Clarification in respect of issues under GST law for companies under Insolvency and Bankruptcy Code, 2016

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1. How are dues under GST for pre-CIRP period be dealt?

In accordance with the provisions of the IBC and various legal pronouncements on the issue, no coercive action can be taken against the corporate debtor with respect to the dues for period prior to insolvency commencement date. This prior to the commencement of CIRP, will be treated as “operational debt” and claims may be filed by the proper officer before the NCLT in accordance with the provisions of the IBC.

2. Should the GST registration of corporate debtor be cancelled?

It is clarified that the GST registration of an entity for which CIRP has been initiated should not be cancelled under section 29 of the CGST Act, 2017. The proper officer may suspend the registration. In case the registration of an entity undergoing CIRP has already been cancelled and it is within the period of revocation of cancellation of registration, it is advised that such cancellation may be revoked.

3. Is IRP/RP liable to file returns of pre-CIRP period?

No.

4. Should a new registration be taken by the corporate debtor during the CIRP period?

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 each State or Union territory , where the corporate debtor was registered earlier, within 30 days of the appointment of the IRP/RP.

5. How to file First Return after obtaining new registration?

The IRP/RP is required to ensure that the first return is filed under section 40 of the CGST Act, for the period beginning the date on which it became liable to take registration till the date on which registration has been granted.

6. How to avail ITC for invoices issued to the erstwhile registered person in case the IRP/RP has been appointed before issuance of notification No.11/2020 and no return has been filed by the IRP during the CIRP ?

The special procedure issued under section 148 of the CGST Act has provided the manner of availment of ITC while furnishing the first return under section 40. The first return is eligible for input tax credit on invoices covering the supplies of goods or services or both, received since appointment as IRP/RP and during the CIRP period but bearing the GSTIN of the erstwhile registered person, subject to the conditions of Chapter V of the CGST Act.

7. Some of the IRP/RPs have made deposit in the cash ledger of erstwhile registration of the corporate debtor. How to claim refund for amount deposited in the cash ledger by the IRP/RP?

Any amount deposited in the cash ledger by the IRP/RP, in the existing registration, from the date of appointment of IRP / RP to the date of notification specifying the special procedure for corporate debtors undergoing CIRP, shall be available for refund to the erstwhile registration even though the relevant FORM GSTR-3B/GSTR-1 are not filed for the said period.

The circular can be accessed here : circular-cgst-134-1.pdf

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