File GSTR-1 in time to avoid litigations in GST

CA Umesh Sharma | Last updated: 03 January 2022

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Filing your GSTR-1 on time and accurately is crucial to avoid issues with Input Tax Credit (ITC) claims for your customers and prevent potential legal complications. Since January 1st, 2022, new rules mean that if you don't file your GSTR-1 by the 11th of the following month, your customers may not be able to claim their ITC for that period. Furthermore, any excess tax declared in GSTR-1 but not in GSTR-3B can be recovered by the authorities without prior notice.

Arjuna (Fictional Character): Krishna, what are the changes notified by government in filing GSTR-1 and GSTR-3B from 1^st January 2022?

Krishna (Fictional Character): Arjuna, Earlier taxpayers (Supplier) were not able to file GSTR-1 or use the IFF on the GST portal if they had pending GSTR-3B filings for the past two months (monthly filer) or for the last quarter (quarterly filer) as per CGST Rule 59(6). From 1st January 2022, taxpayers cannot file GSTR-1 if the preceding month’s GSTR-3B is not filed. For Ex. If a supplier does not file GSTR-1 for the month of Jan 2022, he shall not be allowed to file GSTR-3B for the month of Feb 2022.

Arjuna (Fictional Character): Krishna, what are the consequences of non-filing, late filing, or improper filing of GSTR-1?

Krishna (Fictional Character): Arjuna, The consequences of non-filing, late filing, or improper filing of GSTR-1:

Case 1: If the supplier fails to file GSTR-1 on or before the 11^th of the following month the recipient of the goods or services cannot claim ITC of the same in GSTR-3B for that month as GSTR-1 is not filed and the ITC of the same is not reflected in GSTR-2B of the recipient.

File GSTR-1 On Time: Avoid GST Litigation and ITC Issues

For Ex. If the supplier does not file GSTR-1 for the month of Jan 2022, the recipient shall not be allowed to claim ITC for the same in GSTR-3B of Jan 2022.

Case 2: If supplier files GSTR-1 after 11^th of the following month the recipient of the goods or services cannot claim ITC of the same for that month but can claim in GSTR-3B of the subsequent.

For Ex. If the supplier files GSTR-1 for the month of Jan 2022 after 11^th of the following month, the recipient shall be allowed to claim ITC for the same in GSTR-3B for the month of Feb 2022.

Case 3: If supplier files GSTR-1 on or before 11^th of the following month but mentions incorrect GST number or mentions B2B supplies as B2C, recipient of the goods or services cannot claim ITC of the same in GSTR-3B for that month.

For Ex. If the supplier files GSTR-1 for the month of Jan 2022 incorrectly and if the amendment to the same is made in GSTR-1 of March 2022, the recipient shall be allowed to claim ITC for the same in GSTR-3B for the month of Mar 2022.

Therefore, from 1^st Jan 2022 its mandatory for the supplier to file GSTR-1 correctly and timely.

Arjuna (Fictional Character): Krishna, what are the consequences if the supplier declares excess self-assessed tax i.e., outward tax liability in GSTR-1?

Krishna (Fictional Character): Arjuna, from 1^st January 2022, a new explanation to section 75(12) is inserted to the effect that the output tax relating to any invoices which are reported in GSTR-1 but not included in GSTR-3B shall be considered to be self-assessed tax for the purposes of sec. 75, and the same can be recovered u/s 79 without issuing SCN.

Arjuna (Fictional Character): Krishna, what precautions should the recipient take against the above issues?

Krishna (Fictional Character): Arjuna, the recipient of the goods or services should identify the defaulting supplier for this. The recipient can also check whether his supplier has filed GSTR-1 or not by using search taxpayer option on the GST portal. If supplier does not file GSTR-1 timely and correct it can affect the business relationship adversely and the recipient can also recover interest from supplier as recipient cannot claim ITC of the same.

FAQ :

From January 1st, 2022, taxpayers cannot file GSTR-1 if the preceding month's GSTR-3B is not filed. For monthly filers, this means you cannot file GSTR-1 if the previous month's GSTR-3B is pending, and for quarterly filers, the last quarter's GSTR-3B must be filed.

If a supplier fails to file GSTR-1 by the 11th of the following month, the recipient cannot claim ITC for that month as it won't reflect in their GSTR-2B. They can only claim it in the subsequent month's GSTR-3B.

Yes, if the supplier files GSTR-1 after the 11th of the following month, the recipient can claim the ITC in the subsequent month's GSTR-3B, not the current month.

If a supplier files GSTR-1 incorrectly (e.g., wrong GST number or classifying B2B as B2C), the recipient cannot claim ITC for that month. Amendments made in a later GSTR-1 will allow the recipient to claim ITC in that subsequent month.

From January 1st, 2022, output tax related to invoices in GSTR-1 but not in GSTR-3B is considered self-assessed tax and can be recovered by authorities under section 79 without issuing a show cause notice.

Recipients should identify defaulting suppliers and can check their GSTR-1 filing status on the GST portal. Timely and correct filing by the supplier is essential to maintain business relationships and ensure ITC claims.

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CA Umesh Sharma

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Name: - UMESH RAMNARAYAN SHARMA. Residential Address: - 16, Motisagar, Samarthnagar, Aurangabad. Ph :- 2332846. Mobile:9822079900. Head Office Address: - R.B.Sharma Co. Chartered Accountants. Block No 7-10, 2nd Floor, Shangri-La Complex, Samarth Nagar, Aurangabad. Ph :- 2332511,2338388. Email:- rbsha ... Read more

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