NCLAT Rejects Tax Claim Against Reliance Communications, Citing Insolvency Initiation
The National Company Law Appellate Tribunal (NCLAT) has dismissed a tax claim filed by the state tax department against Reliance Communications, stating that the assessment was made after the initiation of the insolvency resolution process.
NclatReliance CommunicationsInsolvencyTax ClaimCorporate Insolvency Resolution ProcessReal Estate MumbaiSep 21, 2024
A two-member NCLAT bench upheld the earlier order passed by the Mumbai bench of the National Company Law Tribunal (NCLT), which had rejected the state tax department’s second claim of Rs 6.10 crore.
Corporate Insolvency Resolution Process (CIRP) against Reliance Communication was initiated on June 22, 2019. The state tax department had filed two claims. The first claim was filed on July 24, 2019, for Rs 94.97 lakh while a second demand was sent on November 15, 2021, for Rs 6.10 crore, which arose out of an assessment order dated August 30, 2021.
NCLT had admitted the first claim, which was passed before the initiation of CIRP. However, it rejected the second claim, which was based on an assessment order passed in 2021. The Committee of Creditors (CoC) of RCom approved the CIRP on March 2, 2020, and the subsequent claim was filed by the state tax department on November 15, 2021.
The said order was challenged by the state tax department before the NCLAT contending that NCLT ought to have accepted the entire claim. However, it was also rejected by NCLAT observing that the subsequent claim was filed after the approval of the plan of CoC. It upheld the view taken by NCLT that delay in filing the second claim cannot be condoned.
In December last year, NCLT Mumbai approved the sale of some of the real estate assets of telecom company Reliance Communications. The assets identified for sale include Chennai Haddow Office of RCom, comprising land and building; land parcel in Ambattur in Chennai spread over an area of about 3.44 acres; 871.1 square metres of land parcel in Pune; Bhubaneswar-based office space, investment in shares of Campion Properties and investment in shares of Reliance Realty.
Reliance Communications is an Indian telecom company that has been facing financial difficulties in recent years. The company has been undergoing a Corporate Insolvency Resolution Process (CIRP) since June 2019.
Reliance Communications is a subsidiary of the Reliance Group, a conglomerate with interests in various sectors including telecom, energy, and finance.
Frequently Asked Questions
What is the Corporate Insolvency Resolution Process (CIRP)?
CIRP is a process under the Insolvency and Bankruptcy Code (IBC) that allows for the resolution of debts of a company that is facing financial difficulties.
Why did the NCLAT reject the tax claim filed by the state tax department?
The NCLAT rejected the tax claim because it was filed after the initiation of the insolvency resolution process against Reliance Communications.
What assets of Reliance Communications were approved for sale by the NCLT?
The assets identified for sale include Chennai Haddow Office of RCom, comprising land and building; land parcel in Ambattur in Chennai spread over an area of about 3.44 acres; 871.1 square metres of land parcel in Pune; Bhubaneswar-based office space, investment in shares of Campion Properties and investment in shares of Reliance Realty.
What is the current status of Reliance Communications?
Reliance Communications is currently undergoing a Corporate Insolvency Resolution Process (CIRP) and has been facing financial difficulties in recent years.
What is the significance of the NCLAT's decision in this case?
The NCLAT's decision is significant as it sets a precedent for the treatment of tax claims filed after the initiation of the insolvency resolution process.
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