Indirect TaxationInsolvency & BankruptcyStandard Operating Procedure for raising Tax Claims during Corporate Insolvency Resolution Process

June 21, 20220


The Insolvency and Bankruptcy Code, 2016 (“I&B Code”) was implemented in India for consolidating the laws concerning reorganisation and insolvency resolution of corporate persons, partnership firms and individuals in a time-bound manner. I&B Code inculcates a streamlined process for resolution of insolvency while protecting the interests of all stakeholders, including the Government for recovery of its dues.

The primary focus of I&B Code is the resolution of corporate debt and recovery of dues from the Corporate Debtor, which are to be paid as per the priority order set down by I&B Code. Section 5(21) of I&B Code defines operational debt as “a claim in respect of the provision of goods or services including employment or a debt in respect of the repayment of dues arising under any law for the time being in force and payable to the Central Government, any State Government or any local authority.

Pursuant to Section 5(21) of I&B Code, the dues of the Government, whether Central, State or any local authority, are classified as ‘operational debt’ under I&B Code. Thus, the dues of the Government arising out of Goods and Services Tax (“GST”) or Customs Duty unpaid or short paid by any taxable person is treated as operational debt, and the GST or Customs officials tasked with the recovery of such dues becomes an operational creditor under I&B Code.

This blog shall discuss and elaborate upon the Standard Operating Procedure (“SOP”) laid down by the Central Board of Indirect Taxes and Customs (“CBIC”) vide Instruction No. 1083/04/2022-CX-9 dated 23.05.2022 (hereinafter referred to as “the SOP”) concerning the claims of the GST and Customs Authorities during the Corporate Insolvency and Resolution Process (“CIRP”).


Regulation 12(2) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016  (hereinafter referred to as “the CIRP Regulations”) requires the creditors to submit their claim to the Interim Resolution Professional (“IRP”) or Resolution Professional (“RP”) along with proof within 90 days of the commencement of CIRP.

Thus, Customs and GST officials, who are classified as operational creditors for the purpose of recovery of Customs Duty or GST dues from the Corporate Debtor, are required to submit their claim of Customs/GST dues to the IRP or RP within 90 days from the date of commencement of CIRP.

However, the prevailing situation concerning submission of claims by the GST and Customs officials is that there has been an inordinate delay in filing of claims. As a consequence, the claims made by them are not considered when a Resolution Plan is approved.

Further, the GST/Customs authorities tend to undertake onerous litigation for their rejected claims, in ignorance of the settled position of law that no claims can be filed once the Resolution Plan is approved, and no demands can be raised against the successful Resolution Applicant who takes over the Corporate Debtor’s business through the approved Resolution Plan.

The SOP identifies the key reason for such delays in filing claims as the lack of receipt of timely information regarding initiation of CIRP by the concerned Zonal office. Therefore, the SOP lays down certain guidelines to be followed by the Insolvency and Bankruptcy Board of India (“IBBI”) as well as the GST and Customs Authorities to ensure timely filing of claims during the CIRP.


The SOP primarily provides a mechanism for the Zonal office to receive information regarding CIRP in a timely manner, through which the IBBI would regularly share the details of public announcement of CIRP to an identified office, officer or a centralized system.

For this purpose, CBIC has designated the Additional Director General (“ADG“) of Directorate General of Performance Management (“DGPM”) as the identified officer, to be referred to as the Nodal Officer.

The Nodal Officer shall receive all information pertaining to initiation of CIRP of a corporate debtor from the IBBI on a dedicated email ID accessible by the Nodal Officer. For assistance, the Nodal Officer may nominate the Joint Commissioner or Additional Commissioner of Tax Arrear Recovery, DGPM as an alternate Nodal Officer.

Within  two working days, the Nodal Officer will disseminate the information he has received to all Zonal Principal or Chief Commissioners through official email, with a copy to the relevant Principal Commissioner or Commissioner.

A dedicated WhatsApp group will also be created by the Nodal Officer for faster and timely dissemination of information, of which the Joint Commissioner or Additional Commissioner concerned in the Principal or Chief Commissioner’s office, and the Principal Commissioners or Commissioners concerned shall be members.

The concerned office or Commissionerate having tax arrears pending against the Corporate Debtor shall file its claims promptly after receipt of information from the Nodal Officer, and must notify the same to the Nodal Officer through the Joint Commissioner or Additional Commissioner in the Chief Commissioner’s Office.

The SOP requires all field formations to conduct the daily exercise of checking the website for any new parties going into CIRP, to file timely claims as required. The website must also be checked regularly for any orders issued by the National Company Law Tribunal regarding resolution, liquidation, and/or withdrawal of an application.

Additionally, correspondences with the Resolution Professional must be made regarding finalization of the Resolution Plan and acceptance of the claims arising from dues of GST or Customs Duty.

The Joint Commissioner or Additional Commissioner concerned in the Chief Commissioner’s office is required to send the Nodal Officer a monthly report of work done in terms of tracking the public announcements, submitting claims, if any, and liasoning with the Resolution Professional for updates in CIRP.

Similarly, the Nodal Officer shall submit a consolidated monthly report to IBBI for the purpose of review of progress/action taken by the field formations.


The mechanism of CIRP envisaged under I&B Code focuses on a time-bound process for resolution of corporate debt. Such debt is inclusive of tax arrears of GST and Customs Duty incurred by the corporate debtor. Thus, CIRP enables Government officials to recover the dues of GST and Customs Duty as operational creditor.

For the Government officials to successfully recover their GST/Customs Duty arrears from the corporate debtor undergoing CIRP, their claims have to be submitted with sufficient proof within the prescribed time period of 90 days from the initiation of CIRP.

However, an inordinate delay has often taken place in the submission of tax arrears claims by the Government officials due to numerous reasons, some of them being lack of information regarding initiation of CIRP, non-proactive approach of the officials, lack of I&B Code knowledge, and so on.

The CBIC, taking note of such lapses on the part of the Government officials, has issued the SOP laying down strict guidelines to be followed by the Government officials so as to not delay the submission of claims beyond the prescribed 90-day period.

The SOP prescribes the guidelines to be followed by the Government officials to ensure that they receive information regarding initiation of CIRP at the earliest, and submit their claims accordingly. If followed in its true essence, the SOP will result in maximised recovery of tax arrears by the Revenue and overall growth of the economy.

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