GSTR 9 n 9C for FY 17-18

on 1/4/17 proprietorship firm converted into partnership firm and during transition period tax consultant has taken gst number in proprietorship PAN. Till Nov 2017 gst sales were filed in proprietorship firm's gstn and from Dec 17 onwards in partnership firm. however in income tax total sales were reflected in firm only. GSTR 9 of proprietorship firm was not filed and only partnership firm was filed in which total sales of 17-18 were disclosed. Now the dept has issued notice for non filling of GSTR 9 of proprietorship firm. sales in proprietorship in gstn was 2.06 cr.

whether the plea sustain that we have disclosed total sales in partnership firm gstr 9 and if not what consequences to be born.

Hi Namrata,

In your case, where a proprietorship was converted into a partnership firm on 1/4/2017 and two separate GST registrations were involved (one for the proprietorship PAN and one for the partnership firm), here’s a breakdown of the issues and possible approach:

Key points:

Separate GSTINs for proprietorship and partnership — each GSTIN is treated as a distinct taxable entity for GST purposes.
Filing GSTR-9 (Annual Return) is mandatory for each GSTIN having turnover above the prescribed limit.
Even if you disclosed the entire FY 2017-18 sales in the partnership firm’s GSTR-9, the proprietorship GSTIN’s annual return for the period it was active (Apr-Nov 2017) still needs to be filed separately.

Legal Position:

Each GSTIN is independent; you cannot merge sales or returns across different GSTINs.
Failure to file GSTR-9 for the proprietorship GSTIN can attract late fees and scrutiny.
Showing all sales in the partnership firm’s GSTR-9 doesn’t absolve the proprietorship GSTIN from the obligation to file its own GSTR-9.

Consequences:

Notice for non-filing of GSTR-9 against proprietorship GSTIN can lead to late fees (₹100 per day CGST + ₹100 per day SGST, capped at 0.25% of turnover).
Possible further scrutiny or penalty if the department suspects suppression or misreporting.
However, since you have disclosed the full turnover correctly under partnership GSTIN for the whole year in income tax and GSTR-9, it may help in defense but not a substitute for filing the proprietorship GSTIN’s return.

Suggestions:

File the proprietorship firm’s GSTR-9 immediately (if possible) as a belated filing to avoid escalation.
Attach explanation stating that due to conversion, filings were consolidated but now filing separately as per the GSTIN.
Consult GST authorities for possible waiver of late fees if filing is delayed.
Keep records of the transition and sales breakup for clarity.