NCLAT Sets Aside NCLT’s View On CST Dues, Clears Way For Approval Of Amul Industries Resolution Plan

NCLAT Sets Aside NCLT’s View On CST Dues, Clears Way For Approval Of Amul Industries Resolution Plan

Introduction

The National Company Law Appellate Tribunal (NCLAT), New Delhi, has reiterated that dues under the Central Sales Tax (CST) Act do not constitute secured debt under the Insolvency and Bankruptcy Code (IBC). A Bench comprising Chairperson Justice Ashok Bhushan and Technical Member Indevar Pandey set aside orders of the National Company Law Tribunal Ahmedabad Bench dated November 6, 2025, which had rejected the resolution plan of Amul Industries Ltd. on the ground that it failed to treat CST dues as secured debt.

Factual Background

The Corporate Insolvency Resolution Process (CIRP) against Amul Industries Ltd. commenced on April 8, 2024. Seven prospective resolution applicants submitted expressions of interest, and three eventually submitted resolution plans. The Committee of Creditors (CoC) approved the resolution plan submitted by Sandeep Vadodaria (in consortium) on July 3–4, 2025. The Resolution Professional thereafter filed an application before the NCLT seeking approval of the plan under Section 30(2) of the IBC. Meanwhile, the State Tax Officer filed an application seeking declaration that CST dues be treated as secured debt.

Procedural Background

On November 6, 2025, the NCLT Ahmedabad rejected the resolution plan on the ground that it did not treat CST dues as secured debt and therefore did not comply with Section 30(2) of the IBC. In a separate order passed on the same day, the NCLT allowed the State Tax Officer’s application declaring CST dues as secured debt. Aggrieved, the resolution applicant and other stakeholders approached the NCLAT.

Issues

1. Whether dues under the Central Sales Tax Act constitute secured debt under the IBC.

2. Whether the NCLT was justified in rejecting the resolution plan for non-treatment of CST dues as secured debt.

3. Whether the NCLT’s order was contrary to settled precedent of the Appellate Tribunal.

Contentions

Before the Appellate Tribunal, it was submitted that the issue stood conclusively settled in an earlier NCLAT judgment holding that CST dues are not secured debt. The appellants argued that the NCLT’s reasoning was directly contrary to binding precedent and therefore legally unsustainable.

The respondents did not dispute that the earlier decision of the Tribunal had declared that CST dues do not qualify as secured debt.

Reasoning and Analysis

The NCLAT recorded that there was no dispute between the parties that the Tribunal had previously held CST dues not to be secured debt. It observed that the Adjudicating Authority’s rejection of the resolution plan on the ground of non-treatment of CST dues as secured debt was contrary to the law already laid down by the Tribunal. The Bench held that once the legal position was settled, the NCLT could not take a contrary view and reject the plan on that basis.

Decision

The NCLAT set aside both orders dated November 6, 2025:

• The order rejecting the resolution plan; and
• The order declaring CST dues as secured debt.
• The resolution plan approval application has been revived before the NCLT Ahmedabad, which has been directed to pass a consequential order within eight weeks from production of the judgment.
• All three appeals were allowed.

In this case the appellant was represented by Abhijeet Sinha, Sr Advocate with Karan Valecha, Jaimin R Dave, Hirva Dave, Shivangi Khandelwal and Henna Kochar, Advocates. Meanwhile the respondent was represented by Krishnendu Dutta, Sr Advocate with Advocates Palash Singhai, Harshal Sareen and Aashima Gautam and Yash Tandon, Advocates.