New application for GST registration by Cos. undergoing CIRP couldn’t be rejected on ground of suo motu cancellation
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- Last Updated on 22 July, 2021
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Case details: Sapan Mohan Garg v. Commercial Tax officer, Gujarat - [2021] 128 taxmann.com 173 (NCLT - Ahd.)
Judiciary and Counsel Details
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- Ms. Manorama Kumari | Judicial Member, and Chockalingam Thirunavukkarasu | Technical Member
- Milan Negi and Parth Shah, Advs. for the Applicant
Facts of the Case
The Applicant Resolution Professional with the intent of keeping the corporate debtor company as a going concern, made an arrangement, on a trial basis to run unit/factory and generate revenues.
In that event, the applicant applied for registration of GST of a corporate debtor which was rejected by the GST Department on the ground that since GST registration of corporate debtor was earlier canceled by Department suo motu, there was no occasion to apply for or grant a fresh registration.
Furthermore, the applicant had ignored Circular No. 134/04/2020-GST, dated 23-3-2020, whereby the Ministry of Finance issued a clarification to all GST Departments/officials in respect of issues under GST law for companies under CIRP under the aegis of IBC.
NCLT Held
However, as per the above circular, a suo moto cancellation of GST registration on an earlier occasion by the GST department could not be a ground to reject a fresh registration application by the company/corporate debtor undergoing CIRP under IBC.
Further, above said circular was very clear on the issue, that corporate debtor who was undergoing CIRP was to be treated as a distinct person and shall be liable to take a new registration in each State or Union Territory, where the corporate debtor was registered earlier. That apart, Section 238 clearly provides that, it will override the provision of other laws. Therefore, the department was to be directed to allow the applicant to register as a corporate debtor in GST.
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