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<p>Circular No. 134/04/2020-GST provides detailed guidelines on how GST provisions should be applied in cases of insolvency, bankruptcy, and corporate restructuring under the Insolvency and Bankruptcy Code (IBC), 2016. It addresses critical concerns regarding the treatment of GST liabilities during the Corporate Insolvency Resolution Process (CIRP) and the process for handling GST registrations for companies undergoing insolvency proceedings.</p><p><strong>Key Highlights:</strong></p><ul><li><strong>GST Liabilities and CIRP</strong>: The circular clarifies how GST liabilities are handled for companies undergoing insolvency proceedings under the IBC. It emphasizes that no penal actions can be taken against the corporate debtor for the period before the start of the CIRP. However, GST dues before CIRP are considered operational debt, and claims for such liabilities must be filed with the National Company Law Tribunal (NCLT).</li><li><strong>GST Registration During CIRP</strong>: The circular advises that a company undergoing CIRP should not be deregistered under GST. If necessary, a new registration can be obtained. Insolvency professionals (IRPs) or resolution professionals (RPs) are responsible for ensuring that the business continues to comply with GST obligations during the insolvency proceedings.</li><li><strong>GST ITC and Refunds</strong>: The circular outlines the treatment of Input Tax Credit (ITC) and refund claims during CIRP. If an IRP or RP is handling the proceedings, they can claim refunds based on previously filed GST returns. If cash has been deposited in the taxpayer’s cash ledger during the proceedings, a refund claim can also be filed.</li><li><strong>ITC Transfer and Compliance</strong>: The circular clarifies how ITC is to be handled in cases where assets are sold, transferred, or merged during the insolvency process. The rules ensure that businesses comply with GST regulations while undergoing corporate restructuring.</li><li><strong>Filing and Reporting</strong>: GST registration and filings continue during CIRP. The IRP/RP must file GST returns (like GSTR-3B or GSTR-1) on behalf of the company, even if some of the filing was pending before the CIRP.</li></ul><p>This circular ensures that businesses undergoing insolvency proceedings can continue to comply with GST regulations without being hindered by procedural issues, while also safeguarding the interests of the stakeholders involved in the insolvency process.</p><p><a href="https://cms.plasament.com/storage/chirag-singla/circular-cgst-134h.pdf">circular-cgst-134h</a><br> </p>