(Corresponding Central Circular No. 134/3/2020-GST)
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. 439-F.T., dated 03.04.2020 has been issued by the Government prescribing special procedure under section 148 of the West Bengal Goods and Services Tax Act, 2017 (hereinafter referred to as the "WBGST 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, the Commissioner, in exercise of its powers conferred under section 168 of the WBGST Act hereby clarifies various issues in the table below:-
TABLE
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 said class of persons shall, in his first return, be eligible to avail input tax credit on invoices covering the supplies of goods or services or both, received since appointment as IRP/RP and during the CIRP period but bearing the GSTIN of the erstwhile registered person, subject to the conditions of Chapter V of the WBGST Act and rule made thereunder, except the provisions of sub-section (4) of section 16 of the WBGST Act and sub-rule (4) of rule 36 of the WBGST Rules.
In terms of the special procedure under section 148 of the WBGST Act issued vide notification No. 39-F.T., dated 03.04.2020. This exception is made only for the first return filed under section 40 of the WBGST Act.
The instructions contained in Trade Circular No. 45/2019-GST dt. 21.11.2019 stands modified to this extent.
5. Difficulty, if any, in the implementation of the above instructions may please be brought to the notice of the Commissioner.
6. This Trade Circular shall be deemed to have come into force on 23rd March, 2020
Sd/-
(Devi Prasad Karanam)
Commissioner, State Tax,
West Bengal