GSTR -3B is a return under GST Law, confirmed by Hon’ble Supreme Court

The Hon’ble Supreme Court of India in Union of India & Ors. v. Aap and Company [Civil Appeal No(s). 5978/2021 dated December 10, 2021] reversed the judgment dated 24.06.2019 of the Hon’ble Gujarat High Court, stating that

“This appeal takes exception to the judgment and order dated 24.6.2019 passed by the High Court of Gujarat at Ahmedabad in Special Civil Application No.18962 of 2018. This judgment has been expressly overruled by a three-Judge Bench decision of this Court in Civil Appeal No.6520 of 2021 titled Union of India vs. Bharti Airtel Ltd. & Ors., reported in (2021) 13 SCALE 301.”

“Learned counsel for the respondent was at pains to persuade us that the three-Judge Bench judgment can be distinguished, without realising that the three-Judge Bench judgment expressly overrules the impugned judgment. In such a case, the argument of distinguishing the three- Judge Bench judgment is not available.”

Basically, Civil Appeal No. 6520 of 2021 titled Union of India vs. Bharti Airtel Ltd. & Ors. has already been decided by three-judge Bench on 28.10.2021 and Civil Appeal No. 5978 of 2021 in Union of India & Ors. v. Aap and Company is come later on (December, 2021), therefore, Hon’ble Supreme Court viewed that

“The appeal succeeds on the same terms as in Civil Appeal No. 6520 of 2021 titled Union of India vs. Bharti Airtel Ltd. & Ors., reported in (2021) 13 SCALE 301. The civil appeal is disposed of in the above terms

It is stated that recently on 28^th October, 2021 in Union of India v. Bharti Airtel Ltd. & Ors., [Civil Appeal No.6520 of 2021], three-judge Bench of Hon’ble Supreme Court has expressly overruled the decision/judgment given by the Hon’ble Gujarat High Court in AAP and Co. v. Union of India [R/Special Civil Application No. 18962 of 2018 dated 24.06.2019]  wherein it was ruling that FORM GSTR-3B is not a return specified under Section 39 of the Central Goods and Services Tax Act, 2017 (“the CGST Act”).

On 24 June 2019 the Hon’ble Gujarat High Court in AAP and Co. v. Union of India [R/Special Civil Application No. 18962 of 2018] has given a landmark ruling that the FORM GSTR-3B is not a ‘Return’, rather Return specified for Section 39 in FORM GSTR-3 is a ‘Return’. The Court observed and held that the return in FORM GSTR-3B is only a temporary stop gap arrangement till due date of filing the return in FORM GSTR-3 is notified. The Court also observed the following-

“31. It would also be apposite to point out that the Notification No.10/2017 Central Tax dated 28th June 2017 which introduced mandatory filing of the return in Form GSTR-3B stated that it is a return in lieu of Form GSTR-3. However, the Government, on realising its mistake that the return in Form GSTR-3B is not intended to be in lieu of Form GSTR-3, rectified its mistake retrospectively vide Notification No. 17/2017 Central Tax dated 27th July 2017 and omitted the reference to return in Form GSTR-3B being return in lieu of Form GSTR-3.

32. Thus, in view of the above, the impugned press release dated 18th October 2018 could be said to be illegal to the extent that its para-3 purports to clarify that the last date for availing input tax credit relating to the invoices issued during the period from July 2017 to March 2018 is the last date for the filing of return in Form GSTR-3B.

33. The said clarification could be said to be contrary to Section 16(4) of the CGST Act/GGST Act read with Section 39(1) of the CGST Act/GGST Act read with Rule 61 of the CGST Rules/GGST Rules.”

However, Notification No. 49/2019 Central Tax dated 09/10/2019 has been issued after the decision of Hon’ble Gujarat High Court, giving retrospective amendment to Rule 61(5) categorised FORM GSTR 3B as a return u/s 39 of CGST Act. It amended Rule 61(5) of the CGST Rules, 2017 provides that-

“where the time limit for furnishing of details in Form GSTR-1 under section 37 or in Form GSTR-2 under section 38 has been extended, the return specified in sub-section (1) of Section 39 shall, in such manner and subject to such conditions as the Commissioner, may, by notification, specify, be furnished in in Form GSTR-3B, electronically through common porta, either directly or through a Facilitation Centre notified by the Commissioner.”

Provided that where a return in Form GSTR-3B is required to be furnished by a person referred to in sub-rue (1) then such person shall not be required to furnish the return in Form GSTR-3.”

After the fully substitution of Rule 61 of CGST Rules, 2017 vide Notification No. 82/2020-Central Tax dated 10-11-2020, w.e.f. 01-01-2021, FORM GSTR-3B has been notified as the monthly and quarterly return and FORM GSTR-3 has been done away with.

Now, the Hon’ble Supreme Court of India has expressly overruled the judgment dated 24.06.2019 of the Hon’ble Gujarat High Court, wherein it was ruling that FORM GSTR-3B is not a return specified under Section 39 of the CGST Act.

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For more clarification, please refer/read our article dated 31st August, 2021 titled as “GSTR -3B has been notified as a return as specified for Section 39 of CGST Act, 2017 w.e.f. 01-01-2021” as under-

The Central Goods and Service Act, 2017 (“CGST Act, 2017”) prescribed three returns i.e. FORM GSTR-1 (for outward supplies) u/s 37 of CGST Act, 2017 [Rule 59(1)], FORM GSTR-2 (for inward supplies) u/s 38 of CGST Act, 2017 and FORM GSTR-3 (Combined Return for outward and inward supplies i.e. monthly return) u/s 39 of the CGST Act, 2017 [Rule 61(5)].

Section 39(1) of the CGST Act, 2017 prescribes a monthly return for every registered person other than

– An Input Service Distributor;

– A non-resident taxable person; or

– A person paying tax under the provisions of section 10; or

– A person deducting tax at source under Section 51 or

– A person collecting tax at source Section 52 (i.e. an electronic commerce operator and supplier of OIDAR services located in non-taxable territory providing such services to non-taxable online recipient).

Provided that the Government may, on the recommendations of the Council, notify certain class of registered persons who shall furnish a return for every quarter or part thereof, subject to such conditions and restrictions as may be specified therein.

Initially, return in FORM GSTR-3 was notified as the return under section 39(1) which was to be filed by 20^th day of month succeeding the relevant calendar month or part thereof. However, due to technical glitches in the system, return in FORM GSTR-2 and FORM GSTR-3 were kept in abeyance. Therefore, in lieu of return in FORM GSTR-3, a shorter return in the FORM GSTR-3B was introduced as a stop gap arrangement till due date for filing of the return in FORM GSTR-3 is notified.

It is stated that return filing process is under review and is yet not finalised. A simplified monthly return in FORM GSTR 3B was introduced in July, 2017 to help businesses to file return easily in the initial months of GST roll out. The GST Council recommended to postpone the date of filing of FORM GSTR-2 (details of inwards supplies) and FORM GSTR-3 (monthly return) for all normal taxpayers, irrespective of turnover, till further announcement were made in this regard.

A shorter return in the FORM GSTR-3B was introduced in Rule 61(5) of CGST Rules, 2017 which provides that –

“Where the time limit for furnishing of details of FORM GSTR-1 under section 37 or in FORM GSTR-2 under section 38 has been extended, the return specified in sub-section (1) of section 39 shall, in such manner and subject to such conditions as the Commissioner may, by notification, specify, be furnished in FORM GSTR-3B electronically through the common portal, either directly or through a Facilitation Centre notified by the Commissioner.

Provided that where a return in FORM GSTR-3B is required to be furnished by a person referred to in sub-rule (1) then such person shall not be required to furnish the return in FORM GSTR-3.

Now, Rule 61 of CGST Rules, 2017 has been fully substituted vide Notification No. 82/2020-Central Tax dated 10-11-2020, w.e.f. 01-01-2021. With the amendment in Rule 61 of CGST Rules FORM GSTR-3B has been notified as the monthly and quarterly return and FORM GSTR-3 has been done away with.

After the aforesaid amendment, Rule 61(1) of CGST Rules, 2017 prescribes that every registered person other than

– A person referred to in section 14 of the Integrated Goods and Service Tax Act, 2017

– An Input Service Distributor;

– A non-resident taxable person; or

– A person paying tax under the provisions of section 10; or

– A person deducting tax at source under Section 51 or

– A person collecting tax at source Section 52 (i.e. an electronic commerce operator and supplier of OIDAR services located in non-taxable territory providing such services to non-taxable online recipient).

shall furnish a return in Form GSTR-3B, electronically through the common portal either directly or through a Facilitation Centre notified by the Commissioner, as specified under-

(i) Sub-section (1) of Section 39, for each month, or part thereof, on or before the twentieth day of the month succeeding such month;

(ii) Proviso to sub-section (1) of section 39, for each quarter, or part thereof, for the class of registered persons mentioned in column (2) of the Table given below, on or before the date mentioned in the corresponding entry in column (3) of the said Table, namely-

TABLE

Please note that earlier i.e. before amendment, Rule 61(1) of CGST Rules, 2017were provided as under-

“every registered person other than a person referred to in section 14 of the Integrated Goods and Service Tax Act, 2017 or an Input Service Distributor or a non-resident taxable person or a person paying tax under the provisions of section 10 or Section 51 or as the case may be, under Section 52 shall furnish a return specified under sub-section (1) of section 39 in Form GSTR-3, electronically through the common portal either directly or through a Facilitation Centre notified by the Commissioner.”

REMARK: It is submitted when the CGST Rules, 2017 were notified, first time, it became as Central Goods and Services Tax Rules, 2017, however, it was contained only some rules. Later on, in exercise of the powers conferred by section 164 of the Central Goods and Services tax Act, 2017 (12 of 2017), the Central Government, vide Notification No. 10/2017-Central Tax, dated 28.06.2017, amended the CGST Rules, 2017 as Central Goods and Services Tax (Second Amendment) Rules, 2017, by which more rules after Rule 26 were inserted. By the aforesaid amendment, Rule 61 has been introduced. Rule 61(5) provides that

“where the time limit for furnishing of details in Form GSTR-1 under section 37 and in Form GSTR-2 under section 38 has been extended and the circumstances so warrant, return in Form GSTR-3B, in lieu of Form GSTR-3, may be furnished in such manner and subject to such conditions as may be notified by the Commissioner.”

Further, in exercise of the powers conferred by section 164 of the Central Goods and Services tax Act, 2017 (12 of 2017), the Central Government, vide Notification No. 17/2017-Central Tax, dated 27.07.2017, amended the CGST Rules, 2017 as Central Goods and Services Tax (Fourth Amendment) Rules, 2017, by which Rule 61(5) was amended retrospectively (w.r.e.f 01.07.2017) to replace ‘Return in FORM GSTR-3B being in lieu of FORM GSTR-3’with ‘FORM GSTR-3B being in lieu of FORM GSTR-3 as under.

“(5) Where the time limit for furnishing of details in FORM GSTR-1 under section 37 and in FORM GSTR-2 under section 38 has been extended and the circumstances so warrant, the Commissioner may, by notification, specify that return shall be furnished in FORM GSTR-3B electronically through the common portal, either directly or through a Facilitation Centre notified by the Commissioner.

Thereafter, notifications were issued from time to time extending the due date of filing in FORM GSTR-3 i.e. return required to be filed under Section 39 of the CGST Act, 2017. The latest Notification No. 44/2018– Central Tax dated 10 September 2018 states that the due date of filing the return under Section 39 of the CGST Act, 2017 for the months of July2017 to March 2019 shall be subsequently notified in the Official Gazette.

Later through a Press Release dated 18 October, 2018, it was clarified that last date for claiming of ITC for invoices issued during the period July 2017 to March 2018 shall be the last date of filing of FORM GSTR-3B for the month of September 2018 i.e. 20^th October 2018.  Para 3 of the press release dated 18.10.2018 says that

“With taxpayers self-assessing and availing ITC through return in FORM GSTR-3B, the last date for availing ITC in relation to the said invoices issued by the corresponding supplier(s) during the period from July, 2017 to March, 2018 is the last date for the filing of such return for the month of September, 2018 i.e. October 20, 2018.”

This created a huge confusion that whether the FORM GSTR-3B is a return prescribed under Section 39 of CGST Act 2017 i.e. FORM GSTR-3 or FORM GSTR-3B is the substitute of FORM GSTR-3. Against the said Press Release, AAP and Company, Chartered Accountants had filed a writ petition challenging the legality and validity of the same.

On 24 June 2019 the Hon’ble Gujarat High Court has given a landmark ruling in the case of AAP & Company, Chartered Accountants v/s Union of India that the FORM GSTR-3B is not a ‘Return’, rather Return specified for Section 39 in FORM GSTR-3 is a ‘Return’. The Court observed and held that the return in FORM GSTR-3B is only a temporary stop gap arrangement till due date of filing the return in FORM GSTR-3 is notified. The Court also observed the following-

“31. It would also be apposite to point out that the Notification No. 10/2017 Central Tax dated 28th June 2017 which introduced mandatory filing of the return in Form GSTR-3B stated that it is a return in lieu of Form GSTR-3. However, the Government, on realising its mistake that the return in Form GSTR-3B is not intended to be in lieu of Form GSTR-3, rectified its mistake retrospectively vide Notification No. 17/2017 Central Tax dated 27th July 2017 and omitted the reference to return in Form GSTR-3B being return in lieu of Form GSTR-3.

32. Thus, in view of the above, the impugned press release dated 18th October 2018 could be said to be illegal to the extent that its para-3 purports to clarify that the last date for availing input tax credit relating to the invoices issued during the period from July 2017 to March 2018 is the last date for the filing of return in Form GSTR-3B.

33. The said clarification could be said to be contrary to Section 16(4) of the CGST Act/GGST Act read with Section 39(1) of the CGST Act/GGST Act read with Rule 61 of the CGST Rules/GGST Rules.”

Further, Notification No. 49/2019 Central Tax dated 09/10/2019 has been issued after the decision of Hon’ble Gujarat High Court, giving retrospective amendment to Rule 61(5) categorised FORM GSTR 3B as a return u/s 39 of CGST Act. It amended Rule 61(5) of the CGST Rules, 2017 provides that-

“where the time limit for furnishing of details in Form GSTR-1 under section 37 or in Form GSTR-2 under section 38 has been extended, the return specified in sub-section (1) of Section 39 shall, in such manner and subject to such conditions as the Commissioner, may, by notification, specify, be furnished in in Form GSTR-3B, electronically through common porta, either directly or through a Facilitation Centre notified by the Commissioner.”

Provided that where a return in Form GSTR-3B is required to be furnished by a person referred to in sub-rue (1) then such person shall not be required to furnish the return in Form GSTR-3.”

CONCLUSION: It is submitted that Hon’ble Gujarat High Court had observed and held that the return in FORM GSTR-3B is only a temporary stop gap arrangement till due date of filing the return in FORM GSTR-3 is notified. It was held that the FORM GSTR-3B is not a ‘Return’, rather Return specified for Section 39 in FORM GSTR-3 is a ‘Return’. Now, after the fully substitution of Rule 61 of CGST Rules, 2017 vide Notification No. 82/2020-Central Tax dated 10-11-2020, w.e.f. 01-01-2021, FORM GSTR-3B has been notified as the monthly and quarterly return and FORM GSTR-3 has been done away with.

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Disclaimer: Nothing contained in this document is to be construed as a legal opinion or view of either of the authors whatsoever and the content is to be used strictly for educative purposes only.