Unpaid tax on self-declared supplies by a GST assesee will be considered as admitted liability, government sources said on Thursday. Accordingly, recovery can be initiated for that.

For such recovery, however, any apprehension of unauthorised visits of GST officials to premises is ‘unfounded’. These explanations have come at a time, when some changes in CGST (Central Goods & Services Tax) Act are coming into effect from January 1.

One such change is amendment in section 75 (12) of the CGST Act. An explanation has been added here which says: “the expression ‘self-assessed tax’ shall include the tax payable in respect of details of outward supplies furnished under section 37, but not included in the return furnished under section 39.”

Explaining this, a senior Finance Ministry official said that the tax on self-declared supplies by the registered person in GSTR-1, which has not been paid through GSTR-3B, will be considered as his self-assessed (and admitted) liability and can be recovered. “This explanation is also in line with the legal position taken by Courts in some cases,” he said while explaining that if an assessee has himself declared total tax liability of ₹100 but paid only ₹70, then recovery is to be made for ₹30.

What does the law say

The law prescribes a registered person to declare his supply in return form, GSTR-1 and accordingly pay his tax liability with the filing of return form GSTR-3B. This helps the recipient to avail input tax credit (ITC) on supplies declared by his suppliers in their GSTR-1 and in respect of which tax has been paid.

However, if a supplier does not discharge his entire liability, then not only the recipient of supply gets affected as they will not avail ITC for supply where supplier has not paid tax, but the government too gets lower tax revenue. “In many cases, the recipient may already have settled the payment for the supply too,” the official said while adding that this explanation has been added to explicitly clarify the legal intent so that the recipients are not made to suffer due to non-compliance on part of the suppliers.

He further mentioned that due opportunity would be provided to taxpayers to explain the difference in GSTR-1 and GSTR-3B in cases where bona-fide errors are committed in reporting details of outward supplies in GSTR-1. “Besides, the apprehension of unauthorised visits of the GST officials to the premises of the taxpayers for such recoveries is totally unfounded. CBIC is considering issuance of suitable guidelines to field formations for proper implementation of above provision,” he said.

Another change is related with 100 per cent invoice matching. This means an assessee will get input tax credit (ITC) only to the extent of invoices matched. The official said that such a measure aims to curb fake invoices as in a number of cases ITC has been availed in respect of the supplies which have not been declared by their suppliers and on which tax has not been paid.

“The amendment would not only reduce misuse of ITC facility by unscrupulous elements, but will also facilitate recipients to avail ITC in respect of amount available in his GSTR-2B and thus reducing avoidable notices to taxpayers to explain the ITC mismatch between GSTR-2B and GSTR-3B,” the officials said.

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