CA Anand Tanna

CA Anand TannaEver since GST implemented from 01st July 2017 there were several rumours and anticipation for GST Annual return and reconciliation of Annual return with GST Audit.

Government has through Notification number 39/2018-CT dated 04.09.2018 and Notification number 49/2018 -CT dated 13.09.2018 have notified GSTR 9 & 9A (Annual Return for Regular & Composite dealer) and GSTR 9C (GST Audit Form), respectively.

Let’s see provisions in question & answer form related to Annual Return and GST Audit to understand better:

Question 1: What are legal provisions for Annual return and GST Audit?

Answer: – Legal requirement of filing Annual return hereafter called GSTR-9 is governed by section 35(5) and section 44(1) of CGST Act. Section 44(1) of CGST Act read with Rule 80(1) of CGST Rules requires that every Registered person other than

– an Input Service Distributor,

– a person paying tax under section 51 (TDS) or section 52 (TCS),

– a casual taxable person and

– a non-resident taxable person,

Shall furnish an annual return for every financial year electronically in Form GSTR-9 on or before the thirty-first day of December following the end of such financial year.

Further, as per section 35(5) of CGST Act, every registered person whose turnover during a financial year exceeds the prescribed limit (Rs. 2 cr.) shall get his accounts audited by a chartered accountant or a cost accountant and shall submit a copy of the audited annual accounts, the reconciliation statement (GSTR-9C) under sub-section (2) of section 44 and such other documents in such form and manner as may be prescribed. Reconciliation statement – GSTR-9C is reconciliation of data as per books of accounts and data as reported in GSTR-9.

Question 2: Whether transactions for the period April-17 to June-17 are also to be included in GSTR-9 for FY 2017-18?

Answer: – No, instructions forming part of GSTR-9 which was notified by Notification No. 39/2018 dated 04th September 2018, clearly mentions that only details for the period July 2017 to March 2018 are to be provided in GSTR-9.

Question 3: If a Taxpayer has obtained more than one GST Registration even though he has a single PAN, then whether GSTR-9 is to be filed at Entity level or GSTIN wise?

Answer: – As per Legal provision of Section 44(1) of CGST Act, every registered person shall be required to file GSTR-9. Hence, if a Taxpayer has obtained multiple GST Registrations whether in one state or more than one state, it shall be treated as a distinct person in respect of each such registration as per section 25(4) of CGST Act. Hence, GSTR-9 is required to be filed separately for each such GSTIN.

Question 4: What is the difference between GSTR-9 and GSTR-9C?

Answer: – As per section 35(5) of CGST Act, every registered person whose turnover during the financial year exceeds prescribed limit (Rs. 2 cr.) shall get his accounts audited by a chartered accountant or a cost accountant and shall submit a copy of the audited annual accounts, the reconciliation statement under sub-section (2) of section 44 which is called GSTR-9C and such other documents in such form and manner as may be prescribed. Hence, requirement of GST Audit u/s 35(5) would arise only if prescribed limit of turnover exceeds Rs. 2 cr. and certified reconciliation statement -GSTR-9C shall require to be submitted.

On the other hand, GSTR-9 is an Annual return which is required to be filed by every registered person irrespective of threshold limit of turnover.

Question 5: Whether Turnover of 2 Cr. For GST Audit would be for 9 months or Full Financial year?

Answer: – For the FY 2017-18, the GST period comprises of 9 months whereas the relevant section 35(5) uses the expression Financial Year; Therefore, in the absence of clarification from Government, also to avoid any cases of default, it is reasonable to understand that reckon the turnover limits prescribed for audit i.e. 2 Cr. One has to reckon the turnover for the whole of the Financial Year which would include the first quarter of FY 2017-18.

Question 6: What will be source of information for filling up GSTR-9?

Answer: – GSTR-9 is merely a compilation of data filed in GSTR-3B and GSTR-1. As per the instructions of the form GSTR-9, it is stated that information of outward supplies ‘may’ be derived from Form GSTR 1. Hence, so far as Outward supplies and tax payable in the annual return is concerned, the same are to be extracted from Form GSTR 1 only.

Inward supplies, input tax credit and the net tax paid in cash are to be gathered from Form GSTR 3B.

But before filing GSTR-9, Value as per GSTR-3B and GSTR-1 must align. If there are any differences, then the same must be adjusted to subsequent returns filed up to September-18 as per circular 26/26/2017-GST dated 29th December 2017.

It seems that the inherent assumption that has been taken while drafting the form is that Form GSTR 3B and Form GSTR 1 are in consonance with each other which may not be always true.

In case the values as per Form GSTR 3B and GSTR 1 are not matching with each other, one may arrive at a differential value of tax payable and tax paid as per annual return. A clarification may be expected from the Government regarding the manner of payment of any additional liability (if any). However, if one faces such a situation, then the additional tax liability may be paid through Form GSTR 3B of the subsequent month/Form DRC-03.  

Question 7: Whether GSTR-9 can be revised?

Answer: No such option has been provided in the law till now.

Question 8: How much late fee is payable for late filing of GSTR-9?

Answer: – As per section 47(2) of CGST Act, Late fee for belated filing of GSTR-9 is Rs.100 per day subject to maximum of 0.25% of turnover in a state/UT. Similar provision is there in SGST Act also. Hence, in total there will be late fee of Rs.200 per day subject to 0.50% of turnover in a state on late filing of GSTR-9.

Question 9: What are the consequences of the failure to file GSTR-9?

Answer: – If one fails to file GSTR-9 then first late fees will be payable as discussed above. A notice may be issued u/s 46 requiring him to furnish such return within stipulated time.  

Note: This article is for reference purpose only; this article shall have no legal implication. Views expressed in this article are strictly personal and are not bound by the law.

The Author is a partner at Hemal Parikh & Co LLP, and Can be reached at, anand.tanna@laabdhi.com

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12 Comments

  1. JITENDER KUMAR RANKA says:

    NOTE FOR OPINION ON ITEMS NOT SHOWN IN GSTR1 BUT ADJUSTED IN GSTR3B
    There are various issues in current GST laws and one issues arises from a deviation from earlier GST provision in treating general discounts in trade (which are related to many invoices) as sales promotion instead of reversal of purchase for buyer and sales for seller.
    Here are facts of case:
    1. This is related to distributor and FMCG company.
    2. They usually ask distributor to pass on discounts in market and make claim (based on supporting) periodically monthly/quarterly or so.
    3. As per earlier practice of VAT there was no VAT involved and there was no reversal of input VAT by distributor and output VAT by FMCG company(supplier).
    4. But with GST being in force. Companies have been giving GST 18% in their credit notes and accordingly they reverse the GST in output GST and distributor reverses it in input VAT and distributor in effect ends up paying GST so reversed to government.
    5. No one (neither company nor distributor) is showing it in their GSTR1 return but only adjusting in GSTR3B.
    This is resulting in mismatch in annual return of year 2017-18 to the extent of credit notes of company(supplier) not coming through GSTR1 return and only adjusted in 3B.
    Now the opinion is sought on how to treat it in annual return:
    A. 1. Can the distributor show the input GST without adjusting GST in credit notes? If done so it results in sizeable refund. 2. Will GST authorities refund big amount immediately? If agreed to do so company is going to debit distributor immediately.
    B. Can distributor show the annual return as it is that is input GST after adjusting GST in credit notes(which he has been doing in 3B) so there would not be any refund. Then can Auditor under GST audit show the Input GST detailed computation by showing the input GST on purchases and input GST reversed on account of credit notes of company and giving all details of credit notes for period from 1st July 17 to 31st March 18. Can this become basis for FMCG company to claim out put reversal which they can show in their audit report as well.

  2. Venkateswaran says:

    If a assessee has multiple registrations in the country & certain registrations does not cross 2 crores turnover, is he required file GSTR9C for all or only in respect of registrations which cross 2 crore turnover

    1. CA. TANNA ANAND KIRITBHAI says:

      Requires to see date of Advance receipt.
      Further also advance is for Goods or Service.
      You can mail all details on my mail id.

  3. Jayesh says:

    I Was Claimed Purchase credit on date 1st august 2018. But saler Company does not File it GSTR return From October 2017. And it was taken Back it good Which is Purchsed By me. So what i will do For it

    1. CA. TANNA ANAND KIRITBHAI says:

      For 2 different number in same city, or state.

      I understand that 2 entity is there, therefore entity whose turnover exceeding 2 Cr applicable for GST Audit.

  4. R Mukundan says:

    GSTR3B filed with payment Aug 17. GSTR1 in Quarterly return sales details of Aug 17 missed out. There is difference between GSTR 1 & 3B, It has come to the light in the month of Nov 18. How & What is the rectification? Kindly clarify.

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