Allow Input Tax Credit due to Recipients by way of belated filing of GSTR 1

BEFORE SMT. NIRMALA
SITARAMAN,

HON’BLE FINANCE MINISTER,
GOVERNMENT OF INDIA,
NEW DELHI & CHAIRPERSON, GST
COUNCIL

All Chief Ministers / Ministers of Finance,
State Governments

GST Council

16-09-2021

Respected Madam,

We are all indebted to the Government of India, the GST Council and all other authorities concerned for having declared an Amnesty Scheme for those tax-payers, who failed to submit their GST Returns since July 2017.

By making use of this Amnesty Scheme, the registered dealers can come out of the complexities and penalties connected to the non-compliance of various provisions connected with filing of Returns and subsequent tax payments.

On complying with this Amnesty Scheme, though the Government is getting the Revenue by way of filing the pending GSTR 1 and GSTR 3B, the poor tax-payers who made use of this Amnesty Scheme are to face a very serious threat from the B2B dealings of these tax-payers.

As per Sec. 16(4) of the GST Act, any Input Tax Credit has to be claimed on or before the filing of the Returns for the month of the succeeding September month of the concerned financial year.

Hence, by filing the GSTR 1 and GSTR 3B, after paying the concessional late fee as per the Amnesty Scheme, and the tax due thereon, though the details of the Outward supplies get reflected in the GSTR 2A, the purchasing dealers (Recipients) are denied the Input Tax Credit, since the period for availment of the Input Tax Credit by them has ended by the time for filing of the Returns for the month of succeeding September. It is only quite natural that the Recipients, who received the supplies, will claim this denied Input Tax from the Suppliers and shall be making payment to the Suppliers, only after deducting the amount of the denied Input Tax plus interest thereon. This shall cause a very heavy financial burden on these Suppliers.

The tax-payer who availed the opportunity of this Amnesty Scheme, will have to pay the Output Tax, once again to the recipient, by way of the Input Tax Credit denied to the Recipient.

Once the erring Tax-payer has accepted his mistake, corrected it, filed the Returns, paid the concessional late fees and also the tax thereon with interest, natural justice demands that he is not further penalised.

Hence, it is prayed that suitable amendments may be made in the GST Act and Rules, so that the Input Tax Credit due to the Recipients by way of belated filing the GSTR 1, as per the Amnesty Scheme, is made available to them and thus those tax-payers who opted the Amnesty Scheme, are saved from the unaffordable and unbearable financial loss, and hence further failure in complying with the provisions of the GST Act.

Hoping for a favourable and pro-active course of action from the side of the Government and the GST Council and thanking you in the meanwhile,

Yours faithfully,

(P. Venkitarama Iyer)

(GST Advisor, Former State President of the All Kerala Distributors’ Association and Co-author of the book “Handbook for Hand Holding GST Compliance” both in English and vernacular Malayalam GST Trainer)