To ensure that taxpayers comply with the GST laws, the Central Board of Indirect Taxes and Customs (CBIC) amends the Central Goods and Services Tax Rules, 2017 as and when required. On 1 January 2021, the CBIC issued Notification No. 01/2021 – Central Tax to notify that taxpayers will not be able to furnish their FORM GSTR-1 if they have not furnished the required FORM GSTR-3B for preceding two months.
As per the above-mentioned notification:
- A GST registered Taxpayer will not be able to furnish his/her FORM GSTR-1 if he/she has failed to furnish FORM GSTR-3B for the previous two months.
- If the GST registered Taxpayer is a quarterly filer, he/she will not be able to furnish his/her FORM GSTR-1 if he/she has failed to furnish FORM GSTR-3B for the previous tax period. Such defaulting taxpayers will not be allowed to use the Invoice Furnishing Facility (IFF) as well.
- A GST registered Taxpayer who is restricted from using the amount available in his/her electronic credit ledger to discharge his/her liability towards tax, in excess of ninety-nine per cent of such tax liability under rule 86B, will not be allowed to furnish his/her FORM GSTR-1, if he/she has not furnished his/her FORM GSTR-3B for the preceding tax period. These taxpayers will not be allowed to use the Invoice Furnishing Facility (IFF) as well.
As on today, the GSTR-1 filing will be unblocked as soon as the relevant GSTR-3B is filed. This new amendment will help the Government in tracing non-filers which will force the defaulters to be GST compliant.
When a Taxpayer does not file his/her GSTR-1, the purchaser/counterparty will not be able to claim the eligible Input Tax Credit (ITC) on the purchases because GST returns are inter-linked. When invoices are not uploaded in the suppliers GSTR-1, the details will not reflect in the purchasers GSTR-2A and GSTR-2B. This will lead to inconveniences to the purchaser as he/she will be denied the eligible credit. This can affect business relations and cycle adversely.
GSTR-1 is a monthly or quarterly statement that should be filed by every GST registered taxpayer. This form contains details of all outward supplies (i.e. the sale of goods or provision of services).
In simple words, GSTR-3B is a consolidated summary return. This return contains details of inward and outward supplies. Every GST registered Taxpayer (subject to exceptions) must file FORM GSTR-3B.