Special Procedure for Corporate Debtors under Insolvency – GST Compliance

Notification No.: 11/2020 – Central Tax
Date of Notification: 21st March 2020

Relevant Sections and Rules:

• Central GST Act, 2017:
  • Section 148 – Special procedure for certain registered persons
  • Section 40 – First return
  • Section 16(4) – Time limit for availing ITC (relaxed)
• CGST Rules, 2017:
  • Rule 36(4) – Document-based ITC matching (relaxed)

Summary of Notification

Special Procedure for Corporate Debtors under Insolvency Resolution:
The Government, exercising powers under Section 148, notifies a special procedure for corporate debtors undergoing Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code, 2016 where the management is taken over by an Interim Resolution Professional (IRP) or Resolution Professional (RP).

1. New Registration Requirement:
   The IRP/RP shall obtain new GST registration in each State/UT where the corporate debtor was previously registered.

• Time limit: Within 30 days from appointment as IRP/RP
• For existing appointments before this notification: 30 days from commencement of this notification

2. First Return (Section 40):
   The newly registered entity shall furnish its first return from the date of liability to registration till the actual date of grant of registration under the new GSTIN.
3. Availment of Input Tax Credit (ITC):

• IRP/RP can claim ITC in the first return on invoices bearing old GSTIN received after their appointment.
• Conditions of Chapter V of CGST Act apply, but Section 16(4) and Rule 36(4) are not applicable for such credits.

4. ITC for Recipients Receiving Supplies from IRP/RP:

• Buyers can avail ITC on invoices issued by the corporate debtor using the old GSTIN for the transitional period until new registration is obtained, or within 30 days from this notification—whichever is earlier.
• Exemption from Rule 36(4) during this period.

5. Refund of Cash Ledger Balance:
   Any cash deposited under the old GSTIN during this transitional period is refundable to the erstwhile registration.

Explanation:
Terms like “corporate debtor”, “IRP”, “RP” are to be interpreted as defined under the Insolvency and Bankruptcy Code, 2016.

Source: Notification No.: 11/2020 – Central Tax