Another side of the coin on the extension of the due date of Annual Return

Implication of due date extension Annual Return
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Another side of the coin on the extension of the due date of Annual Return

Vide 7th Removal of Difficulty Order, 2019 issued on 26th August 2019, the due date of annual return for FY 17-18 is extended to 30th November 2019. Naturally, it has benefited business houses, consultants and executives for performing the working and furnishing the annual return. But at the same point of time, it is important to see the other implications of this extension.

Implications from the due date extension

1st Implication – Demand & Recovery  [Sec 73 & Sec 74 of CGST Act]

Proper officer can issue the order u/s 73 and 74 within 3/5 years of the due date of annual return respectively. As the due date of annual return is extended to 30th Nov 2019 for FY 17-18 so the department gets the additional time due to extension of the due date. Had late fee be waived instead the extension of the due date, then the period of issuance of the order would not have been stretched accordingly.

So, for FY 2017-18 the order u/s 73 and 74 can be issued till 30th November 2022 and 30th November 2024 respectively.

Section 73 of CGST Act: Determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilized for any reason other than fraud or any wilful misstatement or suppression of facts.
Section 73(2) of CGST Act: The proper officer shall issue the notice u/s 73(1) at least three months prior to the time limit specified in sec 73(10) for issuance of the order.

Section 73(10) of CGST Act: The proper officer shall issue the order u/s 73(9) within three years from the due date for furnishing of annual return for the financial year to which the tax not paid or short paid or input tax credit wrongly availed or utilized relates to or within three years from the date of erroneous refund.

Section 74 of CGST Act: Determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilized by reason of fraud or any wilful-misstatement or suppression of facts.
Section 74(2)of CGST Act: The proper officer shall issue the notice u/s 74(1) at least six months prior to the time limit specified in sub-section (10) for issuance of the order.

Section 74(10)of CGST Act: The proper officer shall issue the order u/s 74(9) within a period of five years from the due date for furnishing of annual return for the financial year to which the tax not paid or short paid or input tax credit wrongly availed or utilized relates to or within five years from the date of erroneous refund.

2nd Implication – Period of retention of accounts (Sec 36 of CGST Act)

As per section 36 of CGST Act, books of account or other records u/s 35(1) are required to be retained till 72 months from the due date of furnishing the annual return. With the extension of the due date of annual return for FY 17-18, the books of accounts and records for FY 17-18 u/s 35(1) shall have to be retained by every registered person till 30th November 2025.

Section 36 of CGST Act: Every registered person required to keep and maintain books of account or other records in accordance with the provisions of sub-section (1) of section 35 shall retain them until the expiry of seventy-two months from the due date of furnishing of annual return for the year pertaining to such accounts and records.

3rd Implication – Due date of ITC [Sec 16(4) of CGST Act]

After having the decision of AAP and Co. Vs Union of India in Gujarat HC, it is clear that GSTR 3B is not the return u/s 39. And so, in absence of return u/s 39 the due date of annual return will be the determining factor for the due date of ITC. So with this extension of the due date of annual return, the due date of ITC is now 30th November 2019.

Section 16(4) of CGST Act: A registered person shall not be entitled to take the input tax credit in respect of any invoice or debit note for the supply of goods or services or both after the due date of furnishing of the return u/s 39 for the month of  September following the end of financial year to which such invoice or invoice relating to such debit note pertains or furnishing of the relevant annual return, whichever is earlier.

 

The article is compiled by CA Vivek Laddha. If you have any queries concerning the above article. Please write to us either in the comments section below or email the author on vivekladdha@wisecor.in 

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