Non-filers of GST (Goods & Services Tax) returns will now face cancellation of registration as Central Board of Indirect Taxes and Custom (CBIC) has amended the CGST Rules. It has also notified changes made in Finance Act 2022 related with timeline for availability of Input Tax Credit (ITC) beside others. All of these will come into effect from October 1.

Conditions for cancellation

Rule 21 of CGST Rules 2017 prescribes seven conditions for cancellation of registrations. These conditions include not conducting any business from the declared place of business, not issuing invoice or bill without supply of goods or services, involving in profiteering and wrongfully availing input tax credit beside others. Now two more conditions have been added to this list through a notification.

The eighth condition is related with file monthly returns and the ninth one corncerns quarterly return filers. Now, if a monthly return filers “has not furnished returns for a continuous period of six month” and quarterly filers “has not furnished returns for a continuous period of two tax periods”, will see their registration cancelled. Section 39 of CGST makes filing of return mandatory.

Rajat Mohan, Senior Partner of AMRG & Associates says new GST rules permit Tax officers to cancel the registration of a taxpayer in case of non-filing of GSTR-3B for a continuous six months period. “This change will fish out non-compliant taxpayers from the GST ecosystem, improving the overall compliance in the GST regime,” he said.

Provisions of Finance Act

Meanwhile, CBIC has notified changes in GST system, as mentioned in the Finance Act 2022. Accordingly, due date for availing ITC pertaining to the previous financial year has been extended from the due date of filing of GST return for September (i.e. October 20) to November 30. Similarly, due date of issuance of credit notes and declaration in the returns has been extended from 30 September to November 30. Another provision says ITC, in respect of an invoice, can be availed only if the same has not been restricted as per GSTR-2B. Due date for rectification of errors in reporting details of outward supplies has been extended to November 30.  

Saurabh Agarwal, Tax Partner with EY India says applicability of these changes to the compliances for FY 2021-22 would need to be analysed in detail. “In case the said changes are effective for FY 2021-22, it will provide significant relief to the industry,” he said.

Vivek Jalan, Partner with Tax Connect Advisory feels extension of  last date for taking ITC and passing Credit notes and making amendments for transactions is “a festive bonanza for Tax and Finance Departments of Organsiations who would now celebrate Dussehra without much worry about compliances.”

However, recipients’ ITC can be denied due to a mismatch in the GSTR-1 & 3B or GSTR-2B & 3B of suppliers. “These restrictions have to be supported by the govt. In giving the right machinery to purchasers to check the compliances of the suppliers, else the recipients would be required to do the impossible and would result in tremendous hardship for trade and industry,” he said.

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