Letter To GST Council on Shortcomings In Revised GSTR-9

To,
THE SECRETARY
GST COUNCIL OF INDIA

Subject– Comments on revised form GSTR-9

Dear Sir,

The Government of India vide its circular no. 39/2018 – Central Tax dated 04.09.2018, has introduced a form- GSTR 9 “Annual Return”. In this form, there have been various points which have created confusion among taxpayers on account of ambiguous and contradictory instructions given in the form. There was also a shortcoming that this form is only a sum-up of form GSTR-3B and Form GSTR-1, as already submitted. There was also no room in form GSTR-9 to declare and submit the additional tax liabilities, which has escaped from filing form GSTR-3B and from GSTR-1.

To mitigate the above shortcomings and to clarify the view of the taxpayers, the government of India (Ministry of Finance), vide notification no. 74/2018 dated 31 December 2018, substituted the new GSTR-9. On going through the form, it is emerged out that the shortcomings, doubts and ambiguities as prevailing in the original GSTR-9 are still in existence and making sound in different volumes.

The point wise ambiguities, shortcomings and other relevant points regarding the new and old forms are as under:

• The format of the old and new forms are exactly same, however the instructions to file the form have been changed.

• Heading of Table 4 has been changed from “Details of advances, inward and outward supplies made during the financial year on which tax is payable as declared in return filed during the financial year” to “Details of advances, inward and outward supplies made during the financial year on which tax is payable”.

The word “as declared in return filed” has been deleted. This is a welcome deletion, as this has clarified the position of submitting figures pertaining to period 01.07.2017 to 31.03.2018, whether or not the GSTR  return for this period has been filed upto 31.03.2018 or thereafter.

• I would like to draw your kind attention to instruction no. 3 of Form GSTR-3 as under:

It may be noted that additional liability for the FY 2017-18 not declared in FORM GSTR-1 and FORM GSTR-3B may be declared in this return. However, taxpayers cannot claim input tax credit unclaimed during FY 2017-18 through this return.

Here, in the first part, government has made clear that the assessee can declare the additional liability which was not declared in form GSTR-1 and GSTR-3B.This is a good decision. But the entire form is silent as to how to declare the additional tax liability in the form. We will discuss more in the ensuing paras.

• In instruction no. 4, following clarification/ instruction has been given:

Part II consists of the details of all outward supplies & advances received during the financial year for which the annual return is filed. It may be noted that all the supplies for which payment has been made through FORM GSTR-3B between July 2017 to March 2018 shall be declared in this part.

The above instruction can be divided into two parts:

In the first two lines of this instruction, it has been clarified or seems to have been clarified that, while submitting the details of outward and inward supplies, the assessee has to fill the figure of all advances, inwards and outward supplies made during the year on which tax is payable. This seems to indicate an optimal position that one has to submit the actual figure, on which he is liable to pay GST, whether included or not, in already submitted GSTR- 3B and/or GSTR-1.  Surprisingly, the next line of the instruction unequivocally reverses the first line of the instruction and mandates that in this form, only the figure of supplies on which the tax has been paid through form GSTR-3B between July 2017 to March 2018 shall be declared in Part II Table 4 of Outward and Inward supply.

The two statements within the same instruction no. 4 are contradictory to each other.

If we read instruction no. 3 and 4 simultaneously, it would be clear that the figure of all outward supply, inter alia sale declared in Form 3B and GSTR-1 and also additional supply not declared in these forms can be sum-up and reported here. But second part of the instruction no.4 restricts the figure of supply on which the tax has been paid through Form GSTR-3B can be reported here. Clarification in this regard is sought from the government.

• Further, in second part of instruction no. 4, same mistake as existing in the original form GSTR-9 i.e. return filed during the financial year has been repeated. The instruction no. 4 of new form 9 states as under:

“____________________ . It may be noted that all the supplies for which payment has been made through FORM GSTR-3B between July 2017 to March 2018 shall be declared in this part.”

In the instruction, it is not clear that GSTR-3B of which period is to be considered, whether it for the month of July’17 to March’18 (whether filed within the FY 2017-18 or thereafter) or the form GSTr-3B, filed during the period July ’17 to March’18 only.

• On going through the instruction no. 4A and 4B, it is abundantly clear that now in form GSTR-9, only the figure of supply on which the tax has been paid through form GSTR-3B will be declared.

Looking to the above instructions, the form GSTR-1 becomes redundant because we will first consider form GSTR-3B and the supplies pertaining to tax paid and declared therein will be sum-up for the period July’17-March’18 and declared in from GSTR-9 Table 4. There are a lot of cases in which the assessee has declared the supply in GSTR-1, however, the same has not been declared in form GSTR-3B and accordingly the tax on such supply has not been paid. Looking to the revised instructions of this form GSTR-9, these supplies will not be considered in Form GSTR-9.

Now the question arises that if we are considering the value of supply in accordance with the actual tax paid through GSTR-3B, then as per GSTR-9, there would be no underpayment of tax, as supply has been filled in Form GSTR-9 in accordance with the actual tax paid as per GSTR-3B. Another question also arises that how will the assessee declare additional tax liability in this form.

• In instruction no.9, a clarification has been given that the tax payer shall be given an option to declare any additional tax liability declared in this form through form no. DRC-03.

However, as stated above, there is not table/column in form GSTR-9, under which the tax payer can declare the additional tax liability. Form DRC-03 is not routed through Form GSTR-3B, therefore additional supply will not be covered under supply of Form 9. As stated above, form GSTR-9 will contain only the amount of supply on which the tax has already been paid through Form 3B. Therefore, there will be no short payment of tax in form GSTR-9.

• One can also presume that the assessee can first declare and pay the additional tax liability through form DRC-03, and will then include the additional supply in column 4A or 4B as the tax has been paid. But the third line of instruction no.4 clearly states that only those supply on which the payment has been made through From GSTR-3B, will be considered for GSTR-9. It means that even if the tax payer has paid tax through DRC-03 on additionally declared supply, the same will not be considered in Form GSTR-9.

• Clarification is sought from the government regarding meaning of the words- “tax has been paid”, as used in instruction no. 4A and third line of instruction no. 4. Whether “tax has been paid” includes the tax paid through DRc-03 or it will be restricted to the tax paid through GSTR-3B.

• Here it is pertinent to refer the order no. 02/2018 dated 31.12.2018 under which the time of claiming the ITC for the period FY 2017-18 can now be claimed upto 31^st March 2019 and also any rectification of error or omission in respect of the details furnished in GSTR-3B or GSTR-1 shall be allowed after furnishing of the return under section 39 for the month of September, 2018 till the due date for furnishing the details under sub-section (1) for the month of March, 2019 or for the quarter January, 2019 to March, 2019. Now even after this order, the annual return (GSTR-9) still contains the figure for modification carried out through the return of 1^st April 2018 to 30^th September 2018 in Table no.5. Whereas in the order, date has been extended to March 2019.

• The doubt prevailing in Table 8 of the original form GSTR-9 regarding ‘ITC lapsed in the case of import of goods’ still continues. In column no. 8G, figure of IGST paid on import of goods has to be filled. Thereafter in column 8H, the figure of IGST credit availed on import of goods during the year is to be filled. The balance amount under column 8I (8G-8H) will be lapsed. Now the question is that we can take the credit of IGST upto the date of filing of return of September of next financial year, then how will the ITC not claimed till March’18 will lapse, when we have the time to claim the credit upto 25^th day of October 2018. ITC on purchase of import for the month of March’18 even though not claimed in the month of March’18 will not lapse on 31^st match 2018, but can be claimed upto 25^th October 2018. In these circumstances, how can it be termed as ‘ITC lapsed’ in current financial year? We need clarification from government in this regard.

• In view of all the above defects, the revised form GSTR-9 should also be withdrawn to save the taxpayer from unwanted hassles.

Thanking You

Yours faithfully

 Anil Kumar Gupta

LL.B., A.I.C.W.A., F.C.A., DISA, CISA (USA)