GST Update on Clarification on certain issues related to Companies under IBC under GST Law vide Circular No. 138 /08/2020 dated 6th May 2020 #36/2020

In our earlier update also, we have discussed about certain clarifications made by CBIC vide circular 134 dated 23^rd march 2020 where certain issues related to prior and post CIRP process was dealt and were resolved by the board and the compliance for taking registration for the IRP was also extended vide Notification 39/2020 dated 5^th May 2020 till 30^th June 2020 or within 30 days of the appointment of IRP whichever is later.

In this circular the board has clarified some pertinent issues which were represented before the Government as the compliance could not be done due to the current lockdown situations in the country.

One such problem which was being faced by the taxpayers was that the IRP/RP could not take registrations during the current scenario and it was requested to increase the time limit from present 30 days as obligatory under notification 11/2020 where it was made mandatory for the IRPP/RP to take a separate registration post their appointment in the said company as per the Insolvency and Bankruptcy Code 2016.

The board observed that such compliance burden could not be followed and the time limit for taking such registration was increased till 30^th June 2020 or within 30 days of the appointment of IRP whichever is later. Only the time limit is extended but no relaxation on the registration provisions was given under notification no. 35/2020 dated 3^rd April was given to any taxpayers. We would like to clarify that relaxations were not given to registration provisions under notification 35/2020. Hence, a new notification 39/2020 cited supra was issued to relax the provisions of registration.

In addition to the above problem , another issue that was put before the board was whether IRP would be required to take a fresh registration even when they are complying with all the provisions of the GST Law under the earlier GSTIN registration of Corporate Debtor i.e. all the GSTR-3Bs have been filed by the Corporate debtor / IRP prior to the period of appointment of IRPs and no default was done with respect to filing of returns is concerned.

The board vide notification 39/2020 dated 5^th May 2020 has inserted a proviso in the original notification 11/2020 dated 21^st March,2020 where the relaxation was provided as to no registration is required for those IRP/RP where there is no compliance default done by the corporate debtors on account of furnishing of GST returns for all the tax periods prior to the appointment of IRP/RP.

In this regard, we would like to make it clear that the above amendment has come due to Delhi High Court decision in this matter wherein it was held that IRP/RP need not to file the old returns and they can file the returns onwards when petition in insolvency code has been filed. Now, there is no provisions in GST Rules to file new returns without filing old returns. To overcome this problem, IRP/RP was allowed to take a new registration. We have prepared update on the same. In this update, we have raised this point also that if IRP/RP has already field the returns prior to this notification then whether they will file the return again? The extract of same update is enclosed herewith:- the cash ledger by the IRP/RP?

Issue-Some of the IRP/RPs has made deposit in the cash ledger of erstwhile registration of the corporate debtor. How to claim refund for amount deposited in the cash Ledger by the IRP/RP?
Clarification- Any amount deposited in the cash ledger by the IRP/RP, in the existing registration, from the date of appointment of IRP / RP to the date of notification No.11/2020 specifying the special procedure for corporate debtors undergoing CIRP, shall be available for refund to the erstwhile registration under the head refund of cash ledger, even if the relevant FORM GSTR-3B/GSTR-1are not filed for the said period.
Now, if the IRP/RP has filed the return for this period and this cash is adjusted then how the refund will come. Moreover, IRP/RP has to file again returns as per provision of notification as well as circular then whether the payment will be made twice? There is no clarification on this issue. It only says that they have to file return.

We have raised this objection when notification was issued. Now, notification 11/2020 has been amended and it was told that there is no need to take new registration by IRP/RP when all returns have already been filed.

Another concern that was raised before the board was that in many of the cases appointment of IRP is not ratified and a different RP is appointed then in that cases whether the GSTN shall stand transferred to the new RP or he shall have to take all together a new registration under the GST Act.

This issue was clarified by the board it is clarified that such a change would need only change of authorized signatory which can be done by the authorized signatory of the Company who can add IRP /RP as new authorized signatory or failing that it can be added by the concerned jurisdictional officer on request by IRP/RP.

This is solely for educational purpose.

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GST Update on Clarification on certain issues related to Companies under IBC under GST Law vide Circular No. 138 /08/2020 dated 6th May 2020 #36/2020

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