From, CA Deepabali Das
Respected Prime Minister,
Subject: Representation on issue of notice for intimating discrepancies in return — “GST ASMT-10 Rule 99(1)” — Mismatch of Input Tax Credit claimed in GSTR 3B and Input Tax Credit available in form GSTR 2A.
I’am a practicing Chartered Accountant from Karnataka who has been involved with the GST saga since its implementation. From the time GST got introduced in India, we all know that both professionals and tax payers have been facing issues in the implementation process, mainly due to non functionality of the so called “GST Common Portal”. The entire industry has undergone tremendous changes with respect to the way they maintain their records and gauging the new law the hard way. It is hardly a year into this new Act, and already there are numerous notifications and circulars to cope up with. And recently, tax payers have been receiving notices from the GST department to submit reconciliations of various sorts. I hereby submit my representation with respect the above mentioned subject.
1) We have received a notice for our client on 21/05/2018 @ 12.50 pm via email from email id [email protected] to the registered email id of the client. As this notice has been sent from a “GMAIL ID” evidently it is not from a Government domain (as anybody with access to internet can also create a similar email ID) without any signature/ seal of the authority, we would not know the legal authenticity of this notice.
And also, when we login to the respective tax payer’s GST portal and check for Notices it shows “No record found”. In such a scenario as registered taxable person how should one treat this notice at the first instance?
In this highly digital world where DATA Privacy is such a big concern the departments should have more authentic way of sending notices.
2) GST ASMT-10 — is issued under Rule 99(1) of CGST, for scrutiny of “Returns”. The extract of the said Rule is reproduced for ready reference:-
“Where any return furnished by a registered person is selected for scrutiny, the proper officer shall scrutinize the same in accordance with the provision of section 61 with reference to the information available with him, and in case of any discrepancy, he shall issue a notice to the said person in Form GST ASMT-10.”
With reference to the above I would like to quote the definition of “Return” as defined in the Section 2(97) of CGST ACT.
“Return means any return prescribed or otherwise required to be furnished by or under this Act or the rules made thereunder;”
Returns mentioned under the ACT is as below :-
|GSTR 2||Inward Supplies|
|GSTR 3||Monthly return|
|GSTR 2A||Details of supplies auto drafted from GSTR 1|
|GSRT 1A||Details of auto drafted supplies of goods and service|
As the GSTN Portal was not ready with the above series of forms, a SIMPLIFIED FORM GSTR 3-B was prescribed to be filed for making payment of taxes. Please note till date GSTR 2 and 3 is not made available and has been extended until further notice from the GST Council.
|In this scenario the return that is filed by the registered taxable person is Form GSTR-3B (a stop gap arrangement for GSTR 1, GSTR 2and GSTR3). Please note that Form GSTR-2A is not a “return filed” by the taxable person and is only an auto populated listing available for view in the common portal. Hence a notice on the ground for mismatch of ITC claimed as per GSTR 3-B and ITC appearing in GSTR -2A does not arise. GSTR-2A is merely an intermediary form available to view the details uploaded by the supplier in their GSTR-1 and does not have any edit/modify option to take any corrective action. Therefore when there is no such instructions given anywhere in the law to match the GSTR 3B with GSTR -2A, issuing such a notice on that grounds is not appropriate.|
The extract of Section 61 of CGST Act is as below:
“Scrutiny of Returns -The Proper officer may scrutinise the return and related particulars furnished by the registered person to verify the correctness of the return and inform him of the discrepancies noticed, if any, in such manner as may be prescribed and seek explanation therto.”
| I would like to highlight the words “furnished by the registered person” here. The question here is, ” is GSTR -2A, a “Return” furnished by the registered person (recipients of Inward Supply)? “
GSTR-2A is only auto populated details consolidated by the GST Network from the various GSTR-1 filed by the suppliers of the registered person. Hence how can this be considered for the purpose of analysing discrepancies in GSTR — 3B? The Only details that are being furnished by the registered person till date are details in Form GSTR 3B and Form GSTR 1, and ideally, this should be compared before giving any such notices.
3) I would like to reproduce below extract from the CHAPTER VIII- Return Rules under CGST Rules 2017 which is as follows
RULE 59. Form and manner of furnishing details of outward supplies:-
1. Every registered person, other than a person referred to in section 14 of the IGST Act 2017, required to furnish the details of outward supplies of goods and services or both under section 37, shall furnish such details in Form GSTR -1 electronically through the common portal, either directly or through a Facilitation Centre notified by the commissioner.
3. The details of outward supplies furnished by the supplier shall be made available electronically to the concerned registered persons (recipients) in Part A of Form GSTR-2A, Form GSRT-4A and in Form GSTR 6A through the common portal after the due date of filling of Form GSTR-1
4. The details of inward supplies added, corrected or deleted by the recipient in his form GSTR2 u/s 38 or form GSRT 4 or Form GSTR -6 u/s 39 shall be made available to the supplier electronically in Form GSTR-1A through the Common Portal and such supplier may either accept or reject the modifications made by the recipient and Form GSTR-1 furnished earlier by the supplier shall stand amended to the extent of modifications accepted by him.
|Based on the above, Form GSRT 2 is a return provided under the law to perform a reconciliation of the inward supplies and corresponding input tax credit available to the registered person (recipient) to ensure that accuracy of the input tax credit availed in GSTR-2 and in case of mismatch to rectify himself .Form GSTR 2A is made available in the common portal for view of the auto populated inward supplies consolidated from the GSTR-1 filed by the suppliers. However GSTR -2 is not available at this juncture to add, correct, delete or modify such details available in GSTR-2A. In such scenario the registered taxable person is not in a position to perform any such reconciliation as mentioned in the provisions of GST Act as mentioned above.|
Rule 61. Form and manner of submission of monthly return ……….
(5) Where the time limit for furnishing of details in Form GSRT-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 the manner and conditions subject to which the] return shall be furnished in Form GSTR 3B electronically through the common portal, either directly or through a Facilitation Centre notified by the Commissioner.
|Based on the above rules in the current scenario Form GSTR-3B is being filed as the due dates of Form GSTR 2 has been extended to an indefinite period until further notice. To repeat here that GSTR-3B is an temporary form introduced for the purpose of payment of tax. Since the whole process of GSTR-1, GSTR-2 and GSTR-3 is not available in portal, GSTR-3B was introduced as a stop gap arrangement by the GST Council with sole purpose of collection of tax.|
Rule 69. Matching of Claim of Input Tax Credit:
The following details relating to the claim of input tax credit on inward supplies including imports, provisionally allowed under section 41, shall be matched under section 42 after the due date for furnishing return in Form GSTR-3 —
a) Goods and Service Tax Identification Number of the supplier
b) Goods and Service Tax Identification Number of the recipient
c) Invoice or Debit Note Number
d) Invoice or Debit Note Date
e) Tax amount
|Provided that where the time limit for furnishing the Form GSRT-1 specified u/s 37 and Form GSTR-2 specified u/s 38 has been extended, the date of matching relating to claim of input tax credit shall also be extended accordingly.|
|Based on the above it is very clear that the intent of the law to match the claim of input tax credit is through GSTR 2 where the supplier and the recipient gets a fair opportunity to verify and claim the correct input tax credit. Hence this opportunity to file GSTR -2 meant for input reconciliation is not made available to the registered person, issuing a notice on the grounds of mismatch of input tax credit is not good in law and against the natural justice available to the tax payer.|
Rule 71. Communication and rectification of discrepancy in claim of input tax credit and reversal of claim of input tax credit.
1) Any discrepancy in the claim of input tax credit in respect of any tax period, specified in subsection (3) of section 42 and the details of output tax liable to be added under sub-section (5) of the said section on account of continuation of such discrepancy , shall be made available to the recipient making such claim electronically in Form GST MIS -1 and to supplier in Form GST MIS -2 through the common portal on or before the last date of the month in which the matching has been carried out
2) A supplier to whom any discrepancy is made available under sub-rule (1) may make suitable rectifications in the statement of outward supplies to be furnished for the month in which the discrepancy is made available
3) A recipient to whom any discrepancy is made available under sub-rule (1) may make suitable rectifications in the statement of inward supplies to be furnished for the month in which the discrepancy is made available
4) Where the discrepancy is not rectified under sub-rule (2) or sub-rule (3), an amount to the extent of discrepancy shall be added to the output tax liability of the recipient in his return to be furnished in FORM GSTR-3 for the month succeeding the month in which the discrepancy is made available
|Based on this ideally the registered tax payer should first get an opportunity of rectifying the discrepancies. The intent of the law is very clear here where an opportunity is provided to the tax payer to rectify the discrepancies. However the department have directly gone to scrutiny by passing all the above provisions of the GST Act and Rules|
4) I would like to bring the reasons for which a difference in GSTR3B and GSTR2A is possible and comparing these 2 Forms for discrepancy is not appropriate.
a) GSTR 1 not filed by the supplier:
There are instances where registered person have filed and paid taxes through GSTR 3B however have not file GSTR-1 due to various technical and GST portal issues. In such cases even though the tax for the outward supply is paid to the government by the supplier and the recipient is eligible to take a credit of such supplies there will be a difference input tax credit available as per GSTR-2A and availed in GSRT -3B.
b) Credits of the Input tax credit
for the inward supplies need not be taken in the same month by the recipient in GSTR 3B. However the same would appear GSTR 2A as uploaded by the supplier in the GSTR 1 in the same month.
c) Input Tax Credit claimed for taxes paid for inward supplies under Reverse Charge Mechanism are shown as Credits GSTR 3B with the regular credits. Such Credits obviously don’t reflect in GSTR 2A.
d) In many cases the supplier has shown the outward supply in B2C instead of B2B by mistake in Form GSTR 1. This also leads a mismatch in the GSTR 2A and GSTR 3B input tax credit.
e) Wrong details uploaded by the supplier:
In many cases the Suppliers have not filed their GSTR-1 correctly and hence it would not reflect in GSTR-2A of recipient and lead to difference with the credit declared in GSTR-3B
5) The intention of the law is to perform matching for GSTR-2 of tax payer with GSTR 1 of the vendor and not GSTR 3B of tax payer with auto-populated details in GSTR-2A.
Where is a requirement in law to match the credits disclosed in 3B (which is temporary return need to be filed as the due date of GSTR 1 and GSTR2 got extended) with GSTR -2A?
What recovery actions can be taken for a matching which is not provided in the law?
Where GSTR -2 has been extended indefinitely where is the requirement of matching the Input tax credit with GSTR 3B. Though GSTR 2A is made available for view to the registered tax person, what action practically can be taken to rectify the details appearing in GSTR-2A as the GSTR 2 is still not available for reconciliation.
In the recent council meeting it was decided that the taxes not paid on the outward supplies will not be recovered from the tax payer but from the vendor and the entire matching exercise will not be operational at least for a year.
6) The notice GST ASMT -10 issued provides a consolidated details of credit as per GSTR 3B and GSTR 2A. I believe this kind of view is available to the department. However for the tax payer no such view is made available in the common portal. If user friendly consolidated reports showing total credit available as per GSTR 2A on a monthly basis and the corresponding mismatch with the input claimed With all the mentioned points above it seems that the implementation of the GST is basically failing because of the wrong interpretation of the act and rules by the Bureaucrats and for not training the officers correctly by the department. These kind of notices will only increase the litigations and will not help in ease of doing business by smooth implementation of GST. The mindset of the department has to undergo change in a revamped Indirect Tax Environment.
At this Juncture the Government should concentrate on stabilising the whole implementation of GST and should not waste their time in issuing notices which will make the process further complicated and give rise to more litigation. Increased number of litigations will lead to a situation where the largest tax reforms in Indian history will become unpopular without serving its purpose and reforms will not reach the common man.
CA. Deepabali Das