What are the ramifications of not filing Form GSTR 3B?

Ashish M. Shaji

06 Sep, 2022

GST was introduced by the Union Government on 1^st July 2017. The Goods & Services Tax was introduced as an indirect tax reform in India by amalgamating various indirect taxes into one tax. Under the GST Law, a registered taxpayer is required to file a number of GSTR forms. In this article, we shall discuss one such form called as GSTR 3B and also understand the ramifications of not filing the same.

What is GSTR 3B?

GSTR 3B is a return form which should be filed by a regular GST tax payer. This return form comprises of the summary details of the outward supplies made and the details of the Input Tax Credit. Generally, this form should be filed by 20 of the next month, but the government can extend its due date of filing.

GSTR 3B: Consequences of failure to file the form

• Late fees (Section 47 CGST Act 2017)

One of the imminent consequences one can face for not filing GSTR 3B is levy of late fees. The late fees will grow each day until it reaches the capped limit. The fee will be added in the following month’s form. Further, you also cannot edit or you cannot proceed to file the return until you have paid the late fees. There is a domino effect of not filing this return form, and the late fee will increase continuously till it touches the capped limit.

• Levy of Interest (Section 50)

In case a taxpayer is required to pay tax within the due date, but he fails to pay the same, then interest at the rate of 18% shall be levied for such delay in payment. The interest shall be payable if you use cash ledger balance to pay tax. Hence if you have enough input tax credit and you don’t pay taxes via net banking/challan, then interest will not be levied. Moreover, there is no maximum capping of interest.

• Restriction of e-way bill generation (Rule 138E)

In case a person fails to furnish returns for a consecutive two tax period, then a restriction shall be placed on the generation of e-way bill for all types of outward supply of that person. When the return is filed then, such restrictions shall be removed. 

e-way bill restriction will cause restriction of outward supply valued more than 50k outside the state and outward supply of specific value notified by the State government inside the state.

• Penalty for not paying tax amount collected within 3 months

In case of specific offences, penalties are placed under the GST law. One such penalty is for not paying tax collected within 3 months from the due date. The penalty in such case will be equal to the tax amount collected subjected to minimum of 20000.

• Suspension and Cancellation of GST Registration (Section 29(2))

In case a regular taxpayer fails to file a return for a period of six months continuously, then the GST registration of such person shall be liable to be cancelled. However, before the registration is terminated, the officer will issue a notice requiring clarification, and such person must reply in 7 days by providing reasons why his registration should not be cancelled. In case the officers initiate cancellation procedure of the GST registration, then your GSTIN would be suspended, and the registered person would be unable to supply any taxable goods till the time the suspension is in place.

• Recovery Proceedings (Section 79)

Not filing form GSTR 3B can lead to initiation of recovery proceedings however, before such initiation, notices and reminders must be served. The following procedure is followed:

1. The first reminder will be sent 3 days before the due date;
2. The second reminder is sent immediately after the due date;
3. A notice shall be sent 5 days after the due date asking the person to file return in 15 days;
4. If, after the 15 days period, return is still not filed, then the officer can proceed for assessment. The officer will calculate the tax liability. An order would be issued in ASMT 13, and summary will be uploaded in Form DRC 07^[1].
5.  Once the order is served, 30 days after that, the officer shall initiate the recovery proceeding and actual recovery under section 79.

One must note here that officers may proceed with assessment. The word “may” means that it is not binding on officers to compute the tax payable exactly after the 15^th day of serving notice. They can proceed on any day after the 15 days period.

• Restriction of Input Tax Credit of recipients

In order to claim input tax credit, the payment of tax to the government by the supplier on supplies is required. If GSTR 3B is not filed, then it may be assumed that the supplier is yet to pay taxes. However, there are exceptions to it.

Conclusion

GSTR 3B is a return form which should be filed by a regular GST tax payer. As a regular GST taxpayer, one must file the return form without fail. There are various forms under GST which have to be filed by taxpayers as per their eligibility therefore, one can get confused as to which form is to be filed. In that case, you are advised to seek the assistance of a GST professional who would help you with filing GSTR form.

Read our article:Govt. Allows Taxpayers to File GSTR-3B Returns in a Staggered Manner