Since the inception of GST both the taxpayers and the GST Portal have been facing numerous issues ranging from technical lapses to procedural ambiguity. Even before these problems are resolved, taxpayers have started receiving notices in Form GST ASMT-10 issued u/s 61 r.w. Rule 99(1) of GST Act.
These notices are issued seeking reasons for discrepancies in GSTR-1 and GSTR-3B or GSTR-3B and GSTR-2A.
Issues in Notices.
The major reasons for discrepancies in GSTR-1 and GSTR-3B could be as follows:-
- Sales understated or overstated in GSTR-3B as compared to GSTR-1 due to late booking of Sales invoices or credit notes.
- Credit notes in GSTR-1 are not considered by GST Officer while issuing notice.
- Sales figure inadvertently misstated while filing GSTR-3B or GSTR-1.
The major reasons for discrepancies in GSTR-2A and GSTR-3B could be as follows:-
- GSTR-1 not filed by the supplier or a particular invoice not considered while filing GSTR-1.
- Invoice is recorded by the supplier in previous month.
- Debit note not recorded by the taxpayer or inadvertently omitted while claiming ITC in GSTR-3B.
*Taxpayers had inadvertently committed various mistakes while filing GSTR-3B and these clerical errors have been rectified by the taxpayers while filing GSTR-1 giving rise to discrepancies between the GSTR-3B and GSTR-1 returns.**
One may also challenge the legal validity of such notices as the complete process of GSTR -1, 2 & 3 has not yet been implemented by GST Portal on the basis of which law is drafted.
Procedures to Reply
The Notice in form ASMT-10 is to be replied in form ASMT-11 which is to be physically submitted to the officer issuing notice.
If the proper officer finds the reply in form ASMT-11 satisfactory he may issue ASMT- 12 i.e Order of acceptance of reply or he may issue a Show Cause Notice or Notice of Demand.
Introduction of Form DRC-03
The GST portal has provided new facility of filing an Electronic form “DRC-03” to enable the taxpayer to pay tax, interest, penalty and fees to the GST Department. This option is introduced since there is no mechanism available to pay tax other than the Return GSTR-3B.
Form DRC-03 is to be filed under the following circumstance:-
- Tax not Paid or Short Paid while filing GSTR-3B.
- Erroneous Refund issued to the dealer.
- Input Tax Credit wrongly availed or utilized.
The Form DRC-03 can be filed on voluntary basis or on receipt of notice issued by The Department.
While comparing GST Returns with the books of accounts, if any liability arises, then it can be discharged through filing of form “Intimation of Voluntary Payment (DRC-03)”.
Procedure of filing Form DRC-03
The form DRC-03 is available under the My Applications option in the User Services column of the Services Tab on the GST Portal.
While filing the above form taxpayers are required to fill in the following details:-
- Whether the tax is being paid by the taxpayers voluntarily or in response to a show cause notice received by them.*
- Once the above option is selected the taxpayers are required to mention the Section under which payment is being made by them i.e u/s 73 (5) or u/s 74 (5).*
Section 73(5) of the CGST Act signifies payment of tax, which was earlier inadvertently not paid or short paid or due to erroneous availment or utilization of input tax credit
Section 74(5) of the CGST Act signifies payment of tax due to wilful misstatement or suppression of liability or fraudulent availment or utilization of input tax credit with a view to evade tax. Payment under this section also attracts a penalty @ 15% of the tax liability as it’s a wilful misstatement and not an inadvertent mistake
Since most of the taxpayers had made inadvertent error while filing GSTR-3B, in our view section 73(5) applies to them. It must be noted that penalty can be levied on payments made u/s 73 as well if the payment is not made within thirty days of issue of show cause notice.
If the taxpayers have already paid the incremental liability through cash and such cash paid by them still reflects in the electronic Cash ledger then they can mention the payment reference number in the column given in form DRC-03.
The taxpayers are required to mention the period for which tax is being paid by them. If liability or ITC amounts are misstated in the GSTR-3B of multiple months all such months can be selected while discharging the liability.
Once the period is selected, the taxpayer is required to mention the amount of CGST, SGST, IGST & CESS the taxpayers is liable to pay along with Interest and penalty (if any) for each month and click on proceed to pay. (The amount of interest payable shall be determined on the basis of the provisions of Section 50 of the CGST Act.)
However, one can argue that if the government’s initial system of return had been in place i.e. the whole Process of GSTR-1, GSTR-2 and GSTR-3, then such misstatement could have been resolved in the first place itself and there would be no requirement to pay such additional liability at a later date. Hence, why must the taxpayer bear the interest burden due to government’s inability to implement the initial GST returns system?
- After proceeding the taxpayers shall be directed to a page where they will have to mention the mode through which they would like to discharge the liability i.e. through Cash or Credit (if any available).
The Tax liability can be discharged through Cash ledger or Credit ledger, however the Interest, Payment and Fees liability has to be mandatorily discharged through Cash ledger. Further it must be noted that if excess refund is received by the taxpayer from the government then in such a case it is mandatory to pay back the excess refund received through Cash. (Refer Sec 49(3) and Sec 49(4) of the CGST Act.)
- Once the liability has been set off, the draft form DRC-03 is available for verification by taxpayer before final submission using DSC or through OTP is done.
In nutshell, it is advisable to not wait for Department’s Notice and if possible, one should suo-moto assess the discrepancies and discharge tax liabilities (if any) at the earliest through Form DRC-03 and avoid adjustments in Form GSTR-3B.
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