CA Ranjan Mehta
GSTR-3B is not a return?? Is it true?? What are the Consequences??
In the recent times there were a plethora of notices issued for best judgement assessment u/s 62 or Cancellation of registration u/s 29. Also various press release and Removal of difficulties orders were issued for publicizing the time limit of taking the ITC of extending such date. These notices, orders and press release contain the same understanding that everything of these have been linked with the return filed in form GSTR-3B. Each time limit is decided by the date or due date of filing of return in form GSTR-3B. Time and again, it was clarified by the department that it is only the date/due date of filing of return in form GSTR-3B that would determiner various rights and liabilities under law.
What happened recently?
In a recent judgement of Hon’ble Gujarat High Court the court while deciding a writ petition in a case, where petitioner requested to quash the press release dated 18.10.2018 clarifying the last date to avail the ITC for the financial year 2017-18 to be the due date of furnishing the return for the month of September 2018 (later the said date was extended by way of order no 02/2018 to the due date of filing return for the month of March 2019), has stated that GSTR-3B is not a return under section 39.
Earlier as per CGST Rules, 2017 prescribed vide notification no. 10/2017 (Central Tax) dated 28th June 2017 the return in GSTR 3B was a return in lieu of GSTR-3.
“…………..return in FORM GSTR-3B, in lieu of FORM GSTR-3, may be furnished in such manner and subject to such conditions……….”
Later the said rule was amended and the word in lieu of GSTR-3 were removed by notification no 17/2017 –Central Tax dated 27th July, 2017.
“…………return shall be furnished in FORM GSTR- 3B electronically through the common portal………”
Thus, the Govt identified there mistake on their part and corrected it. They never intended GSTR-3B to be a return in lieu of GSTR-3. Even the GSTR-3’s due date is still being extended to be notified at a future date.
Further rule 61(1) also states that GSTR-3 is the return u/s 39 not GSTR-3B which is prescribed u/s 61(5). The courts also viewed this provisions for their verdict and explicitly stated that GSTR-3B cannot be said a return u/s 39 and at the same time cannot be used for determining timing for the purpose of provisions of this act.
The court also observed that GSTR-3B was only a temporary stop gap arrangement to ease the burden of the taxpayer till the time GSTR-2 and GSTR-3 are kept in abeyance.
Thus they finally ordered that GSTR-3B is not a return form u/s 39
Whether GSTR-3B is not a return?
Absolutely not. Beyond any doubt GSTR-3B is a return. Merely, it is not a return u/s 39. It is a return prescribed u/r 61(5) which has its relevance till the time the GSTR-2 and GSTR-3 are not finally brought to the common portal.
Consequences if GSTR-3B is a return but not a return u/s 39
1. No time limit for taking ITC:- As stated by the Hon’ble Gujarat High court the time limit prescribed u/s 16(4) to be reckoned from the date of GSTR-3, u/s 39 or the date of filing of annual return whichever is earlier. They further stated that since GSTR-3B in not a return u/s 39 and GSTR-3’s date to be considered. In the absence of such date, the date of filing of annual return to be reckoned for the purpose of identifying the last date of taking ITC. This applies for both the years 2017-18 and 2018-19. In case of FY 2019-20 one would be required to see the new provisions which will be there for the new return forms.
2. Eligibility of credit u/s 16(2):- There are certain conditions prescribed u/s 16(2), which are to be satisfied for the purpose of availing credit. 4th condition as per sec 16(2)(d) the assessee has to file the return u/s 39. Thus if the return in form GSTR-3B has not been filed by the assessee then even in such cases his due credit cannot be denied by him till the time of the date of filing annual return. This would be beneficial where the assessee has been denied benefit of ITC in case of any enforcement proceedings u/s 67 or best judgement assessment u/s 62 or any other case where the credit is denied merely on the ground that the return u/s 39 is not filed.
3. Cancellation of registration:- As per sec 29 the proper officer has the right to cancel the registration on his own motion if the return u/s 39 is not filed by him for a consecutive period of 6 months. This judgement can be taken as a defence in such case since the return u/s 39 is GSTR-3 which is yet to be notified. In such cases, on the basis of the argument that GSTR-3B is not a return u/s 39 the benefit can be argued by the assessee.
4. Rectification of GSTR-1 and 3B:- As per proviso to sec 37(3) and proviso to Sec 39(9) no rectification in the return in form GSTR-1 and 3B for a year can be made after the due date of filing of September month return u/s 39 of the subsequent year. This provision is also ineffective and as per the interpretation of Hon’ble High court this time limit is also extended till the due date of GSTR-3 is extended. However, this will not be possible now as the portal has closed all such amendments. In such cases the assessee can go on to file manual returns to department with the respective changes.
5. Notice u/s 46 and order u/s 62:- If an assessee has not filed return u/s 39 or 44 (annual return) then a notice is issued u/s 46 to file the return within 15 days. Even after that if the assessee has not filed his returns under those section then proceedings u/s 62 could be made. As per the interpretation now since GSTR-3B is not a return u/s 39 such notices cannot be issued and proceedings u/s 62 can also not be carried out.
6. Late Fee:- Late fee u/s 47(1) is prescribed for the details u/s 37 & 38 i.e. GSTR-1 & GSTR-2 and for returns u/s 39 (GSTR-3) and sec 45 (Final Return). Thus as per this now the validity of late fees for late filing of GSTR-3B is also in peril. If the assessee can ask for refund from the department is a question which each assessee should ask now from the department.
7. Interest:- As per sec 50 interest is to be paid by the assessee if any tax due is not deposited by him. As per Sec 39 (7) due date of deposit of tax as per return is as follows:-
“39 (7) Every registered person, who is required to furnish a return under sub-section (1) or sub-section (2) or sub-section (3) or sub-section (5), shall pay to the Government the tax due as per such return not later than the last date on which he is required to furnish such return.”
Thus the due date for the payment of tax has been prescribed with respect to return u/s 39(1) which is GSTR-3 as per the order of Gujarat HC discussed above. Thus again the interest liability related to tax as per return is in peril. However the department may again argue that for tax payment related to GSTR-3B it had to be deposited by the due date of said return.
8. Penalty u/s 73:- In the same way as discussed above the penalty is prescribed under this section if the due tax has not been deposited within a period of 30 days from the due date. Thus, such penalty is also is in peril since the due date cannot be viewed now with the interpretation that GSTR-3 is the return u/s 39 not GSTR-3B. However the department may again argue that for tax payment related to GSTR-3B it had to be deposited by the due date of said return.
In a nutshell, this judgement has long lasting impact on the GST practice. The professional should understand the repercussions clearly and guide their clients accordingly. The law is in an evolving process and the department will also not be keeping quiet. Soon, the matter will be listed before Hon’ble Supreme court. But as of now the tax professionals should try to get the best of this judgement.
DISCLAIMER: The entire contents of this document have been developed on the basis of relevant statutory provisions and as per the information existing at the time of the preparation. Though the authors have made utmost efforts to provide authentic information however, the material contained in this document does not constitute/substitute professional advice that may be required before acting on any matter. The authors expressly disclaim all and any liability to any person who has read this document, or otherwise, in respect of anything, and of consequences of anything done, or omitted to be done by any such person in reliance upon the contents of this document.
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Dear Sirs,
I was informed by one our officer that in the recent Budget speech our Hon’ble Finance Minister has mentioned that there will be waiver of penalties / interests charged for all the indirect taxations. Accordingly please letme know is there any circular for waiver of damages/penalty/interest charged by the Provident Fund Organisation. Kind Regards