Blocking of GSTR-1 if GSTR-3B is not filed

Blocking of GSTR-1 filing has been notified by adding a new sub-rule (6) under Rule 59 of the CGST Rules. The Central Board of Indirect Taxes and Customs (CBIC) issued the update vide notification no. 94/2020 dated 22nd December 2020. This rule deals with the form and manner of furnishing details of outward supplies.

Latest Updates on GSTR-1

All about blocking of GSTR-1 and IFF filing

If a registered taxpayer fails to file the return in GSTR-3B for the preceding 2 months then he would not be allowed to provide the details of outward supplies of goods or services or both in GSTR-1. The CGST Rule 59(6) covers this aspect.

Further, if the taxpayer has opted into the QRMP scheme to file returns on a quarterly basis, then he will not be allowed to file B2B sales on the IFF or file GSTR-1 if GSTR-3B of last quarter is pending for filing.

As per prior provisions, non-filing of GSTR-3B resulted in the blocking of e-way bill generation. But, as per new rules, it will result in the blocking of the e-way bill as well as GSTR-1 of the registered person. Also, if a taxpayer is required to file GSTR-3B due to the applicability of Rule 86B and fails to do so, his GSTR-1 will get blocked.

For example, if the taxpayer has not filed GSTR-3B for April and May, then his GSTR-1 will get blocked for June. For quarterly return filers if the taxpayer fails to file GSTR-3B for the preceding tax period then he will not be permitted to file GSTR-1 for subsequent quarters. The main motto of the Government behind this is to track the non-filers and make them compliant.

Rule 59(6) implementation on the GST portal

The GST portal is implementing this on the GST portal starting from 1st September 2021. Hence, if a taxpayer tries to save data of GSTR-1 or use IFF for August 2021 and attempts to click the ‘Submit’ button for filing, the portal throws an error. It flags any pending GSTR-3B returns for two months in a row (up to July 2021) or one quarter (ending 30th June 2021). The taxpayer should file pending GSTR-3B returns to perform GSTR-1 filing.
Tax officers cannot intervene to unblock the filing as it is system-automated.

Impact of the blocking of GSTR-1 filing

If a taxpayer is unable to file GSTR-1 then the counterparty will not be able to claim the credit on such purchase. Non-uploading of invoices in GSTR-1 will result in the non-reflection of the transaction in the counterparty’s GSTR-2A and GSTR-2B. Thus, the recipient will be automatically denied credit.

How to resolve the issue?

Filing of GSTR-3B will result in unblocking of GSTR-1. The Government wants the taxpayer to be compliant and thus these new provisions have been added to the existing rules and regulations.

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