SOP for non filer regarding Circular No.129/48/2019-GST and chaotic situation during the lock-down process and its problem and solutions
Base of the Provision
1.1 As per the circular, the GST Department plans to act tough with non-filers of returns and cancel their registration. It has also decided to update the progress made in this regard on a daily basis.
1.2 In the 38th meeting of the GST Council under the chairmanship of the Union Minister for Finance and Corporate Affairs Smt. Nirmala Sitharaman had decided to issue SOP for Tax officers to take action against Non Filling of GST Returns.
1.3 The CBIC had noticed that divergent practices are being followed in case of non-furnishing of the said returns.
1.4 In order to clarify the above issue and to ensure uniformity in the implementation of the provisions of the law across field formations, the Board in the exercise of its power conferred by subsection (1) of section 168 of CGST Act regarding power to issue instructions and directions.
2.0 Details of the provision
2.1 As per Section 46(Notice to return defaulter) of the CGST Act read with rule 68 of the Central Goods and Services Tax Rules, 2017 requires the issuance of a notice in Form-GSTR-3A to a registered person who fails to furnish return under section 39(Furnishing of Return) or section 44(Annual Return) or section 45(Final Return) requiring him to furnish such return within fifteen days. Further section 62 provides for assessment of non-filers of return of registered persons who fails to furnish return under section 39 or section 45 even after service of notice under section 46.
2.2 The Central Board of Indirect taxes and Customs (CBIC) also released a format of FORM-GSTR-3A. The CBIC also said that, as such, no separate notice is required to be issued for best judgement assessment under section 62 and in case of failure to file the return within 15 days of issuance of FORM-GSTR-3A, the best judgement assessment in Form- ASMT-13 can be issued without any further communication.
3.0 Guidelines issued by CBIC to ensure uniformity in the implementation of the provisions of law across the field formations:
3.1 Step 1: Preferably, a system generated message would be sent to all the registered persons 3 days before the due date to nudge them about filling of the return for the tax period by the due date.
3.2 Step 2: once the due date for furnishing the return under section 39 is over, a system generated mail or message would be sent to all the defaulters regarding non filling for the said tax period. It is to be sent to the authorized signatory as well as the proprietor/partner/Director/Karta, etc.
3.3 Step 3: Five days after the due date of furnishing the return, a notice in FORM GSTR-3A shall be issued electronically to defaulters, requiring them to furnish such return within fifteen days.
3.4 Step 4: In case the return is not furnished within 15 days of said period, proper officer may proceed to assess the tax liability of the said person under section 62 of the CGST Act, to the best of his judgement taking into account all the relevant material which is available or which he has gathered and would issue order under rule 100(Assessment in certain cases) of the CGST Rules in FORM GST ASMT-13. The proper officer would then be required to upload the summery thereof in FORM GST DRC-07.
3.5 Step 5: For the purpose of assessment of tax liability under section 62 of the CGST Act, the proper officer may take into account:
> details of outward supplies available in the statement furnished under section 37 (FORM-GSTR-1)
> details of supplies auto populated in FORM GSTR-2A
> information available from e-way bills
> any other information available from any other source including from under section 71(Access to business premises).
3.6 Step 6: In case the defaulter furnishes a valid return within thirty days of the service of assessment order in FORM GST ASMT-13, the said assessment order shall be deemed to have been withdrawn. But, the liability for payment of interest under section 50 or for payment of late fee under section 47 shall continue.
3.7 However, if the said return remains unfurnished, then proper officer may initiate proceeding under section 78 and recovery under section 79 of the CGST Act.
3.8 In deserving cases, based on the fact of the case, the commissioner may resort to provisional attachment to protect revenue under section 83 of the CGST Act before issuance of FORM GST ASMT-13.
3.9 Further the proper officer would initiate action under section 29 with sub-sections 2 of the CGST Act for cancellation of registration in cases where the return has not been furnished for the period specified in section 29.
4.0 General problem and Solutions
4.1 First problem is that second reminders are to be sent to taxpayer by the consultants/return preparers in case data is not received by last days.
Already solutions mentioned in first step as this burden shall be reduced by department itself to provide a system generated message sent to all the registered persons 3 days before the due date to nudge them about filling of the return for the tax period by the due date.
4.2 Second problem here arises as we have all seen that although returns are sometimes filed, still system generated messages are sent to taxpayers and that should be taken care to be avoided by the department.
As to check return filling status, there exists no need to login to account to taxpayers, so by the help of automated tools or applications, both consultants and taxpayer can be proactive by generating timely reports.
Third problem may arise in consultant’s offices where taxpayers are generally relaxed. Earlier, consultant too was relaxed as they had tilled last date to furnish return; now this earlier reminder will unnecessary overloaded the situation in already tensed last moment.
Based on the above, we can observe that the consultant should just advice clients to avoid this messages if receive repeatedly but another thing is that the taxpayers will warn to avoid from return filling and the ultimatum is filed return timely.
5.1 Chaotic Situation during this epidemic and its impact
5.2 Already The Government deferred the release of GST revenue collection as the ongoing lockdown led to a lower mop-up and also extended the deadline for filing returns to help the assessee in this situation.
5.3 As per Circular No. 136/06/2020-GST on dated 3rd April, 2020 the government had in march extended the deadline to file the GST returns for entities with a turnover of over Rs 5 crore by 15 days from the due date without payment of any late fee, interest and penalty subject to a reduced rate of 9 percent interest will be levied if the return is filed after 5th May to 30th
5.4 Due to the current “unprecedented situation” arising out of the corona virus (covid-19) outbreak it has been decided to defer the GST collection data release. From the media source it was pointed out that in 2019-20 fiscal, Goods and Services Tax (GST) collection had remained above the key Rs 1 trillion marks from 7 months out of 12 months but the collection was Rs 97,597 crore in March.
5.5 The government is expecting that more returns will be filed and that to adding a decision on extension was taken. The real impact of the lockdown on GST revenue will be reflected in the revenue collection of may (for business activity of April) as the country was in complete lockdown last month with only essential services permitted.
5.6 Based on the above, it is observe that though the current situation is very tough, after the relaxation from the government side; the business entity should go forward to enjoying the above benefit and to avoid the ambiguity mentioned in step-6 to file the return properly and to helping the government to increase the revenue for nation building.
Note:-“This article is for the purpose of information and shall not be treated as solicitation in any manner and for any other purpose whatsoever. It shall not be used as legal opinion and not be used for rendering any professional advice. This article is written on the basis of the author’s personal experience and provision applicable as on the date of writing of this article.