Quick answer: In Jaiprakash Associates Limited v. The Office of the Commissioner of Customs, Air Cargo Complex Import & Anr., decided on 2 September 2026, a Division Bench of the Delhi High Court (Anil Kshetarpal, J. and Shail Jain, J.) quashed an Order-in-Original that had confirmed differential customs duty of Rs. 5,89,366, interest under Section 28AA, and a penalty of Rs. 4,00,000 under Section 117 of the Customs Act, 1962, arising from an import made on 15 September 2023. The Court held that because the underlying customs liability related to a transaction predating the Corporate Insolvency Resolution Process (CIRP) commencement date, and the Customs Department had not submitted any claim before the Resolution Professional despite the public announcement inviting claims, the liability stood extinguished under Section 31(1) of the Insolvency and Bankruptcy Code, 2016 once the National Company Law Tribunal (NCLT) approved the resolution plan on 17 March 2026 — irrespective of whether the demand was later adjudicated on its merits.
Key Takeaways
- A customs liability need not be adjudicated to be a “claim” under the IBC. The Court held that the wide definition of “claim” in Section 3(6) of the Insolvency and Bankruptcy Code, 2016 covers a right to payment whether or not it is fixed, disputed or reduced to judgment, so an unadjudicated but pre-existing customs liability from a transaction predating the insolvency commencement date is a claim that had to be submitted to the Resolution Professional — its later quantification through a show-cause notice does not convert it into a fresh, post-CIRP liability.
- The burden to file a claim during CIRP lies on the creditor, not the corporate debtor. Once the statutory public announcement inviting claims has been made under Regulation 6 of the CIRP Regulations, a creditor’s failure to submit a claim — including a government department — cannot later be excused on the ground that the corporate debtor did not separately notify it, nor can a creditor’s own delay in adjudicating be used to claim the liability arose only after approval of the resolution plan.
- Determination of customs duty during CIRP and enforcement after an approved resolution plan are two different things. The Court read ABG Shipyard Liquidator v. Central Board of Indirect Taxes & Customs as authority only for the proposition that customs authorities may determine duty liability during CIRP subject to the moratorium, not as licence to continue enforcing a pre-CIRP liability against the corporate debtor once a resolution plan binding under Section 31(1) has been approved.
- A finding that the department is a “secured creditor” under a state tax statute, as in Rainbow Papers, does not extend to unfiled central customs claims. The Court relied on the Supreme Court’s subsequent confinement of Rainbow Papers in Paschimanchal Vidyut Vitran Nigam Ltd. v. Raman Ispat Pvt. Ltd. to hold that Rainbow Papers turned on a specific state “first charge” provision and the waterfall mechanism under Section 53 of the IBC, and does not support a general proposition that statutory dues survive extinguishment under Section 31(1).
- A writ petition can lie even though a statutory appeal exists, where the challenge goes to jurisdiction rather than merits. The Court entertained the writ under Article 226 without relegating the petitioner to the appellate remedy under the Customs Act, because the dispute concerned whether the adjudicating authority had jurisdiction to continue proceedings at all after the resolution plan’s approval, not the correctness of the classification or duty computation.
1. Introduction
A customs show-cause notice and a corporate insolvency resolution process can run on entirely separate tracks for years without either side noticing the other — until one catches up. That is what happened to Jaiprakash Associates Limited. It imported digital video recorders in September 2023; the following year it went into the Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code, 2016 (IBC); and only after the resolution plan for its revival had been approved by the National Company Law Tribunal (NCLT) did the customs authorities confirm a differential duty demand, interest and penalty on that 2023 import. The Delhi High Court’s judgment in Jaiprakash Associates Limited v. The Office of the Commissioner of Customs addresses a question that recurs wherever a corporate debtor going through insolvency also happens to be an importer, exporter or GST-registered assessee with pending or dormant indirect tax proceedings: what happens to a customs (or, by the same logic, any indirect tax) demand for a pre-insolvency period when the tax authority never filed a claim during the resolution process?
The Court’s answer follows a well-trodden path laid down by the Supreme Court in Ghanashyam Mishra & Sons (P) Ltd. v. Edelweiss Asset Reconstruction Co. Ltd. and its progeny, but applies that path squarely to a customs adjudication that had continued, seemingly oblivious to the resolution plan, right up to the final Order-in-Original. The judgment is useful for three reasons. First, it works through, in the customs context specifically, the distinction between a tax authority’s power to determine duty liability during CIRP and its very different, and more limited, power to enforce that liability once a resolution plan has been approved. Second, it addresses head-on the department’s argument that the customs department’s own belated knowledge of the CIRP, and the taxpayer’s inability to prove the liability was placed before the Resolution Professional, could keep the demand alive — and rejects both. Third, it shows how the Supreme Court’s narrowing of State Tax Officer v. Rainbow Papers Ltd. in Paschimanchal Vidyut Vitran Nigam Ltd. v. Raman Ispat Pvt. Ltd. now operates as a check on any government department’s attempt to treat statutory dues as immune from the IBC’s extinguishment regime. This article sets out the facts, the Court’s reasoning, and what both mean for customs, GST and CENVAT practitioners advising corporate debtors and resolution applicants alike.
2. Case summary and background
2.1 The import and the demand
On 15 September 2023, Jaiprakash Associates Limited imported Digital and Network Video Recorders, described as an AVASYS New Digital Video Recording System with Encoder, at a combined assessable value of Rs. 45,40,569 vide Bill of Entry No. 7856824. The goods were classified under Customs Tariff Heading (CTH) 85219090, and the petitioner claimed Basic Customs Duty at the concessional rate of 10% under Serial No. 499A of CBIC Notification No. 50/2017-Customs dated 30 June 2017.
Almost two years later, the Additional Commissioner of Customs issued a Pre-Notice Consultation letter dated 24 July 2025 under Section 28(1) of the Customs Act, 1962, alleging that the imported goods were not eligible for the Serial No. 499A concession and were liable to duty at 20% instead of 10% — a short levy of Rs. 5,89,366. A formal Show Cause Notice, No. 27/2025-26, followed on 10 September 2025, proposing recovery of that differential duty with interest under Section 28AA and penalty under Sections 112(a)(ii) and/or 117 of the Act. Five rounds of personal hearing were held, on 29 October 2025, 19 November 2025, 11 February 2026, 19 March 2026 and 19 May 2026.
2.2 The parallel insolvency process
In the meantime, and unrelated on its face to the customs proceedings, the NCLT’s Allahabad Bench had, on 3 June 2024, admitted a petition filed by ICICI Bank Limited under Section 7 of the IBC and commenced CIRP against Jaiprakash Associates — fixing 3 June 2024 as the Insolvency Commencement Date. A public announcement inviting claims from creditors was issued on 6 June 2024, with 17 June 2024 fixed as the last date for submitting proofs of claim under Regulation 12(1) of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. The Customs Department did not submit any claim within that period, or within the extended windows the CIRP Regulations otherwise permit.
The Committee of Creditors approved a resolution plan submitted by Adani Enterprises Limited on 31 October 2025 — after the customs Pre-Notice Consultation letter had already issued, but before the Show Cause Notice. The Resolution Professional then applied to the NCLT under Sections 30(6) and 31(1) of the IBC for approval, and the NCLT approved the resolution plan by order dated 17 March 2026. On 18 May 2026, the petitioner wrote to the Additional Commissioner of Customs enclosing the NCLT’s approval order and invoking Clause 4.12.1 of the approved plan, under which claims relating to the pre-CIRP period that had not been submitted to the Resolution Professional, or had been submitted and rejected or not verified, were to stand extinguished and become nil.
2.3 The impugned order and the writ petition
Despite this submission, the Additional Commissioner of Customs passed Order-in-Original No. 23/2026-27/ACC Import/2789 on 2 June 2026, confirming the differential customs duty of Rs. 5,89,366 under Section 28(1), directing recovery of interest under Section 28AA, declining the penalty proposed under Section 112(a)(ii) but imposing a penalty of Rs. 4,00,000 under Section 117 instead. The order reasoned that the petitioner had not established that the customs liability had actually been placed before, or considered by, the Resolution Professional or the NCLT, and noted that the pendency of the CIRP had been disclosed to the department only at the final hearing on 19 May 2026. The order also recorded that the petitioner’s authorised representative had, during that hearing, expressed willingness to discharge the dues, attributing non-payment to technical difficulties on the ICEGATE portal.
Jaiprakash Associates challenged the order by way of a writ petition under Article 226 of the Constitution, W.P.(C) 10387/2026, contending that the liability stood extinguished by operation of Section 31(1) read with Section 238 of the IBC and Clause 4.12.1 of the approved resolution plan, since it arose from a pre-CIRP transaction the Customs Department had never placed before the Resolution Professional despite the statutory opportunity to do so. On 2 September 2026, the Division Bench allowed the petition and quashed the Order-in-Original in its entirety, without going into the merits of the underlying classification dispute.
3. Legal analysis
3.1 A “claim” under the IBC does not wait for adjudication
The Court’s analysis begins with the definition of “claim” in Section 3(6) of the IBC — a right to payment “whether or not such right is reduced to judgment, fixed, disputed, undisputed, legal, equitable, secured or unsecured.” The Bench read this definition as deliberately wide, and held that a claim’s existence is tied to the underlying right to payment, not to its subsequent adjudication or quantification. On that basis, the fact that the Customs Department had not, as of the Insolvency Commencement Date, quantified or adjudicated the differential duty did not take the underlying liability outside the scope of a “claim.” The transaction giving rise to the liability — the September 2023 import — had already occurred; the department’s subsequent Pre-Notice Consultation letter and Show Cause Notice, issued more than a year after CIRP began, did not convert an already-existing pre-CIRP claim into a fresh post-CIRP one.
This reasoning does real work in the customs and indirect tax context specifically, because indirect tax demands are frequently raised years after the underlying transaction, once an audit, investigation or departmental review flags an issue. The judgment forecloses an argument a department might otherwise be tempted to run — that because the liability was not yet crystallised into a demand at the time of CIRP, it fell outside the claims process altogether and could be raised afterward as though it were a fresh liability.
3.2 The burden of filing a claim lies on the creditor, and public announcement discharges the corporate debtor’s obligation
The Court rejected the department’s contention that it could not be faulted for failing to submit a claim because it had not been individually notified of the CIRP. Relying on the statutory scheme — Regulation 6 of the CIRP Regulations, which requires the Resolution Professional to publish a public announcement in English and regional-language newspapers and on designated websites — the Bench held that a corporate debtor is not required to individually track down and notify every conceivable creditor; the burden of identifying and filing a claim lies on the creditor once the public mechanism has been followed. The department’s later argument that the pendency of CIRP was disclosed to it only at the final hearing on 19 May 2026 was, for the same reason, held immaterial: the obligation to file a claim arose from the public announcement of 6 June 2024, not from any personal intimation by the corporate debtor.
3.3 Section 31(1), the 2019 Amendment, and the “clean slate” doctrine
The centrepiece of the Court’s reasoning is Section 31(1) of the IBC, which makes an NCLT-approved resolution plan binding on the corporate debtor and its creditors, “including the Central Government, any State Government or any local authority to whom a debt in respect of the payment of dues arising under any law for the time being in force” is owed. That express reference to government creditors was inserted by the Insolvency and Bankruptcy Code (Amendment) Act, 2019, and the Supreme Court in Ghanashyam Mishra & Sons (P) Ltd. v. Edelweiss Asset Reconstruction Co. Ltd. — extracted at length in this judgment — held that the amendment was declaratory and clarificatory, and therefore retrospective, and that “on the date of approval of resolution plan by the adjudicating authority, all such claims, which are not a part of resolution plan, shall stand extinguished and no person will be entitled to initiate or continue any proceedings in respect to a claim, which is not part of the resolution plan.” The Delhi High Court treated this as squarely governing the case: the customs liability was not part of the approved plan, and Clause 4.12.1 of the plan itself expressly reduced such unfiled pre-CIRP claims to nil.
The Bench reinforced this with the Supreme Court’s reasoning in Essar Steel India Ltd. Committee of Creditors v. Satish Kumar Gupta, on the “clean slate” rationale underlying Section 31(1) — that a successful resolution applicant must be able to calculate exactly what liabilities it is taking on, and cannot be “flung with any surprise claims” after the plan is approved — and with Vaibhav Goel v. Deputy Commissioner of Income Tax, in which the Supreme Court applied the same extinguishment principle to income tax dues not forming part of an approved plan. Section 238 of the IBC, which gives the Code overriding effect over any inconsistent law, was invoked to resolve any apparent tension with the Customs Department’s ordinary statutory powers: where the exercise of power under the Customs Act comes into conflict with the binding consequences of an approved resolution plan, the Court held, Section 238 gives precedence to the IBC.
3.4 Distinguishing ABG Shipyard and confining Rainbow Papers
The department’s strongest authorities were dealt with directly rather than brushed aside. It relied on ABG Shipyard Liquidator v. Central Board of Indirect Taxes & Customs, in which the Supreme Court held that customs authorities may determine the quantum of duty payable even during CIRP, though recovery remains subject to the IBC. The Delhi High Court read this as authority for a limited proposition — the power to determine liability during the insolvency process, subject to the moratorium — and not as authority for continuing to enforce a pre-CIRP liability against the corporate debtor after a resolution plan has since been approved and become binding under Section 31(1). The Court drew a clear line between determination and enforceability, and held that ABG Shipyard answers only the first question, not the second, which is what this case turned on.
The department also invoked State Tax Officer v. Rainbow Papers Ltd. for the proposition that statutory dues cannot simply be disregarded in insolvency. The Delhi High Court noted that the Supreme Court itself had subsequently confined Rainbow Papers in Paschimanchal Vidyut Vitran Nigam Ltd. v. Raman Ispat Pvt. Ltd., which held that Rainbow Papers turned specifically on Section 48 of the Gujarat Value Added Tax Act, 2003 — a “first charge” provision that made the state a secured creditor under that particular state statute — and that the judgment had not considered the waterfall mechanism under Section 53 of the IBC, which ranks government dues well below secured and even unsecured operational creditors, nor had it arisen in the context of a resolution process rather than liquidation. On that basis, Paschimanchal held that Rainbow Papers “has to be confined to the facts of that case alone.” The Delhi High Court applied this confinement to reject the department’s reliance on Rainbow Papers here, since no comparable statutory “first charge” or secured-creditor status was available to the Customs Department under the Customs Act.
3.5 Writ jurisdiction despite an available statutory appeal
The department also argued that the petitioner should have been relegated to the statutory appellate remedy under the Customs Act, citing M/s Rajesh Projects India Ltd. v. Commissioner, Central Tax, Delhi West, in which the Delhi High Court had declined to entertain a challenge on merits given the availability of an appeal. The Bench distinguished that decision as concerned with whether an assessment could be framed during CIRP, not with the consequence of an already-approved resolution plan on an unfiled claim. It held that because the present challenge went to whether the adjudicating authority retained jurisdiction to continue proceedings at all, rather than to the correctness of the classification or duty computation, the writ petition was maintainable notwithstanding the statutory appeal — the classification and computation questions were left entirely unaddressed and expressly recorded as not decided.
4. Practical significance
For resolution professionals, committees of creditors and resolution applicants evaluating a target with import or export operations, this judgment reinforces a due diligence point that is easy to overlook: a public announcement inviting claims discharges the corporate debtor’s obligation regardless of whether a particular government creditor — customs, GST, or otherwise — actually reads it or reacts in time. A resolution applicant taking over a corporate debtor with unresolved indirect tax audits, investigations or pending show-cause proceedings for the pre-CIRP period can, on this reasoning, treat any liability not reflected in the approved plan as extinguished once the plan takes effect, and need not carry a contingent provision for it merely because the department’s own adjudication was still pending on the resolution date.
For customs, GST and central excise field formations, the practical lesson cuts the other way: any pending audit, investigation or adjudication concerning a taxpayer that later enters CIRP must be tracked against the insolvency timeline, and a claim filed with the Resolution Professional before the claims window closes, even on a provisional or estimated basis, preserves the department’s position far more reliably than waiting for the underlying adjudication to conclude and then attempting to enforce the resulting demand afterward. The CBIC’s own Standard Operating Procedure of 23 May 2022 (Instruction No. 1083/04/2022-CX09), which the petitioner cited to show that customs authorities are themselves expected to file claims as operational creditors during CIRP, underscores that this is departmental policy as much as case law.
For advisers handling a live indirect tax dispute against a corporate debtor that has gone through, or is going through, CIRP, the immediate step is to establish two dates precisely: the Insolvency Commencement Date, and the date the resolution plan was approved by the NCLT. Any demand relating to a transaction predating the first date, not reflected in the approved plan, is a strong candidate for a writ challenge on jurisdictional grounds — bypassing the ordinary requirement to first exhaust the statutory appeal — because the question is not the correctness of the assessment but whether the department retained any power to adjudicate or enforce it at all. Conversely, departments and their counsel should treat a corporate debtor’s disclosure of a live or concluded CIRP, however belated, as requiring an immediate and independent inquiry into the resolution plan’s terms before confirming any demand, rather than treating the taxpayer’s failure to produce proof that the claim was considered by the Resolution Professional as decisive — this judgment holds that the burden runs the other way.
5. Conclusion
Jaiprakash Associates does not extend the extinguishment doctrine established in Ghanashyam Mishra into new statutory territory; its significance lies in applying that doctrine, cleanly and without qualification, to a customs duty demand that had continued to be adjudicated years after the relevant CIRP had already run its course. The judgment confirms that the wide statutory definition of “claim” catches an unadjudicated pre-CIRP indirect tax liability regardless of when a show-cause notice happens to be issued; that the burden of filing a claim during CIRP lies squarely on the creditor, government departments included; and that a department’s power to determine duty during CIRP, recognised in ABG Shipyard, does not survive into a power to enforce that duty once a resolution plan binding under Section 31(1) has been approved.
The decision also does useful housekeeping on precedent: it treats the Supreme Court’s own confinement of Rainbow Papers in Paschimanchal Vidyut Vitran Nigam as settled law, foreclosing any renewed departmental attempt to invoke Rainbow Papers for a general proposition that statutory dues are immune from extinguishment under the IBC. For indirect tax practitioners on both sides of the table, the case is a reminder that the CIRP timeline, not the adjudication timeline, now decides whether a customs, GST or excise demand for a pre-insolvency period survives — and that a department which sits on its claim-filing rights cannot recover the position later by simply continuing its own adjudication as though the resolution plan had never happened.
Authorities
Applied by the Court
| Authority | Citation | Proposition |
|---|---|---|
| Ghanashyam Mishra & Sons (P) Ltd. v. Edelweiss Asset Reconstruction Co. Ltd. | (2021) 9 SCC 657 | Once a resolution plan is approved under Section 31(1) of the IBC, all claims not forming part of the plan stand extinguished; the 2019 Amendment bringing government creditors within Section 31(1) is declaratory, clarificatory and retrospective. |
| Essar Steel India Ltd. Committee of Creditors v. Satish Kumar Gupta | (2020) 8 SCC 531 | Section 31(1) ensures the successful resolution applicant takes over the corporate debtor on a “fresh slate” and cannot be confronted with undecided or “surprise” claims after the plan is accepted. |
| Vaibhav Goel v. Deputy Commissioner of Income Tax | 2025 INSC 375 | Applied the Ghanashyam Mishra extinguishment principle to hold income tax dues for periods not part of an approved resolution plan stand extinguished. |
| ABG Shipyard Liquidator v. Central Board of Indirect Taxes & Customs | (2023) 1 SCC 472 | Customs authorities may determine the quantum of customs duty during CIRP, but recovery remains subject to the IBC — distinguished as addressing determination during CIRP, not enforcement after an approved resolution plan. |
| Paschimanchal Vidyut Vitran Nigam Ltd. v. Raman Ispat Pvt. Ltd. | (2023) 10 SCC 60 | Confined Rainbow Papers to its own facts, holding it did not consider the Section 53 IBC waterfall mechanism and arose from a state “first charge” provision, not a general immunity for statutory dues from extinguishment. |
| M/s Rajesh Projects India Ltd. v. Commissioner, Central Tax, Delhi West | W.P.(C) 2647/2023 (Delhi High Court) | Pendency of CIRP does not prevent framing of an assessment, though recovery must conform to the IBC — distinguished as not addressing the effect of an already-approved resolution plan on an unfiled claim. |
Cited by counsel (not independently applied by the Court as central to the ratio)
| Authority | Citation | Context |
|---|---|---|
| State Tax Officer v. Rainbow Papers Ltd. | (2023) 9 SCC 545 | Cited by the Department for the proposition that statutory dues cannot be disregarded in insolvency; held confined to its facts by Paschimanchal and not applied here. |
| SBI v. V. Ramakrishnan | (2018) 17 SCC 394 | Quoted within the extracted portion of Essar Steel on the binding effect of Section 31(1); concerned a personal guarantor’s liability, not a government creditor’s claim. |
| National Sewing Thread Company Limited v. Deputy Commissioner of Income Tax | 2024 SCC OnLine Del 4426 | Cited by the Petitioner for the proposition that a successful resolution applicant cannot be burdened with liabilities excluded from the resolution plan. |
| Ireo Fiveriver Pvt. Ltd. v. Income Tax Department | 2024 SCC OnLine Del 5885 | Cited by the Petitioner, applying Ghanashyam Mishra and Essar Steel to income tax dues. |
| Surya Manufacturing Private Limited v. Assistant Commissioner of Income Tax | 2025 SCC OnLine Del 3127 | Cited by the Petitioner as applying the same extinguishment principle to a post-CIRP income tax demand. |
| Garg Inox Ltd. v. Union of India | 2026 SCC OnLine Del 2581 | Cited by the Petitioner as applying the same principle. |
| CBIC Standard Operating Procedure dated 23.05.2022 | Instruction No. 1083/04/2022-CX09 | Cited by the Petitioner to show that customs authorities are themselves expected to recognise their status as operational creditors and file timely claims during CIRP. |
Legislation considered
| Statute | Provisions | Source |
|---|---|---|
| Insolvency and Bankruptcy Code, 2016 | Sections 3(6), 3(11), 7, 30(2), 30(4), 30(6), 31(1), 238 | https://www.indiacode.nic.in/ |
| Insolvency and Bankruptcy Code (Amendment) Act, 2019 | Amendment to Section 31(1) | https://www.indiacode.nic.in/ |
| IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 | Regulations 6, 12(1) | https://www.indiacode.nic.in/ |
| Customs Act, 1962 | Sections 28(1), 28AA, 112(a)(ii), 117 | https://www.indiacode.nic.in/ |
| CBIC Notification No. 50/2017-Customs | Serial No. 499A, dated 30.06.2017 | https://www.indiacode.nic.in/ |
| Constitution of India | Article 226 | https://www.indiacode.nic.in/ |
Judgment
Jaiprakash Associates Limited v. The Office of the Commissioner of Customs, Air Cargo Complex Import & Anr., W.P.(C) 10387/2026 & CM APPL. 48073/2026, High Court of Delhi at New Delhi (Anil Kshetarpal, J. and Shail Jain, J.), decided 2 September 2026 — https://indiankanoon.org/doc/181125151/
FAQ
If a customs, GST or excise department never files a claim during a company’s insolvency resolution process, can it still pursue the demand afterward? Not once the resolution plan is approved by the NCLT and takes effect. This judgment holds that a pre-CIRP indirect tax liability the department failed to submit as a claim during the resolution process stands extinguished under Section 31(1) of the IBC, and the department cannot revive it by continuing or concluding an adjudication after approval.
Does it matter that the customs department only found out about the insolvency process late, or only issued its show-cause notice after CIRP had already started? No. The Court held that the obligation to file a claim arises from the public announcement inviting claims, not from any personal notice to the creditor, and that a liability arising from a pre-CIRP transaction remains a pre-CIRP claim even if it is only quantified or adjudicated through a show-cause notice issued later.
Can customs or tax authorities still determine duty liability while a company is going through insolvency resolution? Yes — ABG Shipyard remains good law for that limited proposition. What changes is enforceability: once a resolution plan is approved and becomes binding under Section 31(1), a liability not reflected in that plan cannot be enforced against the resolved corporate debtor, whatever power to determine it may otherwise have existed during the CIRP itself.
This article is not legal advice and does not create an attorney–client relationship. Readers should verify the certified copy of the judgment and any subsequent clarificatory orders before relying on it, and consult a qualified advocate on the facts of their matter.