Time limits for GST Compliances extended due to Corona Outbreak

Frah Saeed, Advocate

Co-founder Clearmytax.in

1. Introduction:

Due to the outbreak of Novel Corona Virus (COVID-19) across many countries of the world, including India and challenges faced by tax payers in meeting compliance requirements under various provisions of the CGST Act, the Government has announced various relief measures relating to statutory and regulatory compliance matters across sectors.

In order to provide the relief, various notifications have also been issued by the Government on 03-04-2020. Out of these one of the notification, is Notification No. 35/2020-CT dated 03-04-2020 issued under Section 168A of the CGST Act,2017 for extending due date of compliance which falls during the period from 20-03-2020 to 29-06-2020 to 30-06-2020. However said notification states that the above extended time limit shall not be applicable in respect of certain provisions of CGST Act.

Let us discuss in detail the benefit offered by Notification No. 35/2020-CT dated 03-04-2020.

2. Section 168A has recently been inserted through The Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance,2020

Before proceeding ahead, it is pertinent to note here that Section 168A has recently been inserted in the CGST Act,2017 through Chapter VII of The Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance,2020 which was promulgated on 31-03-2020. Under Section 168A, the Government on recommendation of Council can extend the time limit in respect of actions which cannot be completed or complied with, due to force majeure. The expression force majeure as defined in the Ordinance inter alia includes epidemic. As India is currently grappling with Corona outbreak, based upon recommendation of GST Council and in exercise of powers vested under Section 168A, Notification No. 35/2020-CT has been issued on 03-04-2020.

3. Relief granted by Notification No. 35/2020-CT dated 03-04-2020

The said Notification mandates as under:

(i) where, any time limit for completion or compliance of any action, by any authority or by any person, has been specified in, or prescribed or notified under the said Act, which falls during the period from the 20-03-2020 to the 29-06-2020, and where completion or compliance of such action has not been made within such time, then, the time limit for completion or compliance of such action, shall be extended upto the 30-06-2020, including for the purposes of– 

(a) completion of any proceeding or passing of any order or issuance of any notice, intimation, notification, sanction or approval or such other action, by whatever name called, by any authority, commission or tribunal, by whatever name called, under the provisions of the Acts stated above; or 

(b) filing of any appeal, reply or application or furnishing of any report, document, return, statement or such other record, by whatever name called, under the provisions of the Acts stated above; 

It has further been stated that such extension of time shall not be applicable for the compliances of the provisions of the said Act, as mentioned below –

(a) Chapter IV;

(b) sub-section (3) of section 10, sections 25, 27, 31, 37, 47, 50, 69, 90, 122, 129;

(c) section 39, except sub-section (3), (4) and (5);

(d) section 68, in so far as e-way bill is concerned; and

(e) rules made under the provisions specified at clause (a) to (d) above;

(ii) where an e-way bill has been generated under rule 138 of the CGST Rules, 2017 and its period of validity expires during the period 20th day of March, 2020 to 15th day of April, 2020, the validity period of such e-way bill shall be deemed to have been extended till the 30th day of April, 2020.

Let us now deliberate on above notification and what it offers to the tax payers in detail in the succeeding paras.

3.1 Effective date of applicability of Notification No. 35/2020-CT

It is specifically stated in the Notification that same shall come into force with effect from the 20th day of March, 2020. Accordingly any compliance which was to be made till 19^th March, 2020 will not be covered by said notification and no extension of time thereon will be provided.

3.2 Filing of tax returns

Furnishing of returns is covered under Section 39 of the CGST Act,2017 which is excluded from the purview of relief. However person required to furnish returns under sub-section (3), (4) and (5) of Section 39 are eligible for relief as these sub-sections have specifically been kept out from the exclusion. Accordingly the tax deductors, Input Service Distributor, and non resident taxable person which are covered by said three sub-sections, will get the extended time relief in filing of their returns.

Further every electronic commerce operator who is required to collect tax at source under Section 52 is required to file return as per Section 52(4) of the CGST Act,2017. It is pertinent to mention here that Section 52 is not excluded from the benefit of the notification and thus extended time benefit will also be available to the tax collectors (electronic commerce operators).

For ready reference the position of due dates as well as extended dates of filing of returns in respect of above categories of tax payers is summed up in the table below:-

*The due dates for the returns for the month of March to May, 2020 falls between 20-03-2020 to 29-06-2020 and accordingly as per Notification No 35/2020-CT the due date is extended to 30-06-2020.

The above position is further corroborated by Circular No. 136/06/2020-GST dated 03-04-2020 whose Sl. No 9 and 10 are reproduced below:

What are the measures that have been specifically taken for taxpayers who are required to deduct tax at source under section 51, Input Service Distributors and Non-resident Taxable persons?

Under the provisions of section 168A of the CGST Act, in terms of notification No. 35/2020- Central Tax, dated 03.04.2020, the said class of taxpayers have been allowed to furnish the respective returns specified in sub-sections (3), (4) and (5) of section 39 of the said Act, for the months of March, 2020 to May, 2020 on or before the 30th day of June, 2020. 

What are the measures that have been specifically taken for taxpayers who are required to collect tax at source under section 52?

Under the provisions of section 168A of the CGST Act, in terms of notification No. 35/2020- Central Tax, dated 03.04.2020, the said class of taxpayers have been allowed to furnish the statement specified in section 52, for the months of March, 2020 to May, 2020 on or before the 30th day of June, 2020. 

3.3 Payment of Tax

As deliberated above, the return filing dates for tax deductors and tax collectors have been extended. Now the question arises as to whether the due date of making payment has also extended consonantly or not. Let us discuss the same as under:-

1. Tax Deductors

In terms of Section 39(7) of the CGST Act, 2017, every registered person, who is required to furnish a return inter alia under section 39(3), shall pay to the Government the tax due as per such return not later than the last date on which he is required to furnish such return. Thus the due date of payment hinges upon the due date of filing of return, meaning thereby if the due date of filing of return is extended, as has been done currently the due date of payment shall also be extended consonantly.

Further in terms of Rule 85(4) of the CGST Rules,2017 the amount deducted inter-alia under section 51, shall be paid by debiting the electronic cash ledger maintained as per Rule 87 and the electronic liability register shall be credited accordingly. Thus in case only payment of tax has been made (without filing of GSTR-7), which has been credited to electronic cash ledger, it will not amount of discharge of liability and liability will be discharged only at time of filing of GSTR-7 by debiting the electronic cash ledger.

From above it is aptly clear that even if we make payment of TDS now, it won’t serve any purpose as anyways Government doesn’t get any money as money is lying in your account. Thus the tax deductors can file their GSTR-7 (along with payment of TDS) for months March, 2020 to May, 2020 on or before the 30^th June, 2020 without any levy of interest as interest under Section 50(1) is levied when payment of tax is made after the due date which in instant case has been extended to 30^th June,2020.

2. Electronic Commerce Operator (Tax Collectors)

As per Section 52(3) of the CGST Act, 2017 the amount of tax collected at source is required to paid to the Government by the operator by 10th of next month. As Section 52(3) is not excluded from the purview of Notification No. 35/2020-CT, the due date of making of payment of TCS for the month of March to May, 2020 is extended to 30-06-2020 as due date of payment of TCS for said months is falling between 20-03-2020 to 29-06-2020.

3.4 Other Compliances

In regard to other compliances, Circular No. 136/06/2020-GST dated 03-04-2020 states as under:-

The time limit for compliance of some of the provisions of the CGST Act is falling during the lock-down period announced by the Government. What should the taxpayer do?

Vide notification No. 35/2020- Central Tax, dated 03.04.2020, issued under the provisions of 168A of the CGST Act, except for few provisions covered in exclusion clause, any time limit for completion or compliance of any action which falls during the period from the 20th day of March, 2020 to the 29th day of June, 2020, and where completion or compliance of such action has not been made within such time, has been extended to 30th day of June, 2020.

3.4-1 Exclusions

Now let us see which provisions of the CGST Act, 2017 which have been kept out of the Notification No. 35/2020- CT, meaning thereby benefit of the extended timeline would not be available thereon.

For ready reference of the readers the exclusions are tabulated below:

Further as per the Notification No. 35/2020-CT, no relaxation has also been provided in regard to the rules made under the above tabulated provisions of CGST Act.

3.5 Validity of E-way bills

As per Notification No 35/2020-CT where an e-way bill has been generated under Rule 138 of the CGST Rules, 2017 and its period of validity expires during the period 20-03-2020 to 15-04-2020, the validity period of such e-way bill shall be deemed to have been extended till the 30-04-2020.

It may be noted here that the provisions regarding validity period of e-way bill are contained in Rule 138(10) of the CGST Rules, 2017 wherein generally validity for a period of one day is granted for journey upto 100 KM and one additional day is granted for every additional 100 Km or part thereof. Due to lock down and stoppage of outbound trucks the validity has been extended.

In this regard it is worth taking note of Sl. No 8 of Circular No. 136/06/2020-GST dated 03-04-2020 which is reproduced below:

What will be the status of e-way bills which have expired during the lockdown period?

In terms of notification No. 35/2020- Central Tax, dated 03.04.2020,Issued under the provisions of 168A of the CGST Act, where the validity of an e-way bill generated under rule 138 of the CGST Rules expires during the period 20th day of March, 2020 to 15th day of April, 2020, the validity period of such e-way bill has been extended till the 30th day of April, 2020.

4.0 Concluding Remarks

To conclude, from above deliberations it is aptly clear that corona relief is offered to tax payers by means of extending the return filing dates / payment dates and validity period of E-way bill. This a welcome measure and will give a breathing space to the tax payers in such critical time of Corona outbreak. However we should remember that the extension of time granted is not a blanket one as certain provisions of the CGST Act as discussed in the article have been left out.

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Frah Saeed

Frah Saeed is a law graduate specializing in the core field of indirect taxes and is the Co-founder of taxwallah.com. She has authored many publications on GST and is into full-time consultancy on GST to big corporates. She as a part of taxwallah.com heads a team comprising of Chartered Accountants and Advocates and plays a key role in our mission to disseminate GST knowledge to all.