GST Updates

Issues in GST: Inconsistency in Provisions for rectification of error in Monthly Return-Part 9

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In today’s update, we would be discussing about inconsistency in the provision for rectification of the monthly return for the outward supplies and inward supplies i.e. GSTR-1 and GSTR-2 read with the relevant provision rectification of the consolidated monthly return in GSTR-3.

CBEC has released revised Draft GST Law on 26th November 2016. The law is slated to be presented before Loksabha in the coming days. It’s not the final blueprint and is bound to change on the basis of suggestions received from various quarters. In this series of updates, we would be putting forth various issues in the Revised Draft GST Law which needs consideration. The entire objective is to bring before the readers certain issues in the present revised GST Law which may be raised at appropriate platforms.

1. Provision regarding rectification of error or omission in the details filled in GSTR-1 and GSTR-2

9.1 Proviso to Section 32(3) of the Revised Model GST Law regarding rectification of error or omission in the return for outward supplies provides that

“PROVIDED that no rectification of error or omission in respect of the details furnished under sub-section (1) shall be allowed after furnishing of the return under section 34 for the month of September following the end of the financial year to which such details pertain, or furnishing of the relevant annual return, whichever is earlier.”

 

9.2 Proviso to Section 33(5) of the Revised Model GST Law regarding rectification of error or omission in the return for inward supplies provides that

“PROVIDED that no rectification of error or omission in respect of the details furnished under sub-section (1) shall be allowed after furnishing of the return under section 34 for the month of September following the end of the financial year to which such details pertain, or furnishing of the relevant annual return, whichever is earlier”.               

 

9.3 Both the above provisions provides that a person would not be able to rectify any omission or error in respect return for outward/inward supply i.e. GSTR-1 and GSTR-2 pertaining to a particular financial year

a) After furnishing of return under section 34 for the month of September following the end of financial year to which such details pertain or

b) Furnishing of the relevant annual return, whichever is earlier

Condition (a) above provides for furnishing of return for the month of September of next financial year to which the details pertain and not the due date for filing of return for the month of September. Condition (b) also provides for furnishing of Annual Return of the relevant financial year.

 

9.4 The important thing to observe here is that, the law is not restricting the time limit by the due date of filing of the return for the month of September following the end of the financial year to which the details pertain.

 

9.5 Supposedly, a person detects any error or omission in the return for outward or inward supply i.e. GSTR-1 and GSTR-2 for the month of March 2018. Thus as per the provisions of Section 32 and 33, he can rectify the error or omission till he files return for the month of September 2018 or file annual return for the period 2017-18, whichever is earlier.

 

2. Provision regarding rectification of error or omission in filled in consolidated monthly return GSTR-3

9.6 Now coming to the Proviso to Section 34(9) of the Revised Model GST Law regarding rectification of error or omission in the Consolidated Monthly Return in GSTR-3 hihc provides that

“PROVIDED that no such rectification of any omission or incorrect particulars shall be allowed after the due date for furnishing of return for the month of September or second quarter, as the case may be, following the end of the financial year, or the actual date of furnishing of relevant annual return, whichever is earlier.”

 

9.7 The key thing to observe here is that the provision allows rectification of omission or incorrect particulars only till the due date for furnishing of the return for the month of September following the end of financial year or the actual date of furnishing of the relevant annual return whichever is earlier.

 

9.8 Supposedly, a person detects any error or incorrect particulars in the consolidated monthly return i.e. GSTR-3 for the month of March 2018. Thus as per the provisions of Section 34, he can rectify the omission or incorrect particulars only till the due date for the month of September 2018 or till the actual date of furnishing of the annual return for the period 2017-18, whichever is earlier.

 

9.9 The issue is that first the proviso to Section 32(3) and 34(5) are not in consonance with the proviso to Section 34(9). The rectification of GSTR-1 and GSTR-2 are allowed till the filing of the return of September of the next financial year and rectification of GSTR-3 is allowed only till the due date for filing of the return for the month of September of the next financial year.

Here we are not detailing about the second time limit of filing of Annual Return as it is same in all the cases for rectification of GSTR-1, GSTR-2 and GSTR-3.

9.10 Rectification of GSTR-1 and GSTR-2 can be extended beyond the due date by delaying the filing of GSTR-1 and GSTR-2 for the month of September of the next financial year. However, Rectification of GSTR-3 cannot be extended by delaying the filing of GSTR-3 for the month of September of the next financial year as rectification in this case is linked with the due date for filing of the return for the month of September of the next financial year.

 

9.10 How can it at all be possible that GSTR-1 and GSTR-2 can be rectified till the actual furnishing of return for the month of September of Next Financial Year and GSTR-3 which would be auto-populated by GSTR-1 and GSTR-2 can only be revised till the due date for return for the month of September of next financial year.

Comment: The provision of law need to be brought in consonance with each other and both proviso to Section 32(3) and 33(5) need to be amended to bring in line with proviso to section 34(9) or vice versa. This would bring in parity in the law.

Issues in GST: Inconsistency in Provisions for rectification of error in Monthly Return-Part 9
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