AIMTPA has made a representation to Smt. Nirmala Sitharaman, Finance Minister and discussed prevailing Issues in GST and their probable solutions that can be acceptable to all. They discussed the issue of GST Late Fees, The unanswered question of section 16(4), Issues related to Departmental Audit under section 65 and Rule 36(4) issues. Relevant Text of the Representation is as follows:-

1) Late fees:

On knowing the graveness of the subject from media, the Council decided to reduce late fees at Re 500/- per return for taxpayers declaring outward liability and Re Nil for taxpayers having no outward liability. But the waiver had a flaw –

It waived late fees only if returns were filed between 01-07-2020 to 30-09-2020. Because of this condition, those who had a carry forward late fee in the last return they filed could not find it possible to avail the benefit. Secondly, it is observed that those whose registrations are cancelled suo-moto, the corresponding revocation applications are either not decided or they are rejected for no proper reason. Many taxpayers could not take the benefit of late fees waiver due to rejection of revocation applications. It is requested to extend the waiver scheme till 31-12-2020. An SOP to process revocation applications that requires Nodal Officers to revoke the cancelled numbers in time or say by 30.11.2020 would do well, so that people who have gone out of system are given proper chance to come back in system. It is believed that substantial amount of tax that was paid from time to time will be available if returns are filed.

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2) The unanswered question of section 16(4):

Those who filed returns from July 2017 (late migrations as an example) have the fear of the consequences of invoking section 16(4) lingering. The Board has not clarified the position on this provision, despite several requests to do so. The intention of the Council behind enacting such a provision is to instill discipline regarding correct, complete and timely compliance. In normal circumstances, i.e. when compliance is streamlined with actual law and when economic conditions are better, the logic behind this provision is acceptable and is hence well understood. But when the Council is repeatedly requested to first create an atmosphere conducive for compliance (slow, glitch prone GST Portal), invoking a penal law for late compliance is not a prudent idea. Therefore, one of the solutions can be to avoid invoking the provision 16(4) altogether, by “assuming” the Doctrine of Severability. The Board, its Policy Wing must consider this option and decide to not to use this sub section for the initial 3 years.

3) Departmental Audit under section 65: –

Taxpayers are in receipt of notices under the above cited section for the years 2017-18 and 2018-19. It is requested to keep the proceedings in abeyance till other important compliance like GST Annual Returns, Audits and Income Tax Audits are completed. It is not possible to comply for a proceeding under a section as vital as section 65 at this juncture. It is therefore requested that the proceedings be commenced from a later date, preferably in the next calendar year.

4) Rule 36(4) issue:

As per notification 49/2019 dated 09-10-2019, a new rule has been inserted in the CGST Rules. As per the said Rule, one is not allowed to take credit of an amount more than the amount of ITC appearing in his GSTR 2A and an addition of 10% to it.

Trade is well aware that governments need revenue to cope with the ongoing pandemic and also continue with developmental projects. But framing such policies to garner revenue is, in simple words, cutting the branch one is sitting on. Businesses have already been struggling to pay taxes on time. The pandemic has somewhat aggravated the struggle. Even if one accepts the rationale behind the Rule, how does one negate the fact that a recipient who buys from a supplier who files a quarterly GSTR 1 has to pay tax twice from his pocket for apparently no fault of him or his supplier?  This is also in violation of original intent of law which provided Taxpayers to  report ITC  (through GSTR 2) not appearing in their 2A. Kindly note that in a way present rule penalize genuine Taxpayers and spares those who collect tax from their clients and  do not pay it, while depriving opportunity to genuine suppliers by not providing facility to report such instances and thereby also affecting revenue and sentiment of Taxpayers which is never intended.

In addition to this, it is feared that noncompliance would increase due to this Rule. If substantial amount of ITC is not appearing in the GSTR 2A of recipient, say because his suppliers file quarterly GSTR 1, he will either opt to not to follow the Rule or to avoid filing his GSTR 3B for 3 months and demand a late fee waiver for the 3 months. Neither the government gets monthly tax that it required and nor the taxpayer is happy. We therefore suggest for a holiday from following this Rule – ab-initio.

These are some issues that need immediate response. Apart from that a faulty GST Portal continues to be the top troublemaker for taxpayers. It has maintained its repute of failing near due dates right from the beginning and there is no change or improvement in the server capacity. It launches any form or facility on its own and without any prior notice. One more request is made to administer the functioning of the Portal. Taxpayers requests to extend due dates rise when portal is unable to handle load. Taxpayers have already suffered heavy late fees in the past due to portal problems.

At last, we request your honor to allow a meeting of the Trade and Professional members of this Association with yourself and the members of the Board for an elaborate discussion aiming at making this reform a success.

Download Full text of the Representation in PDF Format

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  1. ANURAG PANDEY says:

    if someone filed nil return after 30th september 2020 then will it be returned the amount of Rs.85000paid for late fee of nil return to be revocation of suo-moto cancelled registration?

  2. Jayshree says:

    Due to the rejection of GST, I have applied for revocation it is in progress for more the 45 days pls extended the waiver offer till 31/12/2020 it would be most helpful for us to overcome the challenges
    And pls approve the revocation ASAP

  3. reenabhagat says:

    I am doing very small business . Due to covid-19 .was unable to do business as it’s cctv installation business. I hav not filed gst return from June. Now for June month late fees is 2380 , like wise other charging 5k . How to pay when there is no source of income.

  4. nayna says:

    Please extend the due date for waiver of late fees.

    large tax payers are facing the issue. Since there business is started just now and on Nil return also they need to pay late fees

  5. HCA H M GARAD says:

    waiver of late filling fees is need of time and smooth operation of small tax payer which in totality will have big effect on business environment because of that government should take step to extend the time limit of waiver to 31st December, 2020 which in terms would result in decision ease of doing business .

  6. Milind Gudadhe says:

    GST Amnesty scheme also needs to extend up to 31/12/2020 in this pandemic corona period. Small taxpayer unable to shoulder the burden of late fees

  7. Senthilnathan says:

    Absolutely correct, so many dealers are not availed late fee waiver, due to economic problem, in this pandemic situation, and so many of them not able to pay rent and basic needs. Si kindly avoid late fees till dec 2020.

  8. Rajkumar gupta says:

    Gst no.cancelled volentery.. Apply in April 19 and approved in June w. e. f. 30th April 19..april 19 3b and gstr1 filed. Final return pending till date because sales bills are pending with us, no option seen for update pending bills. ITC balance in credit ledger, we left the ITC for availing against pending invoice but portal not open for June gstr1. How can update the bills and also our buyer are waiting update.
    Problem is deptt approved cancellation in June but we. e. f 30/4/19
    Proposal is cancellation to be approved w. e. f approval date. Not prevent. Date. And open the portal till approval date so that tax payer update all formallities of return

  9. sandeep says:

    people want to pay taxes, but system of late fees and intrest has made it complicated . More relaxation should be given to clear backlog and people shold be encouraged to come into mainstream taxation system rather then to penalize.

  10. shine says:

    Dept is sending notice to taxpayers for pay back to govt ITC not appearing in GSTR2A alongwith interest. the reason for not appearing ITC in 2A is either wrong GST no given by suppliers or treated as B2C sales. Tax payers have already paid GST to govt while buying and gain asking the GST and interest for above reason is not at all fair and natural justice. Dept is not asking any questions to the suppliers who made mistake. Govt should take immediate action to stop such notices by dept. If any criminal court in India issues any order it is applicable to all citizens of India. The same principle to be applied for civil case judgement also.

  11. Sunder says:

    Even to day after 3 years of GST there is no provision for claiming ITC on capital goods over 60 months as provided by law. There are many short commings causing undue hardship but the government seems just not botheredS


    It is very genuine and appreciable decision has to be taken in favor of small categories of business person, if fine waived which imposed in 3B. There are so many SME who did not filled the particular form in stipulated time due to pandemic situation of COVID’19.

  13. JYOTHIKUMAR P says:

    Dept. is only interested in their revenue, by making it mandatory of filing the 3B on monthly basis. But at the same time they are least bothered making the GSTR1 filing on monthly basis.
    If they make this GSTR1 filing on a monthly basis, most of the issues especially this Rule 36(4) will automatically met without hitting the genuine assessees ITC availments.
    Again apart from all these stringent day to day infusions of these Rules, amendments, notifications, circulars, they have started issuing audit intimations u/s 65.

  14. s.s.vijayakumar says:

    The ITC provisions of claiming 2A amount + 10% affects a lot of traders/manufacturers as, though made with good intentions, funds get locked up, besides time involved in doing reconciliation. I therefore suggest, this section should be made applicable to say those who are having a turnover of 50 crores and above. There should be a cut off so that genuine MSME businesses are not affected.

  15. Pradeep N. Kasarikar Patil says:

    Considering current financial crisis of every Tax payer due to Lock down & Covid 19, Waiver of late fee is required.

    So many Taxpayers are already facing problems to amount recover from customers.

    Additionally, Late fees burden is too high.
    If Late fees waived, It will be Support to small Taxpayers from government.

    Waiver of Late fees will be relief to all Tax payers, which is really required.

  16. Shree Niwash Singhania says:

    Your discussion on Rule 36(4) is appriciable. For every one GSTR-1 should be monthly have one Due date for all & from next vary day the late fee Rs.50/-x3 per day must start for the late filer to save the filer who wants to file the returns in time. I and the citizens of India will be more obliged if this issue will be solved. Most of the ITC problem can be solved. On late return filing, the burden of taxation on timely filers is more. Please help to solve the issues.

  17. Anik Sarkar says:

    Hi Taxguru
    Is it possibility to waiver of late fee again?
    If it possible a big relief of taxpayers who doesn’t file due return till now

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