Insolvency regulator IBBI has clarified that an Insolvency Professional (IP) managing the voluntary liquidation process will not be required to apply for a Certificate of No Objection (NOC) or Certificate of No- payment of the income tax service to comply with such a process.
The position was spelled out in a circular from the Insolvency and Bankruptcy Board of India (IBBI) which found that the process of applying for such a NOC / NDC from the IT department is time consuming and against the law. ‘Target for time-bound completion of the process under the Insolvency and Bankruptcy Code (IBC), said the IBBI.
Currently, the Voluntary Liquidation Regulation mandates the liquidator to make the public announcement within five days of the appointment of the office, calling for the submission of claims by stakeholders within 30 days from the start date of the office. liquidation. The regulations also oblige all financial creditors, operational creditors, including the government and other stakeholders, to submit their claims within the specified time frame. If the complaints are not submitted on time, the legal person can be dissolved without dealing with these complaints and these complaints can therefore be extinguished.
It has been found that even after giving the possibility to file claims, liquidators seek NOCs / NDCs from the income tax service while the code or regulation does not contemplate soliciting such NOCs / NDCs.
The experts’ point of view
Yogendra Aldak, Partner, Lakshimkumaran and Sridharan Attorneys, said: “This provides the necessary reassurance to stakeholders and ensures that stakeholders are not required to comply with any procedure not contemplated in the Code”.
Veena Sivaramakrishnan, Partner, Shardul Amarchand Mangaldas and Co, said: “Abandoning the practice of seeking an NOC / NDC from the IT department would operationally facilitate the voluntary liquidation process. Liquidators can remove this requirement from their Obligations Checklist.
Maneet Pal Singh, Partner, IP Pasricha & Co, said that in recent times we have seen that the goal of time-limited completion of the liquidation process is being overcome mainly due to the process of obtaining a notice of compliance of the income tax service by the insolvency practitioner since it takes a long time compared to the express provisions of the Insolvency and Bankruptcy Code, 2016.
“In order to remedy this, the IBBI clarified that an insolvency professional responsible for the voluntary liquidation process is not required to seek a notice of compliance with the income tax service and, with this, we believe the process will be run smoothly within a limited timeframe, ”Singh says.