GSTR-1 RETURN BUT FAILED TO SUBMIT GSTR-3B

[Vinod jadhav]

The supplier disclosed sales in the GSTR-1 return for the periods 2018-19, 2019-20, and 2020-21, but failed to submit the GSTR-3B return. The buyer received a notice from the department for reversal of availed ITC from the supplier.

1. If the supplier pays the tax today through the GSTR-3B return for past period, can the buyer still get input tax credit even if it was filed late?

[VENU K]

Rule - 37A , Central Goods and Services Tax Rules, 2017

[Reversal of input tax credit in the case of non-payment of tax by the supplier and re-availment thereof.

37A. Where input tax credit has been availed by a registered person in the return in FORM GSTR-3B for a tax period in respect of such invoice or debit note, the details of which have been furnished by the supplier in the statement of outward supplies in FORM GSTR-1^69b[, as amended inFORM GSTR-1A if any,] or using the invoice furnishing facility, but the return in FORM GSTR-3B for the tax period corresponding to the said statement of outward supplies has not been furnished by such supplier till the 30th day of September following the end of financial year in which the input tax credit in respect of such invoice or debit note has been availed, the said amount of input tax credit shall be reversed by the said registered person, while furnishing a return in FORM GSTR-3B on or before the 30th day of November following the end of such financial year:

Provided that where the said amount of input tax credit is not reversed by the registered person in a return in FORM GSTR-3B on or before the 30th day of November following the end of such financial year during which such input tax credit has been availed, such amount shall be payable by the said person along with interest thereon under section 50:

Provided further that where the said supplier subsequently furnishes the return in FORM GSTR-3B for the said tax period, the said registered person may re-avail the amount of such credit in the return in FORM GSTR-3B for a tax period thereafter.]

Based on the above rule it should be possible for you to reverse the amount of credit taken with interest and avail it without time limit once the supplier makes payment.

I am not very clear if there are any provisions barring this course of action once a notice is issued by department.

[Padmanathan KV]

Once the tax is paid by Supplier (whether in GSTR-3B/DRC-03), the recipient becomes entitled to ITC.

Legally, the Govt cannot enrich itself by collecting tax from supplier on one hand and disallowing ITC to recipient on the other hand.

[Raam Srinivasan Swaminathan Kalpathi]

Please refer Cal HC decision in Suncraft Energy 2023 8 TMI 174 wherein the HC delineated that the department must first proceed against the supplier and only in exceptional circumstances can the department ask the recipient to reverse ITC.  Diya Agencies - 2023 (9) TMI 955 - KERALA HIGH COURT Ker HC has adopted a similar line.  For the years 2017-18, 2018-19 and 2019-20 the the taxable person who availed ITC has to prove receipt of goods/ services, possess a tax invoice and ensure payment to the supplier as per Sec.16(4).  Once this is established even at the Comm (Appeals) level one can secure favourable decision. Rule 37A was introduced from 27-12-2022 and cannot be applied to the above case. 

[Shilpi Jain]

Recipient should be eligible for credit however favourable decision for this can be obtained at levels Tribunal and above and it would be difficult to expect department officers to be so generous that once they have got tax into their pockets they will allow credit!!

[Vijay kumar]

The notice might have been issued in terms of Sn.16(2) of the CGST Act' 17 on the ground that the supplier has not filed his GSTR-3B returns and thereby not paid tax to the Government. If the supplier files his 3B returns now (subject to 3 years time period where applicable) by paying his taxes, same will be reflected in the buyer's 2A (which is dynamic in nature). The notice can be replied accordingly by submitting the latest 2A return and 3B filing status of the vendor and request for dropping the demand.

AI Summary

Supplier's GSTR-3B Filing Delay Leads to ITC Reversal Notice; Rule 37A Allows Re-availment if Taxes Paid A supplier disclosed sales in GSTR-1 returns for 2018-2021 but failed to submit GSTR-3B returns, causing the buyer to receive a notice for reversing availed ITC. Discussions suggest that if the supplier pays the tax through GSTR-3B, the buyer may re-avail the ITC. Rule 37A of the CGST Rules allows for credit reversal and re-availment. Legal opinions highlight that the government cannot deny ITC if the supplier pays taxes, and court decisions support this stance. The buyer should respond to the notice by showing updated GSTR-3B filings and request withdrawal of the demand.