GST- Law for companies under insolvency & Bankruptcy Code, 2016
[From the date of the appointment of the IRP/RP till the period they undergo the corporate insolvency resolution process]
Corporate debtors under the provisions of the Insolvency and Bankruptcy Code, 2016 (31 of 2016), undergoing the corporate insolvency resolution process and the management of whose affairs are being undertaken by interim resolution professionals (IRP) or resolution professionals (RP), as the class of persons who shall follow the following special procedure, from the date of the appointment of the IRP/RP till the period they undergo the corporate insolvency resolution process.
To address the aforementioned problems, notification No.11/2020- Central Tax, dated 21.03.2020 has been issued by the Government prescribing a special procedure under section 148 of the Central Goods and Services Tax Act, 2017.
Registration
The said class of persons shall, with effect from the date of appointment of IRP / RP, be treated as a distinct person of the corporate debtor, and shall be liable to take a new registration in each of the States or Union territories where the corporate debtor was registered earlier, within thirty days of the appointment of the IRP/RP.
Provided that in cases where the IRP/RP has been appointed before the date of this notification, he shall take registration within 30 days from the commencement of this notification, with effect from the date of his appointment as IRP/RP.
Returns
The said class of persons shall, after obtaining registration file the first return under section 40 of the said Act, from the date on which he becomes liable to registration till the date on which registration has been granted.
Input Tax Credit
1. The said class of persons shall, in his first return, be eligible to avail input tax credit on invoices covering the supplies of goods or services or both, received since his appointment as IRP/RP but bearing the GSTIN of the erstwhile registered person, subject to the conditions of Chapter V of the said Act and the Rules made thereunder, except the provisions of subsection (4) of section 16 of the said Act and sub-rule (4) of rule 36 of the Central Goods and Service Tax Rules, 2017 (hereinafter referred to as the said rules).
2.Registered persons who are receiving supplies from the said class of persons shall, for the period from the date of appointment of IRP / RP till the date of registration as required in this notification or thirty days from the date of this notification, whichever is earlier, be eligible to avail input tax credit on invoices issued using the GSTIN of the erstwhile registered person, subject to the conditions of Chapter V of the said Act and the Rules made thereunder, except the provisions of sub-rule (4) of rule 36 of the said rules.
Refund
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 registration in terms of this notification shall be available for refund to the erstwhile registration.
Some FAQs
How dues under GST for the pre-CIRP period are be dealt with?
No coercive action can be taken against the corporate debtor concerning the dues for the period before the insolvency commencement date following the provisions of the IBC and various legal pronouncements on the issue.
The dues of the period before the commencement of CIRP will be treated as ‘operational debt’ and claims may be filed by the proper officer before the NCLT following the provisions of the 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.
Should the GST registration of the corporate debtor be canceled?
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.
In case the registration of an entity undergoing CIRP has already been canceled and it is within the period of revocation of cancellation of registration, it is advised that such cancellation may be revoked by taking appropriate steps in this regard.
Is IRP/RP liable to file returns of the pre-CIRP period?
No. Following the provisions of IBC, 2016, the IRP/RP is under obligation to comply with all legal requirements for a period after the Insolvency Commencement Date. Accordingly, it is clarified that IRP/RP are not under an obligation to file returns of the pre-CIRP period.
During CIRP Period
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 thirty days of the appointment of the IRP/RP.
Further, in cases where the IRP/RP has been appointed before the issuance of notification No.11/2020- Central Tax, dated 21.03.2020, he shall take registration within thirty days of issuance of the said notification, with effect from the date of his appointment as IRP/RP.
How to file the First Return after obtaining new registration?
The IRP/RP will be liable to furnish returns, make payment of tax and comply with all the provisions of the GST law during the CIRP period. 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.
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- Central Tax, dated 21/03/2020 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 availing of ITC while furnishing the first return under section 40. The said class of persons shall, in his first return, be eligible to avail 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 and rule made thereunder, except the provisions of sub-section (4) of section 16 of the CGST Act and sub-rule (4) of rule 36 of the CGST Rules. In terms of the special procedure under section 148 of the CGST Act issued vide notification No.11/2020- Central Tax, dated 21.03.2020. This exception is made only for the first return filed under section 40 of the CGST Act.
How to avail ITC for invoices by persons who are availing supplies from the corporate debtors undergoing CIRP, in cases where the IRP/RP was appointed before the issuance of the Notification No.11/2020 – Central Tax, dated 21/03/2020?
Registered persons who are receiving supplies from the said class of persons shall, for the period from the date of appointment of IRP / RP till the date of registration as required in this notification or 30 days from the date of this notification, whichever is earlier, be eligible to avail input tax credit on invoices issued using the GSTIN of the erstwhile registered person, subject to the conditions of Chapter V of the CGST Act and rule made thereunder, except the provisions of sub-rule (4) of rule 36 of the CGST Rules.
Some of the IRP/RPs have deposited in the cash ledger of erstwhile registration of the corporate debtor. How to claim a refund for the 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 under the head refund of cash ledger, even though the relevant FORM GSTR-3B/GSTR-1 is not filed for the said period.
