GST Update on recommendations of gst council with respect to filing of annual return part-12

This Epistle is about the recommendations made during the 31st Meeting of the GST Council and communicated through the Press Release dated 22nd December,
2018. The present update encompasses the Amendments/Changes/Clarifications related to the Annual Returns and related forms including Form GSTR-9, Form
GSTR-9A and Form GSTR-9C.

The important points pertaining to amendments proposed with respect to annual return and related forms are as follows:
 Recently, there was extension in the due date of filing the Annual Return for the Financial Year 2017-2018 vide Order No. 01/2018-Central Tax dated 11.12.2018 wherein the due date was extended from 31.12.2018 to 31.03.2019. However, the Press Release re-schedules the due date of filing annual return for the period 01.07.2017 to 31.03.2018 to 30.06.2019. This is primarily due to the fact that a number of changes have been anticipated in the format of annual return and even the utility for filing the annual return is not operational. This announcement was truly desired as assessees are facing many issues in the first year of GST implementation.

 An important alteration has been done as regards the supplies to be reported in the annual return. It was stated that while filing the details of the Supplies etc in the forms of the Annual Return, “supplies as declared in returns filed during the year” was to be considered irrespective of the fact that wrong reporting was done in the monthly/quarterly returns filed during the financial year. This would lead to nothing but a true example of the famous idiom Garbage in, Garbage out. The assessee was under obligation to simply use the data reflected in the filed GSTR-1 and GSTR 3B returns irrespective of the actual position of supplies. However, the GST Council has proposed to amend the heading to “supplies made during the
Year” implying that the information about supplies that were submitted in the returns GSTR-1 and GSTR-3B are not the sole basis of filing annual return and the figures of the annual return should incorporate the actual
position of supplies rather than that reported in the monthly/quarterly returns filed by assessee. This would really help the assessees in depicting true picture of their transactions if due to some reason, the rectifications
could not be made in the monthly/quarterly returns filed by them.

For example, while reflecting supplies for the month of March, 2018, the figure was wrongly reported as 70,00,000/- instead of Rs. 7,00,000 in GSTR-3B but
the tax was correctly paid on supplies of Rs. 7,00,000/-. If the assessee could not correct the value of supplies in the subsequent GSTR-3B returns filed upto September, 2018, the assessee was supposed to reflect the value of supplies as Rs. 70,00,000/- in annual return. However, with the proposal of the GST Council, the assessee would be required to correctly report the supplies as Rs. 7,00,000/- irrespective of what was reported in the monthly/quarterly returns filed by them.

 Moreover it is to be noted that all Returns in Form GSTR-1 and Form GSTR3B have to be filed before filing of Form GSTR-9 and Form GSTR-9C. Similarly, Form GSTR-4 (Composition Scheme) must be filed before filing Form GSTR-9A. It is to be noted that the returns for the period July, 2017 to September, 2018 have been permitted to be filed by 31.03.2019 without any late fees. Consequently, one more chance is being given to assessees to file the monthly/quarterly returns and thereafter file correct annual return.

 The reporting requirement at serial no. 18 of the annual return entailed assessee to report HSN wise summary of inward supplies which was cause of concern for entire trade and industry. This reporting was a tedious task particularly with respect of all inward supplies. For example in case of purchase of hardware items, a number of items can be part of invoice such as braces, brackets, door knobs, screws etc. and finding HSN codes of all such different items is a mind blogging task. Similar may be the case with a stationary bill involving number of items like pens, calculator, notebooks etc. having different HSN codes. Consequently, the trade and Industry represented the government to provide relaxation as regards this reporting requirement in annual return. It appears that the request has been partly considered and now, the HSN wise summary is required to be given only for principal inputs whose value independently amounts for 10% or more of the total value of the Inward supplies. This amendment is appreciated and welcomed by the trade and industry.

 It is also stated in the Press Release that additional payments if required to be made by the assessee via annual return are to be paid in cash through Form GST DRC-03. Hence, there will be cash outflow even if the assessee has sufficient balance of input tax credit. Furthermore, in contrast, it is also specified that ITC cannot be availed through annual return and reconciliation statement thereby indicating that assessee is liable to
discharge any additional liability in cash whereas assessee is not allowed to avail any ITC through annual return.

 All invoices pertaining to previous financial year (irrespective of the month in which such invoice is reported in Form GSTR-1) would be auto-populated in Table 8A of Form GSTR-9. It appears that there is some mistake in this
point as mentioned in the press release issued by the government because Table 8A of the GSTR-9 pertain to ITC as per GSTR-2A which would be auto populated. The press release talks about invoices reported in GSTR-1
whereas table 8A of GSTR-9 pertains to ITC on inward supplies which is totally different.

 At the time when the Annual Return was first introduced, there was confusion amongst the assessees about the term “No Supply” as there was no meaning of the said term in the CGST Act, 2017 or the rules made
thereunder. However, many experts opine that ‘no supply’ includes the activities mentioned in Schedule III of the CGST Act, 2017. It is clarified that value of ‘non-GST supply’ includes ‘no supply’.

 Last but not the least, as represented by the trade and industry that the last date of availment of input tax credit for the financial year 2017-18 should be extended, the said request has received approval of the GST council. The
last date of availment of Input tax Credit for the financial year 2017-18 as per provision of section 16(4) of the CGST Act, 2017 was 30th September 2018. However, ITC in relation to invoices issued by the supplier during FY 2017-18 can now be availed till the due date for furnishing of Form GSTR3B for the month of March, 2019 (i.e., 20th April, 2019). This was much awaited decision which is highly applauded by the assessees. However, the power of the government to extend the last date of availment of input tax credit needs to be examined as it requires amendment in provisions of CGST Act, 2017 that need to be passed by both houses of the Parliament, needs Presidential assent and also need to be passed by all the State Assemblies. The time needed to implement the extension of the last date to avail input tax credit appears to be too short as it usually takes 7-8 months for an amendment in CGST Act to materialize and the last date of
filing annual return as of now is 30.06.2019.

This is solely for the educational purpose.

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GST Update on recommendations of gst council with respect to filing of annual return part-12

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