I-T department, other tax agencies can initiate insolvency: NCLAT

Income tax, value added tax, other such dues will come within the meaning of operational debt, says NCLAT

The Income Tax department of the central government, the sales tax department of the state government and other local authorities “who are entitled for dues arising out of the existing law” can now initiate corporate insolvency resolution process against such companies who owe them the dues, the National Company Law Appellate Tribunal (NCLAT) has held.

These tax departments will be considered as operational creditors of the debtor companies and all statutory dues including income tax, value added tax and others will come within the meaning of operational debt, a two-member Bench headed by Justice S J Mukhopadhaya said on Wednesday.