The Goods & Services Tax (GST) Administration is going to bridle the non- filers of returns following lower than expected tax mop-up.  The administration is all set to act tough with the non-filers of returns by cancelling their registration. In technical terms, the filing of returns helps tax authorities to estimate the tax liability and find out how much tax has been paid. But that’s where the issue of non-filers arose as nearly 20% of assessees do not file for returns which in turn affects the total GST collections.

The non-filers who have not filed GSTR 3B (showing tax payments) returns for six or more than six return periods will be facing the cancellation of registration and will be held liable to action under GST law. Section 29 of the Central Goods & Services Tax (CGST) Act prescribes conditions for cancellation of registration and fulfilment of any of these will invite action. These include contravention of the provisions of the Act, a composition scheme assessee not filing returns for three consecutive tax periods, any non-composition assessee not furnished returns for a continuous period of six months, not commencing business within six month from the voluntary registration, and registration obtained by means of fraud, wilful misstatement or suppression of facts. The Act clearly provides that registration will not be cancelled without giving the person an opportunity of being heard.

The administration has been keeping in check the daily progress made in this regard and has come to follow the cancellation of registration after taking everything into consideration. The reports were sent from the office of the Principal Chief Commissioner of GST & Central Excise, Mumbai to Principal Commissioner/Commissioner posted in its jurisdiction. Further, the Central Board of Indirect Taxes & Customs (CBIC) is planning to furnish the non-filers by November 25 after taking this task on a priority basis.

The following comes under a registered filer for Returns as per the GST law –

1. A registered supplier will have to file returns either on a monthly or quarterly basis if the supplier is opting for composition scheme.

2. An ISD (Input Service Distributor) will have to file monthly returns showing details of credit distributed during the particular month.

3. A person required to deduct tax (TDS or Tax Deducted at Source) and persons required to collect tax (TCS or Tax Collected at Source) will also have to file monthly returns showing the amount deducted/collected and other specified details.

4. A non-resident taxable person will also have to file returns for the period of activity undertaken.

The law has been very transparent and clearly stated that the cancellation of registration will not affect the liability of the person to pay the tax and other dues. Every registered person whose registration is cancelled will pay an amount, by way of debit in the electronic credit ledger or electronic cash ledger, equivalent to the credit of input tax in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock or capital goods or plant and machinery on the day immediately preceding the date of such cancellation or the output tax payable on such goods, whichever is higher.

This new initiative might increase the tax mop-up under GST and will prove to be a groundbreaker rule.