Page 72 - GSTL_2nd April 2020_Vol 35_Part 1

C8 GST LAW TIMES [ Vol. 35
Companies under Insolvency and Bankruptcy Code, 2016 —
Clarification in respect of issues under GST law
Subject : Clarification in respect of issues under GST law for companies under
Insolvency and Bankruptcy Code, 2016 - Regarding.
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 21-3-2020 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
Board, in exercise of its powers conferred under section 168(1) of the CGST Act
hereby clarifies various issues in the table below :-

S. Issue Clarification
No.
1. How are dues under In accordance with the provisions of the IBC and
GST for pre-CIRP various legal pronouncements on the issue, no
period be dealt? 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.

GST LAW TIMES  2nd April 2020  136