As per law, the form, manner and time within which a return under Section 39 is to be furnished was to be prescribed. Sub rule (1) and (5) of Rule 61 were prescribed vide Notification No. 10/2017 – Central Tax dated 28th June 2017 which prescribed GSTR 3 as the return under Section 39 and where the time limit for furnishing of details in FORM GSTR-1 under section 37 and in FORM GSTR-2 under section 38 was extended prescribed that the return in Form GSTR-3B be filed in lieu of Form GSTR-3 as notified.
However, the Government, immediately vide Notification No. 17/2017 – Central Tax dated 27th July 2017 amended the aforesaid sub rule (5) under Rule 61 to indicate and prescribe that the return in Form GSTR-3B is not intended to be in lieu of Form GSTR-3, and this change was brought in retrospectively with effect from 1st July 2017. GSTR 3B since then was demonstrated to be a return in cases where the time limit for furnishing details in FORM GSTR 1 and GSTR 2 had been extended with effect from 1st day of July, 2017 vide Notification No. 17/2017 – Central Tax dated 27th July, 2017 but not being in lieu of GSTR 3. .GSTR 3B was thus intended to be a stop gap arrangement to address the difficulties in payment of taxes, return filing and compliance mechanism due to unpreparedness / deficiencies in the filing process including in competencies of the common portal. It was meant to be a temporary arrangement until the return filing mechanism of GSTR 1, 2 and 3 could be implemented, but even after a lapse of more than 2 years since implementation of GST in the country, GSTR 2 and GSTR 3 still could not be implemented, the question whether GSTR 3B is a return under Section 39 of the GST law was brought before the Honorable Gujarat High Court and the Honorable High Court in the case of AAP and Co. v. Union of India, 2019 ITL(GST) 687, sounded the first big alarm in June 2019 wherein it was held that GSTR 3B is not a return in terms of Section 39 of the CGST Act, 2017. Consequentially, the government immediately recognised its mistake and took up the challenge to remedy the consequences of the judgement with retrospective effect from 1st July 2017 and amended Sub Rule (5) of Rule 61 of the CGST Rules, 2017 vide Notification No. 49/2019 – Central Tax dated 09-10-2019. Instead of reinstating the original Rule 61(5) as was notified under Notification 10/2017 – Central Tax dated 28th June 2017, the sub Rule was redrafted with care and a proviso was inserted to state that where a return in Form GSTR 3B is required to be furnished by a person referred to in sub – rule (1) then such person shall not be required to furnish the return in Form GSTR 3. Sub Rule (6) of Rule 61 has also been omitted w.e.f. 1st July 2017 to support the amendment in sub rule (5). Let us understand the same by way of a tabular comparison of the old and new provision:
|Old Rule 61(5)& 61(6)||New Rule 61(5)& 61(6)|
|(5) Where the time limit for furnishing of details in FORM GSTR-1 under section 37 and in FORM GSTR-2 under section 38 has been extended and the circumstances so warrant, the Commissioner may, by notification, specify the manner and conditions subject to which the return shall be furnished in FORM GSTR- 3B electronically through the common portal, either directly or through a Facilitation Centre notified by the Commissioner.||(5) Where the time limit for furnishing of details in FORM GSTR-1 under section 37 or in FORM GSTR-2 under section 38 has been extended, the return specified in sub-section (1) of section 39 shall, in such manner and subject to such conditions as the Commissioner may, by notification, specify, be furnished in FORM GSTR-3B electronically through the common portal, either directly or through a Facilitation Centre notified by the Commissioner:
Provided that where a return in FORM GSTR-3B is required to be furnished by a person referred to in sub-rule (1) then such person shall not be required to furnish the return in FORM GSTR-3.”;
|(6) Where a return in FORM GSTR-3B has been furnished, after the due date for furnishing of details in FORM GSTR-2—
(a) Part A of the return in FORM GSTR-3 shall be electronically generated on the basis of information furnished through FORM GSTR-1, FORM GSTR-2 and based on other liabilities of preceding tax periods and Part B of the said return shall be electronically generated on the basis of the return in FORM GSTR-3B furnished in respect of the tax period;
(b) the registered person shall modify Part B of the return in FORM GSTR-3 based on the discrepancies, if any, between the return in FORM GSTR-3B and the return in FORM GSTR-3 and discharge his tax and other liabilities, if any;
(c) where the amount of input tax credit in FORM GSTR-3 exceeds the amount of input tax credit in terms of FORM GSTR-3B, the additional amount shall be credited to the electronic credit ledger of the registered person.
Note: The above has been amended retrospectively w.e.f. 01-07-2017.
For understanding what is a return under Section 39, let us also refer to the Section 39(1) of the CGST Act, 2017 itself which reads as under:
“39. (1) Every registered person, other than an Input Service Distributor or a non-resident taxable person or a person paying tax under the provisions of section 10 or section 51 or section 52 shall, for every calendar month or part thereof, furnish, in such form, manner and within such time as may be prescribed, a return, electronically, of inward and outward supplies of goods or services or both, input tax credit availed, tax payable, tax paid and such other particulars as may be prescribed:
Provided that the Government may, on the recommendations of the Council, notify certain classes of registered persons who shall furnish return for every quarter or part thereof, subject to such conditions and safeguards as may be specified therein.”
On a plain reading of the above section, we understand that a return under this Section should have the following attributes:
1) Details of inward supplies of goods or services or both;
2) Details of outward supplies of goods or services or both;
3) Details of Input Tax Credit availed;
4) Details of Tax Payable;
5) Details of Tax Paid; and
6) Such other particulars as may be prescribed
On a detailed scrutiny of Form GSTR 3B, the information that is furnishable under the Form GSTR 3B is:
a) Table 3.1: Tax on outward and reverse charge inward supplies’
b) Table 3.2: Inter State Outward Supplies;
c) Table 4: Eligible ITC;
d) Table 5: Exempt, nil and Non GST inward supplies;
e) Table 5.1: Interest and Late Fee;
f) Table 6.1: Payment of tax;
g) Table 6.2: TDS/TCS Credit
It is seen that one important feature that is missing in Form GSTR 3B is the details of inward supplies of goods or services or both. Though Table 5 of Form GSTR 3B requires a taxpayer to fill details relating to Exempt, Nil and Non-GST inward supplies, the complete details of all inward supplies of the taxpayer which are an important component of Section 39 (1) are missing. It is clearly evident that vital information stipulated under the parent section 39 is absent in the Form GSTR 3B. An incomplete Form which enables payment of tax but does not contain complete information as laid in the parent section and which is not prescribed as return itself under the rule, and the furnishing of which only waives the requirement of filing the prescribed return cannot become the prescribed Form by itself. It lacks legal backing and proper feet to stand. There is no provision that exempts the requirement of furnishing all particulars required under Section 39.
Another very important aspect in respect of Section 39 (1) is that this Section 39 (1) stipulates such a return which can be furnished even without payment of full or part tax, whereas, GSTR 3B does not provide any option to be furnished without payment of the entire self-assessed tax declared thereunder. Readers may kindly note that definition of the term “valid return” under Section 2 (117) has been separately provided which stipulates that the return under Section 39 (1) would be considered valid if the self-assessed tax was paid in full. If GSTR 3B is retrospectively held as a return under Section 39(1), all returns would become valid returns by default and the definition of “valid return” itself would become otiose. Thus, from the above discussion, it is clear that though GSTR 3B is a return in terms of the definition of the term “return” provided under Section 2(97) which is prescribed under Rule 61(5) but GSTR 3B fails the test of being a return under Section 39(1) as such, in spite of the fact that the furnishing of this return GSTR 3B waives the requirement to file the return under Section 39 (1), which is prescribed under Rule 61(1). Rule 61 (5) following Rule 61(1) is merely a subordinate prescription. Rule 61 (5) has only done away with the furnishing of the originally prescribed Form GSTR 3 under Rule 61 (1) if furnishing of GSTR 3B was required in specific circumstances but it cannot be said to be return in terms of Rule 61(1) as such even after the amendment of Rule 61(5) and 61(6) brought in retrospectively on 9th October 2019.
Though power has been given to the Government on recommendation of the Council, to give retrospective effect to any Rule, it is also worthy to understand that the Government can form, modify or annul any rule or regulation to the extent it is without prejudice to the validity of anything previously done under the said Rule or Regulation. When both these stipulations are harmoniously applied to the Act and relevant rules in this regard, the retrospective amendment of Rule 61(5) and (6) appears to lose applicability and create any implication, rather they remain only as prescription of manner of alternative compliance which waive the requirement of furnishing the return itself. If at all, the waiver of requirement of furnishing of Form GSTR 3 was to have the effect of making Form GSTR 3B a return under Section 39 as such, specific provisions in this regard were called for.
It is well laid law that the Rules can only prescribe Rules to carry out the provisions of the Act and not beyond. If at all there was a difficulty in giving effect to the provisions of Section 39(1) without furnishing of GSTR 1,2 and 3, a general or special order to such effect was required instead of mere amendment in Rule 61(5) and 61(6) in our opinion. A rule is a prescribing provision and cannot override the Section itself.
The decision of the Hon’ble Gujarat High Court in the case of AAP and Co. v. Union of India, 2019 ITL(GST) 687 touched upon certain vital issues and post decision in the said case, the retrospective amendment of Rule 61(5) and deletion of Rule 61(6) has been brought in, but it only eases the taxpayers from the need of furnishing GSTR 3 in those cases where furnishing of GSTR 3B was notified, fails to help us read GSTR 3B into Section 39.
Note: The views expressed are the personal views of the author only. Therefore, the same should not be considered as final opinion on the subject matter. There may be other views also. So, the readers are advised to consider all the points before relying upon the above write ups and we are not taking any responsibility for any damage caused or if contrary views are taken by the authorities.
CA (Dr.) Ayush Saraf, Guwahati
CA Raginee Goyal, Guwahati