NCLAT Rejects Odisha GST's ₹740 Crore Claim, Holding That Second Appeal U/S 42 IBC Is Not Maintainable: NCLAT Chennai

The bench observed that a second appeal u/s 42 of the IBC is not maintainable if the defects in the first appeal have not been rectified.

Brief Background

The corporate debtor was undergoing liquidation proceedings after the failure of CIRP. The Joint Commissioner of Commercial Taxes & GST, Odisha, assessed tax dues, penalties, and interest amounting to Rs. 740.2 crore. The due remained unpaid even after the show cause and demand notice.

The liquidator invited the claims with the deadline set for September 2018. However, the Odisha GST Department submitted its claim in September 2020, and that too on an incorrect form. The GST Department attempted to ratify the defects, but the liquidator rejected the claim.

The GST Department then filed an appeal u/s 42 of the IBC challenging the rejection. But the appeal was found to be defective and remain unrectified. Subsequently, the GST department filed the second appeal in July 2023. The second appeal was challenged for being time-barred and having maintainability issues.

Contention of the Parties

The appellant, the Odisha GST Department, argued that it had followed the procedure and submitted its claim before the liquidator. The GST Department contended that it sought to correct the defect in the first appeal, and the second appeal was filed to protect its interests.

However, the liquidator argued that the appellant failed to rectify the defects despite repeated opportunities. It highlighted that the second appeal was not maintainable under the law as the first appeal was pending. It also argued that the appeal was barred by the limitation, as it was filed beyond the 14-day statutory period.

Judgment of the NCLAT

The NCLAT upheld the decision of the adjudicating authority rejecting the GST Department's claim. It held that the second appeal could not be filed u/s 42 of the IBC as the first appeal was pending.

The NCLAT ruled that “the Appellant's first Application under Section 42 of the Code remain pending as defective and defects were not rectified, the second Application for the same cause of action is not maintainable.”

The bench noted that section 14 prescribes a limitation of 14 days after the liquidator's decision. However, the appellant filed the appeal 22 days after the rejection, and the second appeal was filed more than two years later, both exceeding the prescribed limitation.

“The claim of the appellant stood rejected by the Liquidator as back as on 24.11.2020 and if at all, the Limitation prescribed under Section 42 of the Code is taken into consideration, filing of a claim on 16.07.2023, was barred by limitation and the same could not have been entertained.”

The tribunal also observed that the resolution plan has been approved and the corporate debtor was sold as a going concern. Hence, no fresh claims, especially belated ones, can be entertained at this stage.

For the aforesaid reasons, the petition lacked merit and was dismissed accordingly.

Case Title: Joint Commissioner of Commercial Taxes & GST, Odisha v. Anuradha Bisani, Liquidator of M/s. Lanco Infratech Ltd.

Case Number: Company Appeal (AT) (CH) (Ins) Nos. 296 of 2024.

For Appellant: Mr. Anand Das, Advocate

For Respondent: Ms. Anuradha Bisani, Liquidator (appearing in person)

Bench: Justice Sharad Kumar Sharma (Member – Judicial) and Jatindranath Swain (Member – Technical)

Judgment Date: 30/06/2025

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