8 Suggestive Practical Measures for Points to Be Pondered Upon in light of Govt’s Latest GST Facilitation Announcements

Without going into the legal provisions of the respective Sections, this article discusses practical scenarios in light of the recent trade announcements.

1. Filing Of GSTR 1s

While uploading GSTR-1 for the month of April & May 2021, GSTN portal is not accepting Invoices of Inactive GSTIN which were suspended by GST Department by Suo-moto Cancellation due to non-filing of GSTR-3B or GSTR-1 of those dealers.

Since the invoices have already been issued to those dealers without the knowledge of this fact of cancelled GSTNs, the alternate being followed is while filing Gst-1 -to show such sales as B2C sales instead of B2B sales and keeping the fingers crossed that when the GSTNs will be activated, such B2C sales would be rectified as B2B sales.

Relief Sought:

Some middle formula need to be devised so that the interests of the dealers should not be affected.

2. Amendment of GSTR 1 for B2C sales is allowed only once:

The seller dealer has to keep record and keep on updating himself so that such B2C sales amendment/ rectification can be done at one go for all the B2B invoices since B2C transactions amendment for a particular month is allowed only once.

The selling dealer has an additional task of keep on updating and rectification which is a cumbersome task for him.

Relief Sought:

Rectification/ Amendment of Gst 1 for B2C sales need to be provided more than once as above.

3. Status of GST 2A and GST 2B:

Gst 2A and Gst 2B will not be updated since the seller has to show such sales as B2C sales to match his totalling of sales amount vis a vis Gst 1 and the respective equivalent amount of taxes to be paid.

Gst 1 and Gst 3B sales figure need to be matched to avoid any penal interest, wrong turnover disclosure consequences.

In the buyer’s 2A and 2B, such purchases and ITC won’t be reflected due to B2C sales being shown by the seller as per point 1 above.

The purchasing dealer will not get ITC since the same is not reflected in his respective 2A/2B.

Relief Sought:

Any temporary ITC or provisional ITC be reflected in 2A/ 2B with a separate caption under 2A/2B.

4. Restoration of GSTNs with retrospective cancellation dates:

In case the restoration is effected within the time period allowed under Section 16(4) of CGST Act, 2017, the purchasing dealer can claim ITC provided the conditions of Section 16, 17, 18 are duly complied with.

For example, if the GSTN cancelled w.e.f. March 2021 and is restored later on before September 21; that too retrospectively from March 21; so that the purchasing dealer can claim ITC before filing of September 3B return, that will be in favor of the purchasing dealer. But what if the restoration is done in Oct/ November 21, retrospectively from March 21; then what would be the status of ITC claim; needs to be pondered upon.

Relief Sought:

Fast track restoration policy needs to be formulated so that the above practical scenario can be pondered upon.

5. GST Amnesty Scheme Late fees Waiver:

The point to be pondered upon, here is that the taxpayers who have already filed return along with late fee will not be having any relief or refund as this scheme is applicable for prospective tax period only and filed between 01.06.2021 till 31.08.2021. This will give a feeler to all law-abiding taxpayers that they are being fooled by filing returns on time or late along with late fees. Such late fees already paid will not be refunded to them.

Relief Sought:

In the times of pandemic, the late fees paid by those dealers need to be refunded back. There is huge collection to the exchequer on account of the same in last 4 years.

6. GST Amnesty Scheme – No Interest waiver

There is no relief on interest related to late payment of GST. It has to be paid @18% from the date of applicability after the due date till the date of payment. Hence this amnesty scheme is for waiver of late fees but no relief on account of interest is given to them. Hence, all small tax payers will have to pay interest. The only beneficiary will be those taxpayers who could not file nil returns or those who paid the taxes but could not file the returns due to any reason.

Relief Sought:

The interest outgo will become a major outflow and will deter the real benefits of this amnesty scheme reaching at the grassroot levels. Interest amnesty also to be pondered upon on the lines of late fees.

7. Not Claimed ITC under GSTAmnesty Scheme:

The Govt has introduced gst return filing amnesty scheme for the pending returns from July 17 to April 2021 but the point is silent upon the ITC claim which has expired due to Section 16(4) provisions.

ITC which can be claimed as per Section 16, 17, 18 compliances but due to cancellation of registrations or non-filing of Gst returns including annual returns; ITC could not be claimed. What will be the status of those missed ITC which now could not be claimed due to Section 16(4) of CGST Act.

For example: Output tax of 5 lacs for 2017-18 and ITC of 4.50 lacs for 2017-18- Now the ITC of 4.50 lacs could not be claimed. If the dealer has to pay tax of rs. 5 lacs along with applicable interest, that will be a big outflow and would deter to do so in case of paucity of funds.

Relief Sought:

ITC claim to be allowed while filing the Gst returns so that the real benefit of the amnesty scheme can flow seamlessly.

8. Purchaser Could not claim ITC as per point 7:

Continuing the example as per point 7 above, the purchaser of the above dealer claimed ITC of 4.50 lacs but the Gst department would have sent notice to pay tax of Rs.4.50 lacs along with interest since the tax was not paid by the seller.

If the purchaser had paid tax of Rs.4.50 lacs, now again he could not take credit of ITC due to Section 16(4) provisions even if the seller files his Gst returns. Since the last date of ITC was September month (or the extended date for 2017-18 being the first year of Gst), the purchaser could not take the credit.

As per business parlance, the purchaser would have withheld the tax payment of the seller at that time. Even if the seller makes payment of the tax and files Gst returns, the purchaser will not be able to claim that ITC due to Section 16(4) provisions.

Relief Sought:

The above situation needs to be pondered over so that the ITC flows seamlessly to the buyer.

While every care has been taken to ensure the accuracy/ authenticity of the above, the readers are advised to recheck/reconfirm the same from the original sources/ relevant departments. It is based upon relevant law and/or facts available at that point of time and prepared with due accuracy & reliability. By the use of the said information, you agree that the company is not responsible or liable in any manner for the authenticity, accuracy, completeness, errors or any kind of omissions in this piece of information for any action taken thereof. This is not any kind of advertisement or solicitation of work by a professional. The company shall in no way be responsible for any loss or damage suffered to any person on account of the same. These are the views of the author and there can be other views on the above too.

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    point no.8
    suppose the seller already paid tax ( gstr 3b ret liability) for the month which is not filed gstr 3b, then what about ITC for Purchaser of the such seller?

  2. MURUGESAN T.A. says:

    Your Message is very useful to all GST Practitioners. I request you sir Please send all current messages like this.
    Thank You Sir

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June 2021