of the investigation prior to passing on the NCLT final order dated 01.06.2021?
2. Whether the consortium of M/S APM Infrastructure Pvt. Ltd. & M/S Once City Pvt. Ltd. can be made accountable for passing on the benefit of ITC (profiteered amount) to the eligible recipient under Section 171 of CGST Act, 2017?
CONTENTIONS OF THE PARTIES
The Appellant contended that the Respondent has violated the provisions by not passing ITC benefit to buyers. Further the Appellant also stated that the Respondent failed to provide necessary documents to calculate the profiteered amount. And before the investigation could be completed, the Respondent entered into insolvency.
The Appellant also submitted that just because of insolvency proceedings, a corporate debtor or its successor should not be let go of the liability.
The Respondent, on the contrary, argued that Section 238 of Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as “IBC”) states that IBC, 2016 has an overriding effect over other laws.
The Respondent also contended that as per Section 31 of IBC, 2016 once a resolution plan is approved, any claim lodged after that cannot be entertained. All other claims which are not a part of the resolution plan are extinguished.
The Respondent further claimed that the new consortium took over its business after the approval of resolution, and hence should not be held accountable for past failures of the insolvent company.
DECISIONS & FINDINGS
The Hon’ble GST Appellate Tribunal, Delhi held that under Section 238 of IBC, the provisions of insolvency law prevail over any inconsistent laws. Once a resolution plan is approved under Section 31 of the IBC, all claims that are not included in the resolution plan stand extinguished. Therefore, the resolution applicant cannot be burdened with claims that have not yet been decided. Following the Supreme Court’s judgment in the case of Ghanshyam Mishra and Sons (P) Ltd. v. Edelweiss Asset Reconstruction Co. Ltd (SCC Online SC 313), even statutory dues of governments and authorities that are not part of the resolution plan are wiped out. In this case, the claim regarding the passing on of ITC benefit was neither quantified nor included in the resolution plan and thus stood extinguished. Consequently, the resolution applicant could not be held liable for the actions of the erstwhile corporate debtor. The Tribunal accordingly closed the anti-profiteering proceedings and set aside the notice issued by the Appellant.
AMLEGALS REMARKS
The Tribunal’s decision reinforces the supremacy of Insolvency & Bankruptcy Code, 2016 over other statutes, which gives resolution applicants a sense of relief to acquire businesses free from past liabilities. At the same time, it highlights the hurdles faced by governing bodies like DGAP when insolvency comes into picture. The decision safeguards the insolvency resolution but at the cost of no relief to homebuyers for ITC benefits. Therefore, there is need for coordination between GST authorities and resolution professionals so that statutory claims are also included in insolvency proceedings.
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