Srei Equipment Finance Ltd. Vs Assistant Commissioner (Bombay High Court)

The Bombay High Court heard the petition filed by Srei Equipment Finance Ltd. challenging the order dated 25 February 2025, issued by the tax authorities concerning CGST dues for Assessment Year 2020–21. The petitioner was represented by Mr. Parth Badheka and Ms. Nikita Badheka, while Mr. Kantharia and Mr. Das appeared for the first respondent, and Ms. Bharucha appeared for the second respondent.The petitioner contended that the issue was squarely covered by the Supreme Court’s decisions in Ghanashyam Mishra and Sons Private Limited v. Edelweiss Asset Reconstruction Company Ltd. and Vaibhav Goel v. DCIT. Despite being requested earlier to obtain instructions, the respondents maintained that the impugned order was correct and that the petitioner had an alternate and efficacious remedy by way of appeal. However, the Court decided to entertain the petition given the peculiar facts of the case.The record showed that the Reserve Bank of India (RBI) had initiated Corporate Insolvency Resolution Process (CIRP) against the petitioner under the Insolvency and Bankruptcy Code (IBC), 2016, on 8 October 2021. A resolution order was subsequently passed on 11 August 2023. The Court observed that the respondents, who had later issued the impugned order and raised demands, had not intervened during the CIRP process or sought any relief therein.Despite the existence of the resolution order, the respondents issued a show-cause notice on 27 November 2024, demanding payment of CGST dues for A.Y. 2020–21. The petitioner replied, referring to the Supreme Court’s rulings in Ghanashyam Mishra and Vaibhav Goel, and contended that no demand could be raised once the resolution plan had been approved. However, these objections were disregarded, and the impugned order dated 25 February 2025 was issued, leading to the present petition.The Court noted that the legal position was settled through the judgments relied upon by the petitioner. It held that the respondents were bound by the Supreme Court’s pronouncements and should have discharged the show-cause notice instead of proceeding with the demand. The Court also referred to the Supreme Court’s ruling in JSW Steel Limited v. Pratishtha Thakur Haritwal & Ors., where the continuation of proceedings despite the Ghanashyam Mishra ruling was held to be contemptuous. Although the authorities in that case were given the benefit of the doubt, the Court emphasized that once the law was settled, it was binding on all authorities.