GST Dept issued New Guidelines to protect Government Revenue interest in GST and DVAT Refunds

The Delhi GST Department has issued instructions to protect the interest of government revenue in the GST and DVAT ( Delhi Value Added Tax ) refunds.

The Insolvency and Bankruptcy Code (IBC), 2016 has been enacted to consolidate and amend the laws relating to reorganisation and insolvency resolution in a time-bound manner for maximisation of value of assets, to promote entrepreneurship, availability of credit and balance the interests of all the stakeholder. IBC has recognised three types of creditors i.e. Financial Creditors, Operational Creditor and Other Creditors and Government dues fall under the category of “Operational Credit” for which a claim is required to be filed before the Insolvency Resolution Professional (IRP) or Liquidator, as the case may be, in the prescribed form.

The IBC identified three categories of creditors: financial creditors, operational creditors, and other creditors. Government dues are classified as “Operational Credit,” and a claim must be presented to the Insolvency Resolution Professional (IRP) or Liquidator, as appropriate, in the specified form.

It has come to the board’s attention that Proper Officers were issuing refunds under the DVAT Act and GST Act without first checking for any existing insolvency or liquidation procedures against Registered Persons, as well as the status of any Department dues or claims.

To protect the revenue’s interests, it was directed that before sanctioning any refund amount under the DVAT Act or GST Act, Proper Officers must determine whether any insolvency or liquidation proceedings against the Registered Persons are ongoing or have been completed, and the status thereof.

The status of the aforementioned proceedings can be verified through the Registered Persons or the IBBI, NCLT/NCLAT online portals. Alternatively, you can seek confirmation from this Department’s Law & Judicial Branch. If such a proceeding is discovered, it should be immediately informed to the relevant Zonal In-charge for further processing of the reimbursement claim in collaboration with the Law & Judicial Branch.

It is also directed that while sending the file for ECS under the DVAT Act, the concerned Ward In-charge shall also provide a certification as under:

“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.”

For Official Instructions Download PDF Given Below: