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Circular No. 187/19/2022-GST
F. No. CBIC-20001/2/2022 - GST
Government of India
Ministry of Finance
Department of Revenue
Central Board of Indirect Taxes and Customs
GST Policy Wing
*****

New Delhi, Dated the 27
th
December, 2022
To,
The Principal Chief Commissioners / Chief Commissioners / Principal Commissioners /
Commissioners of Central Tax (All)
The Principal Directors General / Directors General (All)

Madam/Sir,
Subject: Clarification regarding the treatment of statutory dues under GST law
in respect of the taxpayers for whom the proceedings have been finalised under
Insolvency and Bankruptcy Code, 2016- reg.
Attention is invited to Circular No.134/04/2020-GST dated 23
rd
March, 2020, wherein
it was clarified that no coercive action can be taken against the corporate debtor with respect
to the dues of the period prior to the commencement of Corporate Insolvency Resolution
Process (CIRP). Such dues will be treated as ‘operational debt’ and the claims may be filed by
the proper officer before the NCLT in accordance with the provisions of the IBC.
2. Representations have been received from the trade as well as tax authorities, seeking
clarification regarding the modalities for implementation of the order of the adjudicating
authority under Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as the “IBC”)
with respect to demand for recovery against such corporate debtor under Central Goods and
Services Tax Act, 2017 (hereinafter referred to as “CGST Act”) as well under the existing laws
and the treatment of such statutory dues under CGST Act and existing laws, after finalization
of the proceedings under IBC.
3. In order to ensure uniformity in the implementation of the provisions of the law across
the field formations, the Board, in exercise of its powers conferred under section 168(1) of the
CGST Act, hereby clarifies as follows.
4.1 Section 84 of CGST Act reads as follows:
“Section 84 - Continuation and validation of certain recovery proceedings.-
Where any notice of demand in respect of any tax, penalty, interest or any other
amount payable under this Act, (hereafter in this section referred to as "Government
dues"), is served upon any taxable person or any other person and any appeal or revision

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application is filed or any other proceedings is initiated in respect of such Government
dues, then-
..
(b) where such Government dues are reduced in such appeal, revision or in other
proceedings-
(i) it shall not be necessary for the Commissioner to serve upon the taxable person a
fresh notice of demand;
(ii) the Commissioner shall give intimation of such reduction to him and to the
appropriate authority with whom recovery proceedings is pending;
(iii) any recovery proceedings initiated on the basis of the demand served upon him prior
to the disposal of such appeal, revision or other proceedings may be continued in relation
to the amount so reduced from the stage at which such proceedings stood immediately
before such disposal.”

4.2 As per Section 84 of CGST Act, if the government dues against any person under CGST
Act are reduced as a result of any appeal, revision or other proceedings in respect of such
government dues, then an intimation for such reduction of government dues has to be given by
the Commissioner to such person and to the appropriate authority with whom the recovery
proceedings are pending. Further, recovery proceedings can be continued in relation to such
reduced amount of government dues.

4.3 The word ‘other proceedings’ is not defined in CGST Act. It is to be mentioned that the
adjudicating authorities and appellate authorities under IBC are quasi-judicial authorities
constituted to deal with civil disputes pertaining to insolvency and bankruptcy. For instance,
under IBC, NCLT serves as an adjudicating authority for insolvency proceedings which are
initiated on application from any stakeholder of the entity like the firm, creditors, debtors,
employees etc. and passes an order approving the resolution plan. As the proceedings
conducted under IBC also adjudicate the government dues pending under the CGST Act or
under existing laws against the corporate debtor, the same appear to be covered under the term
‘other proceedings’ in Section 84 of CGST Act.

5. Rule 161 of Central Goods and Services Tax Rules, 2017 prescribes FORM GST
DRC-25 for issuing intimation for such reduction of demand specified under section 84 of
CGST Act. Accordingly, in cases where a confirmed demand for recovery has been issued by
the tax authorities for which a summary has been issued in FORM GST DRC-07/DRC 07A
against the corporate debtor, and where the proceedings have been finalised against the
corporate debtor under IBC reducing the amount of statutory dues payable by the corporate
debtor to the government under CGST Act or under existing laws, the jurisdictional
Commissioner shall issue an intimation in FORM GST DRC-25 reducing such demand, to the
taxable person or any other person as well as the appropriate authority with whom recovery
proceedings are pending.
6. It is requested that suitable trade notices may be issued to publicize the contents of this
circular.

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7. Difficulty, if any, in the implementation of the above instructions may please be brought
to the notice of the Board. Hindi version would follow.


(Sanjay Mangal)
Principal Commissioner (GST)