GSTR- 3B is not a return under Section 39 of the CGST Act, 2017: Gujarat High Court

In AAP And Co., Chartered Accounts Vs the Union Of India And Others, the Gujarat High Court on 24th June 2019 held that GSTR-3B is not a return under Section 39 of the CGST/GGST Act. Further, held that press release dated October 18, 2018 is illegal to the extent of stating that the last date for taking ITC is the due date of GSTR 3B.

In October 2018, the central government had announced that he last date for availing tax credit for invoices generated during the period from July’2017 to March’2018 will be the last date for filing return in form GSTR-3B. Thus, the said press release publicized the last date for availing ITC to be the last date for the filing of return in FORM GSTR-3B for the month of September, 2018 i.e. 20th October, 2018.

The petitioner is a practicing Chartered Accountant having GST registration who challenged the press release of Central Government with regards to availing input tax credit dated October 18, 2018.

The applicant had sought quashing of the said part of the press release while submitting that as per the clarification made vide the press release, a taxpayer will not be able to claim the input tax credit for the period from July, 2017 to March, 2018 after filing of the return in Form GSTR-3B for the month of September 2018.

It was also contended that the decision to add return in form GSTR-3B was taken in the 18th GST Council held on 30th June 2017 on account of “shorter return for first two months of roll out” and not as a return in substitute of return to be filed in form GSTR-3.

In this present case, two issues Involved:

  1. Whether the return in Form GSTR-3B is a return required to be filed under Section 39 of the CGST Act/GGST Act?
  2. Whether the Press release is 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.

In dealing with the issues, the Court is of the opinion that initially it was decided to have three returns in a month, i.e. GSTR 1, GSTR 2 and GSTR 3. However, considering technical glitches in the GSTN portal as well as difficulty faced by the taxpayers it was decided to stop filing of GSTR-2 and GSTR-3 for time being. 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. But GSTR 3B was not introduced as a return in lieu of return in Form GSTR-3. It is only a temporary gap arrangement till due date of filing GSTR-3 is notified. Accordingly, notifications are being issued from time to time extending the due date of filing of the return in Form GST- 3.

Further, it is held that the return to be filed in form GSTR-3 is the final return for taking additional ITC as well as discharging of additional tax liabilities after filing of return in form GSTR-3B. Therefore, the last date for availing the ITC 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.

Apart from this, notification No.10/2017 Central Tax dated 28th June 2017 introduced mandatory filing of the return in Form GSTR-3B in lieu of Form GSTR-3. Later on, realizing the mistake, vide Notification No.17/2017 Central Tax dated 27th July 2017 the CBIC omitted the reference to return in Form GSTR-3B being return in lieu of Form GSTR-3 with retrospective effect.

So, taking into consideration the above mentioned points, the High Court of Gujarat on 24th June 2019 held that the impugned Press Release dated October 18, 2018 is 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. The said clarification is contrary to Section 16(4) of the CGST Act/GGST Act read with Section 39(1) of the CGST Act/GGST Act. GSTR 3B is a provisional return which to be finalized by GSTR3. If a registered person took less ITC while filling GSTR 3B, his original ITC will be sent in electronic credit laser id while filling GSTR 3. Thus, the registered person has further chance to claim ITC after the due date of GSTR3B.

However, we should keep in mind that the Central Government may file an appeal before the Supreme Court of India against this judgement of the Gujarat High Court. Alternatively, the Central Government may also issue a notification to clarify or amend the exiting anomaly in a way to reflect that the Form GSTR – 3B shall be considered as a return under Section 39 for the purposes of determining the due date for availing ITC under Section 16(4) of the CGST Act. As the judgement of the High Court is favorable to the taxpayers, taxpayers may need to wait for further clarifications on the issue. 

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