IBC Section 250: Amendments of Act 32 of 1994

Section 250 of Insolvency and Bankruptcy Code, 2016: Amendments of Act 32 of 1994

Official Bare Act Text

Override / Mandate Mens Rea (Intent) Actus Reus (Conduct) Punishment Limitation Monetary

The Finance Act, 1994 shall be amended in the manner specified in the Sixth Schedule.

Legal Commentary & Landmark Judgments: Section 250

Section 250 amends the Finance Act, 1994 to ensure that legacy Service Tax dues are subordinated to the statutory priorities established under the Code.

Subordination of Service Tax Claims: Amends Act 32 of 1994 in the manner specified in the Sixth Schedule to the Code.
Consequential Integration: Brings service tax recovery mechanisms into alignment with the overarching distribution framework of Section 53 and Section 178.
Bar on Unilateral Recovery: Prevents service tax officers from executing garnishee orders or bank account attachments against distressed debtors.

Key Landmark Precedents:

Paschimanchal Vidyut Vitran Nigam Ltd. v. Raman Ispat (2023) 10 SCC 60: The Supreme Court held that all historical central tax enactments amended under Part V of the Code confirm the legislative intent to subordinate government claims to commercial debt.
Ghanashyam Mishra & Sons v. Edelweiss Asset Reconstruction (2021) 9 SCC 657: Affirmed that unproved service tax claims are extinguished upon approval of a resolution plan.

Courtroom Practice & Strategic Litigation Guidance:

Garnishee notices issued by service tax authorities to debtors of a corporate debtor during CIRP are void ab initio; resolution professionals should file an immediate application for defreezing relying on Section 250 r/w Section 14.