Advertisment

Filing GST Returns: All You Need to Know

If for some reason if MSMEs file the GST late, then there is a late fee as well as interest that would have to be paid by the company in question

author-image
DQINDIA Online
New Update
GST

The extension of GST return filing timelines along with the deferment of e-invoicing and new returns announced by Nirmala Sitharaman, the Finance Minister of India, would allow businesses to focus on resumption of business processes once normalcy resumes in the future. However, when that happens, businesses must be prepared as non-compliance to GST can lead to cancellation of business registration. This can be only applied to businesses failing to file their returns.

Advertisment

Under any tax regime, return filing is a key activity as it gives a holistic picture of the economy to the regulators and the Government, thus helping in policy decisions. If tax returns are not filed on time, tax authorities levy late fee and interest everywhere. Under GST as well, if returns are filed late, then there is a late fee as well as interest to be paid. It can be paid on the gross liability or net liability i.e., after adjusting the input tax credit. Apart from these provisions, in GST there are other provisions, which can result in cancellation of Registration also.

In this article, we will discuss these provisions and also various case laws related to the cancellation of Registration.

As per provisions of section 29(2) of CGST Act 2017 and Rule 21 of the CGST Rules 2017, the registration number of a taxpayer can be cancelled under the following circumstances

Advertisment
  1. In case of regular taxpayers, if he has not filed returns continuously for a period of 6 months
  2. In case of composition taxpayer if he has not filed returns for three continuous tax periods
  3. The person has taken Registration under a voluntary basis and not commenced business for a period of more than 6 months or
  4. Has contravened the provisions of GST Act or rules
  5. Does not carry business from the location specified in the Registration
  6. Issue tax invoice or bill of supply without the supply of goods or services or both
  7. Does not pass on the reduction of tax rate benefits to customers or reduces prices on account of more input tax credit availed
  8. Does not furnish bank account details after the grant of Registration under GST before 45 days of the grant of Registration or filing of return as per Section 49 of CGST Act whichever is earlier.

Many taxpayers were neither filing GST returns on time nor were they filing for a longer period. As per data available till November 2019, the average return filing for GSTR – 1B is a notch above 60% and for GSTR – 3B, about 80%.

Before the issue of cancellation of Registration by the concerned officer, an opportunity will now be provided as per the law. There are also some cases reported where the department is issuing notices, not in the prescribed format. In such cases, it can be challenged in the court of Law, but it will be in favor of the department; as it may be treated as a procedural lapse.

Advertisment

The registered taxpayers are not filing returns on time due to a variety of reasons ranging from lack of awareness to unavailability of user-friendly technology solutions. For most MSMEs, credit period is 90 days and actual payment realization often happens beyond 90 days. To address the concerns raised by the taxpayers, the Government through GSTN has empanelled 8 accounting and billing software.

Using any of these billing and accounting software will help the taxpayer to file the returns seamlessly and also be GST Compliant and save a lot of money on interest and late fee payment.

Almost all these products provide key data required for the Annual Return filing and moreover it is free for a period of one year for the taxpayers having a turnover less than Rs 1.50 Crores. Apart from these, the Government in the recent budget has enabled the NBFCs to fund the MSMEs and TReDS is again gaining prominence.

Advertisment

It goes without saying that the requirement of 6 months' continuous period should be fulfilled both at the time of issuance of the above said notice in terms of the proviso to Sec. 29(2) of the CGST Act read with Rule 22 of the CGST Act, but also at the stage of passing the final order canceling the Registration as per Sec. 29(2)(c).

By CMA B Mallikarjun Gupta, Chief Taxologist, Logo Infosoft

 (Disclaimer: Any views or opinions represented above are personal and belong solely to the author and do not represent those of people, institutions or organizations that the author may or may not be associated with in professional or personal capacity unless explicitly stated. Any views or opinions are not intended to malign any religion, ethnic group, club, organization, company, or individual)

Advertisment