Cancellation Vs Revocation of Cancellation of GST Registration - Limitations on delay Revocation of Cancellation - Form GST DRC-03 Vs Form GSTR-3B - Input against Form DRC-03 - Voluntary Payment - Year End Restrictions with Sec 16(4) of the CGST/SGST Act 2017 (“ACT”) – Query on Input Availability of the Supplier & Recipient.

[NarendraKumar Thotamsetty]

Query:  Mr A, a taxpayer filed an appeal against cancelation of his GST Registration, since his GST Registration got cancelled on retrospective date with NIL Order. Further post cancellation of his GST Registration, Mr A is unable to file his Returns with Form GSTR-1 for his outward supplies and also unable to take input for the previous financial year through Form GSTR-3B, though his appeal got admitted in this case, but the Order against his appeal is still due in the given case. Now considering the limitations of Section 16(4) of the CGST/SGST Act “Act”, Mr A is getting huge pressure not only against his B2B Supplies from his clients but also getting challenges for the below:

• Availability of input under Sec 16(4) of the act against his inward supplies
• Payment of Taxes and Interest under Sec 29 (3) & (4) of the Act against his supplies which are due in the given case post cancellation of his GST Registration.

With the double edge sword owing fact payment of interest of payment upon availability of the revocation of cancellation of GST Registration.

Considering the above facts of the case, Mr A wanted to discharge his liabilities with Form GST DRC-03 voluntarily only due to non-availability of his returns and wanted to file his pending returns upon revocation both with Form GSTR-1 & Form GSTR-3B read with restrictions under Sec 16(4) of the Act. Hence in this case the taxpayer has the queries more particularly as below:

• Whether A & his clients is eligible to take such input based on Form GST DRC-03 is the query?
• Also, the query is whether the restriction of input under Sec 16(4) of the Act is exists for the September or November is the query?

Answer:  The answer of the GST Input availability on the basis of Form GST DRC-03 is “YES”, but subject to legal outcomes of the case, since the author of this Kt’Qs submits that the input under GST is subject to non-obstante provision under Sec 16 (2) of the Act and also opined that the legal wrangle with reference to Sec 16(2) Vs 16(4) of the Act is still on and not attained the finality.

However as above, after bare perusal of   this case read with Sec 16 of the Act, if Sec 16(2) (aa) got amended with effect from 01.01.2022 and prior to such amendment if taxpayers are eligible to take such input subject to ‘on self-assessment basis’ read with

• concept of the input availability under MODVAT mechanism,

• concept of ease of doing business and its availability of the input more particularly Subject to receipt of Goods and/or Services and
• Payment of taxes by his supplier against supplies read with the disclosure of his returns
  • Read with owing the fact of the non-availability of verification of payment of taxes by the recipients with the GST Common Portal read with differences between with Form GSTR-1 Vs Form GSTR-3B against suppliers supplies
  • Hon’ble Supreme Court Opinion in the case of UNION OF INDIA VERSUS BHARTI AIRTEL LTD. & ORS. [2021 (11) TMI 109 - SUPREME COURT] with reference to the input availability on the basis of Form GSTR-2A as on Self - Assessment basis and
• Possession of the Valid invoice under the GST Act,

the author is in the opinion,  considering the disclosure of factor of payment against his genuine supplies and its procedural compliance of the returns; read with the availability of the Input with  the recipient  disclosure of receipts with his books of accounts; then the denial of such GST input against Form GST DRC-03 can’t be questioned

• specially if the GST Common Portal accepts such payments and disclosures even after cancellation of said GST Registration; and
• if the proper officer accepts such payments with Form GST DRC-03  with Form GST DRC-04 under Sub Rule (2) of 142 of the CGST Rules 2017.

Further the author of Kt’Qs submits, considering the non-availability of the amendment notification with reference to GST input availability read with the Finance Act 2022 for the previous financial year as November 2022, the author of the Kt’Qs suggested taxpayers to avail such input for the earlier financial year on or before Sept 2022 month return, and also suggests the taxpayers to pay such tax with the informed disclosure as below

• By filling Form GST DRC-03 with true disclosure with 100% of payment of Taxes & Interest against such invoices for each month separately
  • If number of invoices are limited, then with its notes
  • If the number of invoices are more then with the Statements
• By Filing of Workings with outward supplies and inputs with the manual return with Form GSTR-3B (if preferable) with Form GST DRC-03.

and ask their suppliers to avail and reverse such input against supplies in the Sept 2022 return if there is a dis-agreement for time being and request them to avail such input there after upon submission of proof of acceptance of

• Form DRC-04 of the proper officer against his submissions Form GST DRC-03 and
• Form GSTR-01 against his actual supplies

Post revocation of Cancellation of his GST Registration.

Then in such case considering the fact of payment of taxes, interest and late fees, then the question of in-eligibility of input may not arise  in this case, hence the taxpayers may advised to proceed accordingly with the informed approach.

Author Advisory Note: The information of this Kt’Qs provided by the author only for educational and advisory basis, hence the reader of the Kt’Qs advised to proceed with the detailed further analysis.

 

Advocate Narendra Kumar Thotamsetty, B.Com, MFM, FCA, LL.B                

Hand Phone: +91-99163-22238