3B FILED NIL FOR SEPT 17 TO DEC 17, ITC DISALLOWED BY OFFICER

[AIJAZ KAZI]

SIR

I have filed gstr1 for the period sept 17 to dec17 but gstr3b was filed nil for the same period.The case is under appeal the concerned officer is not allowing the itc on the grounds that gstr3b for the above period has been filed nil.My facts in the appeal stated is that though i have filed nil gstr3b but i have filed my annual return gstr9 on time with proper discharge of liabilities including the nil period besides gstr2a is also reflecting excess liabilities.The officer is not considering the same. I have also referred him the judgement passed by honourable madras high court in the case of shri shanmuga hardwares electricals dated 20/2/24 in this regard.what to do now please help me out.

[VENU K]

In my opinion, there is no way for a registered person to avail input credit through Annual return. The following provisions make it very clear. No IPT can be claimed otherwise than through 3B returns on a self assessment basis subject to other terms and conditions.

Section 16. Eligibility and conditions for taking input tax credit.

(1) Every registered person shall, subject to such conditions and restrictions as may be prescribed and in the manner specified in section 49, be entitled to take credit of input tax charged on any supply of goods or services or both to him which are used or intended to be used in the course or furtherance of his business and the said amount shall be credited to the electronic credit ledger of such person.

Section 49. Payment of tax, interest, penalty and other amounts.-

(2) The input tax credit as self-assessed in the return of a registered person shall be credited to his electronic credit ledger, in accordance with [section 41 2[***]], to be maintained in such manner as may be prescribed

Section 41. [Availment of input tax credit

(1) Every registered person shall, subject to such conditions and restrictions as may be prescribed, be entitled to avail the credit of eligible input tax, as self-assessed, in his return and such amount shall be credited to his electronic credit ledger.

Section 59. Self-assessment. –

Every registered person shall self-assess the taxes payable under this Act and furnish a return for each tax period as specified under section 39.

Section 39. Furnishing of returns.-

(1) Every registered person, other than an Input Service Distributor or a non-resident taxable person or a person paying tax under the provisions of section 10 or section 51 or section 52 shall, for every calendar month or part thereof, furnish, a return, electronically, of inward and outward supplies of goods or services or both, input tax credit availed, tax payable, tax paid and such other particulars, in such form and manner, and within such time, as may be prescribed:

[KASTURI SETHI]

(i)   Relief is possible only through litigation. You will have to fight a long legal battle. GSTR-3B is the basic requirement to avail ITC. This is  such  a serious lapse that no departmental  officer has power to allow relief on his own. SCN is certain. Only litigation is option for you.

(ii) In the case cited by you, Madras High Court has remanded the case back for re-adjudication subject to produce the  original docs regarding tax paid character to the jurisdictional GST Officer. The High Court Order is not final at present. 

[Sadanand Bulbule]

Dear Sirji

I fully endorse your logical and lawful explanation. Return in FORM GSTR-3B is the heart and soul of the GST regime. Rest all statements are in peripheral nature which cannot substitute GSTR-3B, a provisional deemed self-assessed order. So ITC must be claimed/utilised only via GSTR-3B  read with Section 16. There is no other way.

[KASTURI SETHI]

Sh.Sadanand Bulbule Ji,

Sir, I am highly grateful to you for validation of my reply.  

[Shilpi Jain]

One aspect to consider is that at that time as per the provisions, GSTR-3B was not a return at all. It is only subsequently that the provisions were amended retrospectively to make it a return under GST.

You could consider taking this plea to request for considering ITC availed other than in GSTR-2B more so when the eligibility of the credit is not in dispute.

Also, considering the amount involved, see if there is a possibility of approaching HC.

[Sadanand Bulbule]

Here I did mention GSTR-3B in its letter and spirit, irrespective of its relevance for a particular tax period or otherwise. So my post need to be read in the broader perspective to capture its deeper meaning.

[KALLESHAMURTHY MURTHY K.N.]

Dear Sir.

You have filed nil Returns GSTR-3B after the period for claiming ITC. Unless you claimed ITC in GSTR-3B you will not be eligible for ITC even filed GSTR-9. GSTR-9 is only a consolidated statement. Nil returns of GSTR-3B filed means you have foregone the ITC and are barred by Sec. 16(4). The perspective of Sri Sadanad Bulbule Sir is exactly correct. However, as replied by Sri Kasturi Sethi Ji, you can go for an appeal explaining the circumstances leading to filing nil returns.

[Yash Shah]

As per Section 41(1), every registered person shall be entitled to avail eligible  ITC, as self-assessed in his returns & such amount shall be credited to his electronic credit ledger.

As per Section 59, every registered person shall self-assess the tax payable under this act and furnish a return for each tax period as specified u/s 39

Therefore, in the given case, as per the above provisions, ITC can be claimed only through returns u/s 39 (i.e. GSTR 3B in this case). Also, as per the 4th instruction of GSTR 9, taxpayers cannot claim ITC through GSTR 9.

However, according to Section 16(5) of CGST Act 2017, registered person can claim ITC in respect of an invoice or debit note for supply of goods or services or both pertaining to FY 2017-18, 2018-19, 2019-20, 2020-21, in any return u/s 39 filed up to 30 Nov, 2021.

Therefore, in the given case, ITC will be available to taxpayer if ITC in respect of any invoice or debit note pertaining to the period from Sept 17 to Dec 17 was claimed in any GSTR 3B on or before 30 Nov, 2021.

[KALLESHAMURTHY MURTHY K.N.]

Sirs, 

Sri Yash Shah Sir has given a good suggestion for availing of the benefit of Sec. 16(5). However, as per the query, there was no possibility of claiming the ITC since the nil return of GSTR-3B had already been filed. 

[KASTURI SETHI]

Dear Sir, 

In view of the facility of self-assessed return, filing NIL return is a very serious offence. In self-assessed returns, it is a calk-walk for the department to invoke extended period with an intent to evade payment of tax or avail ITC irregularly. 

Just sharing. 

[Sadanand Bulbule]

Dear all

 The following explanation stood appended to Section 74 till 01/11/2024:

"Explanation 2.––For the purposes of this Act, the expression “suppression” shall mean non-declaration of facts or information which a taxable person is required to declare in the return, statement, report or any other document furnished under this Act or the rules made thereunder, or failure to furnish any information on being asked for, in writing, by the proper officer."

So filing of NIL return consciously or unconsciously leads to "suppression of facts" attracting proceedings under Section 74. Bonafide intent is apart.

[KALLESHAMURTHY MURTHY K.N.]

Dear Sirs,

So, in this case, the undeclared output tax liability is payable with the applicable penalty and interest with the rejection of ITC. 

[KASTURI SETHI]

Sh. Kalleshamurthy Murthy Ji,

Sir, This post is for the welfare of all.

The department singles out those returns wherein the registered persons have either filed, 'NIL' return or declared conditional exemption partially or fully non-GST supplies in their returns. Therefore, the tax payers should be cautious while filing such returns.

Such returns can open Pandora's box.

AI Summary

Taxpayer Faces ITC Denial for Filing Nil GSTR-3B Despite Accurate GSTR-1; Cites Case Law for Defense A taxpayer filed GSTR-1 for September to December 2017 but submitted a nil GSTR-3B for the same period, leading to the disallowance of Input Tax Credit (ITC) by the tax officer. The taxpayer argues that the annual return GSTR-9 was filed correctly, reflecting liabilities, and cites a Madras High Court case for support. However, forum participants emphasize that ITC must be claimed through GSTR-3B, as per GST provisions, and suggest litigation as the only recourse. They highlight the seriousness of filing nil GSTR-3B and suggest that the taxpayer may face legal challenges, including penalties and interest.