Subject: Clarification in respect of issues under GST law for companies under Insolvency and Bankruptcy Code, 2016.
Various representations have been received from the trade and industry seeking clarification on issues being faced by entities covered under Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as the "IBC").
2. As per IBC, once an entity defaults certain threshold amount, Corporate Insolvency Resolution Process (hereafter referred to as "CIRP") gets triggered and the management of such entity (Corporate Debtor) and its assets vest with an interim resolution professional (hereafter referred to as "IRP") or resolution professional (hereafter referred to as "RP"). It continues to run the business and operations of the said entity as a going concern till the insolvency proceeding is over and an order is passed by the National Company Law Tribunal (hereinafter referred to as the "NCLT")
3. To address the aforementioned problems, notification No. F.12(46)FD/Tax/2017-Pt.V-150, dated 30.03.2020 has been issued by the Government prescribing special procedure under section 148 of the Rajasthan Goods and Services Tax Act, 2017 (hereinafter referred to as the "RGST Act") for the corporate debtors who are undergoing CIRP under the provisions of IBC and the management of whose affairs are being undertaken by IRP/RP. In order to ensure uniformity in the implementation of the provisions of the law across the field formations, in exercise of the powers conferred under section 168 of the RGST Act, 2017, clarifications on various issues in the table below are hereby issued:-
Moreover, section 14 of the IBC mandates the imposition of a moratorium period, wherein the institution of suits or continuation of pending suits or proceedings against the corporate debtor is prohibited.
The instructions contained in GST Circular No. 46/2019 dated 21.11.20191 stands modified to this extent.
(Dr. Preetam B. Yashvant)
Chief Commissioner State Tax,
Rajasthan, Jaipur