In a recent decision, the Delhi High Court addressed the issue of whether GST authorities can issue fresh tax demands for periods preceding the approval of a resolution plan under the Insolvency and Bankruptcy Code (IBC). The case involved M/s ERA Infra Engineering Limited, which had undergone a Corporate Insolvency Resolution Process (CIRP). During this process, the GST authorities submitted their claims, and a resolution plan was subsequently approved by the National Company Law Tribunal (NCLT) on June 11, 2024.
Despite the approval, the GST authorities issued new demand orders for periods before the CIRP, which the petitioner contested. The Delhi High Court reiterated that under Section 31 of the IBC, an approved resolution plan is binding on all stakeholders, including statutory authorities. The Court emphasized that all claims related to the pre-CIRP period are considered frozen and extinguished once a resolution plan is approved, even if they were not fully admitted in the plan.
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The Court quashed the GST demand orders, ruling them contrary to the established law as laid down by the Supreme Court in the cases of Ghanashyam Mishra and Essar Steel. The decision underscores the objective of providing a clean slate to successful resolution applicants, thereby preventing any post-resolution demands that could undermine this goal.
Parties: M/s ERA Infra Engineering Limited vs. Joint Commissioner, CGST Delhi
Date: 15 December 2025
Facts:
- The petitioner underwent Corporate Insolvency Resolution Process ('CIRP') under the IBC, during which GST authorities submitted their claims.
- A resolution plan was approved by the NCLT on 11.06.2024.
- Post approval, GST authorities issued fresh demand orders for pre-CIRP periods.
- The petitioner challenged the demands as being barred by the approved resolution plan.
Issue:
- Whether GST authorities can raise fresh demands for periods prior to approval of a resolution plan?
Order:
- The High Court reiterated that once a resolution plan is approved under Section 31 of the IBC, it is binding on all stakeholders, including statutory authorities.
- It held that all claims relating to the pre-CIRP period stand frozen and extinguished, irrespective of whether they were fully admitted in the resolution plan.
- The Court observed that permitting post-resolution demands would defeat the objective of granting a clean slate to the successful resolution applicant.
- Accordingly, the impugned GST demand orders were quashed as being contrary to settled law laid down by the Supreme Court in Ghanashyam Mishra and Essar Steel.
