The addition of a new sub-rule, namely, the sub-rule (6), to the main Rule 59 of the CGST Rules has officially notified the blocking of filing or submission of the form, namely, GSTR-1. The introduction of such a rule or update was released by the CBIC, or the Central Board of Indirect Taxes and Customs, on December 22, 2020, through the uploading of a notice with the number. 94/2020. This regulation governs the format and manner in which the entity delivers outward supplies to the consumer.
Blocking of GSTR-1 and IFF Filing
If a registered person or the taxpayer does not file a form, namely, GSTR-3B return for the previous period of two months, they will be unable to furnish details about the conducting or any outward supply of goods or services, or both, in the form, namely, GSTR-1. This is what is covered and made explicit by CGST Rule 59, sub-rule (6).
Furthermore, suppose the taxpayer has chosen to file returns on a quarterly basis under the QR(the Quarterly Return Filing and Monthly Payment of Taxes) scheme. In that case, he will not be able to declare B2B sales on the IFF or the Invoice Furnishing Facility or file GSTR-1 if the GSTR-3B for the previous quarter is still outstanding or not filed.
Non-filing of GSTR-3B resulted in the blocking of the generation of e-way bills, as per provisions that were stated previously. However, under the new laws or rules, the e-way bill, as well as the registered person’s GSTR-1, will be blocked, making it impossible to file the same. In addition, if a taxpayer is compelled to file GSTR-3B as a result of Rule 86B’s application and fails to do so, his GSTR-1 will also get blocked, not allowing him to file the same.
If a taxpayer does not file GSTR-3B for April and May, for example, then their GSTR-1 for June will be blocked, and they will not be allowed to file it. If a quarterly return filer fails to file the form GSTR-3B for the previous tax period, he will not be permitted to file GSTR-1 for consecutive quarters either. The government’s primary goal is to identify non-filers and bring them into compliance with the provisions of the Acts and associated rules.
Implementation of Rule 59(6) on the GST Official Portal
Starting from September 1, 2021, the GST portal will deploy or apply the provisions of Rule 59(6). As a result, the system will display an error message if a registered person or the taxpayer attempts to save GSTR-1 data or use IFF for August 2021 and subsequently clicks the ‘Submit’ button.
Any GSTR-3B returns that are delayed in filing are flagged for two months, up to July 2021 or one quarter ending on June 30, 2021. To complete GSTR-1 filing, the taxpayer should file any outstanding or delayed and not filed GSTR-3B returns.
As the filing is system-automated, tax authorities or any of their officials cannot intervene or take action to rectify the situation and help you unblock it.
What Impact Does the Blocking of GSTR-1 Filing Bring?
When a registered person or taxpayer does not file or is blocked from filing form GSTR-1, then the counterparty will not be able to claim credit of GST paid on a purchase made by them. If invoices are not uploaded in the form GSTR-1, the transaction will not be reflected in the counterparty’s forms GSTR-2A and GSTR-2B either. As a result, the recipient will be denied credit automatically, which complicates the issue.
Resolving the Issue
GSTR-1 will be unblocked only once the registered person or taxpayer files GSTR-3B. The government wants taxpayers to follow the rules and comply with them, which is why these additional measures have been added to the laws and regulations already in place or implemented by the authorities.
Latest Updates on GSTR-1
Date: 21st December 2021
- Beginning from January 1, 2022, taxpayers who have not filed a GSTR-3B for the prior period will be unable to file the form GSTR-1.
- Beginning from January 1, 2022, GST officers will be able to commence recovery proceedings from those registered persons or the taxpayers who have evidently under-reported their earnings through sales in the form of GSTR-3B compared to GSTR-1 without having to issue a show-cause notice.
Date: 29th August 2021
The CGST notification number 32/2021, issued on August 29, 2021, allows company taxpayers to continue reporting GSTR-1 and GSTR-3B using the EVC (Electronic Verification Code) or DSC (Digital Signature Certificate) until October 31, 2021.
Date: 26th August 2021
If taxpayers have unresolved issues or are unable to file GSTR-3B, they will not be allowed to file GSTR-1 or use the IFF for August 2021 on the GST official portal starting from September 1, 2021. It applies if, according to CGST Rule 59, GSTR-3B has been outstanding for the past two months in the case of a taxpayer who is a monthly filer or the last quarter in the case of a quarterly filer till July 2021.
Date: 28th May 2021
In its 43rd meeting, the GST Council made the following recommendations:
- The deadline for filing GSTR-1 for May 2021 has been extended from June 1111 to June 2626.
- The deadline or due date for QRMP taxpayers to furnish or file B2B sales invoices in IFF for May 2021 has been extended from June 1313 to June 2828.
- GST taxpayers have been granted the authority to authenticate returns using an EVC instead of a DSC until August 3131, 2021.
- For future tax seasons or periods, the late fee has been rationalised as follows:
- If the preceding financial year’s annual turnover was lower than INR 1.5 Crore, then a late fee of up to INR 2,000 per report might be levied by the GST Authorities, i.e., INR 1000 each for CGST and SGST.
- The maximum late fee of INR 5,000 per return can only be charged or levied if the taxpayer’s turnover is between INR 1.5 Crore and INR 5 Crore, i.e., INR 2,500 each for CGST and SGST.
- A late fee of up to INR 10,000, i.e., INR 5000 per CGST and SGST, might be charged or levied if the turnover exceeds INR 5 Crore.
Date: 01st May 2021
(1) The deadline for filing GSTR-1 for April 2021 has been extended from May 1111 to May 2626.
(2) For April 2021, the deadline for submitting B2B supply on the IFF (optional facility) has been extended from May 1313 to May 2828.
Date: 09th January 2021
If a registered person or a taxpayer with an annual aggregate turnover of INR5 Crore does not enrol in the QRMP scheme under GST, he will be treated as a monthly filer of GSTR-1 and GSTR-3B that will begin from January 2021. As a result, GSTR-1 will be due on the 11th of the following month, and GSTR-3B will be due on the 20th of the month that is following.
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