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The government of India along with the Ministry of Corporate Affairs and Department of Revenue has come up with the initiative to permit companies who are undergoing the Insolvency and Bankruptcy Code (IBC) to pay the current GST bill without completing the mandatory payment of the past dues. This particular step of the government has removed hurdles from the overall bankruptcy resolution process and made it hassle-free and simple.
The current GST framework does not allow a firm to file for current tax dues if the firm has unclear dues from the past. Penal action will be initiated in case of non-compliance, wherein the GST registration has been canceled, or the insolvency resolution process has been initiated.
Officials of the Ministry of Corporate Affairs and Department of Revenue (DoR) are having discussions on the matter and are in a process to unveil a framework soon. Two senior government officials said in a statement, “The issue is under discussion…A procedure will be worked out,” said one of them, adding that the officials are expected to meet this week to finalize the contours.
Though, some industry-related organizations are trying to convince the government for the same issue. They don’t seem happy with the government’s initiative and asking the administration to accept the current GST dues while giving a moratorium for the dues from the past. This comes in the way of efforts to revive a company under the IBC process.
Financial experts are of the view that it is high-time to align IBC and GST. It is crucial that during the corporate insolvency resolution process (CIRP), it has to be enclosed from the company’s GST compliances of the past.
Another fact that needs to be taken care of considering taxpayers in mind who somehow missed to complete their GST payments/GST filings in time because of some reasons. A small penalty should be imposed on such defaulters and the primary focus should rely on avoiding business disruptions.
Officials will soon come out with a framework to resolve this matter. A procedure is under construction and it will soon be drafted out, officials are thinking to finalize the contours in this week itself.
Recently, the Chennai bench of National Company Law Tribunal has asked revenue authorities to allow corporate debtors to approach GST portal so that they can file taxes after the commencement of insolvency proceedings.
Also, Read: 38th GST Council Meeting