STANDARD OPERATING PROCEDURE FOR TAKING ACTION AGAINST REGISTERED PERSONS FAILED TO FILE GST RETURNS

[Mr. M. GOVINDARAJAN]

Furnishing of returns

Section 39, section 44 and section 45 of the Central Goods and Services Tax Act, 2017 (‘Act’ for short) requires to file the returns by various registered persons.

Section 39 of the Act provides the following to file return periodically as mentioned below-

• Every registered person –

• GSTR – 1 – Statement of Outward supply – due date – 10^th of the next month;
• GSTR – 2 – Statement of inward supply – due date – 15^th of the next month;
• GSTR – 3B – Monthly Return – due date – 20^th of the next month.

• Registered person opting for composition levy- Form GSTR – 4 – due date – 30^th day of April;
• Registered person liable to deduct tax at source – Form GSTR – 7 – due date – within 10 days from the end of the month;
• Registered person liable to collect tax at source- Form GSTR – 8 – due date – 10 days from the end of the month;
• Input Service Distributor – Form GSTR – 6 – due date – within 30 days from the end of the month;
• Non Resident taxable person – Form GSTR – 5 – due date – within 20 days from the end of the tax period;
• online information and data base access or retrieval services from a place outside India to a person in India other than a registered person - FORM GSTR-5A – due date -on or before the 20^th day of the month succeeding the calendar month or part thereof.

section 44 of the Act requires the registered person to file Annual Return in Form No. GSTR 9 and in Form No. GSTR – 9A by composition dealers, on or before 31^st December following the financial year. The registered person whose turnover exceeds ₹ 2 crores is to file the annual return along with a copy of the audited annual accounts and a reconciliation statement, reconciling the value of supplies declared in the return furnished for the financial year with the audited annual financial statement, and such other particulars as may be prescribed.

section 45 of the Act requires that the registered person whose registration is cancelled is to file Final return within 3 months from the date of cancellation of registration certificate in Form No. GSTR – 10.

Notice to defaulters

Section 46 of the Act provides that where a registered person fails to furnish a return under Section 39 or section 44 or section 45, a notice shall be issued requiring him to furnish such return within 15 days in form No. GSTR – 3A directing to furnish the return within 15 days failing which the tax liability will be assessed on ‘best judgment’ basis based on the relevant material available with the Department. The notice shall be deemed to have been withdrawn in case the return is filed before the assessment order. If the registered person fails to file the return as directed, the Department will proceed to assess on the ‘best judgment assessment’ in Form ASMT – 13 under section 62 of the Act. This assessment will be done without further issue of notice to the registered person.

Section 62 of the Act provides that notwithstanding anything to the contrary contained in section 73 or section 74, where a registered person fails to furnish the return under Section 39 or section 45, even after the service of a notice, the proper officer may proceed to assess the tax liability of the said person to the best of his judgment taking into account all the relevant material which is available or which he has gathered and issue an assessment order within a period of five years from the date specified under section 44 for furnishing of the annual return for the financial year to which the tax not paid relates. If the registered person furnishes a valid return within 30 days of the service of the assessment order, the said assessment order shall be deemed to have been withdrawn but the liability for payment of interest or for payment of late fee shall continue.

Standard Operating Procedure

Doubts have been raised across the field formations in respect of the appropriate procedure to be followed in case of non-furnishing of return under Section 39 or section 44 or section 45 of the Act. Divergent practices are being followed in case of non-furnishing of the said returns.

To bring uniformity in this regard the Department has brought a circular vide No. C.B.I & C Circular No. 129/48/2019-GST, dated 24.12.2019. The detailed guidelines issued vide the said circular are as follows-

• A system generated message would be sent to all the registered persons 3 days before the due date to nudge them about filing of the return for the tax period by the due date.
• Once the due date for furnishing the return under Section 39 is over, a system generated mail / message would be sent to all the defaulters immediately after the due date to the effect that the said registered person has not furnished his return for the said tax period; the said mail/message is to be sent to the authorized signatory as well as the proprietor/partner/director/karta, etc.
• Five days after the due date of furnishing the return, a notice in FORM GSTR-3A shall be issued electronically to such registered person who fails to furnish return under Section 39, requiring him to furnish such return within 15 days.
•  In case the said return is still not filed by the defaulter within 15 days of the said notice, the proper officer may proceed to assess the tax liability of the said person under section 62 of the CGST Act, to the best of his judgment taking into account all the relevant material which is available or which he has gathered and would issue order under rule 100 of the CGST Rules in FORM GST ASMT-13. The proper officer would then be required to upload the summary thereof in FORM GST DRC-07.
•  For the purpose of assessment of tax liability under section 62 of the  Act, the proper officer may take into account the details of outward supplies available-

• in the statement furnished in FORM GSTR-1;
•  details of supplies auto-populated in FORM GSTR-2A;
• information available from e-way bills; or
•  any other information available from any other source, including from inspection under.
•  In case the defaulter furnishes a valid return within 30 days of the service of assessment order in FORM GST ASMT-13, the said assessment order shall be deemed to have been withdrawn in terms of provision of sub-section (2) of section 62 of the CGST Act. However, if the said return remains unfurnished within the statutory period of 30 days from issuance of order in FORM ASMT-13, then proper officer may initiate proceedings under section 78 and recovery under section 79 of the  Act.

Provisional attachment

In deserving cases, based on the facts of the case, the Commissioner may resort to provisional attachment to protect revenue under section 83 of the CGST Act before issuance of FORM GST ASMT-13.

Cancellation of registration

The proper officer would initiate action under sub-section (2) of section 29 of the CGST Act for cancellation of registration in cases where the return has not been furnished for the period specified in section 29.