ITC Issue in case of Acqusition of Company in Insolvency

[umeshkumar jhawar]

Dear Experts,

Our Client has acquired a Company from Resoultion Professional (RP) through Auction on going concern basis.

As per NCLT order new management will not be responsible for any Government dues before 01.08.2023 i.e. date of sale certificate.

Now GST official has conducted Survey on our company asking issue related to fake ITC pertaining to FY 2018-19 and FY 2019-20 i.e. prior to acquisition.

The above issue of Fake ITC was not known as on date of acqusition as per Financial given by RP as on 01.08.2023

The department has never filed any claim before RP for their demand in this regard.

Please suggest/guide how to proceeds with and reply Notices/Summon received during Survey.

AI Summary

New Management Not Liable for Pre-August 2023 Govt Dues, GST Claims Barred Post-IBC Liquidation A client acquired a company through an auction from a Resolution Professional (RP) as a going concern. The National Company Law Tribunal (NCLT) order specifies that the new management is not liable for any government dues before August 1, 2023. However, a GST survey raised issues about fake Input Tax Credit (ITC) from fiscal years 2018-19 and 2019-20, which were unknown at the acquisition time. Experts advised that under the Insolvency and Bankruptcy Code (IBC), once assets are liquidated and distributed, no claims can be made against the dissolved company, and the GST Act is subordinate to the IBC.