37^th Meeting of the G.S.T. council has decided that Annual Return (GSTR 9 and 9A) under the G.S.T.is optional.

Being a new regime of taxation with lot of trial and error approach from the day one and amidst numerous problems during implementation phase, the proposed immunity is offered as a token of compensation or benefit.

It must be noted that Immunity is an option or a choice only for those registered persons whose aggregate turnover in a financial year does not exceed two crore rupees and who have not furnished the annual return.

In view of above decisions by GST Council, CBIC issued  Notification no 47/2019, Dated 9^th October, 2019 which has finally given relaxation from filling the annual GST returns for the Financial year 2017 18 and 2018-19 by the registered persons whose aggregate turnover in a financial year does not exceed two crore rupees and who have not furnished the annual return.

The relevant extract of Notification No 47/2019, Dated 9^th October, 2019 reads as under:

 “G.S.R……(E).— In exercise of the powers conferred by section 148 of the Central Goods and Services Tax Act, 2017 (12 of 2017) (hereinafter referred to as the said Act), the Central Government, on the recommendations of the Council, hereby notifies those registered persons whose aggregate turnover in a financial year does not exceed two crore rupees and who have not furnished the annual return under sub-section (1) of section 44 of the said Act read with sub-rule (1) of rule 80 of the Central Goods and Services Tax Rules, 2017 (hereinafter referred to as the said rules) before the due date, as the class of registered persons who shall, in  respect of financial years 2017-18 and 2018-19, follow the special procedure such that the said persons shall have the option to furnish the annual return under sub-section (1) of section 44 of the said Act read with sub-rule (1) of rule 80 of the said rules:

Provided that the said return shall be deemed to be furnished on the due date if it has not been furnished before the due date. “

In short, the immunity is given to the following persons:

1. The turnover of registered person should not exceed 2 Crores in a financial year.
2. Registered person has not furnished annual return before the due date of filling annual return.

In such case, if the registered person satisfies both the above referred conditions and doesn’t file annual return before the due date then the return shall be deemed to be filled for that financial year. The due date of filing the GST annual returns for the FY 2017-18 and FY 2018-19 are as under:

Time limit for filling annual returns:

In short, the returns filing is not exempted but it is presumed that the return is filed. It is a deeming fiction which clearly conveys that the return is filed.

How it can be “deemed” without it being filed? Obviously, it will take the figures in the auto generated mode from data with the department and the return so generated from the available data with the department it will be deemed to be the return filled U/s 44 of the Goods and Service Tax Act, 2017. There doesn’t seem to be any other options other than this.

However, now the biggest problem would arise. Being a new system, there are lot of errors and mistakes committed by the taxpayers while filing the GST return data on monthly basis. In many cases, even the returns are not filed by the dealers. In short, the data auto generated itself will be erroneous and faulty.

CBIC Press release to clarify issues in GSTR 9 is not of much relevance. Further issues arise, in case of difference in GSTR 3B and GSTR 1, which data will be considered for auto generation?  GSTR 3B data is the data based on which the tax liability is discharged by the dealer and probably it would be considered for auto generation of data in annual return by the software.

Deeming fiction is all the more harmful as the auto populated data may not be correct in majority of the cases. Considering it as “deemed to have been filed” shall leave the scope of litigation and disputes. Ideally, even if immunity is provided, it is advisable to file it as the taxpayers have entire data handy and memory is fresh. Compliances at a later date would be costlier and time consuming.

Actual immunity may be considered as only for those persons with turnover not exceeding Rs. 2 Crore where there are no errors and mistake while uploading the monthly or quarterly return in GSTR 1 and summary monthly return in GSTR 3B during 2017 18 and 2018 19 and as a result auto populated summary generated is perfect.

This is not so in majority of the cases which may be around 99%. The present benefit appears to be like an apple which you can have but you cannot eat.