Excess payment made in 3B adjustment with short payment of GST in next financial year

[Sudhir Kumar]

Sir

One my client has received an SCN on short payment of GST in GSTR-3B in comparison to the liability declared in R1 for 2018-19.

However he replied to the department that he has paid excess liability in GSTR-3B in comparison to the liability declared in GSTR-1 for 2017- 18 and a partial amount of short paid liability declared in GSTR-3B in 2018-19 has been adjusted from excess payment made in 2017-18 in GSTR-3B while rest of the short paid liability of 2018-19 was adjusted with the excess liability paid in 2019-20, however the taxpayer agree to pay interest for delay payment of GST for 2018-19 in 2019-20.

Please suggest whether the client's adjustment is correct or the department 's action is correct? Can the client adjusted excess liability paid shown in GSTR-3B for previous year to the short paid liability shown in 3B for next financial year?

AI Summary

Time barred adjustment under Section 39(9) may be contested due to GSTR 2 non operation; seek refund or pay with interest.
Taxpayer adjusted an alleged shortfall in GSTR 3B for 2018 19 using excess GSTR 3B payments from adjacent years; legal contention focuses on whether such cross year voluntary adjustments are barred by the statutory rectification time limits and related circulars. A factual counter argument notes non operation of certain matching/return facilities, but the adjustment remains commercially and procedurally risky. Recommended alternatives include claiming refund of excess payments or paying the outstanding liability with interest, and recording adjustments via annual return disclosures or formal intimation, with professional advice.