Circular No.134/04/2020-GST
Page 1 of 5
CBEC-20/16/12 /2020 -GST
Government of India
Ministry of Finance
Department of Revenue
Central Board of Indirect Taxes and Customs
GST Policy Wing
New Delhi, dated the 23rd March, 2020
To,
The Principal Chief Commissioners / Chief Commissioners / Principal Commissioners /
Commissioners of Central Tax (All)
The Principal Director Generals / Director Generals (All)
Madam/Sir,
Subject: Clarification in respect of issues under GST law for companies under
Insolvency and Bankruptcy Code, 2016 - Reg.
Various representations have been received from the trade and industry seeking
clarification on issues being faced by entities covered under Insolvency and Bankruptcy
Code, 2016 (hereinafter referred to as the “IBC”).
2. As per IBC, once an entity defaults certain threshold amount, Corporate Insolvency
Resolution Process (hereafter referred to as “CIRP”) gets triggered and the management of
such entity (Corporate Debtor) and its assets vest with an interim resolution professional
(hereafter referred to as “IRP”) or resolution professional (hereafter referred to as “RP”). It
continues to run the business and operations of the said entity as a going concern till the
insolvency proceeding is over and an order is passed by the National Company Law Tribunal
(hereinafter referred to as the “NCLT”)
3.
To address the aforementioned problems, notification No.11/2020- Central Tax, dated
21.03.2020 has been issued by the Government prescribing special procedure under section
148 of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as the “CGST
Act”) 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. In order to ensure
uniformity in the implementation of the provisions of the law across the field formations, the
Circular No.134/04/2020-GST
Page 2 of 5
Board, in exercise of its powers conferred under section 168(1) of the CGST Act hereby
clarifies various issues in the table below:-
S.No.
Issue
Clarification
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.
The
dues
of
the
period
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. 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.
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 the provisions of section
29 of the CGST Act, 2017. The proper officer
may, if need be, 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
Circular No.134/04/2020-GST
Page 3 of 5
may be revoked by taking appropriate steps in
this regard.
3.
Is IRP/RP liable to file returns
of pre-CIRP period?
No. In accordance with the provisions of IBC,
2016, the IRP/RP is under obligation to comply
with all legal requirements for period after the
Insolvency
Commencement
Date.
Accordingly, it is clarified that IRP/RP are not
under an obligation to file returns of pre-CIRP
period.
During CIRP period
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 thirty days of the appointment of
the IRP/RP. Further, in cases where the IRP/RP
has been appointed prior to 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 date of his appointment as
IRP/RP.
5.
How to file 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 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.
Circular No.134/04/2020-GST
Page 4 of 5
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-
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
availment 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.
7.
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.
Circular No.134/04/2020-GST
Page 5 of 5
8.
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
under the head refund of cash ledger, even
though the relevant FORM GSTR-3B/GSTR-1
are not filed for the said period.
The instructions contained in Circular No.
125/44/2019-GST
dt.
18.11.2019
stands
modified to this extent.
4.
It is requested that suitable trade notices may be issued to publicize the contents of this
circular.
5.
Difficulty, if any, in the implementation of the above instructions may please be
brought to the notice of the Board. Hindi version would follow.
