DOES THE RESOLUTION PLAN [INSOLVENCY AND BANKRUPTCY CODE, 2016] OVERRIDE THE SOVEREIGN RIGHT OF TAXATION?
SHORT NOTE: The waterfall liability under section 53 of the Insolvency and Bankruptcy Code, 2016 (hereinafter ‘IBC’) places government at fifth place in order of priority. Although with the operation of Sec. 53 of the IBC, the statutory dues/government dues merely have been lowered in order of priority from the sale of the liquidation assets, whereby not abolishing the statutory dues. Simply grading down in the priority order from the sale of the liquidation assets does not impede the government’s right, as it does not extinguish the government’s claim. Therefore, it cannot be said that while placing statutory dues/government dues in the lower order of priority from the sale of the liquidation assets, impede government’s right of taxation. Statutory dues arise pursuant to a provision in the various statute. In taxing statute, the statutory dues get levied from the charging section of the respective statute. There is an enormous difference between employees, members, creditors, guar...