Question: A registered person X has purchased goods from a registered manufacturer Y over a period of last 4 months. Y has filed GSTR1 but did not file GSTR3B and now, Y has become insolvent and gone for Corporate Insolvency Resolution Process. After the completion of resolution process, Y will be immune from his previous GST liability not paid. What will happen to his buyers including X? Is there any relief for them to claim ITC of GST paid to the manufacturer? Will the restriction laid down in section 16 be applicable on recipient X?
Answer: In my humble opinion, Mr. X would not be entitled as there is no mechanism with him to confirm whether GST of his supplies is paid or not.
