Clarification on Corporate Insolvency and Recovery of GST

- Sales Tax : Soham Mashruwala

Circular No. 187 dated 27 December 2022 dated 27th December 2022 by the Government as to how the factors work and what to do in case of corporate insolvency proceedings for a limited or private limited company has made specific provision for recovery of arrears under the GST Act. /19/2022 Checked with GST. Today's article discusses circular dated 27/12/2022 and circular number 134/04/2020 dated 23/03/2020 regarding GST.

Corporate Insolvency Proceedings

When corporate insolvency proceedings are initiated in a company under the Insolvency and Bankruptcy Code, all demand recoveries under the GST Act are suspended and the amount claimed by the officer has to be deposited in the NC LT before that officer. known as '. This matter has been clarified by the Government vide Circular No. 134/04/2020 GST dated 23/03/2020. Obviously what to do after bankruptcy proceedings are completed. In this regard the provision of Section 84 of the CGST Act has to be taken into consideration.

Clarification of Section 84 and Circular

As per Section 84 of the CGST Act, the recovery proceedings in special cases shall not be void and shall continue. When any Government debt against any person has been reduced, information of such reduced amount is to be given by the Commissioner to the (Recovery) Officer as per section 84. No appeal, revision or other proceedings are defined by reason of reduction of this amount. The Government has issued a circular dated 27-12-2022 for the fact that there is no clear provision in the CGST Act as to what to do in case an amount is reduced or the demand becomes nil under corporate insolvency proceedings. And it has been suggested that in section 84, the words 'other proceedings' include corporate insolvency proceedings. Therefore, as per rule 161, the officer has to report the reduced recovery amount in Form GST DRC-25. When DRC-07/ DRC 07-A has been issued and the amount has changed due to insolvency proceedings, the Commissioner has to inform the taxable person and the Recovery Officer of his area in Form DRC-25. Thus, this circular has clarified how to give effect to orders under corporate insolvency. So that recovery under section 83 and exemption from penalty can be obtained.