What is GSTR-3B, and how is it different from GSTR-1?

GSTR-3B vs GSTR-1: Key Differences

GSTR-3B and GSTR-1 are two of the most crucial returns in the Goods and Services Tax (GST) system in India. Both serve different purposes and are filed at different intervals by registered taxpayers. Let’s break down the key differences between the two and the statutory framework governing them.

1. GSTR-3B: Overview

GSTR-3B is a monthly self-declaration return that serves as a summary return filed by registered taxpayers under GST. The primary purpose of this return is to enable taxpayers to pay their GST liability (both output tax and input tax credit (ITC)) for a specific period, and to maintain compliance with the GST laws.

Key Features of GSTR-3B:

• Form GSTR-3B is a summary return, meaning it is a simplified form where taxpayers report their summary sales, purchases, taxable value, and GST liability (i.e., output tax) and claim input tax credit (ITC).
• GSTR-3B helps the government collect taxes regularly from businesses, as it includes the details of tax payable and tax paid.
• Taxpayers file GSTR-3B every month, regardless of whether they have made any sales or not.

GSTR-3B Filing Process:

1. Reporting Sales: You report the taxable supplies and the output tax (GST collected on sales).
2. Claiming Input Tax Credit (ITC): You can claim ITC on eligible purchases made during the period.
3. Paying Tax Liability: The difference between output tax and input tax is the taxpayer’s net tax liability, which is paid to the government.

Due Date for Filing GSTR-3B:

• The due date for filing GSTR-3B is generally the 20th of the following month.
  • Example: GSTR-3B for July must be filed by 20th August.
  • Quarterly filers (for businesses with turnover under ₹5 crores) can file GSTR-3B on a quarterly basis by the 22nd or 24th of the month after the quarter ends.

Late Fees and Penalties:

• If a taxpayer fails to file GSTR-3B on time, the late fee is ₹200 per day (₹100 each for CGST and SGST) up to a maximum of 0.25% of the annual turnover.

2. GSTR-1: Overview

GSTR-1 is a detailed monthly return that captures the outward supplies (sales) made by a registered taxpayer. Unlike GSTR-3B, which is a summary return, GSTR-1 requires taxpayers to report detailed information about sales invoices, credit notes, debit notes, advance receipts, and other supplies made during the period.

Key Features of GSTR-1:

• Detailed Report of Outward Supplies: GSTR-1 reports detailed information about sales transactions, including invoice details for each sale made.
• Sales Details: Taxpayers report details of taxable supplies, zero-rated supplies, exempt supplies, export sales, etc.
• Tax Payer’s Responsibility: Every registered taxpayer is required to file GSTR-1 irrespective of whether they have made any sales or not during the period.
• Impact on Input Tax Credit: The details reported in GSTR-1 are critical because they affect the input tax credit (ITC) claim of the buyer. Buyers can claim ITC based on the GSTR-1 filed by the supplier.

GSTR-1 Filing Process:

• GSTR-1 is filed for outward supplies, and the return must include details such as:
  • Invoices issued (sale of goods/services)
  • Credit notes and debit notes
  • Exports and zero-rated supplies
  • Advance received and its tax treatment
• The taxpayer reports details of sales transactions and GST collected on sales.
• Information in GSTR-1 is reflected in the GSTR-2A (for the recipient) for claiming Input Tax Credit.

Due Date for Filing GSTR-1:

• The due date for filing GSTR-1 is the 11th of the following month for regular monthly filers.
  • Example: GSTR-1 for July must be filed by 11th August.
• For quarterly filers (taxpayers with turnover below ₹5 crore), the due date is 13th of the month following the quarter.
  • Example: GSTR-1 for Q1 (April-June) must be filed by 13th July.

Key Differences Between GSTR-3B and GSTR-1

Constitutional Provisions and Statutory Framework

The Constitution of India and GST Acts provide the legal framework for the filing of GSTR-1 and GSTR-3B returns.

Constitutional Provisions (101st Amendment):

The 101st Amendment to the Constitution (2016) established GST in India, granting the Parliament and State Legislatures the authority to legislate on GST-related matters. It also laid the foundation for the formation of the GST Council, which makes recommendations regarding tax rates, filing procedures, and compliance requirements.

• Article 246A: Grants both Parliament and State Legislatures the power to legislate laws related to GST, including provisions related to return filing.
• Article 279A: Establishes the GST Council, which provides recommendations on the structure and procedure for returns under GST, including the filing of GSTR-1 and GSTR-3B.

Key Provisions of the CGST Act, 2017:

1. Section 39 – Returns:
   • This section mandates the filing of GSTR-1 (detailed outward supply return) and GSTR-3B (monthly summary return).
   • The due date for filing these returns is prescribed, and the section also lays down the framework for penalties for late filing.
2. Section 47 – Late Fee for Non-filing of Returns:
   • This section specifies the penalty for delayed filing of returns. The late fee is ₹200 per day for each of CGST and SGST, with a maximum cap of 0.25% of the taxpayer’s turnover in the state or Union Territory.
3. Section 50 – Interest on Late Payment of Tax:
   • If there is any delay in payment of taxes (resulting from delays in GSTR-3B filing), interest at 18% p.a. will be charged on the unpaid amount.
4. Section 44 – Annual Return:
   • This section outlines the filing of the annual return (GSTR-9) that consolidates information from monthly and quarterly returns, including GSTR-1 and GSTR-3B.

Landmark Cases Related to GSTR-1 and GSTR-3B

Several cases have emerged over the years related to non-filing of returns, delayed returns, and penalties for late filing under the CGST Act.

1. M/s. K.P.S. Sachdeva v. Union of India (2020)

• Issue: The petitioner challenged the late fee imposed on late filing of GSTR-3B, arguing that the delay was due to technical glitches in the GST portal.
• Court’s Ruling: The Delhi High Court upheld the imposition of penalties under the CGST Act for non-filing of returns on time, clarifying that technical issues do not automatically exempt taxpayers from penalties unless it is shown to be a genuine issue.

2. M/s. Filco Trade Centre Pvt. Ltd. v. Union of India (2019)

• Issue: The taxpayer contested the imposition of penalties for the delayed filing of GSTR-3B.
• Court’s Ruling: The Supreme Court ruled that penalties for non-filing of returns are mandatory and cannot be waived without valid reasons. It emphasized the importance of adhering to GST compliance timelines.

3. UOI v. M/s. Bharti Airtel Ltd. (2021)

• Issue: This case dealt with the late filing of GSTR-1 and GSTR-3B, and whether a penalty could be imposed for a delay caused by technical difficulties.
• Court’s Ruling: The court held that late fees and penalties could be imposed for late filing and that taxpayers are expected to comply with GST return filing deadlines even in the event of technical issues.

Conclusion

The Constitution of India and the GST Council play a critical role in the legislative framework for GST returns.

GSTR-1 is a detailed outward supply return filed by taxpayers to report sales and supplies, while GSTR-3B is a summary return used for paying GST liability and claiming input tax credit.

Both returns must be filed by registered taxpayers on a monthly or quarterly basis, with penalties imposed for late filing.

The CGST Act governs the filing of returns and provides penalties for non-compliance.