Blocking of GSTR-1 in case of non-filing of GSTR-3B of preceding two months/preceding tax period

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The CBIC vide Notification No. 94/2020-Central Tax dated December 22, 2020 has issued Central Goods and Services Tax Rules (Fourteenth Amendment), 2020, inter alia, inserting sub-rule (5) after Rule 59(4) of the Central Goods and Services Tax Rules, 2017 (“CGST Rules”), dealing with “Form and manner of furnishing details of outward supplies” in following manner:

  • If the registered person fails to furnish the return in GSTR-3B for preceding two months, he would not be allowed to furnish the details of outward supplies of goods or services or both in GSTR-1.

Previously, non-filing of GSTR-3B resulted in blocking of E-way Bill facility but from now, on the same would also result in blocking of the GSTR-1 of the registered person.

  • Identically, for quarterly return filers, if the registered person fails to file GSTR-3B for the preceding tax period, he would not be permitted to file GSTR-1 or use invoice furnishing facility (“IFF”) for subsequent quarter.
  • A registered person who is restricted from using the amount available in electronic credit ledger to discharge his liability towards tax in excess of 99% of such tax liability as per newly inserted Rule 86B of the CGST Rules, would also not be permitted to file GSTR-1 or use IFF, if he has not filed GSTR-3B for the preceding tax period.

But it is to be noted that Rule 59 of the CGST Rules is already substituted vide Notification No. 82/2020-Central Tax dated November 10, 2020, which is going to be effective from January 1, 2021, sub-rule (5) of which reads as under:

“(5) The details of outward supplies of goods or services or both furnished using the IFF shall include the –

(a) invoice wise details of inter-State and intra-State supplies made to the registered persons;

(b) debit and credit notes, if any, issued during the month for such invoices issued previously.”

Therefore, there is apparent mistake or it is not clear that what will be correct provisions under Rule 59(5) of the CGST Rules, w.e.f. January 1, 2021. Also, the newly inserted Rule 59(5) which is effective from December 22, 2020 talks about IFF also which is proposed in above substituted Rule 59 going to be effective from January 1, 2021. Looks like there is some inadvertent error which needs clarity.

Nonetheless, Rule 59(5) of the CGST Rules effective from December 22, 2020 as per Notification No. 94/2020-Central Tax dated December 22, 2020 reads as under:

“(5) Notwithstanding anything contained in this rule, –

(a) a registered person shall not be allowed to furnish the details of outward supplies of goods or services or both under section 37 in FORM GSTR-1, if he has not furnished the return in FORM GSTR-3B for preceding two months;

(b) a registered person, required to furnish return for every quarter under the proviso to sub-section (1) of section 39, shall not be allowed to furnish the details of outward supplies of goods or services or both under section 37 in FORM GSTR-1 or using the invoice furnishing facility, if he has not furnished the return in FORM GSTR-3B for preceding tax period;

(c) a registered person, who is restricted from using the amount available in electronic credit ledger to discharge his liability towards tax in excess of ninety-nine per cent. of such tax liability under rule 86B, shall not be allowed to furnish the details of outward supplies of goods or services or both under section 37 in FORM GSTR-1 or using the invoice furnishing facility, if he has not furnished the return in FORM GSTR-3B for preceding tax period.”

The Notification can be accessed at: https://www.cbic.gov.in/resources//htdocs-cbec/gst/notfctn-94-central-tax-english-2020.pdf

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