Once a business defaults over the threshold amount, the Financial Creditor or the Operational Creditor may initiate
Corporate Insolvency Resolution Process (CIRP).
Thereafter the management of the Corporate Debtor is shifted to the Interim Resolution Professional and subsequently,
the Resolution Professional.
In CIRP, the CoC assess the viability of debtor’s business and the options for its revival and rehabilitation. If the CIRP
fails or the CoC decide that the business of the debtor cannot be carried on in a profitable manner and it should be
wound up, the debtor’s business undergoes the liquidation process.
The 39th GST Council meeting held on 14thMarch, 2020 addressed various issues, one of which was relating to the
rules pertaining to entities undergoing CIRP under the Insolvency and Bankruptcy Code, 2016 (IBC).
LEADING UP TO THE NOTIFICATION
Videocon Group v. CGST Department
Prayers were made that as far as GST compliances are concerned, the department
take any coercive measures including the cancellation of the registration.
department to refrain from cancelling registration, re-open E Way Bill generation
R. Ravichandran, RP vs. The Asst. Commissioner (ST) Kilpauk Assessment Circle & 12
The National Company Law Tribunal (NCLT), Chennai Bench held that a corporate
Portal Account for filing GST Returns generated after the commencement of the
process (CIRP) period before clearing the pre-CIRP dues.
The NCLT observed that blocking the access to the GST Portal will result in barring
generate bills falling within the ambit of GST. The NCLT also stated that if the
on going concern basis then it should be allowed to pay taxes as well. The NCLT
fall within the ambit of operational creditors and they can recover the GST dues, for
by making a claim to the resolution professional against the corporate debtor as per
Notification No. 11/20 Central Tax dt. 21st March 2020
Prescribes special procedure in respect of GST formalities to be complied
by companies which are in the process of Insolvency Resolution.
Under the authority granted under Section 148 of the Central Goods and
Government, on the recommendations of the Council, notified registered
debtors under the IBC, undergoing the CIRP and the management of
undertaken by interim resolution professionals (IRP) or resolution
persons who shall follow the special procedure as prescribed vide the
Thereafter, Circulars no. 134/04/2020-GST and 138/08/2020-GST issued
o with effect from the date of IRP/appointment, the Company/LLP will be treated as a distinct
person of corporate debtors.
o RP's and will be required to register anew in each state or union territory where the
corporate debtor was previously registered, within 30 days from the date of the appointment
o If the IRP/RP was appointed before the date of the notification, he must register within thirty
days of commencement of the notification, with effect from date of his appointment as
• Cancellation of erstwhile GST registration - 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. If it is already cancelled and it is within the
period of revocation, then such cancellation may be revoked.
• Requirement of fresh registration in case all provisions of the GST law is complied with –
Notification No. 11/2020-Central Tax was amended vide notification No. 39/2020 – Central Tax,
dated 05.05.2020 so as to specifically provide that corporate debtors who have not defaulted in
furnishing the return under GST would not be required to obtain a separate registration with effect
from the date of appointment of IRP/RP.
• Where a new RP is appointed, whether another fresh registration is required - The new
registration by IRP/RP shall be required only once, and in case of any change in IRP/RP after
initial appointment under IBC, it would be deemed to be change of authorized signatory and it
would not be considered as a distinct person on every such change after initial appointment. Thus,
such a change would need only change of authorized signatory which can be done by the authorized
signatory of the Company who can add IRP /RP as new authorized signatory or failing that it can
be added by the concerned jurisdictional officer on request by IRP/RP.
Once registration is obtained, the company must file the first return pursuant to Section 40 for
the period from the day on which it becomes liable to registration until the date on which
registration is granted.
“Every registered person who has made outward supplies in the period between the date on
which he became liable to registration till the date on which registration has been granted shall
declare the same in the first return furnished by him after grant of registration”
• Returns of pre-CIRP period - 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, CBIC has clarified that IRP/RP are
not under an obligation to file returns of pre-CIRP period.
CLAIM OF ITC BY SUCH CLASS OF
Subject to the conditions under Chapter V of the CGST Act, 2017 and the rules made thereunder, such
companies/LLPs shall, in its first return, be eligible to avail ITC on invoices covering the supplies of goods
or services or both, received since the appointment of IRP/RP, but bearing the GSTIN of the erstwhile
The provisions of sub-section (4) of section 16 of the Act , and Sub-rule (4) of rule 36 of the CGST Rules,
Hence, GST can be claimed even after due date of furnishing the return under section 29 for the month of
section 29 for the month of September following the end of Financial Year to which such invoice or invoice
which such invoice or invoice relating to such debit note pertains or furnishing of the relevant annual
of the relevant annual return.
Further, capping of provisional ITC is not applicable.
CLAIM OF ITC BY RECIPIENTS OF
SUPPLY FROM SUCH CLASS OF PERSONS
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, or thirty days from the date of notification no. 11/2020, whichever is earlier, be eligible to avail input tax
credit on invoices issued using the GSTIN of the such company/LLP prior to CIRP period, subject to the conditions of 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.
Hence here as well, capping of provisional ITC is not applicable.
o 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 pursuant to the notification,
shall be available for refund to the erstwhile registration under the head refund of cash
ledger, even though the relevant FORM GSTR-3B/GSTR-1are not filed for the said
DEALING WITH 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.
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.
PROCEDURE TO OBTAIN FRESH
1. IRP/RP appointed to undertake corporate insolvency resolution proceedings for Corporate Debtors, in terms of Notification. No
11/2020-CT, dated 21st March, 2020 can apply for new registration on GST Portal, on behalf of the Corporate Debtors, in each of
the States or Union Territories, on the PAN and CIN of the Corporate Debtor, where the corporate debtor was registered earlier,
within thirty days of their appointment as IRP/RP.
2. The date of commencement of business for IRP/RPs will be the date of their appointment. Their compliance liabilities will also
come into effect from the date of their appointment.
3. They should select the Reason for Registration as “Corporate Debtor undergoing the Corporate Insolvency Resolution Process
with IRP/RP” from the drop down menu.
4. The person appointed as IRP/RP shall be the Primary Authorized Signatory for the newly registered Company.
5. In the Principal Place of business/ Additional place of business, the details as specified in original registration of the
Corporate Debtors, is required to be entered.
6. The new registration application shall be submitted electronically on GST Portal under DSC of the IRP/RP
7. The new registration by IRP/RP will be required only once. In case of a change in IRP/RP, after initial appointment, it would
be deemed to be change of authorized signatory and not an appointment of a distinct person requiring a fresh registration.
KEY ISSUES AND AMBIGUITIES
• The notification provides for the special procedure only for Companies undergoing CIRP, and remains silent on fate of those
companies for which the process of CIRP is not materialised and therefore goes into liquidation. There is no clarification
whether the GST compliance in such situations will be as per the erstwhile GSTIN or the fresh GSTIN.
• The provisions of insolvency and bankruptcy of personal guarantors have come into force from December 1, 2019. These
personal guarantors might also be GST registered persons. The notification is silent on the treatment of GST for such persons.
• While the IRP/RP is allowed to take the input tax credit (ITC) of GST on supplies received during the CIRP, it does not mention
the procedure of transitioning the ITC already lying in the electronic credit ledger of the CD to new registration taken by the
IRP/RP. Therefore, it appears that the ITC lying in the CD’s electronic credit ledger on date of the CIRP commencement
cannot be used by the IRP/RP.