Abstract

The Insolvency and Bankruptcy Code, was enacted with the primary objective of rehabilitation of financially distressed corporates and came into effect on 1st December 2016. The enactment of the Insolvency and Bankruptcy Code, 2016 (“Code”) has had significant ramifications on the corporate world. Over time, the Code has witnessed a manifold increase in litigation since the Code brought about a paradigm shift from the debtor-in-control method to a creditor- driven process. The provisions of IBC have an overriding effect over other enactments in case of any consistency. To give accord to the IBC, amendments have been made in a number of legislations namely the Companies Act, Income Tax Act, SARFAESI Act, etc. Now, it is pertinent to examine the interplay of tax laws with the IBC. The liquidators and the Resolution Professionals have now and then knocked on the doors of the Adjudicating Authority to ascertain the rights and the liabilities of the stakeholders. The principal question whether the IBC prevails over the Income Tax Act and the Goods and Services Act, can be analysed in view of Section 238 of the IBC, 2016 which states that the provisions of the IBC overrides all other enactments to the extent they are inconsistent with the provisions of the Code. The questions which are taken into consideration in this article are whether the statutory dues come within the meaning of operational debts or not and what is the treatment of the tax laws vis-à-vis the IBC.

Keywords