# State Tax Officer Vs. Rainbow Papers Limited, Civil Appeal No. 1661 and 2568 of 2020

> SC judgment dated 2022-09-06. Citation: TCN-2022-SC-00027. The appeals were filed under Section 62 of the Insolvency and Bankruptcy Code (IBC) against a…

- **Court:** SC
- **Order date:** 6 Sept 2022
- **Citation:** TCN-2022-SC-00027
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/supreme-court-of-india/state-tax-officer-vs-rainbow-papers-limited-civil-appeal-no-1661-and-2568-of-202-c44aa253

## Summary

### Background

The appeals were filed under Section 62 of the Insolvency and Bankruptcy Code (IBC) against a judgment and order dated 19th December 2019, passed by the National Company Law Appellate Tribunal (NCLAT). The NCLAT dismissed Company Appeal (AT)(Insolvency) No. 404 of 2019, which was filed by the appellant against an order dated 27th February 2019, issued by the Adjudicating Authority. The Adjudicating Authority had rejected the application being I.A No.224/271/272/337 of 2018 and P-01 of 2019 in C.P. No. (IB) 88/9/NCLT/AHM/2017 filed by the appellants. The NCLAT held that the Government cannot claim first charge over the property of the Corporate Debtor, as Section 48 of the Gujarat Value Added Tax (GVAT) Act, 2003, which provides for first charge on the property of a

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## Facts

Rainbow Papers Limited (the respondent) was engaged in the business of manufacture and sale of Crafts and Oars within and outside the State of Gujarat since 16th April, 1990. The State Tax Officer (1) (the appellant) assessed Value Added Tax (VAT) and Central Sales Tax (CST) under the GVAT Act to the respondent. An amount of Rs.53,71,65,489/- was due from the Respondent to the Sales Tax authorities towards CST and VAT. Recovery proceedings were initiated against the respondent on or about 8th July, 2016, for the dues of the year 2011-2012, and the appellant attached the property of the respondent on 8th October, 2018. Neeraj Papers Private Limited, as operational creditor of the respondent, filed Company Petition (IB) No.88 of 2017 under Section 9 of the IBC before

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## Issues and analysis

### Issue 1: Whether the provisions of the IBC and, in particular, Section 53 thereof, overrides Section 48 of …

**Ratio:** Section 53 of the IBC, which provides for the distribution of assets in liquidation,

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**Reasoning:** The court reasoned that the non-obstante clause in Section 53 of the IBC does not

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**Interpretation:** The interpretation clarifies that while the IBC aims to consolidate and

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**Application:** The court applied this reasoning to the specific facts of the case, stating

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## Parties

- **Judges:** INDIRA BA…; A.S. BO…
- **Appellants:** STATE TAX OFFICER…
- **Respondents:** Rainbow Papers…
- **Other parties:** 7th Edition…; Gujarat V…; +10 more

## Timeline

- **1990-04-16 — Business Comm…**: Rainbow Papers Limited engaged in the business of manufacture and sale of Crafts and Oars…
- **2016-07-08 — Recovery Proceedings…**: Recovery proceedings were initiated against the…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 62 — Appeal to Supreme Court](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-62)

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