Tuesday, July 5, 2016

Insolvency and Bankruptcy Code 2016

Insolvency and Bankruptcy Code 2016 is welcome step and need of hour being part of ease of doing business in India. This Code has been passed by both Houses and got President assent on 28-05-2016 whereby Sick Industries Companies Act, 1985 (SICA), Presidency Towns Insolvency Act, 1909 and Provincial Insolvency Act, 1920 have been repealed, winding up provisions of Companies Act, 2013 have been restructured and laws relating to winding up has been consolidated in single code. This Code offers a uniform, comprehensive insolvency legislation encompassing all Companies, LLPs, partnerships and individuals. This code will facilitate a formal and time bound insolvency resolution process and liquidation. This code is a special Act and its provisions have overriding effect over other laws. This Code has two parts i.e. Part II for Corporate Debtors (applicable for Companies and LLPs) and Part III, IV and V applicable to individuals and partnership firms. Company Law Tribunal is the Adjudicating Authority for Corporate debtors and whereas Debt Recovery Tribunal is the Authority for individuals and partnership firms. The Author would like to discuss provisions applicable to Individuals and partnership firms in this Article.

Destruction of invoices in fire incident won't lead to denial of credit when all invoices recorded in ledger


a)   During the course of audit of the assessee’s record, audit officers observed that original invoices were not available. Assessee submitted that original invoices were lost/destroyed in an accident of fire.

b)  Therefore, department contended that Cenvat credit was availed in respect of non-existing invoices as assessee was not having original input invoices to be produced for verification. The Adjudicating authority demanded interest and imposed penalty. The assessee filed appeal before the Commissioner (Appeals) which was allowed. Aggrieved by the impugned order, revenue filed the instant appeal.

The CESTAT held as under: