GST filing isn’t as complicated as it looks. However, even a single error at the time of filing, such as using the wrong form or making the slightest mismatch in the numbers, can bring notices and cause your business to lose lakhs. Therefore, it is significant for you to keep these things in mind while filing our returns.
1. DELAY IN FILING RETURN
GSTR -1 is a comprehensive return that companies are required to submit to declare their outward supplies or sales for a designated tax period. It contains details about all the products and services offered by the company, whether to other businesses (B2B) or to individual consumers (B2C). On the other hand, GSTR-3B is a summary return that companies submit to report their monthly tax obligations. It is a streamlined return that offers a summary of sales, purchases, and input tax credit (ITC) sought during the month.
Individuals postpone GSTR-1 or GSTR-3B due to limited cash flow or because “there were no sales this month, so what’s the use.” Both factors incur expenses. Late fees are ₹50 per day for a regular return and ₹20 per day for a nil return, with limits based on your turnover. Additionally, any outstanding tax incurs an 18% yearly interest. Skip a couple of months and accrue interest on the taxes owed, and you might find notices arriving at your door. In a recent ruling by the Andhra Pradesh High Court in the case of Sriba Nirman Company versus Commissioner (Appeals), the Court held that the failure to file monthly returns can amount to suppression of fact under Section 74 of the CGST Act, and that where wilfulness is established, the entire scheme of Section 74, with penalty of up to one hundred percent of the tax, becomes available to the department.
2. CLAIMING CREDIT YOU WEREN’T ENTITLED TO
This is the point at which GST non-compliance becomes extremely costly, as Input Tax Credit (ITC) directly reduces cash tax obligations, causing incorrect claims to be a main focus for audit algorithms. Within the CGST framework, asserting credit without possessing a valid tax invoice or receipt of goods, claiming credit on “blocked” business costs as stated in Section 17(5) (like passenger vehicles, catering, or corporate health insurance), or claiming credit prior to a vendor submitting their GSTR-1 and remitting tax results in unlawful liabilities. Excessive claims, repeated invoice listings, and intentional “invoice swapping” with fraudulent invoices lacking real transactions cause serious legal repercussions according to Sections 73 and 74 (and Section 74A for more recent periods). In instances where cases are identified for intentional fraud or falsified invoicing, a mandatory 100% penalty is imposed. In serious instances of fraudulent credits exceeding ₹2 Crore, officials may implement Section 132 for non-bailable criminal charges and prompt arrest.
3. FAILURE TO REGISTER, MAINTAIN RECORDS, OR RESPOND TO NOTICES
Recently, the Delhi HC issued a ruling in TB Marketing Private Limited versus Assistant Commissioner Anti Evasion-I & Ors, where during an inspection by the Assistant Commissioner, the petitioner was unable to present its financial records, resulting in the sealing of all the petitioner’s business locations by the GST authorities. This case highlights that even minor GST compliance oversights can lead to significant repercussions if not dealt with. Regardless of crossing the revenue limit without registration, not keeping accurate financial records, or omitting cash sales from documentation, small mistakes can rapidly lead to major legal and financial risks. Not registering may result in a fine of ₹10,000 or the amount of tax evaded (whichever is greater), while typical record-keeping infractions can incur charges of as much as ₹25,000. Even more concerning, overlooking an official GST notice won’t cause it to vanish; it will merely solidify into a legal obligation and initiate recovery actions.
Therefore, keep clean digital records, keep vigil and treat every notice as urgent.
