GSTR-3B not a monthly return in lieu of GSTR-3. HC quashes Finance Ministry Press release

GSTR-3B not a monthly return in lieu of Form GSTR-3. High Court quashes Finance Ministry Press release clarifying the last date for availing ITC relating to invoices issued during July 2017 to March 2018

ABCAUS Case Law Citation:
ABCAUS 3053 (2019) (07) HC

The Finance Ministry vide Press Release dated 18.10.2018 clarifying that last date for taking Input Tax Credit (ITC) in relation to invoices or debit notes relating to such invoices pertaining to period from July, 2017 to March, 2018 is the last date for the filing of return in Form GSTR-3B.

The appellant who was a chartered accountant had filed the instant Writ Petition in the Hon’ble High Court under Article 226 of the Constitution of India praying inter alia to quash and set aside the said press release.

It was submitted that Section 16(4) of the Central Goods and Services Tax Act, 2017 (the CGST Act)/State Goods and Services Tax Act, 2017 (the GGST Act) provides that a registered person shall not be entitled to take input tax credit in respect of any invoice or debit note for supply of goods or services or both after the due date of furnishing of the return under Section 39 for the month of September following the end of the financial year to which such invoice or invoice relating to such debit note pertains or furnishing of the relevant annual return, whichever is earlier.

It was further submitted that Section 39(1) of the CGST Act/GGST Act provides that every registered person except few categories of persons shall furnish a monthly return in such form and manner as may be prescribed.

It was submitted that a perusal of Rule 61 of the CGST/GGST Rules would indicate that the return prescribed in terms of Section 39 is a return required to be furnished in Form GSTR-3 and not GSTR-3B.

It was pointed out that in terms of notification no.10/2017 – Central Tax dated 28th June 2017 it was provided in terms of sub-rule (5) of Rule 61 of the CGST Rules that where the time limit for furnishing of details in Form GSTR-1 under Section 37 and in Form GSTR-2 under Section 38 has been extended and the circumstances so warrant, return in Form GSTR-3B, in lieu of Form GSTR-3, may be furnished in such manner and subject to such conditions as may be notified by the Commissioner. An analogous notification was also issued by the State Government under the GGST Rules.

It was again pointed out that sub-rule (5) of Rule 61 of the CGST Rules was retrospectively amended with effect from 1st July 2017 vide Notification No.17/2017 – Central Tax dated 27th July 2017 to omit the wordings return in Form GSTR-3B being in lieu of Form GSTR-3.

It was further submitted that from a conjoint reading of Rule 61(1) and Rule 61(5) of the CGST/GGST Rules and the aforesaid Notification that the return required to be furnished in Form GSTR-3B is not the return in lieu of a return specified in Form GSTR-3. The Central and the State Government has consciously omitted reference to return required to be furnished in Form GSTR-3B being in lieu of Form GSTR-3.

It was submitted that the bare perusal of the clause (c) of sub-rule (6) of Rule 61 of the CGST/GGST Rule suggest that if any input tax credit is taken after filing of the GSTR-3B return and it is reflected in return filed in Form GSTR-3 then the same will have to be credited to the electronic credit ledger of the registered person. Further, the discrepancies, if any, in discharge of his tax and other liabilities can also be rectified through the return filed in form GSTR-3.

It was argued that form GSTR-3B has not been introduced as a return in substitute of return to be filed in form GSTR-3. Therefore that return in form GSTR-3B is only a temporary stop gap arrangement till due date of filing return in form GSTR-3 is notified in the GSTN portal. Therefore, the return to be filed in form GSTR-3 is the final return for taking additional input tax credit as well as discharging of additional tax liabilities after filing of return in form GSTR-3B. Therefore, the last date for availing the input tax credit relating to the invoices issued during the period from July 2017 to March 2018 is the last date for filing of the return in form GSTR-3 and not GSTR-3B.

The Hon’ble High Court opined that the moot question was, whether the return in Form GSTR-3B is a return required to be filed under Section 39 of the CGST Act/GGST Act. The said press release would be valid and in consonance with Section 16(4) of the CGST Act/GGST Act only if Form GSTR-3B is a return required to be filed under Section 39 of the CGST Act/GGST Act.

The Hon’ble High Court observed that Section 39(1) of the CGST/GGST Act provides that every taxpayer, except a few special categories of persons, shall furnish a monthly return in such form and manner as may be prescribed. Rule 61 of the CGST Rules/GGST Rules prescribes the form and manner of submission of monthly return. Sub-rule 1 of Rule 61 of the CGST Rules/GGST Rules provides that the return required to be filed in terms of Section 39(1) of the CGST/GGST Act is to be furnished in Form GSTR-3.

The Hon’ble High Court further noted that initially it was decided to have three returns in a month, i.e. return for outward supplies i.e. GSTR-1 in terms of Section 37, return for inward supplies in terms of Section 38, i.e. GSTR-2 and a combined return in Form GSTR-3. However, considering technical glitches in the GSTN portal as well as difficulty faced by the tax payers it was decided to keep filing of GSTR-2 and GSTR-3 in abeyance. Therefore, in order to ease the burden of the taxpayer for some time, it was decided in the 18th GST Council meeting to allow filing of a shorter return in Form GSTR-3B for initial period. It was not introduced as a return in lieu of return required to be filed in Form GSTR-3. The return in Form GSTR-3B is only a temporary stop gap arrangement till due date of filing the return in Form GSTR-3 was notified. Notifications are being issued from time to time extending the due date of filing of the return in Form GST3, i.e. return required to be filed under Section 39 of the CGST Act/GGST Act. It was notified vide Notification No.44/2018 Central Tax dated 10th September 2018 that the due date of filing the return under Section 39 of the Act, for the months of July 2017 to March 2019 shall be subsequently notified in the Official Gazette.

The Hon’ble High Court pointed out that the Notification No.10/2017 Central Tax dated 28th June 2017 which introduced mandatory filing of the return in Form GSTR-3B stated that it is a return in lieu of Form GSTR-3. However, the Government, on realising its mistake that the return in Form GSTR-3B is not intended to be in lieu of Form GSTR-3, rectified its mistake retrospectively vide Notification No.17/2017 Central Tax dated 27th July 2017 and omitted the reference to return in Form GSTR-3B being return in lieu of Form GSTR-3.

Thus, in view of the above, the Hon’ble High Court held that the impugned press release dated 18th October 2018 could be said to be illegal to the extent that its para-3 purports to clarify that the last date for availing input tax credit relating to the invoices issued during the period from July 2017 to March 2018 is the last date for the filing of return in Form GSTR-3B.

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