Page 34 - GSTL_23rd July 2020_Vol 38_Part 4

J92 GST LAW TIMES [ Vol. 38
‘operational debt’ and claims may be filed by the proper of-
ficer 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 corpo-
rate debtor to file the claim before the NCLT.
KSAA Analysis :
(i) This should not be a surprise as GST Laws [Section 82 of the
CGST Act, 2017 : “Notwithstanding anything to the contrary con-
tained in any law for the time being in force, save as otherwise pro-
vided in the Insolvency and Bankruptcy Code, 2016, any amount
payable by a taxable person or any other person on account of tax,
interest or penalty which he is liable to pay to the Government shall
be a first charge on the property of such taxable person or such per-
son.”] specifically states that where it is inconsistent with IBC,
2016, recovery of any tax dues shall be as per the provisions
of the IBC, 2016. This means that tax authorities’ losses their
right of first charge on the property for recovery of tax dues
once the registered person enter CIRP. Accordingly, Tax
Dues would be treated as per Section 53 of the IBC, 2016
which ranks the payment of tax dues in 5th position after fi-
nancial creditors and secured creditors. The settlement of tax
dues is a low priority for the purpose of IBC, 2016.
Conclusion
(a) In this notification w.r.t. addressing a special procedure for comply-
ing with GST Laws however, there are many issues as discussed
above which needs to be addressed either by way of some clarifica-
tion or by way of order by respective judicial authorities. The circu-
lar is silent on what happens when CIRP result into any of the fol-
lowing :
 The entity gets revived under a resolution plan : How the in-
stant registration taken will be surrendered and what will
happen to the ITC lying in the Electronic Credit Ledger of the
Corporate Debtor;
 The entity goes into liquidation;
 The CIRP proceedings may get withdrawn following the pro-
cess of Section 12A;
 The CIRP initiation itself may get reversed by NCLAT or fur-
ther appeals.
(b) The Notification has not envisaged what will be the consequences in
each of the above situations. For example, if the CIRP proceedings
get withdrawn, does it means the erstwhile registration will once
again come back to life? In that case, what will happen to the new
registration? What will be the case where the initiation of CIRP itself
is quashed on appeal. In that case, the initiation process itself is
completely erased out, so that there was no CIRP ab initio. In such a
situation, the IRP/RP’s office ceases immediately and in many cas-
es, appeal orders are received after months of the initiation. All such
issues are situational based and needs to be addressed appropriate-
ly.
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