And an important one, on GST input tax credit
Just after most taxpayers had filed their monthly returns for September comes a press release with no title, number, signature or information as to who has issued it. This was not a notification, circular or order, but just a press release that was unleashed on a large population of taxpayers.
The press release dealt with an important topic — the last date for getting input tax credit (ITC) in respect of invoices or debit notes relating to such invoices pertaining to the period from July 2017 to March 2018. According to section 16(4) of the CGST Act, 2017, a registered person shall not be entitled to take ITC in respect of any invoice or debit note for supply of goods or services or both after October 20 (date of filing monthly return) or December 31 (date of filing annual return), whichever is earlier.
The press release was issued with an intention to clarify a misgiving about the last date for taking ITC. This misgiving appeared to stem from the government’s decision to extend the last date for furnishing of details of outward supplies in Form GSTR-1 from time to time.
At the outset, the press release clarifies that the last date for filing GSTR 3B remains October 20. It goes on to state that the attempting to link GSTR 1 with GSTR 2A would not be necessary to get input tax credit in GSTR 3B. The release draws reference to taxpayers who obtained provisional IDs but could not transition to GST for whom a special window is available to file their returns in GSTR 3B till December 31, 2018.
The press release ends on an advisory note: “All the taxpayers are encouraged to take note of the legal requirements and be compliance savvy.” Considering that GST notifications till date have never used words like “compliance savvy” and the manner in which the entire release was constructed, it is not surprising that some taxpayers felt that this was a fake press release issued without any authority. The only fact that lent some credibility was the fact that the CBIC put out this press release on its Twitter handle.
There can be no two arguments on the whether an extension of the sunset date to utilise ITC on invoices should be extended — it definitely should. It is only now that GST taxpayers have some clarity on how the GST system works in respect of ITC because the concept of the portal matching invoices never took off. A new system of matching of invoices with the onus on the supplier and the receiver is due to be notified soon.
Taxpayers should not be denied credit just because they are utilising credit on the basis of a stop-gap system. The question whether GSTR 3B is a return that has been notified as per Section 39 of the CGST Act can be questioned on the grounds that it was meant to be a temporary return but has become semi-permanent due to lack of alternatives.
Attempts to reconcile GSTR 1 with GSTR 2A throws up some bizarre mismatches just because the software seems to be capturing data in silos. GST authorities have enough of data and tools at their command to spot fake transactions for utilising credit. They should use these tools and go after non-genuine taxpayers. They should permit genuine taxpayers to make use of ITC till their proposed new system of “ Upload, Lock, Pay” works successfully.