The all in one high powered GST Council in its 27th meeting emphases on making the return filing process easy in fact in there presumption very easy. In which they mainly discussed 2 model of return filing therein and bla, bla bla… this is all what we are reading and listing from all newspapers, interviews and tax magazines. But one thing which remains untouched and unanswered is that what shall be the fate of GSTR 2 &3? Will a taxpayer has to file GSTR-2 & 3 … and if the answer is affirmative than how and when the filing shall take place.
Why filing of GSTR -2 & 3 is crucial from a taxpayer's view:
As we all know that there is no direct option is available to amend any return in GST Era. And the indirect way of amendment formulated by our government pass through different return's namely GSTR -2 , GSTR -1A , GSTR - 2A and finally GSTR-3. But at present these all there return are waiting a node from government side.
Now Let us discuss why deferment of GSTR-2 is inviting trouble with the help of a simple case which a lot of taxpayers are facing.
Case ----> An B2B invoice is skipped while filing GSTR -1
Remedy if GSTR-2 is open for filing----> The solution is very simple (at least in saying) that recipient will upload the details of said invoice while filing is GSTR -2 which shall appear in GSTR- 1A of supplier after that supplier will accept such changes and his GSTR -1 shall stand accordingly……….problem resolved.
Remedy at Present ----> At present solution to this issue is that supplier will upload the details of said missed invoice in subsequent month GSTR -1.
Let us discuss the issue and consequence of the aforementioned remedy with the help of an example.
Suppose Mr. A(supplier) has sold goods worth Rs. 100,000 + 18% GST to Mr. B (Recipient) in the month of February and Mr. A while filing his GSTR -1 of February missed that particular invoice. Mr. A realised his mistake and uploaded the details of said invoice while filing his GSTR -1 of March.
Issue ----> Following shall be the prominent issue which may arise in the supposed situation
• When the government will ask for filing GSTR 2 and GSTR - 3 how the matching will took place?
• Whether the invoice uploaded in the month of March by Supplier (MR.A) will appear in the GSTR-2A of February month or in the GSTR -2A of March of recipient (Mr. B)?
• Whether the supplier is eligible to take the credit in the month of February or in March (technicallyand not legally)?
Consequences---->
Following are the Major consequence of doing amendment in aforementioned way when the matching process will begin
1. In our example recipient Mr. B will have already taken the credit of 18,000 while filing his GSTR -3B of February and the same invoice will not be appearing in his GSTR - 2A of February month. Now his is equipped with 2 options namely;
• Either he would reverse the credit with interest and avail the same in the subsequent month …(…uffff loss that too without any mistake from his side)
• Or he can add the same invoice while filing his GSTR-2 of February month. (Mr. B is safe but issue widened for Suppler Mr. A)
2. Further, if Mr. B has uploaded the invoice while filing his GSTR-2 of February month than issue will get widened for Mr. A reason being;
• If, he accepts the same invoice it will lead to paying taxes twice on a single invoice reason being he has uploaded the same invoice in subsequent his month's GSTR -1.
• And If, he reject('ideally he cannot') the same invoice it will lead to a mismatch and ultimately recipient Mr. B has to suffer and reverse ITC with interest.
Furthermore, one thing which twist the knife is the PROVISO TO SECTION 38 (5) which states that,
'Provided that no rectification of error or omission in respect of the details furnished under sub-section (2) shall be allowed after furnishing of the return under section 39 for the month of September following the end of the financial year to which such details pertain, or furnishing of the relevant annual return, whichever is earlier.'
The proviso made crystal clear that no amendment can take place after 31st December ----> i.e. last date of filing Annual return ('in case government will not extend the last date of filing'). But till date there is no indication about fate of GSTR -2 & 3 is provided by the government than how will the amendment shall took place before the last date?
Through these write up I have only touch upon one issue, however issues are many therefore, GST Council should come forward with a timely clarification on these type of issue to avoid any chaos in future.
Disclaimer: Views expressed are strictly personal
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