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GST Annual Return: SC stays extension of filing date on Centre’s plea

FE Bureau
Tax Evasion, Taxpayer, bank account, GST, income tax, GST Council, Central Board of Direct Taxes, CBDT, Central Board of Indirect Taxes and Customs, CBIC, FIU, DoR, Directorate General, GST Investigation, DGG,  state tax administrations.

The Supreme Court has stayed the Rajasthan High Court order that extended the deadline for filing of Form GSTR-9 (annual return) and Form GSTR-9C (reconciliation statement) without fine by up to a week to February 12, 2020 on a plea by the Centre that the move could undermine its efforts to boost GST compliance. Having had to extend the deadlines for filing of the two forms several times and come under flak for such leniency, the government pleaded in the SC: "Tinkering with such time lines would have a catastrophic impact on the functioning of GST law, as it has the tendency to create confusion and ambiguity in the trade."

The stay order was passed pursuant to Mehta's submissions that only Rs 200 per day was being charged for the filing of late returns and the amount will be refunded in case the government lost the case. However, the apex court bench led by Justice RF Nariman directed the HC to decide the issue on the basis of facts without getting influenced by its ad-hoc order.

The government had earlier extended the due dates for filing annual return and reconciliation statement several times. It also allegedly undermined the utility of these returns by virtually removing its crucial anti-evasion features. As the GSTR-9 and GSTR-9C forms have now been 'simplified', taxpayers won't require to provide the split of input tax credit availed on inputs, input services and capital goods. Also, they won't need to provide HSN-level information of outputs or inputs, etc, for 2017-18 and 2018-19.

The SC clarified that there would be no penal consequences for delayed filing due to problems of the GSTN server after the Tax Bar Association pointed out to various technical errors and glitches at the GSTN portal. Mehta also assured the court that no penal consequences would be taken on account of delayed filing. Justice Nariman also directed the government to look into the problems and come out with a solution after the association pointed out that the capacity for online processing of GST applications on the portal was extremely limited.

As on February 4, 7,61,432 GSTR 9Cs have been successfully filed, constituting more than 61% of the total forms required to be filed as per law, of which over 5 lakh GSTR 9Cs have been successfully filed in last 15 days, the government said. More than 25 lakh taxpayers would be filing their GSTR-1 statements of outward supplies made in January 2020 from 7-8 January 2020, the ministry said, adding that if this queue is not cleared (which gives Rs 80,000 crore every month), this would cause disruption in cash flow of both the Central and the state governments. As of now, 1.2 crore assesses are registered under the GST.

The government said that the HC erred by ignoring the well-settled principle of law that the government enjoys a wide latitude in decision making pertaining to fiscal policy, and the scope of interference by the courts in such policy decisions are very limited. The dates of annual returns for 2017-18 (GSTR-9) and the reconciliation statement (GSTR-9C required for taxpayers with aggregate turnover exceeding Rs 2 Crore) have already been extended several times. These extensions are based on recommendations of the GST Council.

By way of a notification on February 3, 2020, the finance ministry had again extended the date for filing returns pertaining to FY 2017-2018 to February 5, 2020 for Group 1 and February 7, 2020 for Group 2. Unable to file returns within the cut-off date of February 5, the Rajasthan Tax Bar Association had moved the HC seeking extension of the due date on the grounds that many of its members could not access the portal and could not file returns on time.