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GST: What happens if person files return but doesn't make payment of taxes?

Under the GST law, the filing of return without payment of taxes shall not be considered as a valid return

Amit Bhagat 


I understand that the applicability of on reverse charge basis has been suspended. In this scenario, I want to know if the notification is also applicable on import of services for which we are paying on reverse charge basis?

In case of import of services, the integrated tax is payable under Section 5(3) of the Integrated Goods and Service Tax Act, 2017 (IGST Act). The liability to pay under reverse charge has only been deferred in respect of transactions falling under Section 5(4) of the IGST Act, which only covers procurements made from suppliers not registered under law. Accordingly, import of services shall continue to be liable to Integrated Tax under reverse charge mechanism.

Who can opt for the composition scheme? Is liability to pay under reverse charge mechanism covered under the composite scheme?

The law provides an option to a supplier of goods, having an annual aggregate turnover not exceeding Rs 10 million, to opt for payment of under Composition Scheme.  A similar option has also been provided to a person engaged in the supply of food/beverages (other than alcohol). However, this option is not available for other service providers. This option is also not available if the supplier is engaged in undertaking inter-state supplies.

The payable under reverse charge mechanism is not covered under the composition scheme. If a person registered under composition scheme procures any goods/services on which is payable under reverse charge mechanism, the person shall be required to pay at applicable rate and not based on rates prescribed under composition scheme.

What happens if the taxable person files the return under the law but does not make payment of

Under the law, the filing of return without payment of shall not be considered as a Section 2(117) defines a It means, a return furnished under sub-section (1) of Section 39 on which self-assessed tax has been paid in full. It is only the that would be used for allowing input tax credit (ITC) to the recipient. In other words, unless the supplier has paid the entire self-assessed tax and filed his return and the recipient has filed his return, the ITC of the recipient would not be confirmed.

Will there be any implication on goods returned under the regime which were sold before July 1, 2017?

The law contains specific transitional provisions regarding goods sold under the pre-regime which are returned by the recipient on or after July 1, 2017. If the buyer is not registered under the law, the seller shall be eligible to claim a refund of the taxes/duties paid under the pre-regime. However, the refund is permissible only if the goods were sold not before six months from July 1, 2017, and are also returned within six months after July 1, 2017.

If the buyer is registered under law, such goods returned by him after July 1, 2017, shall be deemed as a separate supply transaction. In such a case, the buyer shall be required to issue a tax invoice and charge the applicable

Is the supply of software treated as a supply of goods or supply of services under the law?

The law provides that transactions concerning development, design, programming, customisation, adaptation, upgradation, enhancement, implementation of information technology software shall be treated as the supply of services. Accordingly, the supply of software shall be treated as the supply of services.

We are engaged in supplying exempt goods to special economic zones (SEZ). Can we still claim input tax credit in respect of such supplies?

On account of a specific provision under law, supplies to SEZ are treated as zero-rated supply. Such provision also specifically provides that even if such supply is exempt from tax, input tax credit shall be allowed in respect of such supplies.  Therefore, you should be eligible to claim input tax credit of paid by you on procurements of eligible goods and services even if the goods supplied by you to the SEZ unit are exempt from
The writer is tax partner, PwC India. Rahul Kant, associate director at PwC, contributed to this column. The views expressed are the experts’ own. Send your queries to

First Published: Mon, February 26 2018. 05:25 IST