The CBIC has issued clarification on statutory dues under GST law in cases where the proceedings have been finalised under Insolvency and Bankruptcy Code, 2016 vide Circular No. 187/19/2022-GST dated 27/12/2022.
Earlier, CBIC had clarified that no coercive action can be taken against the corporate debtor with respect to the dues of the period prior to the commencement of Corporate Insolvency Resolution Process(CIRP). Such dues will be treated as ‘operational debt’ and the claims may be filed by the proper officer before the NCLT in accordance with the provisions of the IBC.
The circular clarifies that the National Company Law Tribunal (NCLT) and its appellate body are the authorities responsible for deciding IBC proceedings, including for any pending government dues, and that any reduction in these dues as a result of IBC proceedings is considered valid and will be covered under the term ‘other proceedings’ in Section 84 of CGST Act.
If the amount of government debts owed to a person is reduced as a result of IBC proceedings, the Commissioner must notify both the person and the authority responsible for recovery proceedings of this reduction. After receiving this notification, recovery proceedings can continue for the reduced amount of government debts.
Commissioner shall issue an intimation in FORM GST DRC-25 to notify the reduction of government debts as specified in Section 84 of the Central Goods and Services Tax Act.
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