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2021 (5) TMI 409 - Tri - GSTRegistration of fresh GST number of the Corporate Debtor - keeping the Corporate Debtor as a going concern - HELD THAT - the RP is managing to run the business operation of the Corporate Debtor as a going concern as per Section 25(1) of IBC, which is the intent of the IB Code, so as to, keep the Corporate Debtor as going concern. In that event, when the Applicant has applied for registration of the GST of the Corporate Debtor, the GST Department supposed to register the same, instead of rejecting on a very flimsy ground ignoring the circular so issued by the Ministry of Finance on 23.03.2020. On perusal of Circular issued by the Ministry of Finance on 23.03.2020, puts forth, that a suo-moto cancellation of GST registration on an earlier occasion by the GST department cannot be a ground to reject a fresh registration application by Company/Corporate Debtor undergoing CIRP under IB Code - The above said circular dated 23.03.2020 is very clear on the issue, that the Corporate Debtor who, is undergoing CIRP is to be treated as distinct person of the Corporate Debtor and shall be liable to take a new registration in each State or Union Territory, where the Corporate Debtor was registered earlier. That apart, under Section 238 of the IB Code, clearly provide that, it will override the provision of other laws. Under such circumstances, the instant application is fit to be allowed. Thus a suo-moto cancellation of GST registration on an earlier occasion by the GST department cannot be a ground to reject a fresh registration application by Company/Corporate Debtor undergoing CIRP under IB Code - application allowed.
Issues:
1. Application for issuance of direction upon the Commercial Tax Officer to register fresh GST number of the Corporate Debtor. 2. Rejection of GST registration applications by the Respondent Department. 3. Failure of the Respondent to consider circular issued by the Ministry of Finance. 4. Non-appearance of the Respondent in the matter. 5. Management of business operations of the Corporate Debtor during CIRP. 6. Interpretation of provisions of the IB Code regarding GST registration during CIRP. Analysis: 1. The application was filed under Section 25(1) r.w. Section 25(2)(b) and Section 60(5) of the IB Code seeking direction for the registration of a fresh GST number for the Corporate Debtor. The Corporate Insolvency Resolution Process (CIRP) had commenced, and the IRP was replaced by the RP to complete the resolution process. The RP aimed to maintain the Corporate Debtor as a going concern by engaging another entity to run the unit/factory and generate revenues, with the intention to continue business operations. 2. The Applicant submitted that the Respondent Department had rejected the GST registration applications on the grounds of the previous cancellation of GST registration. The rejection failed to consider Circular No. 134/04/2020-GST issued by the Ministry of Finance, which clarified the registration process for companies under CIRP. The Respondent's rejection was deemed arbitrary, ignoring the legal provisions and guidelines provided under the IB Code. 3. Despite the notices and claims lodged by the VAT and GST Departments during CIRP, the Respondent did not appear in the matter. The RP was actively managing the business operations of the Corporate Debtor to ensure its continuity as a going concern, which aligns with the objectives of the IB Code. The Respondent's failure to participate in the proceedings was noted, especially considering the importance of completing the resolution process in a timely manner. 4. The Tribunal emphasized the need to treat the Corporate Debtor undergoing CIRP as a distinct entity, requiring a new GST registration as per the Circular issued by the Ministry of Finance. The Circular highlighted that the cancellation of GST registration by the department previously should not hinder the registration process during CIRP. The Tribunal invoked Section 238 of the IB Code, asserting its supremacy over other laws and directing the Respondent to allow the registration of the Corporate Debtor in GST. 5. The Tribunal concluded by allowing the application and directing the Respondent to register the Corporate Debtor in GST, emphasizing the importance of adhering to the provisions of the IB Code and the circular issued by the Ministry of Finance. The decision aimed to facilitate the resolution process and ensure the continuation of business operations during CIRP, in line with the objectives of insolvency laws.
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