The Central Board of Indirect Taxes and Customs in its notification dated 23rd March 2020, has issued clarification on issues being faced by entities covered under Insolvency and Bankruptcy Code, 2016.
The Government has prescribed special procedures for the corporate debtors who are undergoing CIRP under the provisions of IBC and the management of whose affairs are being undertaken by IRP/RP.
- As per the Code, no coercive action can be taken against the corporate debtor with respect to the dues for period prior to insolvency commencement date and such dues shall be treated as ‘operational debt’ for which claims may be filed by the Proper Officer before the NCLT in accordance with the provisions of IBC. It is clarified that the GST registration of an entity for which CIRP has been initiated should not be canceled under the provisions of section 29 of the CGST Act, 2017. 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 is not under an obligation to file returns for the pre-CIRP period. 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 beginning the date on which it became liable to take registration till the date on which registration has been granted.
- It was further clarified that any amount deposited in the cash ledger 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.
Click here to read the Notification.
