MAY 05, 2020

By Shailesh Sheth, Advocate & Founder, M/s SPS Legal

THE outbreak of the COVID-19 Pandemic and the inevitable national lockdown as a 'National Mitigation Measure' that followed it, has brought the economic activities to a virtual halt. The nationwide lockdown that is in operation since March 25, 2020 has further been extended by 2 (two) weeks starting May 4, 2020. The lockdown, unavoidable thought it may be, and the resultant disruption of the activities naturally has a debilitating impact on the businesses across all the Sectors.

It is, therefore, natural that the businesses have been fervently looking for a substantial 'Bailout Package ' from the Government which would enable them to remain afloat in these critical times. The FM announced the first 'Relief Package' on March 24, 2020 which mainly consisted of the relaxations in the statutory and regulatory compliances covering taxation laws including GST laws, Direct Tax and the Corporate Laws.

So far as the GST is concerned, the relaxations so announced were later effectuated through the notifications issued on April 3, 2020.For the benefit of the readers, the relaxations so notified are tabulated and explained herein below:

A. GSTR-1 for March, 2020 to May, 2020/Quarter ending March, 2020 & Waiver of late fees (Notification No. 33/2020-CT dt. 03.04.2020 refers).

Illustration:

 A registered person files the GSTR-1 for April, 2020 on July 15, 2020, he will be liable for the payment of late fees to be computed for the period from May 12, 2020 to July 14, 2020.

 c. The quantum of late fees prescribed under S.47 of the CGST Act, 2017 (corresponding provisions of SGST Act, 2017) is as under:

i. Rs. 50 (maximum Rs.10000) for failure to file the GSTR-1 by due date; OR

ii. Rs. 20 (maximum Rs.10000) for failure to file the GSTR-1 by due date (in case of 'Nil' outward supplies).

d. The relaxation provided in filing the GSTR-1 for the specified period upto June 30, 2020 is irrespective of the Turnover or the Principal place of business.

B. GSTR-3B for February, 2020 to April, 2020: Waiver /Reduction of interest and waiver of Late fees(Notifications nos. 31/2020-CT and 32/2020 both dt 03.04.2020 refers):

Comments:

a. Original Notification No. 44/2019-CT dt. 09.10.2019 prescribed '20th day of the succeeding month' as the 'due date' for filing of GSTR-3B for each of the months of October, 2019 to March, 2020. No categorisation on the basis of 'Turnover' or 'Principal Place of Business' was provided therein.

b. Subject Notification No. 44/2019-CT was amended as many as 6 (six) times in a short span of 5 months by various notifications. One of the amending Notification No. 07/2020-CT dt. 03.02.2020 prescribed the revised due dates for the months of January, 2020 to March, 2020 in respect of the taxpayers having the turnover of less than Rs. 5.00 Crore in the previous financial year based on the State/UT in which their 'Principal Place of Business' is situated.

c. By Notification No. 25/20-CT dt. 23.03.2020, revised due date of '24th March, 2020' was prescribed for the months of October, 2019 to February, 2020 for the registered persons whose principal place of business is in the UT of Jammu and Kashmir or the Union Territory of Ladakh. The revised date was applicable in case of all such registered persons irrespective of their turnover.

 d. Subsequently, by Notification No. 29/2020-CT dt. 23.03.2020, due dates of '22 nd or 24th , as the case may be, of the succeeding month' were prescribed for the months of April, 2020 to September, 2020 for the taxpayers with an aggregate turnover of upto Rs. 5.00 Crores in the previous financial year depending upon the State or UT in which the principal place of business of such taxpayer is situated.

e. Now, by Notification No. 31/20-CT and 32/20-CT both dated 03.04.2020, registered persons are divided into 3 (three) categories for the purposes of waiver/reduction of the interest and waiver of the late fees in respect of the filing of GSTR-3B Returns. The categorization is based upon the 'turnover' and the criteria of ' location of the principal place of business ' has been dispensed with.

f. It shall again be noted that no extension of the hither to prevalent due dates is provided by the present Notification Nos. 31/20-CT and 32/20-CT ibid. Instead, the specified classes of the registered persons are allowed to file the GSTR-3B for the months of February, 2020 to April, 2020 by the respective specified dates subject to which the benefit of waiver/reduction of interest and waiver of late fees shall be admissible to them. Consequently, if the taxpayer fails to file the GSTR-3B by the newly specified date, he will be liable for payment of interest u/s. 50 of the CGST Act, 2017 and the late fees u/s. 47 of the Act.

This is explained by way of the illustrations given below:

Illustration 1:

 A taxpayer with an aggregate turnover of Rs. 1.25 Crore in the previous financial year files the GSTR-3B for April, 2020 on July 15, 2020. He will be liable for the payment of interest at the full applicable rate and late fees to be computed for the period from 23 rd or 25th May, 2020, as the case may be, till July 14, 2020.

Illustration 2:

 A taxpayer with an aggregate turnover of Rs. 4 Crore in the previous financial year files the GSTR-3B for April, 2020 on July 15, 2020.He will be liable for the payment of interest at the full applicable rate and late fees to be computed for the period from 23 rd or 25th May, 2020, as the case may be, till July 14, 2020.

Illustration 3:

 A taxpayer with an aggregate turnover of Rs.10 Crores in the previous financial year files the GSTR-3B for April, 2020 on June 24, 2020, he will be liable to pay the interest and late fees as under:

Interest:

 i. For the period from April 21, 2020 to May 5, 2020 - Nil

ii. For the period from May 6, 2020 to June 23, 2020 - @ 9% p.a.

Late Fees:

 For the period from 23 rd /25th May, 2020 to June 24, 2020 - Nil.

 Illustration 4:

 A taxpayer with an aggregate turnover of Rs.10 Crores in the previous financial year files the GSTR-3B for April, 2020 on July 15, 2020. He will be liable for the payment of interest and late fees to be computed as under:

Interest:

i. For the period from April 21, 2020 to May 5, 2020 - Nil

ii. For the period from May 6, 2020 to July 14, 2020 - @ 18% p.a.

Late Fees:

 For the period from 23 rd /25th May, 2020 to July 14, 2020 - Rs.50 per day (maximum Rs.10000)

C. GSTR-3B for May, 2020 – Waiver of Interest and Late Fees (Not.No.36/20 CT dt 03.04.2020 refers):

Comments:

 a. By Not. No. 36/20-CT dt. 03.04.2020, the Notification No. 29/20-CT dt. 23.03.2020 has been amended so as to extend the due dates for filing of GSTR-3B for May, 2020 for the specified class of the registered persons based on their Turnover and the location of their principal place of business, as the case may be.

b. In case of the registered persons with the aggregate turnover of more than Rs.5 Crore in the previous financial year , the due date for filing has been extended irrespective of the location of the principal place of business.

c. In respect of the registered persons with aggregate turnover of less than Rs.5 Crore in the previous financial year , the different revised due dates are prescribed based on the location of their principal place of business in the State/UT as specified [4th and 5th proviso to Not. No. 29/2020-CT ibid as inserted by Not. No. 36/20-CT ibid refers].

d. Since the 'due date' for filing the GSTR-3B for May, 2020 has itself been extended as above, the interest and late fees will not be leviable so long as a taxpayer files the return on or before the revised due date as applicable to him. In case of the delayed filing of return, the interest at the full applicable rate and the late fees will be leviable for the relevant period to be computed after considering the revised due date, as may be applicable.

D. For the Composition Taxpayers:

 I. GST CMP-02 & FORM GST ITC-03 for F. Y. 2020-21[Not. No. 30/20-CT dt. 03.04.2020 refers]:

By Notification No. 30/2020-CT dated 03.04.2020, CGST Rules, 2017 have been amended. One of the amendments relates to the insertion of a proviso in sub-rule(3) of Rule3 of the said Rules. It is provided that a registered person opting to pay tax u/s. 10 of the CGST Act, 2017 (Composition Levy) shall file the requisite intimation in FORM GST CMP-02 for F. Y. 2020-21 on or before June 30, 2020 and furnish statement in FORM GST ITC-03 under Rule 44(4) of the CGST Rules, 2017 upto July 31, 2020.

II. GSTR-4 for F. Y. 2019-20 [Not. No. 34/20-CT dt. 03.04.2020 refers]:

 The due date for filing the GSTR-4 i.e. the Quarterly return to be filed by the Composition Taxpayers for F. Y. 2019-20 has been extended to "July 15, 2020". The original due date prescribed by Notification No.21/2019-CT dt. 23.04.2019 was " 30th day of April following the end of the relevant financial year."

 III. GST CMP-08 for quarter ending 31 st March, 2020 [Not. No. 34/20-CT dt. 03.04.2020 refers]:

 The due date for filing of FORMGST CMP-08 i.e. a special statement-cum-challan for self-assessed tax to be filed by the Composition Taxpayers for the quarter ending March 31, 2020 has been extended to 'July 7, 2020' . Earlier, by Notification No. 21/19-CT ibid, "18 th of the quarter succeeding the quarter of the financial year" had been prescribed for filing FORM GST CMP-08 .

E. GSTR-5 & 5A for the months of February, 2020 to May, 2020 [Not.No. 35/20-CT dt. 03.04.2020 refers]:

F. GSTR-6 for the months of March, 2020 to May, 2020:

G. GSTR-7 for the months of March, 2020 to May, 2020:

 H. GSTR-8 for the months of March, 2020 to May, 2020:

Comments:

a. The extension of due dates for filing of the GSTR-5, GSTR-5A, GSTR-6, GSTR-7 and GSTR-8 for the specified months has been granted by Notification No. 35/20-CT dt. 30.04.2020

b. Notification No. 35/20-CT ibid has been issued by the Central Government, on the recommendation of the Council, under S.168A of the CGST Act, 2017 read with S.20 of the IGST Act, 2017 read with S.21 of the UTGST Act, 2017.

c. S.168A has been inserted in the CGST Act, 2017 by the 'Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020 (No.2 of 2020)' w.e.f. March 31, 2020.

d. For the ease of reference, the text of S.168A is reproduced below:

"168A. (1) Notwithstanding anything contained in this Act, the Government may, on the recommendations of the Council, by notification, extend the time limit specified in, or prescribed or notified under this Act in respect of actions which cannot be completed or complied with due to force majeure.

 (2) The power to issue notification and sub-section (1) shall include the power to give retrospective effect to such notification from a date not earlier than the date of commencement of this Act.

 Explanation.- For the purpose of this section, the expression 'force majeure ' means a case of war, epidemic, flood, drought, fire, cyclone, earthquake or any other calamity caused by nature or otherwise affecting the implementation of any of the provisions of this Act."

 I. E-Way Bills – Extension of validity:

 The validity of the E-Way Bills expiring during the period from March 20, 2020 to April 15, 2020 had been extended till April 30, 2020 by Notification No. 35/20-CT ibid.

Comments:

 Since the Nationwide Lockdown has been further extended for two weeks from May 4, 2020, a further extension of validity from 'April 15, 2020' in the above cases is inevitable.

Hopefully, the extension will be announced soon.

 J. Rule 36(4) – Under suspension for the months of February, 2020 to August, 2020:

 By Notification No. 30/20-CT ibid, a proviso has been inserted in sub-rule (4) of Rule 36 of the CGST Rules, 2017. It is effectively provided that the condition of capping the ITC to 10% of the ITC reflected in FORM GSTR-2A in the specified circumstances shall not apply for the months of February, 2020 to August, 2020. It is provided that the subject condition shall cumulatively apply for this period and the Return in GSTR-3B for the tax period September, 2020 shall be furnished with the cumulative adjustment of ITC for the said months in accordance with the said condition.

To sum up…

 The netizens will thus observe that they will be ' stressed out ' while understanding and following the ' compliance relaxations ' granted to them! The reliefs have come in a variety of shades which can leave the taxpayers bedazzled! It is also unfortunate that the temptation to earn some additional revenue by way of charging interest, albeit at the reduced rate, to those which are perceived to be the large taxpayers, has dominated the reliefs granted as if such as taxpayers do not face the serious economic fallout of the COVID-19! It is also obvious that with the extension of the lockdown by a further two weeks, the 15 days' grace period provided to such taxpayers will be of no use insofar as the filing of FORM GSTR-3B for the month of March, 2020 is concerned since the same expires today (on May 5, 2020). It is evident that no extension in this regard has been granted so far nor is the same likely to materialize. It appears that with the disappointing and worrisome revenue figures for March, 2020 (as on April 30, 2020), the hopes have been held out that the revenue collection may show the improvement as on May 5, 2020 i.e. the date on which the grace period for March, 2020 expires.

It is evident that the taxpayers and the tax professionals will have a tough time navigating through this maze of notifications and fresh deadlines! All in all, in these days of 'Lockdown' and the masterly inactivity, the taxpayers and the tax professionals will have enough on their hands which would keep them on their toes for another two months!

"The Taxpayer's prayer: Oh Mighty Internal Revenue Service, who turneth the labor of man to ashes, we thank thee for the multitude of thy forms which thou hast set before us and for the infinite confusion of thy commandments, which multiplieth the fortunes of lawyer and accountant alike. [Russel Baker]

[The views expressed are strictly personal.]

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