Section 40 of CGST Act, 2017 - First Return
Section 40 deals with outward supplies made during the gap between the date a person became liable to GST registration and the date on which registration was actually granted.
Text of Section 40 - First Return
Every registered person who has made outward supplies in the period between the date on which he became liable to registration till the date on which registration has been granted shall declare the same in the first return furnished by him after grant of registration.
Meaning and scope of Section 40
Section 40 is a transitional reporting provision for a person whose GST registration is granted after the date on which liability to obtain registration arose. If outward supplies were made during that intervening period, those supplies are not left outside the return system merely because the registration certificate was issued later. They must be declared in the first return furnished after registration is granted.
Key expressions used in Section 40
| Expression | Practical meaning |
|---|---|
| Registered person | A person registered under Section 25 of the CGST Act, other than a person having a Unique Identity Number. See the statutory definitions in Section 2. |
| Outward supply | Broadly, supply of goods or services or both by a taxable person, including sale, transfer, barter, exchange, licence, rental, lease or disposal, or other modes covered by the statutory definition. |
| Liable to registration | The date on which the person becomes liable to obtain registration under the applicable registration provisions, particularly Section 22 or, where applicable, Section 24. |
| First return | The first applicable GST return furnished after registration is granted, in which the pre-registration-period outward supplies covered by Section 40 are required to be declared. |
How Section 40 operates
The provision applies where three facts exist: the person became liable to registration, registration was granted on a later date, and outward supplies were made between those two dates. The registered person must include those supplies in the first return after grant of registration.
The provision should be read with the registration and return framework of the CGST Act, including Section 25 - Procedure for Registration, Section 37 - Details of Outward Supplies and Section 39 - Furnishing of Returns.
Illustration
Suppose a business becomes liable to registration on 5 April and GST registration is granted on 18 April. If the business makes outward supplies from 5 April to 17 April, Section 40 requires those supplies to be declared in the first return furnished after registration is granted, subject to the applicable return form, rules and GST Portal procedure.
Return filing in practice
For normal and casual registered taxpayers, Form GSTR-1 is the statement used for reporting outward supplies. Form GSTR-3B is the summary return used for reporting tax liabilities and other prescribed details. Taxpayers should ensure that supplies falling within Section 40 are correctly reflected in the applicable return data and reconciled with invoices, books and tax liability.
Related CGST Act provisions
Section 22 - Persons liable for registration
Section 24 - Compulsory registration in certain cases
Section 25 - Procedure for registration
Section 37 - Furnishing details of outward supplies
Section 39 - Furnishing of returns
Section 41 - Availment of input tax credit