Seeks to clarify issues in respect of issues under GST law for companies under Insolvency and Bankruptcy Code, 2016

Circular No.: 134/04/2020-GST
Date of Circular: 23rd March 2020
Relevant Sections and Rules:

• CGST Act, 2017:
  • Section 14 of IBC (moratorium)
  • Section 18(3), Section 29, Section 40, Section 168(1)
• CGST Rules, 2017:
  • Rule 36(4)
• Special Procedure Notification:
  • Notification No. 11/2020–Central Tax dated 21.03.2020 (Section 148)

Summary of Circular:

This circular provides clarification on GST compliance for companies undergoing Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code (IBC), 2016, particularly when managed by an IRP/RP (Interim Resolution Professional / Resolution Professional).

1. GST Dues Prior to CIRP:

• No coercive action can be taken for GST dues prior to the CIRP commencement date.
• These dues are treated as ‘operational debt’.
• GST officers must file claims before NCLT for recovery and observe the IBC moratorium under Section 14.

2. Registration of Corporate Debtor:

• GST registration should not be cancelled during CIRP.
• If already cancelled and revocation period is active, the cancellation should be revoked.
• Registration may be suspended if required, not cancelled.

3. IRP/RP Obligation for Pre-CIRP Period:

• IRP/RP is not liable to file GST returns for the pre-CIRP period.

4. New Registration Requirement:

• A new GST registration must be taken in each State/UT within 30 days of IRP/RP appointment.
• If appointment was prior to Notification No. 11/2020, then registration must be obtained within 30 days from 21.03.2020.

5. First Return Post Registration:

• The first return under Section 40 of CGST Act must cover:

Period from IRP/RP appointment to registration grant date.

6. ITC for Invoices with Old GSTIN (Pre-notification cases):

• IRP/RP can avail ITC on invoices bearing erstwhile GSTIN for goods/services received during CIRP, in the first return under Section 40.
• Exception allowed from Section 16(4) and Rule 36(4) — only for the first return.

7. ITC to Recipients from Corporate Debtors:

• Recipients can avail ITC on invoices issued with old GSTIN during the period from IRP/RP appointment to new registration or 30 days from notification (whichever earlier).
• Exception to Rule 36(4) applies.

8. Refund of Deposits by IRP/RP:

• Any deposit in cash ledger made by IRP/RP before new registration and after appointment can be claimed as refund under “Refund of Cash Ledger Balance”.
• Filing of GSTR-1/GSTR-3B is not mandatory for refund eligibility.

Source: Circular No.: 134/04/2020-GST