GSTR 1A Whether Truly An Aid Or A Farce

The power to amend the GST return after it has been filed has been a bone of contention and subject matter of litigation since the introduction of GST. In this regards, attention is invited to the case of Bharti Airtel Limited vs UOI [2020 (38) GSTL 145 (Del.)] where the High Court on the question as to whether the petitioner is legally liable to make amendment in the Form GSTR-3B after the same had been filed or not, had observed that rectification of return for that very month to which it relates, is imperative. The order passed by the Delhi High Court was reversed by the Supreme Court at 2021 (54) G.S.T.L. 257 (S.C.) on the grounds that the subsequent period Form GSTR-3B was allowed for making corrections for past errors. Hence, there existed no requirement to read down the provisions of Section 39(9) of the CGST Act and allow the amendment of GSTR 3B which has been filed.

The GST Council and the board of indirect taxation have introduced Form GSTR-1A which allows for the amendment in existing Form GSTR-1 which has been filed for a 'tax period'. Form GSTR-1A is notified by Notification No.12/2024-Central tax dated 10.07.2024 and the clarity on the operationality and impact of the return filing process as a whole has been clarified by the recent Advisory issued by CBIC on the GST portal on 26.07.2024.

The advisory clarifies that Form GSTR-1A would be available from August 2024 onwards and an assessee can use the benefit of the same to make amendments to the Form GSTR 1 “filed” for the month of July 2024 and onwards. However, while describing the salient features of the Form GSTR 1A, the advisory mentions as follows:

• Form GSTR-1A for a 'tax period' would only be available after filing the Form GSTR-1 for a tax period and till filing of the GSTR 3B for the same tax period. Hence, the benefit of the GSTR 1A for a procedurally compliant assessee filing all returns on the due date would be available only between 11^th of the month i.e. due date of filing GSTR 1 till the 20^th of the month i.e. due date of filing GSTR 3B.
• The amendments made through the Form GSTR 1A would impact the liabilities in the Form GSTR-3B of the same month but changes in the same would only be reflected in Form GSTR-2B of the 'buyer/recipient' of supply only in the next tax period GSTR 2B.

The aforementioned salient features would get one thinking how beneficial the new form would be to a “supplier” in the practical world. An assessee ideally deals with a lot of data and a mistake would only be noticed in the outward supply data when comparing the Form GSTR 1 data as filed with the supplies recorded in the books of accounts. Once an assessee has 'filed' the outward supply return i.e. GSTR 1, given the limited time available to file the Form GSTR 3B from the date of filing the GSTR 1, the assessee would find it next to impossible to carry out two re-conciliation i.e. of the outward supplied reported in GSTR 1 vs books of account and ITC availed in books of accounts vs GSTR 2B. In such cases the assessee would practically focus on reconciling the eligible ITC as per books of accounts with the GSTR 2B, to compute the outwards tax liability for reporting in the Form GSTR 3B, unless the assessee chooses to file the GSTR 3B belated after the due date. A procedurally compliant assessee, would not be able to reap the full benefits of the new Form GSTR-1 A, due to the limited window given for making amendments. Further, the fact that the changes made by a supplier in Form GSTR 1 using Form GSTR 1A with respect to a supply reported during a tax period would only cause more confusion for an assessee. especially in cases where the supplier reports an invoice in the GSTR 1 but subsequently amends/removes the same by filing GSTR 1A. The said act would result in the credit reflecting in the GSTR 2B of the buyer/recipient of the supply in a tax period but be made aware in the subsequent period GSTR 2B that the ITC is not available. This would bring about a fresh set of litigation for buyers/recipient of the supplies, who are currently already litigating with the department for cases where the supplier had reported the supplies in Form GSTR-2A but failed to file the Form GSTR 3B and cases where the supplier was active during a period but got his registration cancelled retrospectively covering the period when the assessee in question has received the supplies. The department in such cases would surely demand interest on the availment of ITC by the buyer/recipient of the supply, for a supply which the supplier subsequently amended and removed through GSTR 1A and did not pay the tax to the government in GSTR 3B.

In the aforesaid cases, companies who had adopted the practice of releasing payments to the vendors based on the ITC reflecting in the GSTR 2B/2A would also be thrown into a tussle as to the point in time when the payment to the vendors is be released. If the companies amend their existing payment terms to hold the payment of vendors till the GSTR 2B of the subsequent month, the companies will stand to be in violation of the MSMED provisions for failure to pay within 45 days of the acceptance of the goods/service rendered, in case where the vendor is a MSME company.

The GST Council and board should take cognizance of such possible issues and clarify the same before such issues culminate into litigation, defeating the very purpose with which the GST Council has introduced various new provisions in the 53^rd GST Council meeting.

Authors: Nirav Karia (Partner) & Vatsal Bhansali (Principal Associate) at Lakshmikumaran & Sridharan Attorneys. Views are personal.