Tax Recovery for Mismatch of GSTR 1 and GSTR 3B

CBEC-20/l 6/05/2021 -GST/23
Govcrnment of India
Ministry of Finance
Department of Revenuc
Central Board of Indirect Taxes and Customs
GST Policy Wing

New Delhi, dated 7th January,2022
To.
The Principal Chief Commissioners / Chief Commissioners / Principal Commissioners /
Commissioners of Central Tax (All)
The Principal Directors General / Directors General (All)

Madam/Sir.
Subject: Guidelines for recovery proceedings under the provisions ofsection 79 ofthe CGST
Act,2017 in casos covered under explanation to sub-section (12) of section 75 of the CGST
Act,2017-Reg.
Sub-section (12) of section 75 ofthe CGST Act, 2017 (hereinafter referred to as “the Act”)
provides that notwithstanding anything contained in section 73 or section 74 ofthe Act, where any
amount of self-assessed tax in accordance with the return fumished under section 39 remains
unpaid, either wholly or partly, or any amount ofinterest payable on such tax remains unpaid, the
same shall be recovered under the provisions ofsection 79. An explanation has been added to subsection (12) of section 75 vide section 114 of the Finance Act, 2021 with effect from 01.01.2022
to clarifu that “self-assessed tax” shall include the tax payable in respect of outward supplies, the
details of which have been fumished under section 37. but not included in the retum fumished
under section 39.

2. Doubts are being raised by the trade and the field formations regarding modalities for
initiation of the recovery proceedings under section 79 of the Act in the cases covered under the explanation to sub-section (12) of section 75 of the Act. In view of the above, the following
guidelines are hereby issued with respect to the recovery proceedings under section 79 ofthe Act
in such cases.
3.1 Sub-section (12) ofsection 75 ofthe Act is reproduced hereunder for reference:
“(12) Notwithstanding anything contained in section 73 or section 74, where any amount of selfassessed tar in accordance with d returnfurnished under section 39 remains unpaid, either wholly
or partly, or any amounl of interest payable on such tax remains unpaid, the same shall be
recovered under the provisions of section 79.

Explanation. – For the purposes of this sub-section, the expression “self-assessed tax” shall
include the tax payable in respect of delails of outward supplies furnished under section 37, but
not included in the returnfurnished under section 39. ”
From the perusal ofthe above provision, it is clear that where the tax payable in respect of
details of outward supplies fumished by the registered person in GSTR-I, has not been paid
through GSTR-3B retum, either wholly or partly, or any amount of interest payable on such tax
remains unpaid, then in such cases, the tax short paid on such self-assessed and thus self-admiued
liability. and the interest thereon, are liable to be recovered under the provisions ofsection 79.

3.2 There may, however, be some cases where there may be a genuine reason for difference
between the details of outward supplies declared in GSTR-1 and those declared in GSTR-3B. For
example, the person may have made a typographical error or may have wrongly reported any detail
in GSTR-I or GSTR-3B. Such errors or omissions can be rectified by the said person in a
subsequent GSTR-I/ GSTR-3B as per the provisions of sub-section (3) of section 37 or the
provisions ol sub-section (9) of section 39, as the case may be. There may also be cases, where a
supply could not be declared by the registered person in GSTR-I ofan earlier tax period, though
the tax on the same was paid by correctly reporting the said supply in GSTR-3B. The details of
such supply may now be reported by the registered person in the GSTR-I ofthe current tax period.
In such cases, there could be a mis-match between GSTR-l and GSTR-3B (iability reported in
GSTR-I> tax paid in GSTR-3B) in the current tax period. Therefore, in all such cases, an
opportunity needs to be provided to the concemed registered person to explain the differences
between GSTR-I and GSTR-3B, ifany, and for short payment or non-payment ofthe amount of self-assessed tax liability, and interest thereon, before any action under section 79 of the Act is
taken for recovery of the said amount.
3.3 Accordingly, where ever any such amount oftax, self-assessed by the registered person in
his outward supply statement GSTR-I is found to be short paid or not paid by the said person
through his GSTR-3B retum in terms ofthe provisions ofsub-section (12) ofsection 75 of the Act,
the proper officer may send a communication (with DIN, in terms of guidelines issued vide
circular No. 12214112019-GST dated 5th November 2019) to the registered person to pay the
amount short paid or not paid, or to explain the reasons for such short payment or non-payment of
self-assessed tax, within a reasonable time, as prescribed in the communication. If, the concemed
person is able to justifu the differences between GSTR-I and GSTR-3B, or is able to explain the
reasons ofsuch short-payment or non-payment oftax, to the satisfaction of the proper officer, or
pays the amount such short paid or not paid, then there may not be any requirement to initiate
proceedings for recovery under section 79.

3.4 However, ifthe said registered person either fails to reply to the proper officer, or fails to
make the payment of such amount short paid or not paid, within the time prescribed in the
communication or such further period as may be permitted by the proper officer, then the
proceedings for recovery ofthe said amount as per provisions of section 79 may be initiated by
the proper officer. Further, where the said registered person fails to explain the reasons for such
difference/ short payment oftax to the satisfaction of the proper officer, then the proper officer
may proceed for recovery of the said amount as per provisions ofsection 79.
4. Difficutty, if any, in implementation of the above guidelines may please be brought to the
notice of the Board. Hindi version would follow

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