Manner of filing of GSTRs in the case of suspension of registration

[Parag Agarwal]

As per the provisions contained in proviso to section 29(1) and second proviso to section 29(2), the department may suspend the registration of a taxpayer in the following two cases:

1. Where the taxpayer has himself applied for the cancellation of registration, or
2. Where GST officer initiating the proceedings for ‘suo-moto cancellation’ of registration and a show caused notice is issued to the taxpayer as to ‘why the registration should not be cancelled’?

In the above cases the suspension stands withdrawn, from the date it was made effective, when officer either

• restore the registration to ‘Active’ (revoke the suspension), or
• proceed with cancellation of registration.

Rule 21A of the CGST Rules deals with the suspension of registration of a registered person.

The manner of Accounting, Invoicing & Filing of GST Return during the suspension:

As per Rule 21A (3) of the CGST Rules:

A registered person, whose registration has been suspended shall not make any taxable supply during the period of suspension and shall not be required to furnish any return under section 39.

[Explanation. - For the purposes of this sub-rule, the expression ― ‘shall not make any taxable supply’ shall mean that the registered person shall not issue a tax invoice and, accordingly, not charge tax on supplies made by him during the period of suspension.]

Further Reading:

Even where the registered is suspended by the department, the person shall not issue any invoice and collect any GST thereon, however, he may issue a bill / commercial invoice or any document other than ‘Tax Invoice’.

The transactions may be journalized as under:

Dr/Debtor

Cr/Sales Account

The Input Tax Credit on the purchases/inward services shall not be recorded separately in the books of accounts and shall form the part of cost only.

Dr/Purchase Account

Cr/Creditor

As per Rule 21A(5) of the CGST Rules: 

Where any order having the effect of revocation of suspension of registration has been passed, the provisions of Section 31(3)(a), and section 40 in respect of the supplies made during the period of suspension and the procedure specified therein shall apply.

Both the provisions referred in rule 21A (5), however originally dealing with the case of new registration only, the following may be interpreted in the case of revocation of suspension:

Section	Legal Text	Interpretation in the Suspension scenario
31(3)(a)	A registered person may, within one month from the date of issuance of certificate of registration and in such manner as may be prescribed, issue a revised invoice against the invoice already issued during the period beginning with the effective date of registration till the date of issuance of certificate of registration to him.	A registered person may, within one month from the date of order revoking the suspension of registration and in such manner as may be prescribed, issue a revised invoice against the invoice already issued during the period beginning with the effective date of suspension till the date of order revoking the suspension of registration to him.
40	First return.- Every registered person who has made outward supplies in the period between the date on which he became liable to registration till the date on which registration has been granted shall declare the same in the first return furnished by him after grant of registration.	Every registered person who has made outward supplies for the period the suspension was in force shall declare the same in the first return furnished by him after suspension is revoked.

Therefore, the taxpayer shall issue a revised invoice (consolidated or otherwise) for the bills already issued by him during the suspension period. It may be journalized as under:

1. Calculate the GST amount through reverse calculation;
2. Debit the Sales Account by the GST amount so calculated

           Dr/Sales Account

Cr/Debtor;

3. Record GST Payable Liability

           Dr/Debtor

Cr/GST payable.

Filing of GST Return in case of Supply of Goods

As per Section 12 (2) of the CGST Act:

 The time of supply of goods shall be the earlier of the following dates, namely: -

(a) the date of issue of invoice by the supplier or the last date on which he is required, under section 31, to issue the invoice with respect to the supply; or

(b) the date on which the supplier receives the payment with respect to the supply. (clause b was made ineffective vide CT Notification 66/2017)

Therefore, the time of supply of the Goods shall be the date of Revised Invoice being issued and the liability of payment of tax is arising only after the suspension is revoked.

The outward supply, for the period suspension, shall be reported in Form GSTR 1 and Form GSTR 3B of the month in which the suspension is revoked. No Outward supply figure shall be reported in GST Returns being filed for the period of suspension.

Filing of GST Return in case of Supply of Services

As per Section 13 (2) (a) of the CGST Act:

The time of supply of goods shall be the date of issue of invoice by the supplier, if the invoice is issued within the period prescribed under section 31 or the date of receipt of payment, whichever is Earlier.

Therefore, the time of supply of the Services shall be the date of receipt of payment, considering that the payment is received by the supplier on the basis of bill issued during the suspension.

After the revocation of GSTIN, the GSTRs for the period of suspension to be filed as under:

1. The amount received during the period of suspension for the services to reported in the table 11 of Form GSTR 1 i.e. ‘Consolidated Statement of Advances Received/Advance adjusted in the current tax period/ Amendments of information furnished in earlier tax period’

2. The amount shall also be reported in GSTR 3B, and the net tax liability to be paid in cash with interest u/s 50(1) of the Act on the net tax liability.

Further, the outward supply, for the period suspension, shall be reported in Form GSTR 1 on the basis of date of revised invoices, the consolidated figures of advance adjustment shall also be reported in Table 11.

As per Section 16 (4) of the CGST Act:

A registered person shall not be entitled to take input tax credit in respect of any invoice or debit note for supply of goods or services or both after the 30^th November following the end of financial year to which such invoice or debit note pertains or furnishing of the relevant annual return, whichever is earlier.

Further Reading: On revocation of the registration the following accounting entry may be journalised:

1. Credit the Purchase Account by the Input Tax GST amount

            Dr/Creditor

Cr/Purchases Account;

2. Record GST Assets

           Dr/ GST Input Tax Credit

Cr/ Creditor.

In case, the person is dealing in outward supplies of Goods exclusively, he may claim the ITC in Form GSTR 3B for the month in which the revise invoices are reported.

However, if he is involved in supply of services also, the ITC must be claimed in the Form GSTR 3B being filed for the period of suspension itself, since the liability to be discharged on net tax payment.