After the NCLT, Kolkata Bench, passed an order on 19/07/2019, declaring the applicant a corporate debtor under the IBC, 2016, and appointed a liquidator. The applicant wants to know whether any sale done by the liquidator of the assets of the applicant results in a supply of goods and/or services or both within the meaning of “supply” as defined under section 7 of the GST Act. If the answer is affirmative, then what will be the rate of GST. The applicant also wants to know whether the liquidator needs to get registered under the GST Act.
The applicant submits that NCLT has appointed liquidator, after which all powers of directors in decision making are vested in liquidator under section 34 (2) of IBC. In furtherance to this, the plant and machinery, office equipment, and furniture of the applicant were auctioned as per regulation laid down under section 32 (c) of the IBC at the price Rs. 2.82 cr.
The bench observed that the liquidator is appointed under section 34 (1) of IBC after NCLT initiates liquidation in terms of section 33 of IBC. As the applicant is not a going concern, the liquidator is required to sell its assets under clauses (a) to (d) of Regulation 32 of the Insolvency and Bankruptcy Board of India (liquidation process) Regulations. The sale of the applicant’s assets like the plant and machinery, office equipment & furniture is, therefore, a supply of goods by the liquidator. Hence, the liquidator is required to take registration under section 24 of the GST Act.
Further, if he is already registered as a distinct person of the corporate debtor in terms of Notification No. 11/2020 – Central Tax dated 21/03/2020, he should continue to remain registered till her liability ceases under section 29 (1) (c) of the GST Act. It may be noted that the RP/liquidator acts as the authorized person of the corporate debtor. Once an insolvency professional takes registration as the authorized person of the corporate debtor, it remains in effect with a suitable amendment in the certificate of registration if the status or person of the authorized person gets changed.
Based on the above discussion, the bench ruled that the sale of the assets of the applicant by NCLT appointed liquidator is a supply of goods by the liquidator, who is required to take registration under section 24 of the GST Act. If he is already registered as a distinct person of the corporate debtor in terms of Notification No. 11/2020 – Central Tax dated 21/03/2020, he should continue to remain registered till his liability ceases under section 29 (1) (c) of the GST Act.
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