SC slams Chhattisgarh tax dept for contempt in JSW Steel case

Quashing the demand notices issued by the Chhattisgarh tax department and also consequent recovery proceedings initiated against JSW Steel post acquisition of Monnet Ispat & Energy, the Supreme Court on Thursday held this act of the state tax authorities as contemptuous in nature as they had failed to comply with the apex court’s 2021 ruling that held that liabilities of the debt-laden firm gets extinguished after the resolution plan is approved.

A Bench comprising justices B.R. Gavai and Augustine George Masih quashed demand notices of 2022 issued by the Chhattisgarh tax department under Central Sales Tax Act, 1956, Chhattisgarh Value Added Tax Act, 2005 and Entry Tax Act, 1976 against JSW Steel for a total sum of over Rs 4 core.

However, the apex court did not take any action against them in view of unconditional apology tendered by them. " we hold that the act of the alleged contemnors is contemptuous in nature, we do not propose to proceed against the respondents/contemnors inasmuch as they are entitled to benefit of doubt," the court said.


The contemnors included the Assistant Commissioner, Commercial Tax department, Raipur-II, Additional Revenue Collector, Raipur and Assistant Commercial Division-II, Commercial Tax department, Raipur.

When the law laid down by the top court in 2021 was clear and unambiguous and specifically when JSW Steel's own case was part of the batch which was specifically dealt with, the tax department ought not to have proceeded further with the recovery proceedings and ought to have dropped them forthwith, it said.

In 2021, the apex court had ruled that all creditors, including the central government, state government or any local authority are bound by the resolution plan as approved by the National Company Law Tribunal and all claims which were not a part of the plan stood extinguished. JSW Steel had filed a contempt case against the state tax department.