This circular provides clarification on various GST-related issues faced by companies undergoing Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code, 2016, in order to ensure smooth compliance and uniform implementation of the law.

It clarifies that GST dues pertaining to the period prior to the insolvency commencement date are to be treated as operational debt. No coercive recovery action can be taken during the moratorium period, and tax authorities are required to file claims for such dues before the National Company Law Tribunal in accordance with IBC provisions. The GST registration of a corporate debtor under CIRP should not be cancelled, though it may be suspended if required.

The circular further clarifies that the Interim Resolution Professional (IRP) or Resolution Professional (RP) is not required to file GST returns for the pre-CIRP period. However, for the CIRP period, the corporate debtor is required to obtain a new GST registration as a distinct person and comply with all GST requirements, including filing of returns and payment of tax. Detailed guidance is provided on filing the first return and availing input tax credit, including special relaxation for invoices issued under the old GSTIN during the transition period.

It also clarifies the eligibility of recipients to avail ITC on supplies received from corporate debtors under CIRP and provides guidance on refund of amounts deposited in the cash ledger during the interim period. Overall, the circular aims to align GST procedures with the insolvency framework and reduce compliance difficulties.