GST UPDATE ON RETROSPECTIVE AMENDMENT TREATING GSTR-3B AS RETURN UNDER GST LAW:-

The government issued Notification No. 49/2019-Central Tax dated 09.10.2019 wherein Rule 61(5) has been amended so as to deem GSTR-3B as return with effect from 01.07.2017. The content of the Rule 61(5) is produced for the sake of convenient reference as follows:-
OLD RULE:-
[(5) Where the time limit for furnishing of details in FORM GSTR-1 under section 37 and in FORM GSTR-2 under section 38 has been extended and the circumstances so warrant, the Commissioner may, by notification, [specify the manner and conditions subject to which the]82 return shall be furnished in FORM GSTR-3B electronically through the common portal, either directly or through a Facilitation Centre notified by the Commissioner.
NEW RULE:-
“(5) Where the time limit for furnishing of details in FORM GSTR-1 under section 37 or in FORM GSTR-2 under section 38 has been extended, the return specified in sub-section (1) of section 39 shall, in such manner and subject to such conditions as the Commissioner may, by notification, specify, be furnished in FORM GSTR-3B electronically through the common portal, either directly or through a Facilitation Centre notified by the Commissioner:
Provided that where a return in FORM GSTR-3B is required to be furnished by a person referred to in sub-rule (1) then such person shall not be required to furnish the return in FORM GSTR-3.”;
The above amendment clarifies that the GSTR-3B is to be considered as return equivalent to GSTR-3 because if person is required to furnish GSTR-3B, the person is not required to furnish GSTR-3. This amendment seeks to nullify the recent decision rendered by the Hon’ble Gujarat High Court in the case of AAP AND CO. VERSUS UNION OF INDIA [2019 (26) G.S.T.L. 481 (GUJ.)] wherein it was held that the last date of availing input tax credit is the last date of furnishing annual return as GSTR-3B is not a substitute of monthly return GSTR-3 having statutory backing of section 39(1) of the CGST Act, 2017.

It is to be noted that GSTR-3B was introduced as a temporary measure because the GSTN was not ready for the proposed mechanism of GSTR-1, 2 and 3 as prescribed by the CGST Act, 2017. However, with time, filing of GSTR-3B has been extended and the return in FORM GSTR-3 is not yet operational. Now, the question arises is whether the government can retrospectively amend the Rule 61(5) of the CGST Rules, 2017 so as to treat GSTR-3B as a return in lieu of GSTR-3?

The answer to the above question lies in the decision rendered by the Hon’ble Supreme Court in the case of STATE OF RAJASTHAN VERSUS BASANT AGROTECH (INDIA) LTD. [2014 (302) E.L.T. 3. (S.C.)]. It was held in this decision that legislature can make law retrospectively or prospectively, subject to justifiability and acceptability within constitutional parameters and subordinate legislation can be given retrospective effect if the power in this behalf is contained in principal Act. As we all know that the Rules are subordinate and the Act is principal and so in order to consider GSTR-3B as a return in lieu of GSTR-3, it is essential that the government has powers to retrospectively amend such rule.

In this context, the provisions of section 164(3) of the CGST Act, 2017 are worth noting which read as follows:-

SECTION 164- POWER OF GOVERNMENT TO MAKE RULES

(3) The power to make rules conferred by this section shall include the power to give retrospective effect to the rules or any of them from a date not earlier than the date on which the provisions of this Act come into force.

It is to be noted that since the government has been empowered to make retrospective amendment in Rules, the above amendment made to treat GSTR-3B as a return in lieu of GSTR-3 with retrospective effect is legally proper. However, it is pertinent to mention that the government had promised while implementing GST regime that the new regime would be assessee friendly and the practise of retrospective amendments will not be resorted to by the government. It appears that the promise made by the government has been forgotten and the effect of the Hon’ble Gujarat High Court decision given in the case of AAP AND CO. VERSUS UNION OF INDIA [2019 (26) G.S.T.L. 481 (GUJ.)] has been nullified.
When the controversy in case of Vadofone arose then the Government has promised that no retrospective amendment will br brought in the law to nullify the Court verdict. But again this has been done. Earlier the retrospective amendments were always proposed in Finance Bills and these were done by parliament only. But now this power has been extended to bureaucratic set up. Now the retrospective amendment will come too frequently as we all know bureaucracy does not agree normally with Apex Court decisions also. The message is clear “Do not litigate with the department.”

The content of this GST update is for educational purpose only and not intended for solicitation.
You can reach us at www.capradeepjain.com, at our facebook page on https://www.facebook.com/GSTTODAYBYPRADEEPJAIN/as well as follow us on twitter at https://www.twitter.com/@capradeepjain21

Comments

GST UPDATE ON RETROSPECTIVE AMENDMENT TREATING GSTR-3B AS RETURN UNDER GST LAW:-

Post a Comment

Query