The Delhi GST ( Goods and Services Tax ) department, vide instructions to safeguard the government revenue in the GST and DVAT ( Delhi Value Added Tax ) refunds.
The Insolvency and Bankruptcy Code ( IBC ), 2016, was enacted to consolidate and amend laws relating to reorganisation and insolvency resolution in a time-bound manner, aimed at maximising the value of assets, promoting entrepreneurship, ensuring the availability of credit, and balancing the interests of all stakeholders.
The IBC recognized three types of creditors: Financial Creditors, Operational Creditors, and Other Creditors. Government dues fall under the category of “Operational Credit,” for which a claim must be submitted to the Insolvency Resolution Professional (IRP) or Liquidator, as applicable, in the prescribed form.
It has come to the attention of board that Proper Officers were sanctioning refunds under the DVAT Act and GST Act without checking for any pending insolvency or liquidation proceedings against the Registered Persons, as well as the status of any dues or claims of the Department.
To protect the interests of the revenue, it was directed that before sanctioning any refund amount under the DVAT Act or GST Act, Proper Officers must verify whether any insolvency or liquidation proceedings are ongoing or have been concluded against the Registered Persons, and ascertain the status thereof.
The status of the aforementioned proceedings can be verified through the Registered Persons or via the web portals of IBBI, NCLT/NCLAT. Alternatively, confirmation may also be sought from the Law & Judicial Branch of this Department. If any such proceeding is identified, it should be promptly communicated to the respective Zonal In-charge for further handling of the refund claim in consultation with the Law & Judicial Branch.
Furthermore, it is mandated that when forwarding the file for ECS under the DVAT Act, the concerned Ward In-charge must include the following certification:
‘In view of the Instruction No. dated issued by Department, it is certified that as on date. no insolvency/liquidation proceeding is pending/concluded against the Dealer.’
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