The clock was ticking closer to the deadline for filing the Annual Return (GSTR 9) and Reconciliation Statement (GSTR 9C) for the financial year that concluded on March 31, 2023. We could see a wave of apprehension ripple through the landscape of indirect tax compliance. It was not just about meeting the requirements but navigating the intricate web of compliance that demanded attention in the subsequent three months. The burning question looms: Can businesses successfully manoeuvre through this maze and ensure complete compliance before the looming deadline of December 31, 2023? Let’s delve deeper into the complexities and challenges that businesses and taxpayers face in the realm of Goods and Services Tax (GST).
Firstly, against the tsunami of show cause notices (“SCN”) which have been issued for FY 17-18, authorities are required to pass the adjudicating order by 31st December 2023. Next in line for the authorities is to issue the due date for SCN for FY 18-19, which is 31st December 2023 and the due date to pass the order for the same is 31st March 2024. All the adjudications of FY 17-18 need to be completed by the authorities at the earliest to pass the order before the due date of 31st December 2023. Authorities have been following up rigorously with the registered taxpayer to reply to SCN issued so that the orders are passed well before the last date. Further, the issue of mass notices for F.Y 2017-18 is so grave that the apex body of Chartered Accountants (ICAI) had to also represent the authorities for the same. In their representation besides the issues, the ICAI has also requested to ensure that all issues be properly verified by giving everyone time to avoid unnecessary litigation and care to be taken before issuing notice for F.Y 2018-19.
Thereafter, the last date for availing the Input Tax Credit (ITC) for FY 22-23 has been extended to 30th November from 20th October as compared to earlier years. Presentation of ITC availed and reversed while filing GST returns during the year, which had been amended from 1st August 2022 last year, has resulted in a split presentation in GSTR 9. Disclosure of credit notes issued by vendors in GSTR3B of FY 22-23 also experienced changes that have resulted in difficulties in reporting credit notes in GSTR2B which have not been accounted for in books of accounts. To avoid system-generated notices based on presentation in GSTR9, due care will be required to be taken while filing GSTR 9 of FY 22-23.
Further, while filing the annual return on GSTR 9, the figures of Input Tax credit must be reconciled with system-generated figures of the Input Tax Credit (ITC). The issue has been the non-updating of details of Table 8A of GSTR 9 which was last updated on 31st July 2023 and updated on 1st December 2023 till 30th November 2023. The last date to claim ITC for FY 22-23 was 30th November, which will only leave one month to reconcile and file GSTR 9 & 9C by 31st December 2023. It will be of great challenge for the registered taxpayer to avail ITC for vendors who have yet to file GSTR1 for FY 22-23 or are yet to make the necessary amendments to invoices reported in GSTR1 for FY 22-23.
Another new compliance which has been hindering the registered taxpayer is reporting of ITC, which is reflected in GSTR2B but is yet to be recorded in books of accounts as of 31st July 2023. All registered taxpayers are required to report by 30th November 2023 in electronic credit and re-claimed statement the amount of ITC which is reflected in GSTR2B but has yet to be recorded in books of accounts as of 31st July 2023 for monthly return filers and 30th June 2023 for quarterly return filers. The amount so reported can be amended thrice before 31st December 2023. However, for the first instance, if it is not reported by 30th November, the facility of amendment would not be available. This would force the taxpayer to reconcile the ITC from Apr 22 onwards and any incorrect reporting in this re-credit ledger would result in system-generated notices. As the GST system continues to evolve, electronic credit reversal and re-claimed statements will remain fundamental tools in ensuring a fair and effective tax ecosystem.
Further, all the compliances need to be done per registration. Hence, businesses with a multi-state presence must ensure compliance with all the matters for each and every registration with a small team of employees situated at their head offices.
Authorities have been levying a system-generated penalty if the Annual Return in GSTR 9 is not filed on or before the due date. Levying of penalty on the late filing of Reconciliation Statement in GSTR 9C has not been system computed, however, tax officials have the power to levy penalty on late filing of GSTR 9C. To cushion themselves from system computed penalty, taxpayers would be required to be compliant with all the above compliances.
Considering the time frame of all the compliances, it would be of great task for the taxpayer to give justice to each and every compliance. Thus, an extension of at least 1 month i.e. from 31st December 2023 to 31st January 2024 for filing GSTR 9 & 9C of March 2023 is of utmost need. This extension would help taxpayers prioritise the compliance and deal with any outstanding issues, ensuring fair treatment for all the necessary filings, including pending show cause notices from the 2017-18 fiscal year and ongoing assessments for the 2018-19 fiscal year.
(This article is jointly authored by Parag Mehta, Partner and Head of the Indirect Practice at N.A. Shah Associates, and with Neil Shah, Assistant Manager, N.A. Shah Associates)
