Page 29 - GSTL_23rd July 2020_Vol 38_Part 4

CORPORATE DEBTOR UNDER GST — A
NEW LIFELINE IN LIGHT OF GST LAWS
By
CA Kevin Shah
*
MANAGING PARTNER, KEVIN SHAH & ASSOCIATES

Introduction :
The initiation of Corporate Insolvency Resolution
Process (in short ‘CIRP’) proceeding is akin to a new birth
of the company, for GST purposes. Irrespective of wheth-
er the revival process succeeds or not, at least for GST purposes, the entity be-
comes clean-slate entity. Government has notified [Notification No. 11/2020-
C.T., dated 21-3-2020] a special procedure under GST Laws for those registered
persons who are Corporate Debtors under Insolvency and Bankruptcy Code,
2016 (‘IBC, 2016’) with respect to registration and availment of Input Tax Credit
(ITC) under Central Goods and Services Tax Act, 2017 (‘CGST Act’). This was
followed by a Circular [C.B.I. & C. Circular No. 134/04/2020-GST, dated 23-3-
2020] [2020 (35) G.S.T.L. C8]] clarifying various issues in application of the said
notification. In this note we deal with various implications of the said notification
in backdrop of the IBC, 2016.
As per IBC, 2016, when a company goes under CIRP process, moratori-
um starts whereby all pending litigations and dispute whether in Court of Laws
or before any quasi-judicial bodies comes to a halt and the Company gets im-
munity from any possible future litigations. The recent change [Vide Insolvency
and Bankruptcy (Amendment) Ordinance, 2019, dated 28-12-2019], i.e., Section
32A of the IBC, 2016 comes as a saviour to the Corporate Debtor under CIRP. The
said section makes a Corporate Debtor immunes from any possible actions that
the Government agency might take against them to recover their pre-CIRP dues
etc. The said section apart from giving immunity to the present management of
the Company, gives a right of re-birth to the Companies under CIRP. In case of
the GST Laws, the CGST Act [Section 39(10) of the CGST Act, 2017 read with Sec-
tion 39(7) ibid] is very clear that each month’s liability shall be paid to the credit
of the Government and where there is any default in the payment or filing re-
turns the GST Laws shall discontinue the registration of such defaulting regis-
tered person unless the default is made good. Considering the fact that tax pay-
ment and return filing are tagged together and in view of the above restriction on
filing return for the current period, if return for the past period has not been
________________________________________________________________________
* The views expressed in this article are the personal views of the author.
GST LAW TIMES  23rd July 2020  29