GST RETURN - GSTR-1

[THYAGARAJAN KALYANASUNDARAM]

Dear Experts,

One of my client’s shown all the sales transactions during the FY 2017-18 in GSTR-3B under Intra state sales and discharged CGST & SGST within the stipulated time. While submitting GSTR-1 they have selected Deemed Sales instead of Intra Sales transactions inadvertently. Because of this, the buyers who purchased the goods from him are not getting the inputs in GSTR-2A.

Now, the buyers who purchased the goods stopped making payments to the sellers to the extent of the tax amount almost ₹ 40 Lakhs. My client’s working capital got blocked and unable to do further business.

My query is:

Since the rectification/modification time also expired(31.03.2019).

How do we rectify this? Is there any other remedy?

Thanks in advance.

[KASTURI SETHI]

ITC cannot be disallowed due to technical lapse or typographical error. You will have to request to the Officers of Common Portal System through jurisdictional GST Range Officer. It is rectifiable mistake. Helpdesk will not rectify without recommendation from the jurisdictional GST Range Officer or Deputy Commissioner, In-charge of the Division under whose jurisdiction unit falls. Make efforts you will be successful. Your client must not suffer because of such technical lapse. It is not a small amount.

It is very easy for the officers of common portal system but through proper channel.

[Shilpi Jain]

An aspect to note is that payment of taxes by the supplier is a criteria for availing credit by the recipient which in the present case has been done correctly in GSTR-3B. Hence, wrong disclosure in GSTR-1 should have no impact on the credit of the recipients. This can be explained to the recipients and even then if they do not agree to release the amount due the supplier can give an undertaking to its customers to reimburse the amount of credit to the extent it gets denied in the hands of the customers due to his mistake of disclosure in GSTR-1.

Further, it has been made clear in one of the GSTC meetings that GSTR-2A will not be considered as a basis for denying credit in the hands of the recipient.

[Ganeshan Kalyani]

I agree with the views of the experts. Even GST auditor has accepted this view while conducting audit for FY 2017-18.

AI Summary

Client Mislabels Sales in GSTR-1, Affecting Input Credits; Experts Advise Contacting GST Officer for Resolution A client mistakenly reported sales as 'Deemed Sales' instead of 'Intra Sales' in GSTR-1 for FY 2017-18, affecting buyers' input credits in GSTR-2A and resulting in withheld payments totaling 40 Lakhs. The rectification period has expired. Experts suggest contacting the jurisdictional GST Range Officer to rectify the error, emphasizing that input tax credit (ITC) should not be denied due to a technical error. They recommend explaining the situation to buyers and offering to reimburse denied credits. It is noted that GSTR-2A should not be used as a basis for denying credit.