In the GST Act, Section 37 (1) reads as follows:
‘Every registered person, shall furnish, electronically, the details of outward supplies during a tax period on or before the tenth day of the month succeeding the said tax period and such details shall be communicated to the recipient of the said supplies.”
The Amendment to the GST Act vide Finance Act 2021, notified on 28th March 2021, reads thus:
“In section 16 of the Central Goods and Services Tax Act, in sub-section (2), after clause (a), the following clause shall be inserted, namely:––
“(aa) the details of the invoice or debit note referred to in clause (a) has been furnished by the supplier in the statement of outward supplies and such details have been communicated to the recipient of such invoice or debit note in the manner specified under section 37;”.
Both Section 37(1) and Section 16(2) (aa) of the GST Act mentions about a communication to be made to recipient.
This Article is to enquire whether a report by way of GSTR 2A, made available to the recipient, through the GST Portal will satisfy the condition of ‘communication’.
The word used in the above two sections of the Act is ‘communicated to the recipient’. Just by making available a figure in the GST Portal, can the process of communication be considered to be completed?
For this, we will have to discuss about ‘information’, ‘intimation’ and ‘communication’.
While ‘information’ is “a transmission of a message from a sender to a receiver”, and ‘intimation’ is “the action of making something known”, ‘communication’ “is an active interaction between the sender and the receiver.”
Hence to satisfy the word ‘communication’, there should be chance of interaction.
While ‘information’ is the transmission of a message from a sender to a receiver, ‘communication’ is a bi-directional sequence of transmission of messages where the counterparts are both “senders and receivers”.
Section 42 of CGST Act 2017: Matching, Reversal and Reclaim of Input Tax Credit (CHAPTER IX – RETURNS)
(1) The details of every inward supply furnished by a registered person (hereafter in this section referred to as the “recipient”) for a tax period shall, in such manner and within such time as may be prescribed, be matched–
(a) with the corresponding details of outward supply furnished by the corresponding registered person (hereafter in this section referred to as the “supplier”) in his valid return for the same tax period or any preceding tax period;
(b) with the integrated goods and services tax paid under section 3 of the Customs Tariff Act, 1975 in respect of goods imported by him; and
(c) for duplication of claims of input tax credit.
(2) The claim of input tax credit in respect of invoices or debit notes relating to inward supply that match with the details of corresponding outward supply or with the integrated goods and services tax paid under section 3 of the Customs Tariff Act, 1975 in respect of goods imported by him shall be finally accepted and such acceptance shall be communicated, in such manner as may be prescribed, to the recipient.
(3) Where the input tax credit claimed by a recipient in respect of an inward supply is in excess of the tax declared by the supplier for the same supply or the outward supply is not declared by the supplier in his valid returns, the discrepancy shall be communicated to both such persons in such manner as may be prescribed.
(5) The amount in respect of which any discrepancy is communicated under sub-section (3) and which is not rectified by the supplier in his valid return for the month in which discrepancy is communicated shall be added to the output tax liability of the recipient, in such manner as may be prescribed, in his return for the month succeeding the month in which the discrepancy is communicated.
Section 42 (3) and (5) speaks about communication to both such persons. Hence it is acceptable. But the newly introduced Section 16 (2) (aa) of the CGST Act and Rule 36 (4) of the CGST Rules do not mention of communication to both the parties and subsequent chance provided to the parties for rectification of discrepancy, if any. It is true that the provisions of Sec. 42 (3) and 43 (5) have been kept in abeyance, as of now. But the intention of the legislature is crystal clear.
The intention of the Legislature to provide an opportunity for both the supplier and recipient to rectify any discrepancy that might have crept in, while filing Returns, is done away with through the introduction of Sec. 16 (2) (aa) and Rule 36 (4), and hence shall not hold good before the eyes of law or natural justice.
The providing of GSTR 2A and GSTR 2B through the GST Portal completes the formality of information or intimation. But it does not complete the process of communication, as it is not made interactive.
The original provisions in the GST Act, which were expected to be implemented through Forms GSTR 1, GSTR 1A, GSTR 2, GSTR 2A etc. could be termed as communicative, since it provided a bi-directional sequence of transmission. But this is not made available through GSTR 2A and GSTR 2B.
Hence it is to be inferred that the intention of law to ‘communicate to the recipient’ is not satisfied through GSTR 2A and GSTR 2B. At the maximum, it can be termed as ‘is informed to the recipient’ or ‘intimated to the recipient’ and NOT ‘communicated to the recipient’.
Author: Venkitarama Iyer | GST Advisor & Former State President | All Kerala Distributors’ Association