Suspension of GST registration vis-a-vis Notification 94/2020 dated December 22, 2020

Author : Tanvi Thapliyal

The GST Network has started sending SMS alerts to businesses, flagging any mismatches they've spotted between different GST filings. A new rule introduced by (Notification 94/2020 dated December 22, 2020) means that if your GSTR-3B form doesn't line up with your GSTR-1 or 2B forms, your GST registration might be put on hold. Essentially, if these inconsistencies aren't cleared up, it could lead to your GST registration being cancelled.

Also, for businesses that have already asked to cancel their GST registration, the tax authorities now have the power to pause your registration while they finish up the cancellation process. This change is part of the new guidelines introduced in the latest notification. So, it's more important than ever to make sure your filings are accurate and consistent.

To understand more about it lets dive into understanding the possibilities which might convert into suspension of your GST registration and measures and safeguards you must insure and be aware of if you are a GST registrant.

Understanding The New GST Rule On Suspension For Mismatched Returns

In a recent update, the GST framework introduced a tweak that's catching the attention of business owners. Through Notification 94/2020, a new guideline under Rule 21A(2A) has been rolled out, and it's all about keeping your GST filings straight. Here's what the notification states-

• If there's a mismatch between what you've reported as your sales in Form GSTR-1 and what you've paid or claimed in Form GSTR-3B, the authorities will notice.
• Similarly, if your purchases reported in Form GSTR-2B don't align with your Form GSTR-3B filings, that's another red flag.
• And it's not just about sales and purchases. The tax officers are keeping an eye out for any discrepancies through their analyses.

So, what happens if they spot a discrepancy? 

• You'll receive a notice via form GST REG-31, pointing out the issues. 
• If you can't explain the differences satisfactorily, you might face cancellation of your GST registration.
•  from the moment you're notified, your GST registration could be temporarily suspended. This means you're sort of hanging in between positions until you clear things up. 
• But, If you manage to provide a convincing explanation, the suspension can be lifted, and it's back to business as usual.

This rule might sound a bit daunting, but there's a silver lining. The temporary suspension during the investigation period means you're relieved from the compliance burdens typically associated with cancellation proceedings. It's a bit of breathing room that many taxpayers welcome, giving you a chance to sort out any issues without the full weight of the process bearing down on you.

In essence, keeping your GST filings accurate and consistent has never been more crucial. It's all about ensuring that your business stays on the right side of these regulations, avoiding potential hiccups that could interrupt your operations.

Methodology That GSTN Follows To Detect Mismatch

• When taxpayers submit different information when registering for GST, GSTN uses sophisticated data analytics to identify discrepancies. Important facts such as company names, addresses, PAN, and more are included in this.
• When GSTN notices any inconsistencies, it notifies those taxpayers. Electronic techniques like emails and notifications on the GST portal can facilitate this communication. They notify taxpayers about the particular differences that requires attention.
• A suspension notification for the GST registration will be issued by GSTN if the errors are not corrected within the stated time frame. This serves as a preventive strategy to guarantee erroneous information doesn't persist in the system.
• Usually, taxpayers are given a fair amount of time to fix the mistakes that have been found. The timetable and the urgency of fixing the mismatch are conditional on the type and degree of the discrepancy.

How Can Taxpayer Handle This Situation Of Mismatch 

The inability to create e-way bills and submit GST reports are two examples of how a company's activities may be impacted by a suspension of GST registration. So, to keep things running smoothly, it's critical to identify and fix the differences right away. 

As responsible taxpayers, it's essential to act swiftly and carefully when you receive any messages from GSTN about data mismatches. Here's how you can handle it effectively:

• Read Carefully:Take the time to read through the message from GSTN and understand what discrepancies they've found. This will help us figure out what needs to be fixed.
• Update Your Info:Log in to the GST portal and make sure all your business details are accurate. If there are any mistakes in your business name, address, PAN, or anything else, make the necessary corrections.
• Respond on Time:Stick to the timeline given in the message. If we don't reply within the specified timeframe, our GST registration could be suspended, and we definitely want to avoid that.
• Ask for Help if Needed: If the issues seem too complicated or you're not sure what to do, don't hesitate to reach out to tax professionals. They can guide us through the process and make things easier to understand.
• Stay on Top of Compliance:Set up a system to regularly check your GST compliance. By keeping your information up to date, you can prevent future problems and maintain smooth operations.

Remember, addressing these discrepancies promptly is crucial to keeping our business running smoothly and staying compliant with GST regulations.

Duration/Impact/Revocation Of Suspension Of GST Registration

Duration Of Suspension

When a registered individual applies for the cancellation of their GST registration, the suspension of their GST registration takes effect. The effective date of suspension is determined by the later of the following:

• The date of submission of the registration cancellation application.
• The date from which the cancellation is sought.

Impact of Suspension 

During the suspension period, a person whose registration has been suspended:

• Is prohibited from making any taxable supplies after suspension.
• Is not required to file any returns as mandated under Section 39 of the Central Goods and Services Tax Act, 2017. This reduction in compliance burden is the primary benefit enjoyed by the taxpayer until the suspension of GST registration.

Revocation of Suspension of GST Registration

• The suspension of GST registration can be revoked once the GST registration cancellation proceedings are completed.
•  The revocation of the suspension of GST registration will be effective from the date the suspension came into effect.

Compliance To Follow After Receiving Information Of Suspension Of GST Registration

• Address Discrepancies:Upon receiving the suspension notice, you must reply to the tax officer within 30 days. Please address any differences or unusual occurrences noted in the notice and include information on any actions taken to meet the requirements. Additionally, please provide reasons why your registration should not be cancelled.

• Respond to Cancellation Notice:If you get a notification about the cancellation of your registration, make sure to reply to the appropriate officer within 30 days of receiving the notice. You have the option to complete this process online via the GST Portal with the help of Form GST REG-18.

• Failure to file Returns:If the suspension and cancellation notices are because returns were not filed, make sure to submit all pending returns and respond within the given timeframe. Adhere to the guidelines in Form GST REG-31 and submit all required documentation or explanations.

How This Rule Aligns GST With Businesses

It is important for the taxpayers to understand the GST regulation in entirety and not merely in fragments of their needs, like this notification for suspension of GST registration not only individually sheds light upon the importance of Forms GSTR-3B, GSTR-1 & GSTR-2B but also highlights how it is important to form a consistency between these three, similarly the notification helps in the following-

• Increased Compliance Awareness:It helps businesses understand the importance of aligning their GST returns. Highlighting the importance of maintaining consistency motivates companies to regularly review and reconcile their filings.

• Avoiding Registration Problems: The notification serves as a proactive step to prevent any possible registration issues. By notifying businesses about the implications of inconsistencies, it encourages them to take action in order to prevent registration suspension or cancellation.

• Emphasising the significance of precise financial data reporting: By emphasising data accuracy and integrity throughout various GST forms, it helps uphold the trustworthiness and reputation of the GST system. 

Conclusion

It is a general tendency of the population that they manage most of the compliances once the mistake is committed which in reality should be opposite, digitalization has made information direct,convenient and easy to understand yet most of the taxpayer remains uneducated by the bare minimum intricacies which are important to be followed while conducting a business. Right from the introduction of GST the GSTN is trying every possible methodology to educate and communicate effectively with the taxpayers so that the compliances could be seamless which will serve dual prospects, one no hurdle in the conduction of business and no overburdening of non-compliance issues by the tax-officer. It is very important that the taxpayer becomes an active member of this evolution which is pacing up each day.

Therefore, as a taxpayer perform your duties well i.e. stay informed, read notifications updated on the portals from time to time, respond effectively in case you receive any notice and communicate well i.e. understand that to answer back isn’t an option but a compulsion.

If you are still finding it tiresome to maintain a business and follow compliances simultaneously, trust the experts of taxpartners and let them help you with your GST compliance .

FAQ’S

1. Could you please provide information on Notification 94/2020 and its date of issuance?

Notification 94/2020, released on December 22, 2020, discusses differences among GSTR-3B, GSTR-1, and GSTR-2B forms and their impact on GST registration.

 2. What are the implications of Notification 94/2020 for businesses?

Notification 94/2020 emphasises that discrepancies between GSTR-3B and GSTR-1 or GSTR-2B may lead to the suspension or cancellation of GST registration if not corrected.

3. Can you explain what GSTR-3B, GSTR-1, and GSTR-2B forms are?

GSTR-3B is a monthly summary return that registered taxpayers file to summarise their outward and inward supplies, as well as tax liabilities.

GSTR-1 is a report that registered taxpayers need to file regularly, providing information about the sales or supplies made in a specific period.

GSTR-2B is a statement generated by the system that displays the available input tax credit (ITC) for a taxpayer, depending on the information provided by their suppliers.

4. What causes differences between these forms?

Discrepancies can occur because of reporting errors, filing delays, transaction interpretation differences, or data mismatches between suppliers and recipients.

5. What happens if discrepancies are not resolved?

If discrepancies are not resolved, it may result in the suspension or cancellation of GST registration, affecting business operations and compliance obligations.

6. How can companies guarantee adherence to Notification 94/2020?

It is important for businesses to consistently compare data from GSTR-3B, GSTR-1, and GSTR-2B forms, quickly resolve any differences, and keep precise transaction records.

7. What actions should businesses take if they are informed of discrepancies?

Companies should carefully examine the communication from GST authorities, evaluate the identified discrepancies, and submit a comprehensive response within the given deadline, clarifying any irregularities and making required adjustments.

8. Is it possible to reinstate a suspended or cancelled GST registration?

Absolutely, companies have the option to apply for the reinstatement of their GST registration once they have resolved any issues and fulfilled the required compliance steps.

9. Where can businesses seek additional help or clarification about Notification 94/2020?

Businesses can contact GST authorities, tax professionals, or refer to official GST documentation for assistance with complying with Notification 94/2020 and addressing any associated concerns.

10. Exploring how adherence to Notification 94/2020 enhances the efficiency of the GST system.

Adhering to Notification 94/2020 improves data accuracy, boosts transparency, and reinforces the integrity of the GST system, leading to seamless operations and efficient tax administration.