We, the undersigned, are a community of tax professionals, business owners, and concerned citizens of India, coming together to respectfully request the Government of India to consider granting amnesty for the non-compliance under Section 16(4) of the Goods and Services Tax (GST) laws for the financial years 2017-18, 2018-19, and 2019-20. This petition seeks relief for thousands across the country who have been adversely affected by the stringent conditions of Section 16(4).

 

Section 16(4):

A registered person i.e., recipient of supply of goods and
service-

• shall not be entitled to take input tax credit of any invoice
  or debit note
• After the due date of furnishing of the return under section 39
  (Periodic) for the month of September following the end of financial
  year to which such invoice or debit note pertains, or after the
  furnishing of annual return for the relevant financial year, whichever
  is earlier
• Meaning thereby, that the time limit for claiming input tax credit of any invoice is till due date of filing GSTR 3B for the month of September of the next FY, or till the date of filing of annual return of that financial year to which such invoice or debit note pertain, whichever is earlier. After this no claim is entertained.
• Provided that in case of financial year 2017-18 only, if supplier has disclosed the invoice or debit note up to the due date of filing of return for the month of March 2019 input tax credit can be availed in respect of such invoice or debit note.
• The limit is now extended upto 30-November of next financial year.

 

GST Amnesty:

The GST return amnesty scheme was actually offered twice:

1. First Amnesty: In 2020, an amnesty scheme was introduced for GSTR-3B returns covering the period from July 2017 to April 2020. This was due to the initial difficulties faced by businesses adapting to the new GST regime.

2. Second Amnesty: In 2021, the scheme was reopened due to the COVID-19 pandemic's impact on businesses. This second amnesty covered GSTR-3B returns from July 2017 to April 2021. It offered reduced late fees and waived interest on outstanding tax liabilities for those who filed their returns within the specified timeframe.

Details of the Second Amnesty (2021):

Applicable period: July 2017 to April 2021 (GSTR-3B returns)
Validity: 1st June 2021 to 30th November 2021 (extended from 31st August 2021)
Benefits: Reduced late fees: Up to Rs. 100 per month for turnover below Rs. 5 Crore
Rs. 50 per day for turnover between Rs. 5 Crore and Rs. 20 Crore
0.2% of turnover per month exceeding Rs. 20 Crore (capped at Rs. 50,000 per month)
There is no interest on outstanding tax liabilities.
Important notes: Only GSTR-3B returns were covered in this amnesty.

 

There is no relaxation of Section 16(4) in the amnesty:

There was no relaxation of Section 16(4) for the claim of the ITC, though the name was "Amnesty". With the denial of ITC this is double trouble for the businesses. Various Notices and Orders have been issued directing/demanding reversal of ITC along with interest and penalty. The amnesty scheme only provided relief from late fees, not from the underlying compliance requirements of Section 16(4).

 

Impact on Stakeholders:

The inability to claim ITC for the mentioned financial years has not only resulted in financial losses for businesses but has also contributed to increased compliance burdens, thereby affecting the overall economic recovery process. SMEs, in particular, have been disproportionately impacted, risking their survival and the livelihoods of those they employ.

Request for Amnesty:

We request the Indian Government to consider the introduction of an amnesty scheme under Section 16(4) of the GST laws for the financial years 2017-18, 2018-19, and 2019-20. Such a scheme would allow businesses to claim their missed ITC without the penal provisions currently in place. This amnesty would serve as a significant relief measure for businesses across sectors, aiding in their recovery and in stabilizing the economy.

The Way Forward:

By granting amnesty, the Government will not only alleviate the financial burdens faced by businesses but also encourage voluntary compliance and strengthen the trust between the taxpayers and the authorities. It is a step toward fostering a more cooperative and supportive tax environment, which is essential for the growth and stability of our economy.

 

The Tradition of Leniency in the Face of New Beginnings:

Historically, whenever a new law is enacted, a period of relaxation is provided to allow stakeholders to acclimate to the new regulations without the immediate pressure of strict penalties. This tradition of leniency acknowledges the challenges of transition and is a testament to a government's empathy towards its citizens' adjustment periods. Regrettably, such relaxation has been notably absent concerning Section 16(4), leaving many to shoulder the unintended consequences of a law still in its infancy.

The Disproportionate Impact on MSMEs:

The Micro, Small, and Medium Enterprises (MSME) sector, the backbone of our economy, has been particularly hard hit by this provision. These entities, with their limited resources, have found it exceedingly challenging to navigate the complexities of GST, more so with the stringent deadlines imposed by Section 16(4). A relaxation in this area is not just a relief; it is a lifeline that could significantly enhance the sustainability and growth of this vital sector.

An Appeal in Times of Crisis:

The past years have not only tested our resilience in the face of a global pandemic but have also highlighted the interconnectedness of our economic fabric. As businesses across the nation grapple with the financial repercussions of this crisis, the need for supportive measures has never been more acute. A relaxation of Section 16(4) would not only acknowledge the unprecedented challenges faced by the business community but also reflect the government's commitment to nurturing an environment of support and understanding.

 

Conclusion:

We urge the Government of India to consider our request for amnesty under Section 16(4) of the GST laws for the financial years 2017-18, 2018-19, and 2019-20. In doing so, the government will be providing essential support to the business community, thereby contributing to the nation's economic resilience and growth. Such an act of grace would not only alleviate the immediate burdens faced by countless businesses but also reinforce faith in our nation's governance, demonstrating a compassionate recognition of the hurdles we face as we collectively strive towards a prosperous future.

 

With hope and respect,

 

Abhishek Raja Ram

9810638155

abhishekrajaram@hotmail.com