Content authored by practitioners with experience at Amazon India, Intuit QuickBooks, and the Tata Group. Meet the team →
A supplier who has not filed their monthly GSTR-1 by the eleventh of the following month has not yet cost the recipient any input tax credit — but the calendar clock on the recipient's recovery window is already running against the Section 16(4) November 30 deadline of the following financial year. A recipient who sends a single nudge email at T+30 and then goes quiet for five months arrives at November 15 with a large at-risk queue and no paper trail to support commercial recovery. A recipient who jumps straight to a legal notice at T+30 has burned the commercial relationship without exhausting the intermediate escalation levers. Neither approach is defensible. The gap between the two is a graduated ladder that escalates in tone, statutory anchor, and organisational reach across the T+30 to T+180 window, preserving the paper trail every subsequent recovery step is built on.
Sequence the follow-up as a six-level ladder from a T+30 accounts-payable nudge to a T+180 pre-legal notice, with each level carrying a specific trigger event, a specific statutory anchor, and a specific commercial-recovery instrument. Level 1 at T+30 is a friendly reminder to the accounts contact citing the invoice number and the supplier's Section 39 obligation. Level 2 at T+60 escalates to the chief financial officer with a formal request to confirm the filing quarter. Level 3 at T+90 invokes the purchase order's supplier tax indemnity clause and computes the aggregate input tax credit exposure. Level 4 at T+120 serves a notice of intent to withhold future payment under Contract Act 1872 Section 55. Level 5 at T+150 raises a commercial debit note and requests a Section 34 credit note. Level 6 at T+180 is the pre-legal notice referencing Section 16(4) permanent loss, Section 122 supplier penalty, and arbitration under the contract.
A six-template Word pack — one letter per level — with placeholder counterparties, illustrative rupee figures, and a customise-before-sending discipline. A escalation date register that tracks each at-risk invoice against its Section 16(4) November 30 deadline for the applicable financial year, with Level 1 to Level 6 dates calculated backward from that deadline. A named ownership matrix: Level 1 and Level 2 owned by the accounts-payable executive, Level 3 by the accounts-payable manager, Level 4 by the chief financial officer, Level 5 by the chief procurement officer, Level 6 by legal counsel. A monthly review by the controller that closes each letter's follow-up loop and files the response (or the non-response) in the invoice's audit-trail folder. A cross-reference to the reconciliation process design register so each at-risk category feeds back into the Day 15 GSTR-2B sign-off gate of the monthly close cadence.
A supplier follow-up register in which every at-risk invoice sits at a documented level of the ladder, has a named owner for the next escalation, has a target escalation date calculated against the Section 16(4) deadline, and has a paper trail of prior letters filed. A commercial-recovery paper trail sufficient to support arbitration or civil recovery if the Section 16(4) deadline slams shut without a resolved credit. A supplier-relationship management discipline that separates tone-graduated escalation (Levels 1 to 3) from commercial-recovery escalation (Levels 4 to 6) so the sole-source relationship is preserved where operationally necessary. A monthly review that closes the loop between the letter pack and the failure mode analysis register, so recurring supplier non-filers move from the letter queue into a procurement-side vendor rationalisation conversation.
The Section 16(4) November 30 deadline turns a supplier’s late GSTR-1 filing into a permanent input tax credit loss for the recipient. That is the compliance gap the six-letter escalation ladder is engineered against. A recipient who catches the mismatch on Day 15 of the monthly close cadence has ten and a half months of runway to recover the credit before the deadline slams shut on the following November 30 — but only if the escalation is sequenced across that runway with a paper trail heavy enough to support commercial recovery when the tone-graduated letters run out. This is the playbook for that ten and a half months.
The letter pack lives one step downstream of the GSTR-2B input tax credit runbook — the Days 11 to 15 window of the monthly close pillar that produces the at-risk queue in the first place. The Day 15 sign-off gate hands the queue to the accounts-payable team, and the six-letter ladder is what the team runs against each invoice from T+30 onwards. It sits alongside the GSTR-2B failure mode analysis, which catalogues the twelve failure surfaces that produce the queue — the letter pack is the recovery instrument for the classes the design layer flagged as recoverable through supplier engagement rather than through book-side write-off.
The escalation ladder — six levels, T+30 to T+180
The ladder runs six letters across a six-month window starting from the invoice date. Each level carries a distinct trigger, a distinct statutory anchor, and a distinct commercial-recovery instrument. The template pack ships six Word files — one per level — with placeholder counterparties and a customise-before-sending discipline.
| Level | Timing | Recipient at supplier | Statutory anchor | Recovery instrument |
|---|---|---|---|---|
| 1 | T+30 | Accounts contact | Section 39 filing date | Nudge |
| 2 | T+60 | Chief financial officer | Section 39 + reference to Section 16(4) horizon | Formal filing confirmation request |
| 3 | T+90 | Chief financial officer | Purchase order tax indemnity clause | Aggregated exposure computation |
| 4 | T+120 | Legal counsel copied | Contract Act 1872 Section 55 | Notice of intent to withhold payment |
| 5 | T+150 | Chief procurement officer | Section 34 credit note framework | Commercial debit note plus Section 34 credit note demand |
| 6 | T+180 | Legal counsel + arbitrator reference | Section 16(4), Section 122, arbitration clause | Pre-legal notice |
Each level’s escalation date is not a fixed calendar counter — it is calculated backward from the Section 16(4) November 30 deadline of the applicable financial year. An invoice dated 15 April 2026 belongs to FY 2026-27; the recipient’s recovery window closes on 30 November 2027. Level 6 must fire by roughly 30 September 2027 to leave a two-month buffer for the commercial resolution to close before the deadline. Level 1 therefore fires around T+30 from the invoice date; Levels 2 through 6 follow the T+60, T+90, T+120, T+150, T+180 rhythm as a default cadence, with the Level 5 and Level 6 dates advanced closer to Level 4 for FY-end invoices where the deadline compresses the runway.
The illustrative Rs 2,40,000 case — Rs 12 lakh purchase, blended 20 percent goods and services tax
A Rs 12 lakh purchase invoice attracting a blended 20 percent goods and services tax rate carries a Rs 2,40,000 input tax credit component (Rs 1,20,000 central tax plus Rs 1,20,000 state tax for intra-state supply, or Rs 2,40,000 integrated tax for inter-state supply). On the illustrative purchase register carrying twelve such invoices per month across a single non-filing supplier — Rs 1,44,00,000 aggregate purchase, Rs 28,80,000 aggregate input tax credit exposure — the letter pack is the primary recovery instrument between the Day 15 flag and the Section 16(4) deadline.
Where the invoice attracts 28 percent goods and services tax — automotive parts, tobacco, luxury goods — the exposure per Rs 12 lakh invoice rises to Rs 3,36,000. Where the invoice attracts 12 percent — construction materials, certain intermediates — the exposure falls to Rs 1,44,000. Every letter template in the pack carries the illustrative Rs 2,40,000 figure as the worked example, and the customise-before-sending discipline replaces the figure with the actual invoice exposure at the time of drafting.
Level 1 — T+30 friendly reminder to the accounts contact
The Level 1 letter goes out thirty days after the invoice date, addressed to the accounts-payable contact on the supplier side who receives our routine payment and reconciliation correspondence. The tone is informal, the body is three or four sentences, and the intent is a nudge without escalation.
Template — Level 1 friendly reminder
Subject: GSTR-1 filing confirmation — Invoice [INVOICE NUMBER] dated [INVOICE DATE]
Dear [ACCOUNTS CONTACT NAME],
This is a routine follow-up on invoice [INVOICE NUMBER] dated [INVOICE DATE] for goods and services tax input reconciliation. Our GSTR-2B pull for the tax period [MONTH YYYY] does not yet reflect this invoice under GSTIN [SUPPLIER GSTIN]. Could you kindly confirm the GSTR-1 filing acknowledgement number and the return period once filed? This helps us close our monthly input tax credit reconciliation cycle.
Warm regards, [ACCOUNTS PAYABLE EXECUTIVE NAME] [RECIPIENT COMPANY NAME]
Customise before sending. Replace all placeholder counterparties with the actual accounts contact, invoice particulars, and supplier GSTIN. Confirm the tax period matches the GSTR-2B pull month. Send from the shared accounts-payable inbox rather than the executive’s personal address to preserve the paper trail.
Level 2 — T+60 formal request to the chief financial officer
Level 2 escalates thirty days later. The recipient shifts to the supplier’s chief financial officer, and the tone shifts from nudge to formal request. The letter cites the Section 39 filing obligation and introduces the Section 16(4) horizon without invoking the permanent-loss language yet.
Template — Level 2 formal request to CFO
Subject: Formal request — GSTR-1 filing status, Invoice [INVOICE NUMBER]
Dear [SUPPLIER CFO NAME],
We refer to our earlier correspondence dated [LEVEL 1 DATE] with [ACCOUNTS CONTACT NAME] regarding invoice [INVOICE NUMBER] dated [INVOICE DATE] for [AMOUNT] plus [GST AMOUNT] under GSTIN [SUPPLIER GSTIN]. The invoice is not yet reflected in our GSTR-2B pull for the tax period [MONTH YYYY], and we have not received confirmation of the GSTR-1 filing acknowledgement number.
Under Section 39 of the CGST Act 2017 read with Rule 59 of the CGST Rules, the GSTR-1 statement for the tax period was due on [11 OF FOLLOWING MONTH]. We are formally requesting confirmation of the current filing status, the intended filing quarter, and the acknowledgement number once filed. Please note that Section 16(4) of the CGST Act limits our input tax credit recovery window to the thirtieth day of November following the end of the financial year to which the invoice pertains — for this invoice, that deadline is [30 NOVEMBER OF NEXT FY]. A timely filing update assists us in maintaining our compliance calendar.
Kindly respond within seven working days.
Yours sincerely, [ACCOUNTS PAYABLE MANAGER NAME] [RECIPIENT COMPANY NAME]
Customise before sending. Confirm the invoice’s applicable Section 39 filing date (11th for monthly filers, 13th for QRMP quarterly filers). Compute the Section 16(4) November 30 deadline for the invoice’s financial year. Send from the accounts-payable manager’s official address with the chief financial officer named in the recipient line and the accounts contact in copy.
Level 3 — T+90 indemnity clause invocation with aggregated exposure
Level 3 invokes the purchase order’s supplier tax indemnity clause. Most standard purchase orders in Indian enterprise practice carry a supplier tax indemnity clause running along the lines of “Supplier shall indemnify the Buyer against any input tax credit denial arising from Supplier’s non-compliance with Section 39 or any successor provision” — typically numbered Clause 12.3, Clause 15.2, or similar in the enterprise’s standard purchase-order template. The letter computes the aggregate input tax credit exposure across all pending invoices from the same supplier.
Template — Level 3 indemnity clause invocation
Subject: Purchase Order Clause [CLAUSE NUMBER] — supplier tax indemnity invocation, Invoice [INVOICE NUMBER] and aggregate register
Dear [SUPPLIER CFO NAME],
We refer to our earlier correspondence dated [LEVEL 1 DATE] and [LEVEL 2 DATE] regarding invoice [INVOICE NUMBER] dated [INVOICE DATE] and to our purchase order [PO NUMBER] dated [PO DATE], Clause [CLAUSE NUMBER] of which reads:
“[CLAUSE 12.3 VERBATIM TEXT — supplier tax indemnity language]”
The invoice under reference remains un-reflected in our GSTR-2B pull. Aggregating across all invoices raised by [SUPPLIER NAME] under GSTIN [SUPPLIER GSTIN] for the current financial year that are pending GSTR-1 reflection, our exposure register stands as follows:
- Number of invoices: [N]
- Aggregate invoice value: Rs [AGGREGATE VALUE]
- Aggregate input tax credit at risk: Rs [AGGREGATE ITC] (illustrative Rs 2,40,000 per Rs 12 lakh invoice at blended 20 percent goods and services tax)
Under Clause [CLAUSE NUMBER] of the purchase order, this exposure is indemnifiable by [SUPPLIER NAME] in the event that the input tax credit is not availed within the recovery window under Section 16(4) of the CGST Act. We are formally invoking the clause and reserving all rights.
Please respond within ten working days with a filing commitment covering the pending invoices.
Yours sincerely, [CHIEF FINANCIAL OFFICER OR TAX HEAD NAME] [RECIPIENT COMPANY NAME]
Customise before sending. Locate the correct clause number and verbatim text in the enterprise’s standard purchase-order template. Compute the aggregate exposure across all pending invoices from the same supplier, not just the single invoice in question. Send under the recipient’s chief financial officer or head of tax signature; the escalation signal is in the seniority.
Level 4 — T+120 notice of intent to withhold payment
Level 4 invokes Section 55 of the Indian Contract Act 1872 and the payment-hold provision embedded in the purchase order. The letter shifts from tax correspondence to commercial notice, and legal counsel is placed in the recipient line.
Template — Level 4 payment-hold notice
Subject: Notice of intent to withhold future payment — Section 55 Contract Act 1872, purchase order [PO NUMBER]
Dear [SUPPLIER CFO NAME], Copy: [SUPPLIER LEGAL COUNSEL NAME]
We refer to our correspondence dated [LEVEL 1, 2, 3 DATES] regarding the pending GSTR-1 filings against invoices [INVOICE NUMBERS] under GSTIN [SUPPLIER GSTIN]. Despite our indemnity clause invocation dated [LEVEL 3 DATE], no filing update has been received.
Under Section 55 of the Indian Contract Act 1872 (time as essence), and under Clause [PAYMENT-HOLD CLAUSE NUMBER] of the purchase order [PO NUMBER] which reads [PAYMENT-HOLD CLAUSE VERBATIM TEXT], we hereby serve notice of our intent to withhold future payments against [SUPPLIER NAME] to the extent of the input tax credit exposure — Rs [AGGREGATE ITC] as at [DATE] — until such time as the pending GSTR-1 filings are complete and reflected in our GSTR-2B pull.
This notice is served in the spirit of the purchase order’s dispute-resolution framework and is without prejudice to any further rights or remedies available under the contract, the CGST Act 2017, or applicable law.
Please respond within seven working days.
Yours sincerely, [CHIEF FINANCIAL OFFICER NAME] [RECIPIENT COMPANY NAME]
Customise before sending. Locate the payment-hold clause in the purchase order and quote it verbatim. Confirm the aggregate input tax credit exposure at the letter date. Coordinate internally with the accounts-payable team before serving the notice so any in-flight payment run is stopped in the same window.
Level 5 — T+150 commercial debit note and Section 34 credit note demand
Level 5 raises the commercial-recovery instrument. The recipient issues a commercial debit note (a book-side adjustment reducing the next payment) and simultaneously requests the supplier to issue a Section 34 credit note reducing the invoice tax component.
Template — Level 5 commercial debit note and Section 34 demand
Subject: Commercial debit note [DN NUMBER] and Section 34 credit note demand, Invoice [INVOICE NUMBER]
Dear [SUPPLIER CFO NAME], Copy: [SUPPLIER CHIEF PROCUREMENT OFFICER NAME]
We refer to our correspondence dated [LEVEL 1 to LEVEL 4 DATES] regarding invoice [INVOICE NUMBER] and the aggregate pending GSTR-1 exposure of Rs [AGGREGATE ITC].
Please find enclosed commercial debit note [DN NUMBER] dated [DN DATE] for Rs [AGGREGATE ITC], representing the input tax credit exposure that has not been recovered from our GSTR-2B pull despite four prior escalations. This debit note will be adjusted against the next scheduled payment run to [SUPPLIER NAME] in the amount of Rs [NEXT PAYMENT AMOUNT] due on [PAYMENT DATE].
Simultaneously, we formally request [SUPPLIER NAME] to issue a Section 34 credit note under the CGST Act 2017 reducing the original invoice tax component to correspond to our reversed input tax credit. Section 34 credit notes must be declared in the supplier’s GSTR-1 for the month of issue and are required to be issued not later than the thirtieth day of November following the end of the financial year in which the supply was made — for this invoice, [30 NOVEMBER OF NEXT FY]. Your response is expected within thirty days.
The commercial debit note and the Section 34 credit note demand operate in parallel; the commercial adjustment recovers the cash while the Section 34 credit note provides the goods and services tax closure.
Yours sincerely, [CHIEF PROCUREMENT OFFICER NAME] [RECIPIENT COMPANY NAME]
Customise before sending. Generate the commercial debit note in the enterprise’s accounting system before drafting the letter, and enclose it as an attachment. Confirm the next scheduled payment run and its scheduled date. Coordinate with the treasury team to ensure the adjustment is applied on the payment date rather than left as a pending adjustment.
Level 6 — T+180 pre-legal notice
Level 6 is the pre-legal notice. It references Section 16(4) permanent loss, Section 122 supplier penalty, and the arbitration or civil-recovery clause of the purchase order. This letter is drafted by legal counsel and served under the recipient’s registered legal address.
Template — Level 6 pre-legal notice
Subject: Pre-legal notice — invoice [INVOICE NUMBER] and aggregate GSTR-1 non-filing exposure
Dear [SUPPLIER CEO NAME], Copy: [SUPPLIER LEGAL COUNSEL NAME], [SUPPLIER CFO NAME], [SUPPLIER CPO NAME]
Our client [RECIPIENT COMPANY NAME], through its counsel [LEGAL COUNSEL FIRM NAME], hereby serves the following pre-legal notice.
Under the purchase order [PO NUMBER] and correspondence dated [LEVEL 1 through LEVEL 5 DATES], [SUPPLIER NAME] has failed to file GSTR-1 under Section 39 of the CGST Act 2017 for invoices [INVOICE NUMBERS] aggregating Rs [AGGREGATE INVOICE VALUE] with an input tax credit exposure of Rs [AGGREGATE ITC] to our client.
The recovery window under Section 16(4) of the CGST Act 2017 for the invoice(s) in question closes on [30 NOVEMBER OF APPLICABLE FY], after which the input tax credit is permanently unavailable to our client.
Under Section 122 of the CGST Act 2017, [SUPPLIER NAME] is exposed to penalty of ten thousand rupees or an amount equivalent to the tax collected but not paid to the Government, whichever is higher, for failure to furnish returns under Section 39. We record this exposure without prejudice to our client’s rights under the purchase order and the goods and services tax law.
Our client hereby serves notice of intent to invoke Clause [ARBITRATION CLAUSE NUMBER] of the purchase order and initiate arbitration proceedings for the aggregate input tax credit exposure of Rs [AGGREGATE ITC] together with interest, costs, and any additional damages, if the pending GSTR-1 filings and the Section 34 credit note demand of [LEVEL 5 DATE] are not resolved within thirty days from the date of this notice.
Our client also reserves the right to make a regulatory reference under Section 122 of the CGST Act 2017 to the jurisdictional Commissioner of Central Goods and Services Tax, and to pursue any additional legal or commercial remedies available.
Please treat this notice with the seriousness it warrants. A response is expected within thirty days.
Yours faithfully, [LEGAL COUNSEL NAME] [LEGAL COUNSEL FIRM NAME] On behalf of [RECIPIENT COMPANY NAME]
Customise before sending. Route through the enterprise’s retained legal counsel or law firm — this letter should not be sent under an internal finance signature. Confirm the arbitration clause number and jurisdictional framework in the purchase order. Confirm the Section 16(4) deadline and the aggregate exposure figures on the day of drafting. Serve by tracked courier with delivery acknowledgement retained in the invoice’s audit-trail folder.
The Word template pack
The six templates above ship as a Word template pack — one .docx per level, with placeholder counterparties and highlighted customisation fields — at /resources/vendor-gstr-1-follow-up-letter-pack/. The pack sits alongside the Three-Way Input Tax Credit Workbook and the TDS Receivable Aging Workbook as the third instrument in Terra Insight’s Playbook downloadables. Download is soft-gated — the download flow captures name, company, and email so the pack updates for statutory changes reach the sender’s inbox in the following window.
When the manual escalation ladder outgrows itself
The six-letter ladder holds for a finance team running a purchase register of a few hundred at-risk invoices per month and a non-filing supplier base in the manageable low three digits. Above roughly two hundred at-risk invoices per month, or a hundred non-filing suppliers in the escalation queue at any moment, the manual ladder stops being economical. Three specific manual controls break at scale.
Escalation-date tracking against variable Section 16(4) deadlines. Every invoice carries its own November 30 deadline depending on its financial year, and every level’s target date is calculated backward from that deadline. Tracking hundreds of invoice-level clocks in a spreadsheet with the deadline shifting by financial year is a workload the accounts-payable executive cannot economically sustain without silent drift.
Template customisation at scale. Merging invoice particulars, GSTINs, aggregate exposure figures, and the correct statutory anchor into six templates for hundreds of invoices simultaneously is a workload no team economically supports out of the shared inbox and a Word file per letter.
Cross-functional escalation coordination. The ladder spans accounts payable, tax, finance, procurement, and legal across six levels. Coordinating the handoffs, capturing responses, filing the paper trail, and closing the loop with the reconciliation process design register requires a workflow surface that a shared inbox and a folder tree cannot deliver.
The response is a continuously refreshed reconciliation surface where the at-risk queue is generated automatically from the GSTR-2B versus purchase register match, each invoice carries a system-generated escalation clock against its own Section 16(4) deadline, each letter is drafted from the template pack with the invoice particulars merged in, and each escalation is routed to the correct owner with the response captured against the invoice. Terra Insight’s GST reconciliation software delivers this surface, and the reconciliation software India pillar documents where the pattern fits inside the broader reconciliation infrastructure.
Where this fits
- TransactIG — reconciliation infrastructure
- Reconciliation software India — pillar guide
- GST reconciliation software India
- TDS reconciliation software India
Related reading
- The reconciliation playbook — monthly close pillar
- GSTR-2B input tax credit runbook — Days 11 to 15 window that produces the at-risk queue
- GSTR-2B input tax credit failure modes — the design layer above the letter pack
- Three-way input tax credit reconciliation recipe
- Section 16(4) input tax credit time bar — the permanent loss anchor
- Rule 37 and Rule 37A input tax credit reversal on supplier default
- Reconciliation process design pillar
Content authored by practitioners with experience at Amazon India, Intuit QuickBooks, and the Tata Group. Meet the team →
- ▸ Section 16(4), Central Goods and Services Tax Act 2017 — Time limit for availing input tax credit. A registered person cannot claim input tax credit in respect of any invoice or debit note for supply of goods or services after the thirtieth day of November following the end of the financial year to which such invoice pertains, or furnishing of the relevant annual return, whichever is earlier. Where the supplier's GSTR-1 is filed after this cut-off and no book-side accrual has been made, the input tax credit is permanently lost. This is the anchor that gives every letter in the ladder its urgency — the calendar clock on the recipient's recovery window closes on 30 November of the following financial year, and every letter's escalation date is calculated backward from that date rather than from a fixed follow-up counter.
- ▸ Section 34, Central Goods and Services Tax Act 2017 — Credit and debit notes. Where a tax invoice has been issued for supply of any goods or services and the taxable value or tax charged in that invoice is found to exceed the taxable value or tax payable in respect of such supply, the registered person who has supplied such goods or services may issue a credit note. The details of such credit note shall be declared in the return for the month during which such credit note has been issued but not later than the thirtieth day of November following the end of the financial year in which such supply was made. A supplier-issued Section 34 credit note that reduces the invoice tax component to correspond to the recipient's reversed input tax credit is the primary commercial-recovery instrument referenced in Levels 5 and 6 of the ladder.
- ▸ Rule 37A, Central Goods and Services Tax Rules 2017 — Reversal of input tax credit where the supplier has not paid tax. Where input tax credit has been availed by a registered person in the return in FORM GSTR-3B for a tax period in respect of an invoice the details of which have been furnished by the supplier in FORM GSTR-1 but the supplier has not furnished the return in FORM GSTR-3B for the said tax period till the thirtieth day of September following the end of the financial year in which the input tax credit was availed, the said amount of input tax credit shall be reversed by the said registered person in the return for the tax period ending 30 November following the end of such financial year. Rule 37A is what makes a supplier's GSTR-3B slip trigger a recipient-side reversal even where the GSTR-1 has been filed, and is a distinct exposure pathway that the follow-up ladder must address alongside the Section 16(4) primary anchor.
- ▸ Section 39, Central Goods and Services Tax Act 2017 — Furnishing of returns. Every registered person shall furnish for every calendar month a return of inward and outward supplies of goods or services or both, and of input tax credit availed, tax payable, and tax paid, in such form and manner as may be prescribed. The GSTR-1 outward supply statement is due on the eleventh day of the month following the tax period under Rule 59 (or the thirteenth for quarterly filers under QRMP). A supplier who has not filed GSTR-1 by the eleventh has already breached the statutory filing date, and Level 2 of the ladder is the first letter that cites this breach as the basis for a formal request to the supplier's chief financial officer.
- ▸ Section 122, Central Goods and Services Tax Act 2017 — Penalty for certain offences. Where a taxable person collects any amount as tax but fails to pay the same to the Government beyond a period of three months from the date on which such payment becomes due, or fails to furnish returns under Section 39, the penalty is ten thousand rupees or an amount equivalent to the tax evaded or the tax not paid, whichever is higher. A supplier who has collected the goods and services tax from the recipient on an invoice but has not filed the return that carries the corresponding outward supply liability is exposed to Section 122 penalty on the supplier side, and Level 6 of the ladder cites this exposure in the pre-legal notice as the basis for a coordinated commercial recovery and regulatory reference.
- ▸ Section 55, Indian Contract Act 1872 — Effect of failure to perform at fixed time in contract in which time is essential. When a party to a contract promises to do a certain thing at or before a specified time and fails to do any such thing at or before the specified time, the contract, or so much of it as has not been performed, becomes voidable at the option of the promisee, if the intention of the parties was that time should be of the essence of the contract. Where the purchase order embeds a supplier tax indemnity clause with the GSTR-1 filing date as a specified performance milestone, Section 55 of the Contract Act 1872 gives the recipient the right to treat the un-filed GSTR-1 as a contractual breach, and Level 4 of the ladder cites this section as the basis for the notice of intent to withhold future payment under the payment-hold provision of the contract.