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Cus - Export of non-basmati rice - Notification 20/2023 insofar as it denies the benefit of the transitional arrangement as contained in para-1.05 of the FTP 2023, is bad in law: HCCus - Refund of SAD - 102/2007-Cus - Areca Nut and Supari are one and the same - Objections with regard to name, nature and status of importer or buyers or the end use of goods purchased by them etc. are extraneous: HCCX - Interest on Refund - Since wrong order annexed by petitioner in paper book, Bench is unable to proceed further - Petition is dismissed with liberty to file a fresh one: HCGST - No E-way bill - When petitioner imports machinery and after Customs clearance, transports same to his own factory, it cannot be said that such a transportation would fall within the definition of term 'supply' - Penalty imposable under second limb of s.129(1)(a): HCGST - Fix responsibility on officers who allowed BG to lapse - Petitioner not justified in not renewing BG - Cost of Rs.15 lacs imposed, to be paid to PM Cares Fund: HCGST - Since the parties agree that petition can be disposed of on the basis of records available before Appellate Authority, petitioner is directed to enclose all documents filed before Appellate Authority in a compilation, in form of a paper book: HCWrong RoadST - Whether any service is used for personal consumption or not is certainly question of fact and being question of fact, no substantial question of law arises: HCGovt proposes to amend Geographical Indication of Goods Rules; Draft issued for feedbackST - If what has been paid as tax is without authority of law, Revenue should refund the same - Denial of credit would result in the whole exercise being tax neutral: HCWarehousing Authority notifies several agri goods to be stored in only registered warehousesST - Even if the petitioner may have a case on merits, it is best left to be decided by the Appellate Authority under the hierarchy prescribed under the FA, 1994: HCUS FDA okays Eli Lilly Alzheimer’s drugGST - Petitioner challenges jurisdiction of assessing officer - Petitioner is entitled to file an appeal u/s 107 by availing an alternate efficacious remedy: HCFive from Telangana killed in car accident on Pune-Solapur HighwayGST - Existence of an alternative remedy is a material consideration but not a bar to the exercise of jurisdiction: HCHush money case against Donald Trump - Sentencing deferred to Sept 18GST - It is open to a trader to take goods by whichever route he opts, unless the law otherwise requires, destination point being intact: HCDeadly hurricane Beryl smashes properties in JamaicaGST - Conclusion that taxable person is providing a service to supplier while taking the benefit of a discount by facilitating an increase in the volume of sales of such supplier is ex facie erroneous and contrary to the fundamental tenets of GST law: HCIsrael claims 900 militants killed in Rafah since May monthGST - Order expressly records that personal hearing notice was returned with endorsement 'no such person at address' - Since petitioner has shifted to a new premises, it is just and necessary to provide an opportunity to contest demand: HC116 die in stampede at UP ’Satsang’I-T- Application for revision of order dismissed in limine on grounds of delay; case remanded for re-consideration: HCWe are deepening economic ties with India, says US officialI-T- As per Section 119(2)(b), power to condone applications relate to claims for amount exceeding Rs 50 lakhs are to be considered by CBDT; however it is impermissible for CBDT to pass order on merits: HC8 Dutch engineers build world’s longest bicycle - 180 feet, 11 inchesI-T- Additions framed u/s 68 for unexplained income & u/s 69 for unexplained expenditure not tenable where complete transactional details are furnished & not doubted: HCRailways earns Rs 14798 Crore from Freight loading in June monthI-T- Delay in filing ITR is per se insufficient reason to estimate assessee's profit @15% on turnover, more so where audited financial report is filed in timely manner: ITATMoD inks MoU to set up testing facilities in Unmanned Aerial System in TN Defence Industrial CorridorI-T- For invoking section 69A, assessee should be found to be owner of any money, bullion, jewellery or other valuable article & which is not recorded in the books of account: ITATGovt proposes Guidelines for ethical approach to Coal MiningI-T- TDS credit can be allowed based on AIS, where details pertaining to TDS, advance tax & other payments are reflected in Form 26AS: ITATVaishnaw to inaugurate Global IndiaAI Summit 2024I-T- Lending money with the primary intention of earning interest can be considered a business activity, but nature and manner of lending, as well as the frequency, should be taken into account: ITAT
 
Special procedure under GST law during corporate insolvency process: An incomplete code?

APRIL 27, 2020

By Rohini Mukherjee, Joint Partner, Lakshmikumaran & Sridharan

WITH a view to ease the hindrances faced in the Corporate Insolvency Resolution Process (CIRP), recently, a special procedure has been prescribed for Interim Resolution Professional (IRP) or Resolution Professionals (RP) during the corporate insolvency process 1. Certain clarifications have also been issued to further clarify specific issues 2.

While this special procedure prescribes the procedure for registration of the IRP/RP as distinct person of the corporate debtor, filing of first return and specific provisions for availing input tax credit have been prescribed as well, there are still a range of issues which remain unaddressed.

The first open issue which comes to light on a perusal of the special procedure is the duration of the registration of the IRP/RP. A special procedure has been prescribed that the IRP/RP would be treated as a distinct person of the corporate debtor and would be liable to take a new registration in each of the States/Union Territories where the corporate debtor was registered earlier. In this context, a question arises whether such registration taken by the IRP/RP would continue post the CIRP?

As far as the existing GST registration of an entity is concerned for which CIRP has been initiated, it has been clarified that the GST registration of an entity for which CIRP has been initiated should not be cancelled and the proper officer may, if required, suspend the registration 3. Is it indicative of the intention to continue the existing GST registration post the CIRP?

In the backdrop of this clarification, there can be various possibilities depending on the scenario post the CIRP.

One such scenario is if the business is carried out by the same corporate debtor entity post CIRP, whether the new GST registration of IRP/RP or old corporate debtor entity registration may be continued?

Further, in a situation where the business is taken over by a different business entity, the general procedure with respect to the new registration may be required to be followed. In such a case, IRP/RP and old corporate debtor entity registration may be required to be surrendered.

While the above are the possible views that may be adopted in the respective scenarios, neither the Notification nor the Circular specifically address this issue leaving the same unresolved.

There is ambiguity surrounding other areas as well, one such area being the treatment of the input tax credit balance in the electronic credit ledger of the GST registration of IRP/RP post the CIRP. The question which arises here is whether such balance can be carried forward or transferred? The special procedure prescribed is silent on this aspect.

In a scenario where the same entity continues post the CIRP, there is no clarity on the treatment of such balance in electronic credit ledger. On the other hand, if the existing entity undergoing the CIRP is taken over by a new entity, such a case being a case of transfer of business, the unutilised balance credit in electronic credit ledger can be transferred in the manner prescribed under GST law 4.

Another contentious issue which acts as a hindrance to the smooth functioning during the CIRP is the absence of any specific provision addressing the availment of credit on the following invoices by RP/IRP:

a) Invoices which were inadvertently missed out at the time of filing first return by IRP/RP; and

b) Invoices bearing GSTIN of the erstwhile registered person and raised for supplies made prior to the appointment of IRP/RP.

With the special procedure stating that IRP/RP can take credit of invoices issued for supplies of goods and/or services received post their appointment and which bears the GSTIN of the erstwhile registered person in the first return, it appears to be a one-time opportunity for the IRP/RP to avail credit. Though the IRP/RP may consider availing credit of tax charged on the above invoices in the GST return which is to be filed subsequent to the first return, such availment would remain open to dispute.

As is evident from the above, though the special procedure prescribed by the Notification and the Circular has addressed certain specific issues faced during the CIRP, the picture remains unclear at present on various issues. It is imperative that suitable clarifications are issued to settle the open issues faced by the trade and industry during such process for the ease of doing business.

[The views expressed are strictly personal.]

1Notification No. 11/2020-Central Tax dated 21.03.2020

2Circular No. 134/04/2020-GST dated 21.03.2020

3Serial No. 3 of Circular No. 134/04/2020-GST dated 21.03.2020

4 Section 18(3) of the Central Goods and Services Act, 2017 read with Rule 41 of Central Goods and Services Rules, 2017

(DISCLAIMER : The views expressed are strictly of the author and Taxindiaonline.com doesn't necessarily subscribe to the same. Taxindiaonline.com Pvt. Ltd. is not responsible or liable for any loss or damage caused to anyone due to any interpretation, error, omission in the articles being hosted on the site)

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