GST portal updates: Blocking of GSTR-1 and solutions to HSN summary issues

The GST Network (GSTN) has issued two new advisories on 26th August 2021. Both pertain to GSTR-1 filing by regular taxpayers registered under the GST law, to be followed for all future return filings.

Issues while reporting of HSN-wise summary in GSTR-1

Ever since the last deadline passed for GSTR-1, the taxpayers have faced some issues while declaring a few HSN codes for the ‘HSN-wise summary reporting of outward supplies’ in Table 12. The GSTN stated that errors were thrown by the system when the HSN codes were left blank in the fields. 

The taxpayers have various options to fill data in GSTR-1. They can either fill manually on the GST portal or import the JSON file from their computer system onto the GST portal. Alternatively, they can file through third-party software providers or integrate systems directly or using the GST Suvidha Providers (GSP).

Despite declaring the HSN codes for specific items, the portal declined the same while preparing GSTR-1 data using any of the above modes. In turn, it considered this as missing information at times, throwing the errors listed below while submitting GSTR-1. The GSTN notified suitable resolutions for taxpayers, also given below, following every issue. 

• If GSTR-1 is processed with errors or filing is in progress or received but pending due to HSN related issues, then-
  • Cross-check if the correct HSN code is declared with the data updated on the GST portal.
  • Ensure not to report the truncated first six digits of an otherwise valid eight-digit HSN code.
  • GST portal has temporarily allowed taxpayers to manually fill in the HSN codes and description instead of selecting from the drop-down list in Table 12. It can be practised when the taxpayer cannot find the requisite HSN code from the drop-down list. However, it does not apply to the e-invoice and e-way bill portals.
  • Ensure to enter other compulsory fields before submitting GSTR-1, especially the description in Table 12, apart from the HSN code.
• If GSTR-1 is processed with errors or filing is in progress or received but pending due to other issues-
  • Check if the taxpayer uses an older version of the offline tool for converting data in JSON format for upload.
  • Do not leave any HSN code cell blank. Otherwise, the system will not process the GSTR-1.
• If the error appears as ‘Duplicate invoice number found in the payload, please correct’, then-
  • Do not duplicate documents during GSTR-1 reporting. Otherwise, the system rejects such submission.

From 1st April 2021, businesses must mandatorily report HSN codes of specified digits while raising GST invoices and filing GSTR-1. CBIC issued the Central Tax notification number 78/2020 on 15th October 2020, outlining the mandate. Large taxpayers must report six digits of the HSN code if their annual turnover is more than Rs.5 crore. Small taxpayers must declare four digits of the HSN code if their annual turnover is up to Rs.5 crore. The HSN code reporting of four digits for the Business-to-Consumers (B2C) sales is optional for small taxpayers.

Blocking of GSTR-1 and IFF if past GSTR-3B is not filed

The CGST Rule 59(6) is being implemented on the GST portal from 1st September 2021. A few checks will be in place before filing GSTR-1 or Invoicing Furnishing Facility (IFF) for August 2021.  

Businesses must check if they have filed GSTR-3B for the past two months, i.e. up to July 2021, as a monthly filer to file GSTR-1. On the other hand, suppose any Quarterly Return filing and Monthly Payment of taxes (QRMP) taxpayers have failed to file GSTR-3B for the previous quarter ending 30th June 2021. They can neither submit Business-to-Business (B2B) sales on the IFF for August 2021 nor file GSTR-1 once the quarter ends.

If taxpayers click on the ‘Submit’ button after preparing GSTR-1 or while using the IFF, the GST portal might throw an error message if GSTR-3B filing of past tax periods is pending. In turn, it saves such GSTR-1 or IFF data until the taxpayers comply with the CGST Rule 59(6). Since it is system-automated, the tax officers will be unable to intervene for unblocking the GSTR-1 filing. Hence, the only solution would be to file the past GSTR-3B returns before proceeding to the GSTR-1 and IFF filing for August 2021. 

Any delay by the GST-registered suppliers in producing invoices in GSTR-1 or IFF can adversely affect the GST-registered recipients, causing a delay in claiming input tax credits. The CGST Rule 59(6) was notified vide the Central Tax notification number 1/2021 issued on 1st January 2021. 

For any clarifications/feedback on the topic, please contact the writer at annapoorna.m@cleartax.in