Determination of tax not paid or short paid under GST – 19 Questions

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Determination of tax not paid or short paid under GST – 19 Questions

Determination of tax not paid or short paid under GST – 19 Questions Answered. This article explains Determination of tax not paid or short paid as per Goods & Service Tax Act 2017 (CGST Act 2017). Deep analysis for Determination of tax not paid or short paid in GST Regime as per CGST Bill 2017, What is the time limit for issue of order in pursuance of the direction of the Appellate Authority or Appellate Tribunal or a Court? etc…Here you may also check GST Applicability date, Impact of GST, GST Registration, Updates related to Determination of tax not paid or short paid under GST Regime. Lets understand what is the Determination of tax not paid or short paid under GST, Applicability of GST in GST Regime, GST rates, its impact on your business and latest updates about GST Act 2017. Now check more details for Determination of tax not paid or short paid under GST Regime as per CGST Act 2017

Determination of tax not paid or short paid under GST

Determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilized for any reason other than fraud or any willful misstatement or suppression of facts (Section 73)

Q1. Under what circumstances, the proper officer shall invoke provisions of section 73(1) to serve show cause notice on the person chargeable with tax?

Ans. The proper officer shall serve notice under the provisions of Section 73(1) on the person chargeable with tax for any reason other than:

  • fraud
  • willful misstatement
  • suppression of facts,

when he has reasons to believe that tax has not been paid or short paid or erroneously refunded or input tax credit has been wrongly availed or utilized.

Q2. What is the time limit for issue of show cause notice by the proper officer under section 73(2)?

Ans. The proper officer shall issue show cause notice at least 3 months prior to the time limit of 3 years for issuance of order i.e.

  • Before completion of 3 years from the due date for furnishing of annual return for the financial year to which the tax not paid or short paid or input tax credit wrongly availed or utilized relates to, or
  • within 3 years from the date of erroneous refund, as the case may be.

Q3. Whether proper officer can issue similar show cause notice for any periods other than those covered under section 73(1)?

Ans. Yes. The proper officer may serve a statement under section 73(3) containing details of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilized where the grounds relied upon by the proper officer for such periods are the same as are mentioned in the earlier notice issued under section 73(1). The service of such statement shall be deemed to be service of show cause notice on the person chargeable with tax.

Impact and Relevance of GST

Q4. Can the person chargeable with tax pay the amount of demand along with interest before the service of show cause notice under sub-section (1) or as the case may be, the statement under sub-section (3) of section 73?

Ans. Yes. The person chargeable with tax can pay the amount of tax along with interest under section 50 based on his own ascertainment of such tax or the tax as ascertained by the proper officer and inform the proper officer in writing of such payment. On receipt of such information, the proper officer shall not serve any notice or statement with respect to the tax so paid.

Q5. Whether the proper officer can proceed to issue show cause notice in case of any shortfall in payment under sub-section (5) by the person chargeable with tax?

Ans. Where the proper officer is of the opinion that the amount paid under sub-section (5) falls short of the actual amount payable, he shall proceed to issue show cause notice under section 73(1) for such shortfall.

Q6. If the show cause notice is issued under sub-section (1) or (3) of section 73 and thereafter the person chargeable with tax makes payment, is there any need to adjudicate the case?

Ans. No. Where the person chargeable with tax pays the tax along with interest under section 50 within 30 days of issue of such show cause notice, no penalty shall be payable and all proceedings in respect of such notice except for proceedings under section 132 shall be deemed to be concluded.

Q7. What is the maximum penalty leviable under section 73?

Ans. Penalty equivalent to 10% of the tax or Rs.10,000/- whichever is higher.

Q8. Whether any penalty is payable, if the self-assessed tax or any amount collected as tax is not remitted?

Ans. Yes. Penalty shall be leviable under section 73(11) where the self-assessed tax or any amount collected as tax is not paid within 30 days from the due date of payment of such tax. Quantum of penalty leviable shall be 10% of the tax or Rs.10,000/-, whichever is higher.

Determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilized by reason of fraud or any willful misstatement or suppression of facts (section 74)

Q9. Under what circumstances, the proper officer shall invoke provisions of section 74(1) to serve show cause notice on the person chargeable with tax?

Ans. The proper officer shall serve notice under the provisions of Section 74(1) on the person chargeable with tax for any reason of :

  • Fraud
  • willful misstatement
  • suppression of facts

when he has reasons to believe that tax has not been paid or short paid or erroneously refunded or input tax credit has been wrongly availed or utilized.

Q10. What is the time limit for issue of show cause notice by the proper officer under section 74(2)?

Ans. The proper officer shall issue show cause notice at least 6 months prior to the time limit of 5 years for issuance of order i.e.:

  • Before completion of 5 years from the due date for furnishing of annual return for the financial year to which the tax not paid or short paid or input tax wrongly availed or utilized relates to or
  • within 5 years from the date of erroneous refund, as the case may be.

Q11. Whether proper officer can issue similar show cause notice for any periods other than those covered under section 74(1)?

Ans. Yes. The proper officer may serve a statement under section 74(3) containing details of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilized, where the grounds relied upon by the proper officer for such periods are the same as are mentioned in the earlier notice issued under section 74(1), except the ground of fraud or any willful-misstatement or suppression of facts with the intention to evade tax. The service of such statement shall be deemed to be service of show cause notice on the person chargeable with tax.

Determination of tax under GST Regime

Q12. Can the person chargeable with tax pay the amount of demand along with interest and reduced penalty before the service of show cause notice under sub-section (1) or as the case may be, the statement under sub-section (3) of section 74?

Ans. Yes. The person chargeable with tax pay the amount of tax along with interest under section 50 and a penalty equivalent to 15% of such tax based on his own ascertainment of such tax or the tax as ascertained by the proper officer and inform the proper officer in writing of such payment. On receipt of such information, the proper officer shall not serve any notice in respect of tax so paid or any penalty payable under the provisions of this Act or rules made thereunder.

Q13. Can the person chargeable with tax pay the amount of demand along with interest and reduced penalty after the issue of notice under sub-section (1) or (3) of section 74, but before the adjudication and issue of order under section 74?

Ans. Yes. The person chargeable with tax under sub-section (1) or the statement under subsection (3) shall pay the amount of tax along with interest under section 50 and a penalty equivalent to 25% of such tax within 30 days from the issue of notice [Section 74(8)]. On such payment, all proceedings in respect of the said notice except for proceedings under section 132 shall be deemed to be concluded.

Q14. Where a case is adjudicated under section 74 and order issued confirming tax demand and penalty, does the Noticee have any option to pay reduced penalty?

Ans. Yes. The person served with order under sub-section (9) shall pay the tax along with interest under section 50 and a penalty equivalent to 50% of such tax within 30 days of the communication of the order [Section 74(11)]. On such payment, all proceedings in respect of the said notice except for proceedings under section 132 shall be deemed to be concluded.

Q15. Whether the proper officer can proceed to issue notice in case of shortfall in payment under sub-section (5) by the person chargeable with tax?

Ans. Where the proper officer is of the opinion that the amount paid under sub-section (5) falls short of the actual amount payable, he shall proceed to issue show cause notice under section 74(1) for such shortfall.

Q16. If the show cause notice is issued under sub-section (1) or (3) of section 74 and thereafter the person chargeable with tax makes payment, is there any need to adjudicate the case?

Ans. No. Where the person chargeable with tax, pays the tax along with interest under section 50 and applicable penalty within 30 days of notice, all proceedings in respect of such notice except for proceedings under section 132 shall be deemed to be concluded.

Q17. What is the maximum penalty leviable under section 74?

Ans. Penalty equivalent to 100% of the tax.

Q18. What is ‘Suppression’?

Ans. The term ‘Suppression’ means non-declaration of facts or information which a taxable person is statutorily required to declare in the return, statement, report or any other document furnished under the Act or the rules made thereunder, or failure to furnish any information on being asked for, in writing by the proper officer.

Q19. Where the show cause notice is issued to main person liable to pay tax and some other persons under the same proceedings, what will happen to penalty proceedings initiated against other persons on conclusion of proceedings against the main person under section 73 or 74?

Ans. The penalty proceedings against all other persons under sections 122, 125, 129 and 130 are deemed to be concluded on conclusion of proceedings against the main person liable to pay tax.

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