Case Of: M/s Era Infra Engineering Ltd
Issued By: Delhi High Court
Order No: W.P.(C) 16944/2025
Date: 15th Dec 2025
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GST Demands Cannot Survive Resolution: Pre-Insolvency Tax Dues Stand Extinguished
The matter arose from a situation where a corporate debtor had already undergone the complete insolvency resolution process and emerged with an approved resolution plan under the IBC framework.
The resolution plan was approved after due consideration of claims submitted by various stakeholders, including operational creditors and government authorities, in accordance with statutory timelines.
After the successful completion of CIRP and implementation of the resolution plan, GST authorities issued fresh demand notices for tax periods relating to the pre-insolvency era.
The core controversy revolved around whether indirect tax demands, which were not part of the resolution plan, could be revived and enforced after the insolvency process had attained finality.
It was observed that approval of a resolution plan brings complete closure to past claims and is binding on all stakeholders, including Central and State tax authorities.
Statutory dues such as GST liabilities, if not admitted or provided for in the approved resolution plan, stand extinguished by operation of insolvency law.
Permitting recovery of old tax demands after resolution would erode certainty, disrupt revival of the corporate debtor, and defeat the fundamental objective of the insolvency regime.
Accordingly, GST demand notices pertaining to periods prior to commencement of CIRP were held to be legally unsustainable and liable to be set aside.