1. 01.2022 has changed the dynamics for managing the cash-flows as far as the businesses are concerned. No businessmen can take the risk of default in filings/payments under GST as far as the self-assessed liabilities are concerned. We say so for the following reasons.
2. W.e.f. 01.01.2022 the entire GST cycle has been tightened. The normal cycle runs as under:
3. Now a weak business that has made the taxable supplies but is running short of funds to discharge GST liabilities will face the following options as regards the compliance on a monthly basis (exclude the quarterly filers that will eventually face a similar challenge albeit after the end of the quarter):
|To file GSTR 1 and not file GSTR 3B in view of the shortage of funds to deposit the tax||
|Not to file GSTR 1 and GSTR 3B till the funds to deposit the tax along with interest are arranged||
4. The above table reveals that none of the aforementioned options is advisable.
5. Further, the facility of making the payment under instalment (Sec. 80) is generally not available for the self-assessed liability.
6. Further, the facility to generate E-way bills (must for the inward and outward movement of goods beyond the value of Rs. 50,000/- generally) will be restricted if GSTR 1 or GSTR 3B has not been filed for the two consecutive tax periods (Rule 138E). Also, consider that the belated payments of liabilities will attract interest @ 18% p.a. when earning that rate of return is not possible in every business.
7. The aforesaid situation becomes onerous since a default beyond even one month can have harsh consequences. Hence businessmen cannot hope to regularize the default over a period of time (exceeding one month) on the basis of the normalization of the business cash-flow cycle (that may extend over several months depending on the nature of business) without entailing the risk of aggravating the adverse situation.
8. Now in the aforesaid environment, no businessmen can opt to ignore the timely discharge of GST liabilities as the consequences of failure will result in only further aggravation of the problem. Hence now the time has come to review the cash-flow cycle (this applies equally to start-ups as they are not excused from the aforesaid environment). The subject of GST in such evaluation should deserve the top-most priority.
9. Genuine taxpayers facing a temporary cash crunch (due to various exigencies of business) will have to pin their hopes on the Courts to find a solution to keep the businesses running and at the same time secure the recovery of the revenue for the Government.