Shishir Sinha

Come January 1, a GST assessee will not be allowed to file return form GSTR 1 if he/she has not filed GSTR 3B in the preceding month. This is aimed at curbing fake invoices and consequently tax evasion.

GSTR1 has invoice-wise details of outward supplies along with total tax liability and it allows the receiver of supply to claim Input Tax Credit (ITC). Here, tax is not to be paid. GSTR 3B gives details of outward and inward supplies, ITC claimed and the tax to be paid in cash (total tax liability minus ITC). Not filing the latter means government is not getting revenue.

The Central Board of Indirect Taxes & Custom (CBIC) has notified changes in return filing following recommendation made by the GST Council in its meeting on September 17. As on date, with effect from September 1, the GST portal blocks filing of GSTR1 on non- filing of two monthly GSTR 3B forms. The time period will be reduced to one month from next year. There is no change for assessees filing quarterly return which means blocking of GSTR 1 in case GSTR 3b not filed for preceding tax period.

On May 28, the Council approved sequential filing and mandatory filing of GSTR 1 before filing of GSTR 3B. The present move is the next logical step of that decision. According to tax officials, this will not only help in reducing the amount of credit passed on without filing of return and payment of tax, but will also streamline the process of return filing.

Rajesh Gupta, Co-founder & Director, BUSY Accounting Software, said that the government is keen on improving tax compliance and reducing cases of evasion as the tax base has shrunk following various tax relief measures rolled out since the introduction of the GST regime, five years ago. Now, with the help of new provision, “Good companies will file return on time. Companies, which issue fake invoices and don’t file returns, will be blocked from getting e-way bills. Besides this, the government will also monitor all such fraudulent companies (online) so that genuine businessmen do not suffer,” he said.

Aadhaar authentication

The said notification has also detailed procedures for Aadhaar authentication for registered persons in various matters under GST. This will be required for filing of application for revocation of cancellation of registration, filing of refund application and for refund of the integrated tax paid on goods exported out of India.

Said Prateek Bansal, Associate Partner (Tax & Customs) at White and Brief: Post introduction of GST, there have been numerous cases detected of circular trading or obtaining ITC refund fraudulently by creation of non-existing/shell companies or firms. The requirement of Aadhaar authentication for obtaining GST refunds or revocation of cancelled registration is directed towards casting personal liability on the person in-charge of the business entity so as to avoid revenue leakage by GST evasion.

“The blockage of GSTR-1 in case of pending GSTR-3B for the preceding month is aimed at putting a leash on non-filers who report the supplies in GSTR-1 so as to facilitate the counterparty in availing ITC, without actually discharging the GST liability to the government. Pertinently, the blocking/unblocking of GSTR-1 is completely system automated and, unlike revocation of cancelled registration, there is no requirement of approval from tax officers,” he said..