Goods and Service tax is about to complete 3 years of its implementation and after lots of notifications, circulars, and amendments, it is trying to bring stability and smoothness in its functionality. This journey would not be possible without the help of information technology. Information Technology plays a very important role in GST implementation and its efficient working. It provides control to the government on the entire GST Network by providing the uniform platform and facility of registration, return filing, utilisation and payment of taxes, and refund of GST etc. With the passage of time, taxpayers and finance professionals have been communicating the difficulties they are facing in complying with the provisions of GST Law on a regular basis whether related to online or offline processes, to Government. One of the recent problems being faced in compliance with GST is GSTR 2A reconciliation.

Insertion of Rule 36(4) of CGST Rules 2017 vide notification no. 49/2019 dated 09.10.2019, which provides restriction on taking Input Tax Credit of more than 10% of eligible Input tax credit appearing in GSTR 2A in respect of invoices not uploaded by suppliers under section 37(1) of CGST Act, 2017, made GSTR 2A Reconciliation very crucial for taxpayers for the purpose of correct utilisation of taxes and make payment accordingly. But it clearly ultra-vires the provision of section 16 of CGST Act, 2017, which provides statutory right to claim Input Tax Credit to taxpayers, if below-mentioned conditions fulfill:

  • He is in possession of a tax invoice or debit note issued by a supplier registered under this Act, or such other tax paying documents as may be prescribed;
  • He has received the goods or services or both.
  • subject to the provisions of section 41, the tax charged in respect of such supply has been actually paid to the Government, either in cash or through utilisation of input tax credit admissible in respect of the said supply; and
  • he has furnished the return under section 39

Further, Since GSTR 2 are GSTR 3 form are not operationalized due to which matching provisions as stated in Rule 69 of CGST Act, 2017 shall stand deferred due to proviso of Rule 69 of CGST Act, 2017 and apart from this legal position, GSTR 2A report does not provide complete machinery to match input tax credit in case of below-mentioned scenarios:

1. Where Supplier has not uploaded the invoices or Debit notes in GSTR 1 but correctly paid tax through GSTR 3B and vice versa.

2. Where a supplier has wrongly shown less amount in Invoice uploaded in his GSTR -1 but tax paid correctly through GSTR 1 and vice versa.

3. Some Suppliers file their return quarterly and monthly basis according to their turnover status.

4. Delay in filing GSTR-1 by vendors will automatically cause delays in the reflection of those invoices in GSTR 2A of the respective receiver of Goods or services.

All of the above points indicate that there is no any linking of GSTR 2A with GSTR 3B of vendors and GSTR 3B form itself does not provide any type of data validation at the time of filing it, due to which restriction of ITC on the basis of such GSTR 2A Reconciliation creates undue hardships to innocent taxpayers who have possession of valid tax invoice and also made payment and received goods or services or both. This rule withdraws statutory right given to taxpayers to claim Input tax credit if condition prescribed under section 16 of CGST Act, 2017 fulfills.

Recently, Delhi High court in case of Bharti Airtel Limited Vs Union of India has also admitted that government has failed to fully enforce the scheme of the Act due to lack of technical infrastructure and cannot take benefit of its own wrong of not providing the facility for matching ITC and on account of this statutory right of taxpayers to claim ITC cannot be defeated.

Apart from the above-mentioned issues of GSTR 2A, there are some other issues pertaining to GSTR 3B mentioned below:

1. No Validation of data in Form GSTR 3B, due to which there are chances of typographical error which can lead to huge tax and interest costs.

2. No interlinking of GSTR 1 and GSTR 3B can lead to short or excess payment of taxes as the case may be.

3. There should be a facility to revise the return of the particular month for which any discrepancies found later.

Today, the Government and taxpayers both need a robust information technology system to comply with GST provision in an efficient and transparent manner. It will reduce the blockage of funds of Taxpayers due to unnecessary payment of tax made and further reduce undue hardships being faced by taxpayers due to lack of information technology support. It will also help the government to collect and apportion GST revenue more efficiently and transparently.

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Location: DELHI, New Delhi, IN
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2 Comments

  1. P ARAVINDHAN says:

    It is in our interest that our Vendors pay GST collected from us promptly to the Government and also file their GST returns properly to give GST credit. Vendor is not paying GST out of his pocket and if Vendor does not pay GST collected from us to the Government and if he does not file GST returns properly and promptly, probably we deserve a better Vendor. Let us not defend or justify tax evasion by unscrupulous vendors.

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