Question: A person has sold goods worth Rs. 224.00 lakhs (Goods value Rs. 200.00 lakhs + GST of Rs. 24.00 lakhs (@12%)) in 2017-18. He could not recover the sale proceeds from the recipient of goods as the recipient later went into insolvency. The supplier has filed GST returns for 2017-18 without showing this supply in the turnover. The supplier is not in a position to pay the taxes. He is covered under audit both in Income Tax & GST. He has got his accounts audited under Income Tax but has not yet filed GSTR 9 & GSTR 9C for 2017-18. What should be his future course of action? He has continued his business in 18-19 & 19-20.
Answer: Section 35 provides that every registered person whose turnover during a financial year exceeds the prescribed limit shall get his accounts audited by a chartered accountant or a cost accountant and shall submit a copy of the audited annual accounts along with his annual return. The prescribed limit is provided in rule 80 as the aggregate turnover during a financial year, if it exceeds two crore rupees. Further, in the present case, the value is equal to Rs. 2 Crore and, thus, does not exceed the prescribed amount. Therefore, such person would not be required to get his accounts audited under GST. Please appreciate that recovery or not of the amount of supply will not impact the liability of supplier to pay the tax.
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