As notified vide Notification No 94/2020 – the amendment in Rule 21A of GST Rules, 2017 came to effect to enable the GST officers can now suspend a GST Registration with immediate effect if they found significant anomalies in GSTR3B Returns. A detailed SOP (Standard Operating Procedure) in this regard was issued by CBIC on 11th Feb 2021, vide Circular No: 145/01/2021-GST dated: 11.02.2021.
As per the above Circular, the Jurisdiction officer can suspend a GST registration if he finds ‘Significant Anomalies’ between the values of
- GSTR3B Turnover Values vs GSTR1 Turnover Values as declared by the assessee
- GSTR3B ITC Value of the assessee vs GSTR1 Value filed by his suppliers
This suspension will be for 30 days and the Assessee can submit his reply with clarifications / justifications to the Jurisdictional officer within 30 days from the date of notice.
If the jurisdiction officer satisfied with the Assessee’s reply he can revoke suspension of GST registration.
If the Jurisdiction officer not satisfied with the Assessee’s reply, or the Assessee has not submitted his reply to the Jurisdiction officer within the prescribed time limit, then the Jurisdiction officer can proceed for Cancellation of the GST Registration.
The notice to the Assessee in FORM GST REGN – 31 will be generated through System and communicated to the Assessee. However, till the time the facility of generating FORM GST REGN – 31 through Online is enabled, as an alternative arrangement, the Jurisdiction officer can issue a Notice in FORM GST REG – 17 in the GST portal. This notice can be seen from “View/Notice and Order” tab post login.
The reply against FORM GST REG – 17 notice can be filed by the assessee in online through FORM GST REG – 18 in the same portal within the specified time limit of 30 days.
IMPACT TO THE BUSINESSES:
After filing the GSTR3B returns every month, now the assesses need to check their GST Portal, periodically if any notices issued by the department. Also the Assessee need to ensure on daily basis whether his registration was suspended by the department.
Normally any Suspension of Registration can be done only after sending notice and hearing the clarifications from the Assessee. But as per this new SOP the officer can suspend the Registration immediately and then he can send the notice to get clarifications from the Assessee.
This will impact at large to the Business community, as once the Registration was suspended, the EWayBill portal will block generation of EWayBills for this GST number.
Hence, any Outward Supplies, Sales from the Assessee cannot happen.
Similarly, all purchases intended to this GSTN also get stuck, as the Suppliers cannot generate EWayBill to this GST Number, due to EWayBill blocking.
In brief, if an officer feels that there are Significant Anomalies in the Values of GSTR3B returns, he can suspend the registration immediately, and from that minute, the Assessees transactions will get affected, till he clarifies the query and revoke suspension. Sales, Purchases, Production, Manufacturing activity everything will come to pause till the GST Suspension was revoked.
There was a general fear that the department can use this option against Assessee, but I feel, if there are “NO ANOMALIES” in the returns, then the officer may not initiate such Suspension.
Hence, it is now our duty to ensure that all our GSTR3B returns are in compliance with the GST Act and Rules and we are not deliberately deviating the provisions.
This will keep our Registration active without any hindrance.
WHAT ARE THE SIGNIFICANT ANOMALIES :
As explained in the Circular by CBIC, the anomalies considered for Suspending a registration will be:
Our Sales Turnover and Tax liability declared in GSTR1 vs Sales Sales Turnover and Tax liability declared in GSTR3B
And
Our ITC Claim declared in our GSTR3B vs Supplier filed GSTR1 Values against our GST.
The Act and the Circular is pretty clear, that with regard to the comparison of ITC will be based on Supplier GSTR1.
However, there are chances, that the Jurisdictional officers can interpret this Circular in a different way, and compare the ITC Claim values of GSTR2B vs GSTR3B and initiate Suspension.
This will be a problem for all business as they cannot do any transactions till the time the Suspension was revoked. Also this comparison is wrong in view of the below scenarios:
Supplier filed his returns in the previous months and the Assessee Claiming ITC in current Month hence 2B vs 3B for the month having difference
Assessee availing credit for the Purchases made by him in previous year, claiming upto Sep GSTR3B of Subsequent Year.
As per the GST Act and also as per the recent circular, if the Supplier has declared his sales in his GSTR1 then the Recipient Assessee can claim ITC if the same is appearing in his GSTR2A.
But if the department is not considering this above aspect and goes with GSTR2B vs GSTR3B then the Assessees needs to suffer.
BEST PRACTICE TO AVOID SUSPENSION:
In my view the below points to be considered before filing GSTR3B to avoid Suspension of GST Registration under the new SOP.
Download GSTR2B and check if our ITC Claim in GSTR3B is exceeding the GSTR2B value.
If it exceeds GSTR2B value then,
Download GSTR2A for the cumulative period (Apr 2020 to Jan 2021) and check whether all the Invoices related to our ITC Claim in GSTR3B are available in the GSTR2A report (in any of the previous months)
If all the Invoices are available in the GSTR3B then proceed for filing GSTR3B returns.
If any of the Invoices are not available either in the GSTR2B or GSTR2A in any previous months, it will be better to NOT claim the ITC in the GSTR3B.
The Assessee need to wait till the Supplier files his GSTR1 and reflecting in the Assessee’s GSTR2A / GSTR2B before claiming the ITC in his GSTR3B.
If any of Invoices kept pending without claiming ITC, then need to track those Invoices separately, month on month, to check whether the Supplier has filed his returns. If the Supplier not filed his returns, then periodical follow up with the Supplier also needed to ensure that he has filed his returns.
This activity needs a dedicated and routine assignment as this is quite complicated and stressful work, because the numbers and data of GSTR2A is dynamic and subject to change every day.
With the above preparations, if any suspension happened immediately the Assessee can submit his clarifications with back up file workings and comparisons and get the suspension revoked at the earliest.
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