Applicability of Notification on refund of late fees waived under GST

Practical applicability of Notification 57/2020, Dated 30th June 2020, regarding refund of late fees waived under GST

Once again lock down is declared in the various regions of the state. Maharashtra is perhaps the most affected state amid this COVID-19 pandemic. Slowly streamlining businesses are now closed again & their operations are stopped due to the lock down declared. The worst impact of such kind of steps is upon MSMEs which struggles with the liquidity issues. However there are several measures which are available with these businesses such as benefits of TReDS, Getting finance under ‘Atmanirbhar Bharat’ scheme or getting instant refund of the amount lying with revenue authorities etc. Interestingly IT department has refunded Rs.62,631 crores of taxes during this lock down period. This has provided a little bit liquidity to the stagnated businesses.

One of such measure taken under GST Act is waiver of late fees on belated returns. Since govt. also needs revenue it has waived the late fees in order to provide an opportunity to the taxpayer to pay taxes & file belated returns, also this has helped in the cases where certificate of registration is cancelled suo moto by the tax authorities.

Govt. vide notification 57/2020, dated 30^th June 2020 notified that late fees in respect of the returns in form GSTR-3B which pertains to the period starting from July, 2017 to July, 2020 shall be capped to the maximum of Rs.500 provided such returns are filed before 30^th September 2020. Also no late fees shall be levied if return is filed with nil tax liability.  One of the important aspect in this notification was that, this notification shall be deemed to have come into effect from 25^th June 2020. This has a linkage with refund of late fees.  Let us analyse this-

Conditional Due dates for filing the return in form GSTR-3B for the months of Feb, Mar & April 2020 as per notification 52/2020, dated 24^th June 2020 in respect of the assesses whose turnover was above Rs.5 crore during previous FY was 24^th June, 2020. Accordingly for those who have filed returns in respect of the above months after 24^th June, 2020, late fees is charged from the original due dates of filing the returns i.e. 20^th March, 20^th April & 20^th May, 2020. So this amount would have become very big due to the delay of just one day. Hence govt. has run scroll message on GST portal that, In respect of those assesses whose late fees is calculated in pursuance of notification 57/2020 in excess of Rs.500 shall be refunded to their electronic ledger. However this being theoretical announcement, what is the practical applicability of this message?

Let us taken an example of assessee XYZ,

His turnover during FY-2018-19 was say 15 crore. So as per applicability of this notification how late fees will be calculated in this case? Suppose His Return for the month of Feb 2020 is filed on 19^th April 2020 & for the month of March it is filed on 25^th June 2020. However conditional date for filing of the return without late fees & interest as per notification 52/2020 is 24^th June. This means for delay of only one day his late fees would come out to Rs. 4800 as per challan. Here late fees has come out to Rs. 4800, instead as per notification 57/2020, late fees should have been maximum of Rs.500. This means Rs.4300 of excess late fees shall be refunded as per the scroll message run by the department. However No relaxations by way of refund in respect of late fees for the period from July 2017 to Jan 2020 shall be provided since such practical issues arises in case of returns for the months of Feb, Mar, & April.

Suppose if his turnover for FY-2018-19 was Rs.4 crore i.e. below Rs.5 crore, then conditional due dates for waiver of late fees as per notification 52/2020 were 30^th June, 3^rd July, 6^th July, 2020 respectively for the months of Feb, March & April. Since he has filed his return on 25^th June no practical difficulty arises in this case & no issue of refund arises.

Due to such practical issues, Notification number 57/2020 dated 30^th June 2020 is made applicable from 25^th June, 2020.

Govt. is working minutely in order to provide relief bit by bit to the small taxpayers, MSMEs etc. This provides relief to the taxpayers & taxpayers can use this lock down time in order to make compliance of the matters which are pending since long. These small steps taken combine with tax authorities & assessee can surely ease the Burden on the disturbed business community.

For any further query & explanation, kindly contact, 9421061989