QUESTION

Mr. A has received an amount Rs 1 cr (inclusive of GST) as advance during the month of May’20, against the services to be rendered at future date. He has issued ‘Receipt voucher’ against the said advances received. He has reported the same as in the table ‘advances received’ in GSTR-1 and required GST was paid through GSTR-3B in the m/o May’20 itself. But due to unavoidable reason, he has not rendered the services and the whole amount along with GST was refunded to the customer in the m/o Jan’21. ‘Refund voucher’ was issued against the said refunded amount. The same has been reported in the table ‘adjustment of advances’ in the GSTR-1 filed for the m/o Jan’21. Details of taxable supplies and GST thereon for the period Jan-Mar’21 is as below: Jan’21: Taxable value Rs 10,00,000/- GST: Rs 1,80,000/- Feb’21: Taxable value Rs 10,00,000/- GST: Rs 1,80,000/- Mar’21: Taxable value Rs 10,00,000/- GST: Rs 1,80,000/- As he has to adjust the refunded taxable value and GST amount in GSTR-3B, so he has reported nil taxable value and GST in GSTR-3B filed for the Jan-Mar’21. However, he was unable to fully set-off the taxable value and GST amount refunded to his customer against the value of taxable supplies and GST reported in GSTR-3B filed for the m/o Jan-Mar’21. Means, still he has unadjusted/negative balance to be adjusted in GSTR-3B. For e.g. Refunded amount details: Taxable value: Rs 84,74,576/- GST: Rs 15,25,424/- Details of supplies made for the m/o Jan-Mar’21: Taxable value Rs 30,00,000/- GST: Rs 5,40,000/- Unadjusted Taxable value Rs 54,74,576/- Unadjusted GST Rs 9,85,424/- Query: 1. How should he report the Taxable value and GST against the supplies made during the period Jan-Mar’21? 2. How he can report the unadjusted/negative taxable value and GST in GSTR-3B? 3. Can he adjust the same in GSTR-3B to be filed for the FY 2021-22?

ANSWER

Facts of the case:
Mr A received advance in May 2021 for Rs 1 Cr (inclusive of GST Rs 15,25,424/-) and paid tax thereon. Due to unavoidable reasons he has not rendered the services and the whole amount along with GST was refunded to the customer in Jan’21 and the same was recorded in GSTR-1. Taxable supply for the period Jan'21 to Mar'21 amounts to Rs 30,00,000/- and tax Rs 5,40,000/-. How to report this transaction in GSTR-3B?

Law applicable:

CGST RULE 89

(1) Any person, except the persons covered under notification issued under section 55, claiming refund of any tax, interest, penalty, fees or any other amount paid by him, other than refund of integrated tax paid on goods exported out of India, may file an application electronically in FORM GST RFD-01 through the common portal, either directly or through a Facilitation Centre notified by the Commissioner:

(2) The application under sub-rule (1) shall be accompanied by any of the following documentary evidences in Annexure 1 in FORM GST RFD-01, as applicable, to establish that a refund is due to the applicant, namely:-

(k) a statement showing the details of the amount of claim on account of excess payment of tax;

Interpretation:
GSTR-3B will not allow negative figures, Excess tax paid can be adjusted only to the extent of outward tax payable for a particular month. Show NIL Taxable value and NIL tax amount in subsequent months till total tax amount is adjusted.
There is no time limit for adjustment of excess tax paid. Therefore excess tax paid in FY 2020-21 can be adjusted for tax payment in FY 2021-22.
OR
Refund can be claimed under head "Excess payment of tax" in FORM RFD-01 as per Rule 89 of CGST Rules.

Conclusion:
Tax excess paid can be adjusted in subsequent months OR refund can be filed under head "Excess payment of tax" in FORM RFD-01.  (Reply dt. 01/10/2021)