When individuals or businesses neglect filing their Goods and Services Tax (GST) returns, it can lead to serious repercussions. These include attaching bank accounts and canceling GST registration. According to BusinessLine, the finance ministry has added these measures to the Standard Operating Procedure (SOP) to address non-compliance with GST return filings.
Filing Requirements and Non-Compliance Impact
GST assessees must file their returns either monthly (as normal suppliers) or quarterly (if they are under the composition scheme). Despite these obligations, about 20 percent of GST assessees fail to meet requirements. This significantly impacts revenue collection.
Dealing with Non-Filing of GST Returns
The Central Board of Indirect Taxes and Customs (CBIC) has developed a detailed SOP to handle defaults in GST payments. Here’s a step-by-step breakdown:
System-Generated Notice
The system sends a notice to the defaulter when they miss the due date for GST payment.
Formal Notice (Form 3-A)
Authorities issue a formal notice under Form 3-A, requiring payment within 15 days if dues remain unpaid five days after the initial notice.
Evaluation by an Officer
An officer assesses the tax liability and issues Form GST ASMT-13 to demand recovery of pending returns if dues are not cleared within the stipulated 15 days. This form is withdrawn upon clearing all outstanding dues.
Cancellation of Registration
Failure to file returns within the specified timeframe under Section 29 of the CGST Act may result in initiating the process to cancel the GST registration of the defaulter.
Provisional Attachment
The Commissioner can enforce a provisional attachment of the defaulter’s assets, including bank accounts, to safeguard revenue under Section 83 of the CGST Act.
Right to a Hearing
The Act mandates providing the assessee an opportunity to be heard before canceling registration, ensuring due process.
Steps to Avoid Penalties
To mitigate the consequences of not filing GST returns, assessees should:
- Timely Filing: Ensure prompt filing of GST returns according to their classification.
- Monitor Notices: Pay close attention to any notices from GST authorities and respond promptly to avoid further repercussions.
- Clear Outstanding Dues: Immediately clear any outstanding dues upon receiving a notice to prevent the escalation of the issue.
- Maintain Compliance: Regularly review GST regulations and uphold compliance to avoid inadvertent defaults.
Conclusion
Failing to file GST returns not only disrupts revenue collection but also exposes the defaulter to significant risks. These include bank account attachment and potential GST registration cancellation. By understanding the SOP and proactively adhering to GST regulations, assessees can avoid severe penalties and positively contribute to the tax system.
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