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Govt directs the GST & Customs Authorities to follow the timeline of filing CIRP claims under IBC

The Insolvency and Bankruptcy Code (IBC), 2015, was enacted to consolidate the fragmented laws pertaining to insolvency. The IBC handles the insolvency proceedings cases through tribunals i.e. NCLT and appellate tribunal NCLAT. The Code recognises three different types of creditors: Financial Creditors, Operational Creditors and other Creditors.

Section 5(20) of the Code defines an Operational debt as is a claim in respect of the provisions of goods or services including employment or a debt in respect of the payment of dues arising under any law for the time being in force and payable to the Central Government, any State Government or any local authority.'

An Operational creditor has the right to file an application to initiate the insolvency resolution process of a corporate debtor and to file a claim in the insolvency resolution process and participate, without voting rights, in a committee of creditors through their representatives.

A timeline of 90 days from the insolvency commencement date is available for filing of claims. However, it has been observed that there is an inordinate delay in the filing of claims by Customs and GST Authorities. This leads to their claims not being admitted and extinguished once a resolution plan is approved. lt is also observed that the authorities then litigate on the rejection of each claim, despite the settled position that no claims can be raised once the plan is approved and no demands can be raised on the resolution applicant who has taken over the company through such a resolution plan

The basic purpose of nominating a Nodal Officer is to ensure riling of the claims with the lBBl in a timely manner and within the period of 90 days from the insolvency commencement date. ln the interest of protection of government revenue and to make the entire process smooth and effective, CBIC has nominated the Additional Director General, DGPM as the Nodal Officer for the CBIC for the receipt of information regarding the initiation of the insolvency resolution process and dissemination of the same to the field formation for necessary action at their end in terms of the provisions of the Insolvency and Bankruptcy Code, 2016.

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