NEW DELHI, Jan 9: Tax officers will give reasonable time to erring business to explain reasons for mismatch in turnover reported in sales return GSTR-1 and tax payment form 3B before initiating recovery action for short payment or non-payment of taxes.
Apex indirect tax body CBIC has issued guidelines on recovery proceedings and said that taxmen would give a “reasonable time” to businesses to explain the reasons for such mismatch.
As per the changes in the GST law effective January 1, GST officers were allowed to directly initiate recovery action against those errant businesses which showed higher sales in monthly return GSTR-1 but under-report it while tax payment in GSTR-3B.
The move was aimed at curbing the menace of fake billing whereby sellers would show higher sales in GSTR-1 to enable a purchaser to claim an input tax credit (ITC) but report suppressed sales in GSTR-3B to lower GST liability.
So far, under the goods and services tax law, show-cause notices were first issued and then a recovery process was initiated in such cases of mismatch in GSTR-1 and GSTR-3B.
Following doubts raised by the trade and the field formations regarding modalities for initiation of the recovery proceedings, the Central Board of Indirect Taxes and Customs (CBIC) on January 7 issued guidelines, saying that an opportunity needs to be provided to the concerned businesses for short payment or non-payment of the amount of self-assessed tax liability. It noted that in some cases there may be a genuine reason for the difference between the details of outward supplies declared in GSTR-1 and those declared in GSTR-3B. (PTI)
Giving example, the CBIC said the GST law permits rectification of typographical errors or omissions in the GSTR-1 or GSTR-3B of a particular month, in the returns or tax payment forms of subsequent months.
There may also be cases, where a supply could not be declared by the registered person in GSTR-I of an earlier tax period, though the tax on the same was paid by correctly reporting the said supply in GSTR-3B. The details of such supply may now be reported by the registered person in the GSTR-I of the current tax period.
“In such cases, there could be a mismatch between GSTR-l and GSTR-3B (liability reported in GSTR-I> tax paid in GSTR-3B) in the current tax period.
“Therefore, in all such cases, an opportunity needs to be provided to the concerned registered person to explain the differences between GSTR-I and GSTR-3B, if any, and for short payment or non-payment of the amount of self-assessed tax liability and interest thereon, before any action under Section 79 of the Act is taken for recovery of the said amount,” the CBIC said.
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