NCLAT Reaffirms CST Dues Not Secured Debt, Sets Aside Order Rejecting Amul Industries Resolution Plan

The National Company Law Appellate Tribunal (NCLAT) at New Delhi, has recently reiterated that dues under the Central Sales Tax Act are not secured debt in insolvency proceedings.

A bench of Chairperson Justice Ashok Bhushan and Technical Member Indevar Pandey set aside the orders passed by the NCLT Ahmedabad on 6 November 2025.

The NCLT had rejected the resolution plan of Amul Industries Ltd. on the ground that it did not treat Central Sales Tax dues as secured debt and therefore did not comply with Section 30(2) of the Insolvency and Bankruptcy Code. In a separate order passed the same day, the NCLT had allowed the State Tax Officer's application declaring CST dues as secured debt.

The corporate insolvency resolution process against Amul Industries Ltd. commenced on April 8, 2024. Seven prospective resolution applicants submitted expressions of interest. Three submitted resolution plans. The Committee of Creditors approved the plan submitted by Sandeep Vadodaria (in consortium) on 03/04 July 2025. The Resolution Professional thereafter filed an application seeking approval of the plan.

The State Tax Officer had filed an application seeking a declaration that dues under the Central Sales Tax Act be treated as secured debt.

Before the Appellate Tribunal, it was submitted that the issue already stood settled in an earlier decision of the Tribunal holding that Central Sales Tax dues are not secured debt.

The bench recorded:

“There is no dispute between the Ld. Counsel for the parties that the law has been declared by this Tribunal in the above case has clearly held that Central Sales Tax dues are not secured debt. In view of the aforesaid, the reason given by the Adjudicating Authority for rejecting the plan approval application is unsustainable.”

Holding that the NCLT's reasoning was contrary to the law already laid down, the Appellate Tribunal set aside both orders dated 6 November 2025.

The resolution plan approval application has been revived before the Adjudicating Authority, which has been directed to pass a consequential order within eight weeks from the date a copy of the judgment is produced.

All three appeals were allowed.