LATE FEES IN GST : SAGA OF FRACAS BETWEEN TAXPAYERS AND GOVERNMENT

[Navjot Singh]

1.	As per the Press Note tweeted by the CBIC’s official handle, GST Council to take up a late fee waiver for GSTR 3B returns in the next meeting to be held on 14th June 2020.
2.	The late fee waiver for GSTR 3B returns has been one of the key demands form the industry. Hence, considering such requests, The current requests for waiver of late fee pertain to the old period (August 2017 to January 2020) will be discussed in the upcoming GST Council Meeting.
3.	Finance minister Nirmala Sitharamam had already announced below-mentioned measures due to COVID-19:- (Press Release ID: 1607942 dated 24th March 2020) Those having the aggregate annual turnover less than ₹ 5 Crore the Last date can file GSTR-3B due in March, April, and May 2020 by the last week of June 2020. No interest, late fee, and penalty to be charged. Others can file returns due in March, April, and May 2020 by last week of June 2020  but the same would attract a reduced rate of interest @9 % per annum from  15 days after the due date (current interest rate is  18 % per annum). No late fee and penalty to be charged, if complied before till 30th June 2020. The date for opting for composition scheme is extended till the last week of   June 2020.  Further, the last date for making payments for the quarter ending 31st March 2020 and filing of return for 2019-20 by the composition dealers will be extended till the last week of June 2020.  The date for filing GST annual returns of FY 18-19, which is due on 31st March 2020 is extended till the last week of June 2020. The due date for issue of notice, notification, approval order, sanction order, filing of the appeal, furnishing of return, statements, applications, reports, any other documents, the time limit for any compliance under the GST laws where the time limit is expiring between 20th March 2020 to 29th June 2020 shall be extended to 30th June 2020.  Necessary legal circulars and legislative amendments to give effect to the aforesaid GST relief shall follow with the approval of the GST Council. The payment date under Sabka Vishwas Scheme shall be extended to 30th June 2020. No interest for this period shall be charged if paid by 30th June 2020.

Background of Late Fees Levy of Late Fees: Section 47 of the CGST Act Any registered person who fails to furnish the details of outward or inward supplies required under Section 37 or Section 38 or returns required under Section 39 or Section 45 by the due date shall pay a late fee of ₹ 100/- for every day during which such failure continues, subject to the maximum of five thousand rupees.
1.	Section 128 - Power to waive penalty or fee or both The Government may, by notification, waive in part or full, any penalty referred to in section 122 or section 123 or section 125 or any late fee referred to in section 47 for such class of taxpayers and under such mitigating circumstances as may be specified therein on the recommendations of the Council.  Notifications, wherein late fees was waived fully/partially are shared below:  Notification No. 28/2017 – Central Tax dated 01st September, 2017, (For GSTR-3B) Waives the late fee payable for those, who failed to furnish the return in FORM GSTR-3B for the month of July, 2017 by the due date. Notification No. 50/2017 – Central Tax dated 24th October 2017, (For GSTR-3B) Waives the late fee payable those, who failed to furnish the return in FORM GSTR-3B for the months of August and September, 2017 by the due date. Notification No. 64/2017 – Central Tax dated 15th November 2017 (For GSTR-3B) Waives the amount of late fee payable for failure to furnish the return in FORM GSTR-3B for the month of October, 2017 onwards by the due date under section 47 of the said Act, which is in excess of an amount of ₹ 25 for every day during which such failure continues.  Notification No. 73/2017 – Central Tax dated 29th December, 2017 (For GSTR-3B) Waives the amount of late fee payable for failure to furnish the return in FORM GSTR-4 by the due date, which is in excess of an amount of ₹ 25/- for every day during which such failure continues. (₹ 10 for NIL return) Further, the late fee waived for Who failed to furnish the return in FORM GSTR-4 for the quarters from July, 2017 to September, 2018 by the due date but furnishes the said return between the periods from 22nd December, 2018 to 31st March, 2019. Notification No. 22 /2018 – Central Tax, dated 14.05.2018,  Waived the late fee payable  for failure to furnish the return in FORM GSTR-3B by the due date for each of the months from October, 2017 to April, 2018, for the class of registered persons whose declaration in FORM GST TRAN-1 was submitted but not filed on the common portal on or before the 27th day of December, 2017.  Such registered persons have filed the declaration in FORM GST TRAN-1 on or before the 10th day of May, 2018 and the return in FORM GSTR-3B for each of such months, on or before the 31st day of May, 2018. Notification No. 76/2018-C.T., dated 31-12-2018, (For GSTR-3B) The government waived late fee for filing FORM GSTR-3B for the months of July 2017 to September 2018, subject to the condition that the return(s) was/were filed between 22nd December 2018 and 31st March 2019. *The same notification also reduced the late fee for filing FORM GSTR-3B to ₹ 25 per day till the default continues. And Filers with “Nil” tax liability shall pay late fee of ₹ 10 per day till the default continues. (It is pertinent to note that above said notifications were Superseded vide Notification No. 76/2018-Central Tax dated 31-12-2018) Notification No. 75/2018-C.T., dated 31-12-2018, (For GSTR-1) The government waived late fee for filing FORM GSTR-1 for the months/quarters from July 2017 to September 2018, subject to the condition that the return(s) was/were filed between 22nd December 2018 to 31st March 2019. Notification No. 4/2018-Central Tax dated 23rd January, 2018 (For GSTR-1) 1.    For failure to furnish the details of outward supplies for any month/quarter in FORM GSTR-1 by the due date under section 47 of the said Act, which is in excess of an amount of ₹ 25/- for every day during which such failure continues. (₹ 10 for NIL Return) 2.    Who failed to furnish the details of outward supplies in FORM GSTR-1 for the months/quarters from July, 2017 to September, 2018 by the due date but furnishes the said details in FORM GSTR-1 between the periods from 22nd December, 2018 to 31st March, 2019. 3.    Who failed to furnish the details of outward supplies in FORM GSTR-1 for the months/quarters from July, 2017 to November, 2019 by the due date but furnishes the said details in FORM GSTR-1 between the periods from 19th December, 2019 to 17th January, 2020. 4.    For the months of March, 2020, April, 2020 and May, 2020, and for the quarter ending 31st March, 2020, for the registered persons who fail to furnish the details of outward supplies for the said periods in FORM GSTR-1 by the due date, but furnishes the said details in FORM GSTR-1, on or before the 30th day of June, 2020. Further citing the same conditions, Notification No. 5/2018 – Central Tax, dated 23.01.2018 :- For GSTR-5 Notification No. 6/2018 – Central Tax, dated 23.01.2018 for GSTR-5A & Notification No. 7/2018 – Central Tax, dated 23.01.2018 for GSTR-6 has been issued.  Vide Notification No. 77/2018-C.T., dated 31-12-2018, (For GSTR-4)  The government waived late fee for filing FORM GSTR-4 for the quarters from July 2017 to September 2018, subject to the condition that the return(s) was/were filed between 22nd December 2018 and 31st March 2019. NOTIFICATION No. 41/2019 – Central Tax dated 31st August, 2019 amended by  Notification No. 48/2019 – Central Tax dated 09-10-2019 Seeks to waive the late fees in certain cases for the month of July, 2019 for FORM GSTR-1 and GSTR-6 provided the said returns are furnished by 20.09.2019 the registered persons whose principal place of business is in the district mentioned in column (3) of the Table below, of the State as mentioned in column (2) of the said Table:-  Having aggregate turnover of more than 1.5 crore rupees in the preceding financial year or the current financial year,  Who have furnished, electronically through the common portal, details of outward supplies in FORM GSTR-1 of the Central Goods and Services Tax Rules, 2017, for the month of July, 2019, on or before the 20th September, 2019;  the registered persons whose principal place of business is in:- The State of Jammu and Kashmir, having aggregate turnover of more than 1.5 crore rupees in the preceding financial year or the current financial year,  Who have furnished, electronically through the common portal, details of outward supplies in FORM GSTR-1 of the Central Goods and Services Tax Rules, 2017, for the month of July, 2019, on or before the 11th October; the Input Service Distributors whose principal place of business is in the district mentioned in column (3) of the above said Table, of the State as mentioned in column (2) of the said Table:- Who have furnished, electronically through the common portal, return in FORM GSTR-6 of the Central Goods and Services Tax Rules, 2017, for the month of July, 2019, on or before the 20th September, 2019; The Input Service Distributors whose principal place of business is in the State of Jammu and Kashmir,  Who have furnished, electronically through the common portal, return in FORM GSTR-6 of the Central Goods and Services Tax Rules, 2017, for the month of July, 2019, on or before the 20th September, 2019. the registered persons whose principal place of business is in the State of Jammu and Kashmir,  Having aggregate turnover of more than 1.5 crore rupees in the preceding financial year or the current financial year,  who have furnished, electronically through the common portal, details of outward supplies in FORM GSTR-1 of the Central Goods and Services Tax Rules, 2017 (hereafter referred to as the said rules), for the month of August, 2019, on or before the 11th October, 2019, for failure to furnish the said FORM GSTR-1 by the due date;  the registered persons whose principal place of business is in the State of Jammu and Kashmir,  required to deduct tax at source under the provisions of section 51 of the said Act,  Who have furnished electronically through the common portal, return in FORM GSTR-7 of the said rules under sub-section (3) of section 39 of the said Act read with rule 66 of the said rules, for the month of July, 2019, on or before the 10th October, 2019, for failure to furnish the said FORM GSTR-7 by the due date;  the registered persons whose principal place of business is in the State of Jammu and Kashmir, Required to deduct tax at source under the provisions of section 51 of the said Act, who have furnished electronically through the common portal, return in FORM GSTR-7 of the said rules under sub-section (3) of section 39 of the said Act read with rule 66 of the said rules, for the month of August, 2019, on or before the 10th October, 2019, for failure to furnish the said FORM GSTR-7 by the due date; the registered persons whose principal place of business is in the State of Jammu and Kashmir, who have furnished, electronically through the common portal, return in FORM GSTR-3B of the said rules, for the month of July, 2019, on or before the 20th October, 2019, for failure to furnish the said FORM GSTR-3B by the due date; The registered persons whose principal place of business is in the State of Jammu and Kashmir,  Who have furnished, electronically through the common portal, return in FORM GSTR-3B of the said rules, for the month of August, 2019, on or before the 20th October 2019, for failure to furnish the said FORM GSTR-3B by the due date. Sl. No. Name of State Name of District (1) (2) (3) 1. Bihar Araria, Kishanganj, Madhubani, East Champaran, Sitamarhi, Sheohar, Supaul, Darbhanga, Muzaffarpur, Saharsa, Katihar, Purnia, West Champaran 2. Gujarat Vadodara. 3. Karnataka Bagalkot, Ballari, Belagavi, Chamarajanagar, Chikkamagalur, Dakshina Kannada, Davanagere, Dharwad, Gadag, Hassan, Haveri, Kalaburagi, Kodagu, Koppal, Mandya, Mysuru, Raichur, Shivamogga, Udupi, Uttara Kannada, Vijayapura, Yadgir. 4. Kerala Idukki, Malappuram, Wayanad, Kozhikode. 5. Maharashtra Kolhapur, Sangli, Satara, Ratnagiri, Sindhudurg, Palghar, Nashik, Ahmednagar. 6. Odisha Balangir, Sonepur, Kalahandi, Nuapada, Koraput, Malkangiri, Rayagada, Nawarangpur. 7. Uttarakhand Uttarkashi and Chamoli
2.	NOTIFICATION No. 35/2020–Central Tax dated 3rd April 2020 Seeks to extend the due date of compliance which falls during the period from "20.03.2020 to 29.06.2020" till 30.06.2020 and to extend the validity of e-way bills. - 35/2020 - Central GST {In exercise of the powers conferred by section 168A of the Central Goods and Services Tax Act, 2017 Section 168A was Inserted vide THE TAXATION AND OTHER LAWS (RELAXATION OF CERTAIN PROVISIONS) ORDINANCE, 2020 dated 31-03-2020}  (i) where, any time limit for completion or compliance of any action, by any authority or by any person, has been specified in, or prescribed or notified under the said Act, which falls during the period from the 20th day of March 2020 to the 29th day of June 2020, and where completion or compliance of such action has not been made within such time, then, the time limit for completion or compliance of such action, shall be extended up to the 30th day of June 2020, including for the purposes of-- (a) completion of any proceeding or passing of any order or issuance of any notice, intimation, notification, sanction or approval or such other action, by whatever name called, by any authority, commission or tribunal, by whatever name called, under the provisions of the Acts stated above; or (b) filing of any appeal, reply or application or furnishing of any report, document, return, statement or such other record, by whatever name called, under the provisions of the Acts stated above; but, such extension of time shall not be applicable for the compliances of the provisions of the said Act, as mentioned below- (a) Chapter IV; (b) sub-section (3) of section 10, sections 25, 27, 31, 37, 47, 50, 69, 90, 122, 129; (c) section 39, except sub-section (3), (4) and (5); (d) section 68, in so far as e-way bill is concerned; and (e) rules made under the provisions specified at clause (a) to (d) above; (ii) where an e-way bill has been generated under rule 138 of the Central Goods and Services Tax Rules, 2017 and its period of validity expires during the period 20th day of March 2020 to 15th day of April 2020, the validity period of such e-way bill shall be deemed to have been extended till the 30th day of April 2020. (Such limit has been extended further) (This notification shall come into force with effect from the 20th day of March 2020)
Late fees for filing Annual Return Section 47(2) provides that any registered person who fails to furnish the return required under section 44 by the due date shall be liable to pay a late fee of ₹ 100/- for every day during which such failure continues subject to a maximum of an amount calculated at a quarter per cent of his turnover in the State or Union territory.
1.	Thereafter, the Central Government vide Notification No. 47/2019-C.T., dated 09-10-2019; had notified that:- Filing of annual return under section 44 (1) of the CGST Act 2017 for the financial year 2017-18 and 2018-19 is optional for those registered persons whose aggregate turnover is less than ₹ 2 crores and who have not filed the said return before the due date. Provided that the said return shall be deemed to be furnished on the due date if it has not been furnished before the due date.
2.	Trail of Notifications in respect of Annual Return:- The Central Government vide Notification No. 47/2019-C.T., dated 09-10-2019; had notified that filing of annual return under section 44 (1) of the CGST Act 2017 for the financial year 2017-18 and 2018-19 is optional for those registered persons whose aggregate turnover is less than ₹ 2 crores and who have not filed the said return before the due date  Provided that the said return shall be deemed to be furnished on the due date if it has not been furnished before the due date. Thereafter, the CBIC vide press release dated 14th March 2020 had stated that there will be no late fee for delayed filing of the Annual Return for the financial year 2017-18 and 2018-19 for taxpayers with aggregate turnover less than ₹ 2 crores. As per Notification No. 15/2020-C.T., dated 23-03-2020 the Commissioner, on the recommendations of the Council, hereby extends the time limit for furnishing of the annual return specified under section 44 of the said Act read with rule 80 of the said rules, electronically through the common portal, for the financial year 2018-2019 till 30.06.2020  Then, Rule 80 of the CGST Rule is amended vide Notification No. 16/2020-C.T., dated 23-03- 2020, stipulating that:- Every registered person whose aggregate turnover during the financial year 2018-2019 exceeds five crore rupees shall get his accounts audited as specified under section 35(5) and he shall furnish a copy of audited annual accounts and a reconciliation statement, duly certified, in FORM GSTR-9C for the financial year 2018- 2019, electronically through the common portal either directly or through a Facilitation Centre notified by the Commissioner.  Subsequently, vide Notification No. 41/2020-C.T., dated 5-05-2020, the annual return for the financial year 2018-2019 shall be furnished on or before 30th September 2020.

Our View

1. Since the introduction of goods and services tax, taxpayers are facing many problems and challenges in complying with the provision of the Act and the Rules made thereunder.
2. The glitches in the system prevent the registered persons in tiling the returns in regular time for which the due dates for various returns have been postponed now and then. 
3. The major issue in the entire space of GST has been the systems related challenges. These challenges have occupied the mind space of not only the taxpayers and administrators but the judiciary has also been pressed into look at some of the cases.  
4. For an IT giant like India, it is important that this piece is appropriately addressed. In the case of Vision Distribution Pvt. Ltd. Versus Commissioner, State Goods & Services Tax & Ors [2019 (12) TMI 1048 - DELHI HIGH COURT]., Hon’ble Delhi High Court while dealing with an issue of “Liability paid in cash due to delayed credit on account of the inefficient working of the portal”, cited as under:-

“7. ………………..The petitioner cannot be made to suffer on account of failure on the part of the respondents in devising a smooth transition to the GST regime w.e.f. 01.07.2017, from the erstwhile indirect taxation structure…………. 

………………………………The rights of the parties cannot be subjugated to the poor and inefficient software systems adopted by the Respondents. The software systems adopted by the Respondents have to be in tune with the law, and not vice versa. The system limitations cannot be a justification to deny the relief, to which the Petitioner is legally entitled…………………. 

5. It is worthwhile to note that, the technology has been added to the system for the benefit and convenience of the taxpayers. But it should not be subservient to the purpose and hence the impediments, if any, should not make applicant servants of the technology.
6. In the case of ‘Raj SANJAYBHAI Tanna v.  Union of India’ - 2018 (9) TMI 610 - GUJARAT HIGH COURT wherein the constitutional validity of section 47 has been challenged by the writ petitioners.        

• Their main contention is that the Government is trying to recover the penalty in the guise of late fee charges.    
• As a result, the dealers losing their valuable right of appeals as well as right to point out that there was sufficient cause preventing them from filing the return within the due date. 
• In all previous laws which have been repealed by the statutes enacted under the new GST regime, such charges were categorized as penal in nature. 
• Various practical difficulties in filing the returns including such as malfunctioning of the official portal which oftentimes, prevent uploading of the returns were cited.

7. Hence, in our view, there are millions of dealers who would be adversely affected by the provision of late fees. On the contrary, such provisions can not be struck down as well, as a  disciplined manner is also required.
8. Thus, there should be a mechanism in which genuine taxpayers should not face the heat of late fees, further the ruckus among taxpayers should be timely addressed. The recent step of government to acknowledge the various tweets of taxpayers is endearing. We hope that in the future as well, the council will act upon the issues on real time basis so that the unnecessary litigation can be avoided. 

 Appendix-1

 Return Filing Summary

1. GSTR-1

Section 37(1) provides that every registered person, other than 

an Input Service Distributor, 

a non-resident taxable person and 

a person paying tax under the provisions of section 10 or section 51 or section 52, shall furnish, 

electronically, in Form – GSTR -1, the details of outward supplies of goods or services or both effected during a tax period on or before the tenth day of the month succeeding the said tax period and such details shall be communicated to the recipient of the said supplies within such time and in such manner as may be prescribed.

1. GSTR-2

Section 38 (2) provides that  every registered person, other than 

an Input Service Distributor or

a non-resident taxable person or 

a person paying tax under the provisions of section 10 or section 51 or section 52, shall furnish, electronically, 

the details of inward supplies of taxable goods or services or both, including inward supplies of goods or services or both on which the tax is payable on reverse charge basis under this Act and inward supplies of goods or services or both taxable under the Integrated Goods and Services Tax Act or on which integrated goods and services tax is payable under section 3 of the Customs Tariff Act, 1975 (51 of 1975) , and credit or debit notes received in respect of such supplies during a tax period after the tenth day but on or before the fifteenth day of the month succeeding the tax period in Form GSTR-2.

1. GSTR – 3B

Rule 61(5) provides for filing form GSTR – 3B every month since  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 within 20th of the following month.            

1. Others Returns

Section 39 provides that the following registered person shall file returns in the required form periodically within the due dates as mentioned below-

• Quarterly return

The service providers who opted to pay tax under composition scheme is to file return every quarter in Form GSTR – 9A within 18 days from the end of the quarter.

•  Monthly return

Every person required to deduct tax under section 51 is to file monthly return in Form GSTR - 7 within 10 days from the end of the month.

• ISD

Every Input Service Distributor is to file monthly return in Form GSTR – 6 within 13 days from the end of the month.

• Nonresident taxable 

For every calendar month or part thereof, furnish, in Form GSTR - 5, a return, electronically, within twenty days after the end of a calendar month or within seven days after the last day of the period of registration specified under sub-section (1) of section 27, whichever is earlier.

Every registered person, other than an Input Service Distributor or a non-resident taxable person or a person paying tax shall, for every calendar month or part thereof, furnish, in Form GSTR 3, a return, electronically, of inward and outward supplies of goods or services or both, input tax credit availed, tax payable, tax paid and such other particulars as may be prescribed on or before 20th of the following month.

1. Final Return under section 45

Section 45 provides that every registered person who is required to furnish a return under section 39(1) and whose registration has been cancelled shall furnish a final return within three months of the date of cancellation or date of order of cancellation, whichever is later, in Form GSTR – 10.

1. Annual Return under section 44

• Section 44(1) provides that every registered person, other than an Input Service Distributor, a person paying tax under section 51 or section 52, a casual taxable person and a non-resident taxable person, shall furnish an annual return for every financial year electronically in Form GSTR - 9 on or before the thirty-first day of December following the end of such financial year.

• Section 44(2) provides that every registered person who is required to get his accounts audited in accordance with the provisions of sub-section (5) of section 35 shall furnish, electronically, the annual return under sub-section (1) along with a copy of the audited annual accounts and a reconciliation statement, reconciling the value of supplies declared in the return furnished for the financial year with the audited annual financial statement, and such other particulars as may be prescribed.

• The proviso to Rule 80(1) provides that a person paying tax under section 10 shall furnish the annual return in FORM GSTR-9A.

 

CA Navjot Singh

canavjotsinghbrar@gmail.com