AUGUST 27, 2019

By G Natarajan, Advocate, Swamy Associates

ALL social media platforms are replete with the images of the harbinger, CBIC tweet on extension of due date for filing GSTR 9 and 9 C and the arrival of messiah, vide Removal of Difficulty Order No. 7/2019 Dt. 26.08.2019, by which the due dates for filing GSTR 9 and 9C have been extended to 30.11.2019. While the tax paying community rejoiced mostly in private, the consultants' and Chartered Accountants' sigh of relief was spattered in public.

Is it such a great thing to celebrate?

It may be noted that neither the Central Excise law, nor the Service Tax law, contained any provisions for mandatory certification of returns by professionals, while the same was prevalent under Income Tax Act and VAT Acts. May be to ensure that there is no loss of professional opportunities and consequent job loss, the relic of such certification has been introduced in GST law too. So far so good.

It may be noted that whenever the Departmental audit visits an assessees' premises, their first task is to reconcile the books of accounts with the statutory returns filed, in their own conventional way, by discussing with the assessee, eliciting responses, perusing documents, etc. The reasons for differences between the audited books of accounts and tax returns are analysed and the tax payers' perception and that of the department's perception is sought to be reconciled. Thus, an audit is a continuous engagement of minds. In the process, many shortcomings in compliance, whether intentional or otherwise, would come to light, which would turn into an audit objection. While this auditing role of the Department is still intact, is it not a duplication of efforts, in insisting for a reconciliation by a professional, which involves considerable difficulties for the taxpayers? The time and efforts required in complying with the same and the cost involved are really substantial and would certainly not lead to ease of doing business.

Further, if we go deep into the forms, the following facts may be noted.

It is a common fact that the formats of GSTR 1/GSTR 3 B contains various information and during the initial stages, the exact details to be furnished in various columns were understood by many in different ways. It is only over a period, more and more clarity has emerged. For example, the manner in which advance receipts, adjustment of such advances, discharge of GST on advances received have to be shown in the returns were understood differently by different persons. Further, the initial years of GST has seen frequent amendments (rate changes, changes in the threshold limit for composition scheme, grant of exemption from payment of GST on advances for supply of goods, while advances for supply of services still attract GST, initial liability under reverse charge on all inward supplies from unregistered persons and subject exemptions in this regard, etc) and thereby the treatment of such items in the monthly returns are different during different periods. When there was not much of clarity on these issues, while filing the GSTR 1 / 3B, compiling this information now, in GSTR 9 poses great challenge, as there is bound to be difference between the cumulative details shown in GSTR 1 / 3B and what is to be shown in GSTR 9.

Various details such as break up ITC availed on inputs, input services, capital goods and in respect of GST paid under RCM are being asked. All the ITC availed are booked only under one head and many of the taxpayers did not have the break up of ITC availed on inputs, input services and capital goods separately. So, furnishing this break up poses very big challenge and unless and until each and every invoice, for which ITC was availed are perused, such break-up could not be furnished.

ITC not availed and ITC ineligible are also difficult to furnish as no separate information in this regard are maintained in the books of accounts. If ITC is not availed or ineligible, the GST portion is also booked along with the value as an expenditure and segregating the GST component alone is near to impossible.

Another painful area is furnishing HSN wise receipt of inward supplies as the books of accounts do not have the HSN details at all. Unless and until all expenses are reviewed, furnishing this information is very difficult.

Reconcilation of ITC availed as per Table 12 of Part IV of 9C and furnishing expenditure head wise ITC availed in Table 14 of Part V of 9C is very difficult as books of accounts are not kept in such a manner, where such information could be compiled.

The above are only few instances, which makes the filing of GSTR 9 and 9C a nightmare and there are more such instances.

Thus the solution lies, not in postponing the due dates, but a complete overhaul of the GSTR 9 and GSTR 9C forms and its tables, where only minimal information, which are readily available in any books of accounts are required to be furnished. The audit of the transactions of every taxpayer is highly subjective and unique and attempting to bring in objectivity, in the form of fixed tables and statements would, instead of being helpful to both sides, be only an impediment in compliance.

So the need of the hour is -

- Simplification for the forms GSTR 9/9C in line with the present accounting practices and standards.

- Abolishing GSTR 9/9C for the first three years of GST implementation and making them mandatory only from 2020-21, so that the existing accounting practices and books of accounts can be fine tuned in line with the requirements under these forms, from 2020-21. For this purpose, the revised GSTR 9/9C forms have to be introduced well before April 2020.

May I coin a quote - "If you bring more and more objectivity on issues which have to be dealt with subjectively, the object would be lost and the subjects would suffer!".

[The views expressed are strictly personal.]