Page 19 - Banking Finance February 2022

LEGAL UPDATE

Legal News

Empowered tribunal NCLAT were vested with the responsi- The order was given on a writ petition
bility of preserving the corporate debt- by a seller and a trucker for a release
In a recent judgment in the case of
Tata Consultancy Services Vs Vishal ors' survival and could intervene if an of goods and the vehicle concerned
Jain, the Resolution Professional of SK action by a third party affected the detained by the GST authorities. The
Wheels Pvt Ltd, the Supreme Court has CIRP process. confiscation notice was given by a tax
said that the National Company Law However, the Supreme Court also is- commissioner in Ahmedabad.
Tribunal (NCLT) was empowered to sued a note of caution to the tribunals The vehicle and the goods were con-
adjudicate on contract disputes if such over interfering with a party's contrac- fiscated on the grounds that the truck
adjudication contributes to the success tual right to terminate a contract, say- was intercepted while it was traveling
of the resolution process. ing that the tribunals could do so only in a different direction than the direc-
if it was central to the success of the tion of destination. From that, authori-
In the present case, TCS had a 'facilities
CIRP. ties inferred that it appears that the
agreement' with SK Wheels. Disputes
arose between the parties, with TCS goods were being transported with
claiming that the contractor was not Cannot confiscate just for intention to evade tax.
doing a good job and SK Wheels defend- undervaluing goods: Guj The second ground was that the value
ing itself saying that it had rectified the of goods being transported is shown as
minor lapses in quick time. The agree- HC less than compared to its real market
ment had an arbitration clause. The Gujarat high court has ruled that value.
undervaluation of goods under transit
In the meantime, SK Wheels went into The court found sound logic in the ar-
bankruptcy and landed in the Insol- and the route being taken other than guments of the petitioners that there
declared in e-way bills by themselves cannot be any mechanical detention of
vency Courts. The question before the cannot be the ground of confiscating
Apex Court was whether the NCLT and a consignment in transit solely on the
the NCLAT were empowered to adju- items by the GST authorities. basis of the two reasons cited above.
dicate on the contract disputes or not. Mere change of route without any- "We find that merely (from) the direc-
thing more would not necessarily be tion preferred by the petitioners for
The Supreme Court said yes, they were
empowered, by virtue of the residuary sufficient to draw an inference that the delivery of consignment to the place
jurisdiction under Section 60(5)(C) of intention is to evade tax, the court destined for, an inference cannot be
the IBC. The existence of an arbitra- ruled. In the same manner, mere un- drawn with regard to the intention of
tion clause did not oust the jurisdiction dervaluation of the goods also by itself the petitioners to evade tax," it said.
of NCLT to exercise its residuary pow- is not sufficient to detain the goods and So far as the second ground with re-
ers under Section 60(5)(C) of the IBC, vehicle, far from being liable to confis- gard to the goods being transported to
it said. It reasoned that the NCLT and cation. be undervalue is concerned, no mate-

BANKING FINANCE | FEBRUARY | 2022 | 19