Wholesalers delay become trouble for Retailers

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Published on November 10, 2021 by

Wholesalers not updating taxes on the GST portal causes a delay in retailers getting their GST refunds.

Bengaluru: Retailers have been facing delays in getting their GST refunds, leaving them without working capital. A shop owner in the commercial street says he hasn’t received the partial refund amount of Rs.10,000 from the GST department.

Pawan Kumar, who runs a saree store on Commercial Street, “It’s very difficult for us to manage our business because the refund process takes a long time and due to that we get our credit next month, making it difficult to manage the money. To avoid a situation like this, we make every effort to contact the seller and have them amend their taxes on time.”

Retailers like Pawan Kumar say that the refund process often gets delayed due to wholesalers not updating details of the purchase on the governments GST portal.

When asked about the cause behind the delay, Sanjay Kansal, a wholesaler at Chickpete Market said, “We make every effort to pay our taxes on time, but there are instances when we are unable to do so due to personal reasons, lack of funds, incompletion of accounts or because our accountant is ill. We can’t file it.”

As per Section 16(2)(c) of the CGST Act, the recipient of goods and services can avail of Input Tax Credit only if the supplier has deposited the tax with the government either in cash or through the utilization of input tax credit. If a supplier fails to register on the GST portal, the buyer is responsible for paying the taxes on the seller’s behalf that he had already paid when purchasing the products. As a result, the buyer is forced to pay tax to the GST Department along with an interest of 18 percent.

Udit Bansal, a chartered accountant said, “A buyer can only claim ITC if the wholesaler updates the portal before the end of the fiscal year’s annual tax filing deadline. Otherwise, due to the seller’s failure to update the GST, the retailer will pay the taxes twice.”

Further explaining the process of filling the taxation, he added, “The buyer has to file the GSTR-1 form and submit it to the GST portal to receive a refund. Otherwise, they can either put the debit note with the party name in their tally books or request the GST officer. They can also file a complaint with the GST department via mail, and if necessary, the department will take further action.”

Experts believe that adding another option for retailers to the GST Portal will help to mitigate the problem. According to CA Tirlok Bansal, “The problems faced by the buyers can be minimized if the buyer gets the option of uploading the GST invoice received from the seller on the GST portal”

Retailers are hoping for a way out through which they can avoid financial problems, such as freezing of working capital and paying penalties.

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