Concerned with the dipping monthly collections of Goods and Services Tax (GST), the government and indirect tax department are now planning stricter measures against non-compliant taxpayers.
According to sources, the tax department is now planning to block the facility to generate e-way bill for taxpayers who do not file two consecutive GSTR-3B returns with effect from 17 November 2019. Once the taxpayer has filed one of the pending returns, the facility to generate e-way bill will be automatically restored.
GSTR-3B is monthly return that every registered GST payer has to file. It contains details of sales and purchases made by a business.
Sources told Business Today that the required connectivity between GST Network (GSTN) and the e-way bill system and development of an application to block and unblock facility has been developed and tested between two systems.
While a decision to this effect was taken by the GST Council in April, the reason for the 'extreme' step could be to check leakages of taxes. Non-filing of returns is still high and the tax department thinks this is a major cause for falling GST collections.
"With a continuous dip in revenue for the last few months, this is a step towards curtailment of tax leakage. Businesses need to ensure disciplined filing of GSTR-3B to avoid business disruption," says Anita Rastogi, partner, indirect taxes, PwC.
According to the indirect tax department, as of 8 November 2019, 21.99 lakh taxpayers have been found to have not filed GSTR-3B returns of August and September 2019.
These defaulters now face possible blocking of the facility to generate e-way bill from 17 November. The department, however, is planning to send alert messages to such taxpayers if they come to e-way bill website, and ask them to file their returns by the 17 November.
The problem though is that integration testing of backend applications of few states with GST System is not yet completed. Unless the facility to unblock the e-way generation facility is developed, the department cannot go ahead with blocking the facility.
Rajat Mohan, a partner in chartered accountancy firm AMRG & Associates, said that deferment of implementation of tax provisions on the premise that technology is not ready indicates that the tax authorities are still not ready to identify and capture the culprits (evading tax) on a real-time basis.
In September 2019, the GST collection fell by 5.3% to Rs 95,450 crore as compared to a year-ago period. In August, the GST collections fell to Rs 92,000 crore, which was lower than the previous year collection by over 4%. With the average monthly collections so far this year at around Rs 98,000 crore, way below the required Rs 1.20 lakh crore, the government is looking at a large shortfall in GST collection.
With five more months to go in this financial year, the latest move is probably a last-ditch attempt by the government to revive GST collections.