lawwallet.in-Complete Guidelines For Demand and Recovery Under GST For Both GST Department and Taxpayer (1)

1. Complete Guidelines For Demand and Recovery Under GST – For Both GST Department and Taxpayer lawwallet.in/complete-guidelines-for-demand-and-recovery-under-gst June 9, 2021 GUIDELINES UNDER SECTION 73 AND 74 OF GST Goods and Services Tax Department of State of Thiruvananthapuram have issued guidelines dated 22/02/2021, in respect of Section 73 and 74 of the KSGST/CGST Act, 2017 [herein referred to as ‘Acts’]. Under Chapter XV of the Acts, which pertains to ‘Demand and Recovery’, Section 73 and 74 of the Acts talks about the recovery by the proper office in following cases: ‘Tax is not paid’ or ‘shortly paid’ ‘Input Tax Credit is wrongly availed or utilized’ ‘Any Erroneous refund’. Section 73 of the Acts states the tax, interest and penalty to be paid when, there is no intention of the tax-payer to evade tax, either by fraud or through suppression of facts. Section 74 of the Acts states the tax, interest and penalty to be levied by the proper officer, when there is an intention to evade tax by way of fraud or misrepresentation or suppression of facts. Section 73 of the Acts: 1/5

2. In case where the taxpayer is chargeable with tax and has no intention to evade tax, the determination will be done by proper officer under Section 73 of the Acts. Time Limit: Under Section 73(10) – Proper officer has to determine tax, interest and penalty , within 3 years; starting from the date when filing annual return becomes due; And in case of erroneous refund; within 3 years from the date of the refund. Under Section 73(2) – Show Cause Notice shall be issued at least 3 months prior to the limitation period; Note: Period of stay, if any, shall be excluded in computing the above period. Example: If the limitation period for determining tax, interest and penalty is ending on 1 December, 2020 – Then notice has to be issued on or before 1 September, 2020. st st Pre-notice intimation to pay tax as ascertained by the proper officer – Under Section 73(5) read with rule 142(1A), before issuing the notice, proper officer will communicate the details of the tax, interest and penalty determined by him in FORM GST DRC – 01A. Taxpayer to whom FORM GST DRC – 01A have been received, can communicate to the proper officer in Part – B of FORM GST DRC – 01A, stating: part-payment of the ascertained liability by him; Or, liability is not accepted by him; Person can pay tax, interest and penalty in case specified u/s 73(11) and thereafter shall inform the proper officer of the payment in FORM GST DRC – 03. After proper officer received the information of payment under FORM GST DRC – 03, he will issue acknowledgement in FORM GST DRC – 04. Show Cause Notice – Under Section 73(1), proper officer shall issue show cause notice in FORM GST DRC – 01in the following cases: When amount paid falls short of the actual amount to be paid; Or, when taxpayer had communicated that the liability is not accepted by him; Statement under Section 73(3):If proper officer wants to issue Show Cause Notice on the same grounds, as specified in an earlier issued Show Cause Notice, for additional periods than as specified in the said SCN, he may do so by serving a statement. Along with statement, he shall issue a summary thereof electronically in Form DRC-02. Payment against show cause notice: The taxpayer to whom show cause notice has been issued by the proper officer, can make payment and thereafter, inform proper officer of such payment in FORM DRC – 03 within 30 days of the issuance of notice. Proper officer on receipt of information of payment in FORM DRC – 03, shall issue acknowledgement in FORM GST DRC – 05. 2/5

3. Issuance of order determining tax, interest and penalty: Taxpayer to whom show cause notice have been issued under FORM DRC – 01, can make representation against such notice in FORM GST DRC – 06. If payment is not made by the taxpayer within 30 days or if he make representation against the show cause notice, proper officer shall provide an opportunity to the taxpayer for personal hearing u/s 75(4). Thereafter, proper officer shall determine: Tax; Interest u/s 50; And, penalty – 10% of tax or Rs. 10,000/- whichever is higher; Proper officer shall issue order and summary of tax, interest and penalty and will upload it online in FORM GST DRC – 07. Section 74 of the Acts: Where person chargeable with tax has an intention to evade tax, proper officer shall determine tax, interest and penalty as per Section 74. Time Limit:Under Section 74(10), proper officer shall decide the tax, interest and liability within 5 years starting from the due date for filing annual return; In case of erroneous refund, 5 years starting from date of erroneous refund; Section 74 (2) further provides that notice under Section 74 (1) (SCN) shall be issued at least six months prior to limitation period for issuance of order u/s 74. Period of Stay, if any, shall be excluded in computing the above periods. Pre-notice opportunity to pay tax:Under Section 74(5) read with Rule 142(1A), proper officer may communicate details of tax, interest and penalty to the taxpayer in FORM GST DRC – 01A. Taxpayer can communicate to the officer regarding his part-payment in Part B of the FORM GST DRC – 01A. OR taxpayer can communicate to the proper officer regarding his non- acceptance of liability in FORM DRC – 06. Note: Though the issuance of intimation in Form DRC 01A has been made optional through the Rule amendment Notification No. 79/2020 of Central Tax dated 15-10-2020, it is advisable that a pre-notice opportunity may be given to avoid further litigation on this count, especially since there is penal consequences u/s 74. A person can pay tax along with interest and penalty in FORM GST DRC – 03, on receipt of FORM GST DRC – 01A. {Penalty shall be equivalent to 15% of the tax } . The proper officer, on receipt of such information, shall issue an acknowledgment, accepting the payment made by the said person in FORM GST DRC–04 and thereafter shall not serve any Show Cause Notice under 74(1) or Statement under 74(3) Show cause notice Under Section 74(1):proper officer shall issue show cause notice to the taxpayer in FORM GST DRC – 01 in the following cases: If amount paid by the taxpayer falls short of the actual amount to be paid; OR, he had communicated of the non-acceptability of the liability. 3/5

4. Statement under Section 74(3):If proper officer wants to issue Show Cause Notice on the same grounds, as specified in an earlier Show Cause Notice, for additional periods than as specified in the said SCN, he may do so by serving a statement. Along with statement, he shall issue a summary thereof electronically in Form DRC-02 Taxpayer, to whom show cause notice has been issued in FORM GST DRC – 01, can make payment within 30 days of the issuance of notice and have to intimate proper officer regarding the payment in FORM DRC – 03 {Penalty shall be equivalent to 25% of the tax } . If taxpayer pays the tax, interest and penalty within 30 days and inform about it to the proper officer , proper officer shall issue acknowledgement in FORM GST DRC – 05. Issuance of order: The person to whom the show cause notice (SCN) has been issued along with form DRC-01 or form DRC-02, can make representation against such notice in form GST DRC -06 to the proper officer. After issuance of show- cause notice, if taxpayer has not made the payment within 30 days of the issuance of notice, proper officer after considering the representation, if any, filed by the said person in GST DRC -06, and after providing an opportunity for personal hearing shall issue summary order in FORM GST DRC – 07 and upload it electronically stating: Amount of demand; Due date; And, Amount of taxes, penalty and interest; Personal Hearing: Under Section 75(4), proper officer is required to give personal hearing opportunity to the taxpayer. Personal hearing can be adjourned upto 3 times, with reasons of adjournment to be recorded in writing by the proper officer. It is mandatory that the proper officer shall issue a speaking order and shall set out all relevant facts and basis of his decision in the Order issued u/s 73(9) / 74(9). The proper officer cannot determine an amount of tax, interest and penalty in excess of the amount specified in the SCN and also the grounds shall not go beyond what is mentioned in the SCN. It has to be borne in mind that an adjudication proceedings u/s 73(9) shall be deemed to be concluded, if the order is not issued within three years and in the case of proceedings u/s 74(9) shall be deemed to be concluded, if the order is not issued within five years. By virtue of Rule 142(6) of the GST Rules, 2017 the order issued by the proper officer will be treated as the notice for recovery. Where any penalty is imposed under Section 73 or Section 74, no penalty for the same act or omission shall be imposed on the same person under any other provisions of this Act. 4/5

5. Section 83 of the Act authorises provisional attachment to protect revenue in certain cases. Where during the pendency of any proceedings under section 62 or 63 or 64 or 67 or 73 or 74, the Commissioner is of the opinion that for the purpose of protecting the interest of the Government revenue, it is necessary so to do, he may, by order in writing attach provisionally any property, including bank account, belonging to the taxable person. 5/5