Special Procedure under GST for Corporate Debtors

INSOLVENCY AND BANKRUPTCY BOARD OF INDIA

Procedure under GST for corporate debtors undergoing the corporate insolvency resolution process under the Insolvency and Bankruptcy Code, 2016

(Notification No. 11/2020 – Central Tax)

The Central Board of Indirect Taxes and Customs (CBIC) vide notification dated March 21^st, 2020, exercising its powers under Section 148 of the CGST Act, has classified Registered Persons (under Goods and Services Act, 2017), who are corporate debtors undergoing the corporate insolvency resolution process(“CD”) as a separate class of persons and has laid out a special procedure to be followed by such CD till the completion of corporate insolvency resolution process.

The notification clarifies that with effect from appointment of an Interim Resolution Professional/Resolution Professional (“IRP/RP”), CD shall be treated as distinct person from the Registered Person.  The special procedure prescribed is as follows:

1. New Registration

That CD shall be liable to procure new registration in each of the States or Union territories, where such Registered Person was registered prior to commencement of CIRP proceedings, within 30 (thirty) days from the appointment of IRP/RP. For the purpose of on-going CIRP proceedings, CD shall be liable to procure such new registration within 30 (thirty) days of this notification. The GST registration of the Registered Person before the commencement of CIRP has been referred to as the erstwhile registration.

2. Initial Return

CD shall be required to file its initial return from the date of appointment of the IRP/RP till the date on which registration has been granted.

3. Input Tax Credit

• CD, in its initial return, will 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 erstwhile GSTIN of the Registered Person, subject to the conditions of input tax credit provisions as under Chapter V of the CGST Act and the Rules made thereunder, except the restrictions regarding availing input tax credit as mentioned in sub-section (4) of section 16 of the CGST Act and restriction under sub-rule (4) of Rule 36 of the CGST Rules regarding availing Input tax credit in respect of invoices or debit notes not uploaded by suppliers and thus not reflecting in GSTR-2A.
• Other registered persons who are receiving supplies from CD shall, for the period from the date of appointment of IRP / RP till the date of new registration as required in this notification or 30 (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 registration of the Registered Person, subject to the conditions of input tax credit as mentioned in Chapter V of the CGST Act and the Rules made thereunder, except the provisions of sub-rule (4) of Rule 36 of the CGST Rules regarding availing Input tax credit in respect of invoices or debit notes not uploaded by suppliers and thus not reflecting in GSTR-2A.
• Any amount deposited in the cash ledger by the IRP/RP, in the new 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 link of the circular is as follows:

https://www.ibbi.gov.in/uploads/legalframwork/0f84334cf9f344c41c711ab48c66949a.pdf