Legal Provisions for Non-Filers or say “return defaulters”
Section 46 of CGST Act 2017 identifies a registered person as tax return “defaulter” who fails to furnish a return under section 39 (Monthly/quarterly return) or section 44 (annual return) or section 45 (Final return). Sometimes, these persons also called as non-filers.
Further, section 46 of the CGST Act 2017 read with Rule 68 of the CGST Rules, 2017 requires GST officer for issuance of a notice in FORM GSTR-3A to a tax return defaulter requiring him to furnish such return within fifteen days.
Where a registered person fails to furnish the return under section 39 (Monthly/quarterly return) or section 45 (Final Return), even after the service of a notice under section 46, Section 62 of CGST Act 2017 empowers GST officer to assess the tax liability of the said person to the best of his judgement and issue an assessment order within a period of five years from the date specified under section 44 for furnishing of the annual return for the financial year to which the tax not paid relates.
No separate notice is required to be issued for best judgment assessment under section 62 and in case of failure to file return within 15 days of issuance of FORM GSTR- 3A, the best judgment assessment in FORM ASMT-13 can be issued without any further communication.
Standard Operating Procedure:-
To bring uniformity on all India Basis, CBIC has issued a circular to prescribe Standard Operating Procedure for implementation of provisions applicable on non-filers. Following guidelines are hereby prescribed under this:-
(i) SMS before due date : Preferably, a system generated message would be sent to all the registered persons 3 days before the due date to nudge them about filing of the return for the tax period by the due date.
(ii) Message after due date: Once the due date for furnishing the return under section 39 is over, a system generated mail / message would be sent to all the defaulters immediately after the due date to the effect that the said registered person has not furnished his return for the said tax period;
The said mail/message is to be sent to the authorized signatory as well as the proprietor/partner/director/karta, etc.
(iii) Notice of return defaulter: Five days after the due date of furnishing the return, a notice in FORM GSTR-3A (u/s 46 of the CGST Act read with rule 68 of the CGST Rules) shall be issued electronically to such registered person who fails to furnish return under section 39, requiring him to furnish such return within fifteen days;
(iv) Assessment Order: In case the said return is still not filed by the defaulter within 15 days of the said notice, the proper officer may proceed to assess the tax liability of the said person under section 62 of the CGST Act, to the best of his judgement. Then, he would issue order under rule 100 of the CGST Rules in FORM GST ASMT-13. The proper officer would then be required to upload the summary thereof in FORM GST DRC- 07;
For the purpose of assessment of tax liability u/s 62 of the CGST Act, the proper officer may take into account the details of outward supplies available in the statement furnished under section 37 (FORM GSTR-1), details of supplies auto-populated in FORM GSTR-2A, information available from e-way bills, or any other information available from any other source, including from inspection under section 71;
(v) Withdrawal of assessment order: In case the defaulter furnishes a valid return within thirty days of the service of assessment order in FORM GST ASMT-13, the said assessment order shall be deemed to have been withdrawn in terms of provision of sub-section (2) of section 62 of the CGST Act.
(vi) Recovery of dues : However, if the said return remains unfurnished within the statutory period of 30 days from issuance of order in FORM ASMT-13, then proper officer may initiate proceedings under section 78 and recovery under section 79 of the CGST Act;
Based on the facts of the case, the Commissioner may resort to provisional attachment any property, including bank account to protect revenue under section 83 of the CGST Act before issuance of FORM GST ASMT-13.
Further, the proper officer would initiate action under sub-section (2) of section 29 of the CGST Act for cancellation of registration in cases where the return has not been furnished for the period specified in section 29 (i.e. for six months by regular dealer or for consecutive two quarters by composition dealer).
Hence, in this SOP, CBIC clarifies that as and when a registered person defaults in filing his return even after issuance of Assessment order, he would have to face stringent action of GST department.
GST department, beyond cancellation of GST registration, may freeze bank accounts, attach any movable/immovable property for recovery of assessed amount of tax or other dues.
Due to fully computerized online modules of GST, it is very easy for the GST department to keep an eye on tax return defaulters and to act against them in the manner as prescribed under this SOP.
It is thus strongly recommended for all registered persons to complete filing of all their pending returns as soon as possible.
Read full circular : CIR-129/48/2019-GST