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Outbyte PC Repair FREEClear out junk files and repair common Windows errorsFree Scan →Outbyte Driver Updater FREEScan for outdated or missing drivers - takes under a minuteDriver Scan →In India, once the National Company Law Tribunal (NCLT) approves a resolution plan under Section 31 of the Insolvency and Bankruptcy Code, 2016, a tax claim for a period before that approval generally cannot be pursued if the plan omitted it. The tax authority cannot continue an existing proceeding or start a new one to recover that omitted claim. The rule also reaches statutory dues and claims quantified only after approval; the approved plan and the facts of the particular demand still need to be checked.
The rule turns on the tax period and the approved plan
The key question is not simply whether a tax proceeding began before approval. Ask whether the demand concerns a period before the plan was approved and whether the claim is included or otherwise dealt with in that plan. Under the Supreme Court’s interpretation of Section 31, claims outside the approved plan are extinguished, and proceedings to pursue them cannot be initiated or continued.
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In Ghanshyam Mishra & Sons (P) Ltd. v. Edelweiss Asset Reconstruction Co. Ltd., the Supreme Court held that an approved plan binds the corporate debtor and stakeholders, including central and state governments and local authorities. It concluded that statutory dues relating to the period before approval, if not part of the plan, cannot be pursued afterward. Read the Supreme Court judgment, including paragraphs 95 and 102.
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A proceeding already underway
If an authority was already assessing or recovering tax when the plan was approved, it cannot continue that proceeding to collect an omitted pre-approval claim. The same rule applies if the authority begins a proceeding only after approval: a new filing does not revive a claim excluded from the plan.
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An amount quantified after approval
A later assessment does not by itself turn a liability for an earlier period into a post-approval liability. In a 28 August 2024 decision, the Bombay High Court applied the rule to tax proceedings concerning pre-CIRP operations, rejecting the argument that an amount not yet crystallised should count as a future due. Read the judgment copy hosted by the Insolvency and Bankruptcy Board of India.
On 27 March 2025, the Supreme Court reiterated that tax demands for periods before plan approval, where not included in the plan, could not be pursued. The Court described continued demands as contrary to its earlier ruling in Ghanshyam Mishra. Read the Supreme Court order concerning JSW Steel Limited v. Pratishtha Thakur Haritwal.
Government tax dues are covered
The Supreme Court’s holding applies to statutory dues owed to government authorities, not only to private creditors. It said an approved plan binds central and state governments and local authorities as stakeholders. The Court also treated the 2019 amendment to Section 31—which expressly named government authorities—as declaratory and clarificatory, effective from the Code’s commencement. Its reasoning was that government dues were already covered by the Code’s definitions of claim, operational debt and creditor. See paragraphs 66–71 and 91–95 of the judgment.
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How to assess a particular tax demand
Review the documents and dates before applying the general rule. These are the questions that distinguish an omitted old claim from a claim the rule does not resolve:
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- Current Official Bankruptcy Forms
- References to Recent and Notable Case Law
- Latest Statutory Changes to Bankruptcy Code Exemption Amounts
- What period does the tax concern? Identify the tax period or operations underlying the demand, rather than relying only on the date of the notice or assessment.
- When was the plan approved? Use the NCLT approval date and order as the relevant point for determining what was pre-approval.
- How does the approved plan treat the claim? Check whether it is included or otherwise addressed; the general rule concerns claims omitted from the plan.
- What is the procedural posture? Determine whether the authority is trying to continue an existing assessment or recovery process, or commence one after approval. Neither route permits pursuit of an omitted pre-approval claim.
- Was the amount assessed by approval? A later quantification alone does not make a claim for an earlier period a new-period liability.
The cited decisions establish the general treatment of omitted pre-approval claims; they do not decide every dispute about a plan’s wording, a demand’s basis, or a genuinely separate liability arising after approval. Those issues require examination of the plan and the specific tax record.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.The Supreme Court’s stated conclusion
“On the date of approval of resolution plan by the Adjudicating Authority, all such claims, which are not a part of resolution plan, shall stand extinguished and no person will be entitled to initiate or continue any proceedings in respect to a claim, which is not part of the resolution plan.”
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Supreme Court, Ghanshyam Mishra, paragraph 102.1.
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