Consequences of late filing of GSTR 3B Return

1. Late Fees under Section 47 of the CGST Act, 2017 –
Starts Immediately after due date Late fees is the first consequence you will face for non-filing of GSTR 3B. The late fees will increase every day until it hits the capping limit. The fee will automatically be added in the next month’s GSTR 3B. Moreover, you can’t edit it, or you can’t proceed to file the return until you pay the late fees.

2. Interest under section 50 –
Starts Immediately after due date If a taxpayer is required to pay tax within prescribed time but fails to pay, then for the delay in payment, interest @18 percent will be levied. The interest will be payable only if you use cash ledger balance to pay taxes. In other words, if you have enough input tax credit and you do not pay taxes using net banking/challan/balance already added in the cash ledger, then there won’t be any interest leviable on you. There is no concept of maximum capping in case of interest.

3. Restricting E-Waybill Generation Under Rule 138E-
Restriction will be applicable if two consecutive GSTR 3B is not filled: If a person has not furnished the returns for a consecutive period of two tax periods, then the generation of E-Way Bill will be restricted for all types of outward supply of that person. Once the GST Returns are filled, the restrictions will be lifted.

4. Penalty Under Section 122(1)(iii) –
Levy after 3 months of due date for certain specific offences, there are provisions of penalties in GST. One of such offences is not paying collected tax amount within 3 months from the due date. The Penalty will be equal to the amount of tax collected subjected to a minimum of Rs. 20,000.

5. Suspension and subsequent cancellation of GST Registration under Section 29(2) –
May be initiated after 6 Months of Due date If a regular taxpayer does not file a return for a continuous period of six months, then the GST Officer may cancel the GST registration of such person. Before cancellation, the officer will issue a Notice seeking clarification from such person and that person is required to reply in 7 working days, giving reasons to the officer for not cancelling the GST registration.

6. Recovery Proceedings under Section 79

This is the strictest step that can be taken for not filling GSTR 3B. Lots of reminders and notices are required to be served before initiation of the recovery. The flow of reminders and procedure is as under:
1. First Reminder – 3 Days before Due Date to nudge taxpayer to file Return on or before due date
2. Second Reminder – Immediately after due date to inform that return was not filled on due date
3. Notice – 5 Days after Due date, notice in Form GSTR 3A, requiring the person to file returns in 15 Days
4. Order – Any time after the lapse of 15 Days of service of notice in form GSTR 3A, provided return is not filled. Officer may proceed for assessment. Here the officer will compute the tax liability to the best of his/her judgement. The Officer may consider the details of outward supply furnished by the person, inward supply shown by his/her suppliers, e-waybill details etc. Order will be issued in ASMT – 13 and summary will be uploaded in Form DRC -07 by officer.
5. Initiation of proceedings: After 30 Days of serving of order in form ASMT -13, the Officer may initiate the recovery proceeding under section 78 and actual recovery under section 79. In the GST regime, officers are empowered to recover the tax payable from your debtors, refund dues, seized Goods, Property etc.

7. The last consequence: Restriction of Input Tax Credit of recipients: One of the main conditions for claiming Input Tax Credit is payment of tax to the Government by supplier on supplies, for which the recipient is claiming Input Tax Credit. Now, If the GSTR 3B is not filled then it can be assumed that the supplier hasn’t yet paid the taxes to the Government.

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