CBIC issues standard operating procedure in case of non-filing of GST returns

This Tax Alert summarizes a recent circular[1] issued by Central Board of Indirect Taxes and Customs (CBIC) which prescribes the use of a standard operating procedure  in case of non-filing of GST returns.  

The key steps are as follows:

• After five days from the due date of filing Form GSTR-3B, a notice shall be issued in Form GSTR-3A to the defaulter, requiring him to furnish the return within 15 days.

• If the return is not filed within 15 days, the proper officer may proceed for best judgement assessment.

• If a valid return is furnished within 30 days of the assessment order, the said order shall be deemed to have been withdrawn.

• If the return is not furnished within 30 days from the assessment order, the proper officer may initiate the recovery proceedings.

• In deserving cases, the Commissioner may resort to provisional attachment of property (including bank account) of the defaulter.

• Proper officer would initiate action for cancellation of registration in cases where the returns have not been furnished for continuous period of six months.

To avoid unwarranted disputes, the taxpayers should ensure filing of GST returns well within the due date.

While passing best judgement assessment order for non-filers of GSTR-3B, the tax officials should proceed rationally. The courts have time and again held that best judgement assessment should not be exercised arbitrarily. In one of the recent cases, GST Appellate Authority had set aside the best judgement assessment observing that the estimations had no basis.

While the intention of the government is to boost the compliance, it may consider providing relief to genuine businesses facing working capital issues.