sales Against 0.1% GST- if export not done within 90 Days

[NILESH PITALE]

Dear Expert

One of my client has made sale @ 0.10% to his Customer, But Customer has not done export within 90 days. in such case we have raised debit not for differential dues and Recover the Amount and paid to Government treasury and filed DRC-03, Now party is asking that you have not reported Debit Note in GSTR-1 and 3B and therefore we are not getting ITC.

Our Question is that, in such case should we filed GSTR-1 & 3B to give ITC Credit to the party or DRC 3 is correct . Please Guide.

Thanks

Regards

[Raam Srinivasan Swaminathan Kalpathi]

The suggestion would be to amend GSTR-1 in the coming month and rectify the tax rate at 18% (or the correct rate) and remit the same through GSTR-3B of the said month with Sec. 50 interest. The tax payer may avail ITC of the the voluntary remittance in challan-DRC-03 in the same month 3B returns.  Challan-DRC-03 is used for remittances u/s. 73 and 74 and what was done is in my humble opinion is not appropriate.

[KASTURI SETHI]

"2. The registered supplier shall not be eligible for the above mentioned exemption if the registered recipient fails to export the said goods within a period of ninety days from the date of issue of tax invoice.

[Notification No. 40/2017-C.T. (Rate), dated 23-10-2017]

[Amit Agrawal]

Ideally, your client should have raised debit-notes u/s 34, disclose the same in Form GSTR-1 and pay the differential tax liability through corresponding Form GSTR-3B. 

Now, as your client has paid the differential tax liability through Form DRC-03, following process may be followed as a practical solution:

A. Raise debit-notes u/s 34 and disclose the same in GSTR-1 but do not pay the differential tax liability while filing corresponding GSTR-3B. End customer can claim ITC against these debit-notes. 

B. Once notice for the differential tax liability is issued by Dept. under Rule 88C, furnish reply u/r 88C(2)(a) explaining the fact that the differential tax liability is already paid by you by giving the details of Form DRC-03 used for the same. 

C. After submitting above-said reply, please also meet concerned officer, explain the bona fides of your client's conduct and also explain him that any recovery u/s 79 now will amount to double tax-payment. 

I do hope that concerned officer accepts your reply & explanation and do not proceed for recovery u/s 79. 

These are ex facie views of mine and the same should not be construed as professional advice/suggestion.

[Amit Agrawal]

In continuation of my post above:

While furnishing reply u/r 88C(2), please first try option of replying under sub-clause (a) giving details of Form DRC-03 filed earlier. If GST portal accepts the same, this is best outcome for given situation where portal itself allows linking differential tax liability with past payments made through Form DRC-03. 

Only if GST format does not accept above reply u/r 88C(2)(a), then, furnish reply u/r 88C(2)(b) explaining the fact that the differential tax liability is already paid by you by giving the details of Form DRC-03 used for the same. In this procedure (i.e. furnishing reply u/r 88C(2)(b)), meeting with the concerned officer is suggested to avoid possibility (if any) of recovery proceedings u/s 79. 

These are ex facie views of mine and the same should not be construed as professional advice / suggestion.

[Shilpi Jain]

What you could now do is disclose the debit note in GSTR-1. Nothing to be included in GSTR-3B since there is no payment of tax to be done now.

There will be a difference between GSTR-1 and 3B which will generate an auto notice in DRC-1B/C. This can be replied to by giving ref to the already filed DRC-03.

It is important to reflect the debit note in GSTR-1 since only then the customer will be able to take credit.

[Padmanathan KV]

I agree with Ld Amit JI and Shilpi Ma'am. You may disclose the debit note in your GSTR-1 only. The payment in DRC-03 maybe be explained, as suggested by the experts.  

[Padmanathan KV]

RaamSrinivasan Kalpathi

Claiming ITC of amount paid in DRC-03 will lead to unnecessery litigation since ITC needs to confirm with the provisions of section 16, 17 etc.