New Facility for IRP/RP to Register on the GST Portal

On 27th May 2020, the government portal introduced a new GST registration feature for all the Interim Resolution Professionals (IRP) and Resolution Professionals (RP). It applies to those cases where the GST registered companies (known as corporate debtors) are going through the Corporate Insolvency Resolution Proceedings (CIRP) under the Insolvency and Bankruptcy Code, 2016 (IBC).

The appointed IRP/RP should choose the reason as “Corporate Debtor undergoing the Corporate Insolvency Resolution Process with IRP/RP” while registering on the GST portal. The primary authorised signatory will be the IRP/RP himself. Also, the principal place of business/additional place of business will not change and remain the same as the details in the original registration of the corporate debtors. At last, the registration form is submitted on the GST portal using the digital signature certificate of IRP/RP. 

Recently, the government had notified that the IRP/RP who undertake CIRP must ensure to follow certain GST norms during that period. The CBIC, in its notification dated 21st March 2020, stated that the IRP must obtain a new GST registration, file GST returns as done earlier by its corporate debtor, claim Input Tax Credit (ITC), apply for GST refunds, etc. A follow-up circular was also issued to clarify about the timelines.

The date of appointment of IRP/RP shall be considered for assuming the GST compliance duties. A specific timeline for registration is given in this notification. An IPR/RP must obtain a new GSTIN within thirty days from the date of his appointment or 30th June 2020, whichever is later. In case of those corporate entities already undergoing resolution under IBC, the time limit for IRP/RP to take new registration shall expire within thirty days from the date of the above notification. 

At this point, we may observe that GSTN’s communication about the facility has already been delayed. Nonetheless, since the dates of GST compliances have all been extended until 30th June 2020, it is safe to assume that all IRP/RPs can comply by 30th June 2020.

Also Read: GST ITC-02A is Now Live on the GST Common Portal

GST registration must be taken in every state or Union Territory where the corporate debtor was earlier registered. The PAN and CIN of the corporate debtor shall be considered for this purpose.

The reason for a new registration was to reflect the change in the management and administration of the company. The RP is a distinct person from that of the corporate debtor. However, the corporate debtor need not cancel its GST registration. If circumstances warrant, the jurisdictional tax officer may suspend such GST registration. 

Irrespective of changes that happen after the appointment of the first IRP/RP, only one new GST registration would be necessary and valid. The changes may include re-appointment or replacement by the RP due to the non-approval of an appointed IRP by the company’s creditors.

A minor non-core amendment to the GST registration will be required to change the primary signatory by the outgoing IRP. However, if the outgoing IRP does not cooperate, the jurisdictional tax officer may revise the primary signatory details in the name of the re-appointed IRP/RP.

There is an exception carved out. A new GST registration will not be required in some instances, where the corporate debtor regularly filed GSTR-1 or GSTR-3B for all the tax periods before an IRP/RP’s appointment.

The GST laws require registered persons to file their GST returns regularly despite no activity. Otherwise, the authorities may cancel such inactive GSTINs on its failure to file by more than six months. GST registration may also be restored in genuine cases, once all the GST returns are filed to-date. 

There was no particular procedure outlined in the GST law to deal with scenarios that attract the IBC. However, some FAQs in the past had answered that cancellation should not be made in these cases. Accordingly, the CBIC notified a detailed procedure for the same in March 2020. But an amendment to few provisions of the GST Act is still awaited, without which certain rights of RP may be challenged legally in the future.

The principal goal of constituting the IBC, 2016 is to protect a corporate debtor during CIRP and to keep it a going concern, while being given a resolution. The law also upholds tax authorities to be the operational creditors, giving them distinct rights over their tax dues.

For any clarifications/feedback on the topic, please contact the writer at annapoorna.m@cleartax.in