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A free scan shows the junk files, broken settings and background clutter dragging Windows down - then fixes them in one click.Free scan · Windows 10 & 11In India, a tax proceeding over a liability from before an insolvency resolution plan was approved generally cannot continue after approval if the claim was left out of the plan. The same rule can prevent a new proceeding to collect that omitted claim, even if the tax amount was assessed or quantified only later. The controlling question is whether the claim concerns the pre-approval period and how the approved plan treats it—not simply when the tax proceeding began.
What the Supreme Court rule means
Under Section 31 of India’s Insolvency and Bankruptcy Code, 2016 (IBC), an approved resolution plan binds the corporate debtor and its stakeholders, including government authorities. In Ghanshyam Mishra & Sons (P) Ltd. v. Edelweiss Asset Reconstruction Co. Ltd., the Supreme Court held that claims not included in the plan stand extinguished on the date the Adjudicating Authority approves it. A creditor cannot initiate or continue proceedings to pursue an omitted claim. The Court expressly included statutory dues owed to the Central Government, State Governments and local authorities. Read the Supreme Court judgment, including paragraphs 95 and 102.
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In practical terms, if a tax authority had already started an assessment, demand or recovery proceeding for an omitted pre-approval claim, the proceeding cannot be used to revive or collect that claim after approval. The rule also applies to a new proceeding started after approval where it seeks to pursue the same kind of omitted pre-approval liability.
How to assess a particular tax proceeding
Review the claim’s underlying period and basis, the plan and the NCLT approval order. The proceeding’s start date, by itself, does not answer whether the liability survives.
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- Identify the period and basis. Determine which tax period, transaction or operations gave rise to the demand. A liability concerning a period before approval may be a pre-approval claim even if the authority raises it later.
- Check the approved plan’s treatment. Look for whether the tax claim is included, addressed or omitted. The general extinguishment rule concerns claims that are not part of the plan; the plan’s actual language matters.
- Confirm the approval date and order. Section 31’s effect turns on approval by the Adjudicating Authority. Check the NCLT order and date rather than relying on the date a plan was proposed, submitted or otherwise discussed.
- Identify what the authority is trying to do. It may be continuing an existing assessment or recovery matter, or starting a new one. The Supreme Court’s rule addresses both when they concern an omitted pre-approval claim.
- Distinguish a later liability. A demand for a genuinely separate post-approval period is not automatically the same claim as a pre-approval liability. Its treatment requires examining its own legal and factual basis.
A later assessment does not automatically make an old claim new
The amount need not have been finally assessed or crystallised by the approval date for the rule to matter. On 28 August 2024, the Bombay High Court applied the principle to tax proceedings concerning pre-CIRP operations and rejected the argument that an uncrystallised assessment should be treated as a future due. The judgment copy is hosted by the Insolvency and Bankruptcy Board of India: Bombay High Court judgment, 28 August 2024.
The Supreme Court reiterated the principle in its 27 March 2025 order concerning JSW Steel Limited v. Pratishtha Thakur Haritwal: demands for periods before plan approval that were not included in the plan could not be pursued after approval. Read the Supreme Court order.
Why government tax dues are covered
The IBC’s 2019 amendment expressly named government authorities in Section 31. In Ghanshyam Mishra, the Supreme Court treated that amendment as declaratory and clarificatory, effective from the Code’s commencement. The Court also reasoned from the Code’s definitions of claim, operational debt and creditor that government statutory dues were already within the framework. Its analysis appears in paragraphs 66–71 and 91–95 of the judgment.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.What the rule does—and does not—settle
The cited decisions establish the general treatment of omitted claims relating to pre-approval periods. They do not determine every dispute about the meaning or application of a particular plan, the basis of a demand, or whether a separate post-approval liability exists. Those questions depend on the approved plan, the NCLT order and the specific tax proceeding. For an individual matter, those documents and the applicable legal advice are essential.
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