Cos May Soon Be Able to Rec­tify GST Re­turns for Non-IT Er­rors

GST Coun­cil di­rects panel for IT griev­ance re­dres­sal to draw up a so­lu­tion that will give re­lief to in­dus­try

The Economic Times - - Economy: Macro, Micro & More - Deepshikha.Sikar­war @times­group.com

New Delhi: In­dian busi­nesses may soon be able to amend goods and ser­vices tax (GST) re­turn man­dated for car­ry­ing for­ward tax credit from the pre­vi­ous regime for non-IT re­lated er­rors as well. The GST Coun­cil has di­rected a com­mit­tee for IT griev­ance re­dres­sal to quickly draw up a so­lu­tion that will give re­lief to in­dus­try.

Thou­sands of crores of tax credit claimed by busi­nesses have been de­nied be­cause of er­rors in the fil­ing of re­turns, prompt­ing many to ap­proach ju­di­ciary. The move will be a re­prieve for busi­nesses that had lost credit due to mi­nor, non-tech­ni­cal er­rors.

“The coun­cil has ap­proved changes in cases where the er­ror is not IT re­lated,” a gov­ern­ment of­fi­cial aware of de­lib­er­a­tions told ET. It was felt that in some ar­eas where er­rors are ap­par­ent or high courts have is­sued di­rec­tions, those should be set­tled, he said.

A stan­dard op­er­at­ing pro­ce­dure will be de­vel­oped by the griev­ance com­mit­tee for all the cases where high courts have given a di­rec­tion, the amount has been wrongly en­tered or the con­cerned ju­ris­dic­tional com­mis­sioner has made a rec­om­men­da­tion. The forms TRAN1 and TRAN2, spec­i­fied for claim­ing past cred­its, can now be amen- ded to al­low for this.

The GST law does not pro­vide for any ap­peal on is­sues re­lated to TRAN1 or TRAN2 and thus many tax­pay­ers filed writs in high court and also se­cured favourable or­ders hold­ing the view that bona fide er­rors should be con­sid­ered by the gov­ern­ment. A num­ber of tax­pay­ers had lob­bied the gov­ern­ment and the GST Coun­cil to al­low amend­ments.

“Lot of com­pa­nies could not claim the en­tire el­i­gi­ble open­ing credit un­der TRAN1 due to in­ad­ver­tent er­rors,” said Pratik Jain, na­tional in­di­rect taxes leader, PwC. “This move will help them to claim the ad­di­tional amount, with­out go­ing to courts, which some of them have al­ready opted for.”

Busi­nesses look­ing to claim tax credit of the pre-GST pe­riod un­der GST could file TRAN1. The gov­ern­ment had al­lowed re­vi­sion of TRAN1 un­til De­cem­ber 27, 2017. Many busi­nesses missed do­ing so and ended up los­ing large tran­si­tional cred­its, even for ty­po­graph­i­cal er­rors.

The GST Coun­cil had al­lowed a lib­eral scheme for claim­ing credit in lieu of taxes paid un­der the pre­vi­ous regime against GST li­a­bil­i­ties. Busi­nesses could claim credit even if they did not have proof of pay­ment un­der the deemed ben­e­fit pro­vi­sion. How­ever, large tran­si­tion credit claims, which pulled down over­all GST col­lec­tions, made au­thor­i­ties wary, lead­ing to in­creased vigil. Any changes to the TRAN1 were thus not al­lowed on non-IT re­lated is­sues.

Re­ports of fraud­u­lent credit claims also led to in­quiries into tran­si­tional credit claimed by busi­nesses to as­cer­tain if they were gen­uine.

“Tran­si­tion cred­its have been chal­leng­ing for all busi­nesses and the IT griev­ance re­dres­sal com­mit­tee should ide­ally be con­sid­er­ing all is­sues for the en­tire pe­riod in­stead of a sun­set pe­riod and clar­ify that all gen­uine er­rors, whether aris­ing from the GSTN por­tal is­sues or com­mit­ted by the tax­pay­ers would be con­doned un­less there is mala fide in­tent,” said MS Mani, part­ner, at Deloitte In­dia.

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