GST Procedures

Sahaj GST Returns – Form GST RET-2

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By Introducing different return forms for different types of business, the new GST return system aims to simplify the filing process for business registered under GST. Sahaj GST return is one such form among the several types of new GST returns to be introduced.

In this blog, let us understand all about the Sahaj GST returns right from its applicability, periodicity of return filing, payment of tax and return filing process.

What is Sahaj return in GST?

Sahaj is a type of GST returns for small taxpayers whose aggregate turnover in the financial year does not exceed 5 Crores and their outward supplies are of B2C nature i.e. outward supplies are made to end consumers and unregistered business.

Applicability of Sahaj return

The criteria to decide on the applicability of the return depends on the aggregate turnover and types of outward supplies you make.

  • The aggregate turnover in the previous financial years is up to 5 crores
  • You are engaged in making only B2B supplies (Unregistered Business and end consumers)

If you satisfy the above two conditions, you will have an option to file Sahaj GST returns.

Periodicity of filing Sahaj return

The periodicity of Sahaj return filing is on a quarterly basis. However, the payment of tax should be made on a monthly basis.

For businesses opting Sahaj GST return, the due date to file a quarterly return is 25th of the subsequent month following the quarter-end. Following are due date for filing Sahaj returns.

Due Date to File Sahaj GST Return
Quarters Due Data
April -June 25th July
July – September 25th October
October- December 25th January
January-March 25th April

Due date for payment of tax

Taxpayers opting Sahaj return are required to make the monthly payment though the return filing periodicity is quarterly. The payment of tax is on the self-assessed basis and should be made through a payment declaration form known as Form GST PMT-08. The due date for monthly payment of tax for Sahaj return is 20th of succeeding month.

The self-assessed payment is required only for 1st and 2nd month of the quarter and for 3rd month, payment along with all adjustments should be made along with the returns.

Sahaj return filing process

The Sahaj GST return consist of one main return, to be filed on a quarterly basis supported by two main annexures. Form GST RET-2 is the return form to be used to file Sahaj returns supported by the annexures.

The details of return forms and annexures to be used for filling Sahaj return is given below.

Form Description Action
Form GST ANX- I Form GST ANX-1 is an annexure of outward supplies and inward supplies attracting reverse charge. You need to upload details of outward supplies along with purchases attracting reverse charge in FORM GST ANX – 1
Form GST ANX – II It’s an annexure containing details of auto-drafted inward supplies.

 

 

 Form GST ANX-II is an auto-populated annexure containing the details document uploaded by your supplier on a real-time basis.

Here you can either accept, modify or reject the invoice uploaded by your counterpart (seller) for confirming the ITC.
Form RET-2 Form RET-02 is a quarterly return applicable for business opting Sahaj returns (Up to 5 Crores) Business need to file the monthly return by 25th of the subsequent month following the quarter-end

New GST Mechanism Implementation: A Timeline

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The recently held 31st GST council meet came up with a decision a new GST return system will be introduced to facilitate taxpayers. To initiate a smooth transition to the newly introduced return system, a transition plan has been laid out. Unveiling a roadmap for the implementation of the new GST mechanism, the Finance Ministry transition plan will come in subsequent phases. Here are the details of the indicative transition plan:

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May 2019:

To understand the interface and ease of transition, a prototype of the offline tool has been shared with the taxpayers. While the navigation of both online and offline tools is similar, taxpayers need to be aware that there are three main components to the new return – one main return (FORM GST RET-1) and two annexures (FORM GST ANX-1 (Sales) and FORM GST ANX- (Purchases)).

July to September 2019:

From July 2019, for to get familiarised, users will be able to upload invoices using the FORM GST ANX1 offline tool on trial basis. They can also view and download, the inward supply of invoices using the FORM GST ANX-2 offline tool under the trial program. The summary of inward supply invoices will also be available for view on the common online portal. In addition to this, August onwards, users can easily identify mismatches by importing their purchase register in the offline tool and match it with the downloaded inward supply invoices. July to September will be defined as a trial period for taxpayers. Since this is only to get the taxpayers familiarised with the tool’s interface, their entries would have no impact at the back end on the tax liability or input tax credit of the taxpayer. In this period, taxpayers will continue to file existing return forms (GSTR-1 and GSTR-3B). Taxpayers will be penalised if they fail to file their GST returns on time.

October to November 2019:

October 2019 onwards FORM GSTR-1 will be replaced by FORM GST ANX-1 and will mark the emendation of FORM GST ANX-1. Actions for both large and small taxpayers will be difference in the coming months.

For Large taxpayers, whose aggregate turnover in the previous financial year over Rs 5 crores:

  • They would upload their monthly FORM GST ANX-1 from October 2019 onwards.
  • For October and November 2019, they would continue to file FORM GSTR-3B on monthly basis.
  • They would file their first FORM GST RET-01 for the month of December 2019 by 20th January 2020

For Small Taxpayers with an aggregate of up to Rs 5 crores:

  • The first compulsory quarterly GST ANX-1 will be due only in January 2020, for the October-December 2019 quarter
  • They will stop filing GSTR-3B and start filing GST PMT-08 from October and file their first GST RET-01 for the quarter October-December from January 20, 2020.

While invoices can be uploaded in GST ANX-1 on a continuous basis, both by large and small taxpayers, from October, GST ANX-2 can also be viewed simultaneously during this period but no action will be allowed on it.

January 2020:

From January 2020 onwards, all taxpayers shall be filing FORM GST RET-01 and FORM GSTR-3B shall be completely phased out.

Note: Instructions to file and process the refund applications between October to December 2019 will be notified shortly

Prosecution and Compounding under GST

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Prosecution under GST

Prosecution, is defined as the act of conducting legal proceedings against someone, in respect of a criminal charge. Under GST, any taxable person who commits an offence amounting to deliberate intention of fraud, becomes liable for prosecution, or in other words, criminal charges.

Offenses liable to attract Prosecution under GST

The following are the offences, for which a taxable person can become liable for prosecution under GST:

  • Supply of any goods and / or services without an invoice, in order to evade taxes
  • Issue of any invoice without the supply of any goods and / or services, thus taking ITC or refund by fraud
  • Collection of GST (even if it is done against the provisions), but failure to submit the same to the government, within the specified time limit of 3 months
  • Obtaining of refund of CGST / SGST by fraud
  • Submission of fake records or documents or filing of fake returns to evade taxes
  • Obstruction of the proper officer during his duty, for instance, while conducting audit
  • Acquisition or receipt of any goods and / or services with full knowledge that it is in violation of the GST rules, and is liable for confiscation
  • Destruction of evidence
  • Not providing information or providing false information during proceedings
  • Helping any taxable person to commit fraud

Punishment for Prosecutable Offences

As per the provisions of prosecution in GST, the taxable person committing any of the above listed offences i.e. prosecutable offences shall be punished as follows:

Amount of Tax Involved in Offence Bail Applicability Term of Jail
INR 100 to 200 Lakhs Bail-able Up to 1 year
INR 200 to 500 Lakhs Bail-able Up to 3 years
Above INR 500 Lakhs Bail-able* Up to 5 years

*Note: However, if a taxable person commits the following offences and the amount of tax involved in the offence exceeds INR 500 Lakhs, then the offences will be deemed as non-bail-able:

  • Supply of any goods and / or services without an invoice, in order to evade taxes
  • Issue of any invoice without the supply of any goods and / or services, thus taking ITC or refund by fraud
  • Collection of GST (even if it is done against the provisions), but failure to submit the same to the government, within the specified time limit of 3 months

Other specified punishments for Prosecutable Offences

  • For obstruction of the proper officer during his duty, destruction of evidence, falsifying information during proceedings & helping another taxable person to commit fraud – Up to 6 months imprisonment with fine
  • Repeat Offences – Up to 5 years imprisonment with fine

Compounding under GST

Compounding of offences under GST is a method, wherein litigation time, and time of judicial procedures can be cut down. Generally, in the case of prosecution for an offence in a criminal court, the accused has to appear before the Magistrate at every hearing by using the services of an advocate. Given, that court proceedings are both expensive and time-consuming, the accused taxable person may make use of the compounding provisions under GST, wherein, he will not be required to appear in Court personally. Also, under the same provisions, he may be discharged on the payment of a compounding fee, which will not be more than the maximum fine which can be levied under the relevant provisions of prosecution and compounding under GST.

However, compounding under GST will not be available to the following entities:

  • Any taxable person who has already committed any of the offences mentioned under prosecution, detailed above i.e. repeat offenders
  • Any taxable person who has committed an offence involving supplies above INR 1 Crore and has been allowed to compound before
  • Any taxable person who is also being tried under other acts such as Narcotic Drugs Act, FEMA etc.
  • Any taxable person convicted by a court under GST
  • Any taxable person guilty of destruction of evidence, falsifying information during proceedings or preventing an officer from doing his duty

Amount Payable for Compounding under GST

Compounding in GST will be allowed only after the full payment of all taxes, interests and penalties which are due. As per the provisions of prosecution and compounding under GST, the amount payable for compounding under GST is defined as follows:

  • Minimum Limit – 50% of the tax or INR 10,000 whichever is less
  • Maximum Limit – 150% of the tax or INR 30,000 whichever is more

On payment of the compounding amount, no further proceedings shall be initiated against the accused taxable person for the same offence and all criminal proceedings, if already initiated, will be abated immediately. In conclusion, to avoid any kind of loss, businesses should be aware of the functioning of prosecution and compounding under GST.

Offence under GST

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Offence under GST

An offence is defined as a breach of a law or rule, i.e. an illegal act. Similarly an offence under GST is a breach of the provisions of the GST Act. There are 21 offences under GST, which we have classified under the following sections, for your easy reference:

Fake or Incorrect Invoices / Bills

A taxable person indulges in the following GST offences:

  • Supplies any goods / services without any invoice or issues a false invoice
  • Issues any invoice or bill without supply of goods and / or services in violation of the provisions of GST
  • Issues invoices using the identification number i.e. GSTIN of another bona-fide taxable person

Fraud

A taxable person indulges in the following offence under GST:

  • Submits false information while registering under GST
  • Submits fake financial records or documents or files fake returns to evade taxes
  • Does not provide information or provides false information during proceedings

Tax Evasion

A taxable person indulges in the following offences under GST:

  • Collects GST, but does not submit it to the government within 3 months
  • Collects GST by breaking the provisions, but fails to deposit it to the government within 3 months, which will still be treated as an offence under GST
  • Obtains refund of any CGST / SGST by fraud
  • Takes and / or utilizes ITC without actual receipt of goods and / or services
  • Deliberately suppresses his sales to evade taxes

Supply or Transport of Goods

A taxable person indulges in the following offences in GST:

  • Transports goods without proper documents
  • Supplies or transports goods, which he knows will be confiscated
  • Destroys or tampers goods which have been seized

Other offences under GST

A taxable person:

  • Has not registered under GST although he is required to register under the law
  • Does not deduct TDS or deducts less amount than what is applicable
  • Does not collect TCS or collects less amount than what is applicable
  • Takes or distributes input tax credit in violation of the rules, being an Input Service Distributor
  • Obstructs the proper officer during his duty, for instance, during audit
  • Does not maintain all the books that he is required to maintain under the law
  • Destroys any kind of evidence

For all the 21 offences in GST listed above, penalty will be a minimum of INR 10,000, with variations in place, depending of the nature of the offence under GST.

Arrest under GST

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Arrests-under-GST

Arrest under GST

The term ‘Arrest’ has not been defined in the CGST / SGST Act. However, as per the law, it basically implies the taking into custody of a person under some lawful command or authority. In other words, a person is said to be arrested when he is taken and restrained of his liberty by power or colour of lawful warrant.

If the Commissioner of CGST / SGST believes that a person has committed an offence, he can be arrested by any authorised CGST / SGST officer. The arrested person will be informed about the grounds of his GST arrest motion, and he will appear before the magistrate within a period of 24 hours, in case the offence is of a cognizable nature.

As per the arrest provisions under GST, the following officers have been empowered and are required to assist the CGST / SGST officers in the execution of an arrest under GST:

  • Police
  • Railways
  • Customs
  • Officers of State / UT / Central Government engaged in collection of GST
  • Officers of State / UT / Central Government engaged in collection of land revenue
  • All village officers
  • Any other class of officers as may be notified by the Central/State Government

Note: Here, it is important to note the difference between a cognizable and a non-cognizable offense. Cognizable offenses are those where the police can arrest a person without any arrest warrant, i.e. the offense is clear enough. Examples could be murder, robbery, counterfeiting etc. Non-cognizable offenses are those, where a police officer cannot arrest a person without a warrant issued by a competent authority. They are relatively less serious crimes like public nuisance, assault etc.

Offenses which warrant Arrest under GST

The following are the offenses, for which the arrest provisions under GST become applicable:

  • When a taxable person supplies any goods or services without any invoice or issues a false invoice
  • When a taxable person issues any invoice or bill without supply of goods / services in violation of the provisions of GST
  • When a taxable person collects GST, but does not submit it to the government within 3 months
  • When a taxable person has already been convicted earlier under the same provisions i.e. this is his 2nd offense

To sum up the offences which warrant arrests, broadly it may be said, that if tax evasion is more than INR 100 lakhs i.e. INR 1 Crore, or when a person has committed his 2nd offense (i.e. first arrest under GST has occured already), an arrest will be made.

Procedures related to Arrest under GST – Points to Note

The following are certain key procedures that you should note with regards to arrest provisions in GST:

  • Cognizance of Offense – A court cannot take cognizance of any offense punishable without the prior permission of the designated authority. Only a Magistrate of the First Class (and above) can conduct the trial for such an offense.
  • Availability of Bail – Bail is available only for non-cognizable and specified bail-able offenses.
  • Summons – A proper officer can summon any person to provide evidence or to produce a document. Any person summoned, has to either attend the summon himself, or send an authorized representative. Both entities will appear under oath.

Taking a holistic view of inspection, search, seizure and arrest under GST, it can be concluded that the government as well as the GST body have well defined arrest provisions in GST, to restrict tax evasion activities across the nation. Given the stringent nature of these offenses, which attract sizeable penalty, taxpayers would hopefully be discouraged from engaging in any illegal business practices.