The Central Board of Indirect Taxes and Customs ( CBIC ) has issued clarifications in respect of issues under GST law for companies under the Insolvency and Bankruptcy Code, 2016 (IBC) in connection with the notification issued on Saturday.
As per the Code, no coercive action can be taken against the corporate debtor for dues of the period prior to insolvency commencement date and such dues shall be treated as ‘operational debt’ for which claims may be filed by the PO before the NCLT in accordance with the provisions of IBC.
“The tax officers shall seek the details of supplies made/received and total tax dues pending from the corporate debtor to file the claim before the NCLT. Moreover, section 14 of the IBC mandates the imposition of a moratorium period, wherein the institution of suits or continuation of pending suits or proceedings against the corporate debtor is prohibited,” the CBIC Circular said.
Regarding the cancellation of GST registration of corporate debtor, the circular clarified that registration of an entity for which CIRP has been initiated should not be cancelled. However, the Proper Officer may suspend the registration. In case of cancellation of registration of an entity undergoing CIRP within the permitted time, the Circular advises that appropriate steps should be taken.
According to the circular, IRP/RP are not bound to file returns for the pre-CIRP period as the Code does not impose an obligation on them to comply with all legal requirements for period after the Insolvency Commencement Date.
For the purpose of the notification issued on Saturday, the corporate debtor who is undergoing CIRP is to be treated as a distinct person of the corporate debtor and shall be liable to take a new registration in the appropriate State/UT, the circular said.
“Further, IRP/RP appointed prior to the said notification shall take GST registration within thirty days of issuance of the said notification, with effect from date of his appointment as IRP/RP,” it added.
As specified in the Notification, it is mandatory for the IRP/RP to file returns under section 40 of the GST Act for the period it takes registration till the date on which registration has been granted.
With regard to the procedure for availing input tax credit for invoices issued to registered persons where IRP/RP has been appointed before issuance of NN 11/2020, the circular further clarified that the exception to the procedure stated under R. 36(4) as has been provided under Notification No. 11/2020 C.T. dated 21.03.2020 shall apply only for filing the first return.
It was further clarified that the claim of refund of deposit in the cash ledger deposited by IRP/RP of erstwhile registration of the corporate debtor from the date of notification specifying the special procedure for corporate debtors undergoing CIRP, shall be available for refund to the erstwhile registration under the head refund of cash ledger, even though the relevant FORM GSTR-3B/GSTR-1 is not filed for the said period.
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