BANKRUPT COMPANIES TO TAKE INDIRECT TAX DEPARTMENT TO COURT OVER GST SOFTWARE FOR NOT BEING SYNC WITH IBC

INTRODUCTION

Several companies which has the administration are being dragged to the indirect tax department which led to court over the Goods and Service Tax (GST) software, does not give them the required flexibility on the payment made for the statutory dues. On Tuesday, the companies filed a writ petition to the High Court of Gujarat claiming that the indirect tax department position over the GST which is not in line with the regulations of the Insolvency and Bankruptcy Code (IBC).

THE RECOVERY

There are companies being bankrupt which are complaining about the GST software and does not allow them to pay the current or future taxes which are about clearing the dues from the earlier years. Coming to IBC, the tax department had to wait until all the creditors getting their dues before beginning the recovery. The report made on 21st September 2019 had written that the companies are planning to take the indirect tax department to the court of law over the issue.

Appearing before the companies, they told that there is a moratorium under the IBC that is basically meaning the companies which don’t have to clear the past taxes as they are filing for bankruptcy.

In several cases. The direct tax department are not able to claim the past taxes from the companies admitted into the resolution process. The tax demands made as high as several hundred crores of rupees in relating to the income tax or transfer pricing adjustments have been put on hold.

CONCLUSION

The GST paid by the end consumer and no goods or services can be made to sell without paying the tax. Here, the lenders are also concerned about what they require to take a cut, the indirect tax department might be having an undue upper hand.

IBC is overarching and also takes precedence over all the other demands made from the tax departments or any other creditors.

By-

Vijayalakshmi Raju

Student Reporter, INBA.