Here’s a list of sections that fall under the chapter of Demand and Recovery under the CGST, Act 2017.
Determination of tax not paid, short paid, or erroneously refunded or Input tax credit wrongly availed or utilized for any reason other than fraud or any wilful-misstatement or suppression of facts
General provisions relating to determination of tax
Tax collected but not paid to Government
Tax wrongfully collected and paid to Central or State Government
Initiation of recovery proceedings
Recovery of tax
Payment of tax and other amount in instalments
Transfer of property to be void in certain cases
Tax to be first charge on property
Provisional attachment to protect revenue in certain cases
Continuation and validation of certain recovery proceedings
In this article let’s being the discussion with Section 73-
Determination of tax not paid, short paid, or erroneously refunded or Input tax credit wrongly availed or utilized for any reason other than fraud or any wilful-misstatement or suppression of facts to evade tax
Where the Proper officer has reason to believe that the case involves fraud or any wilful-misstatement or suppression of facts to evade tax then proceeding should be initiated under section 73. The notice issued under this shall also contain mention of tax, interest u/s 50 and penalty leviable. A summary of the notice shall be issued in Form DRC-01.
The time limit for issue of notice under sub-section (1)
Notice u/s sub-section (1) at least three months before the time limit specified in sub-section (10) for issuance of an order. So notice or statement must be issued within 2 years and 7 months from the due date of the annual return or the date of erroneous refund.
Issue of Statement instead of notice
Where a notice has been issued for any period under sub-section (1), the Proper officer may serve a statement, containing the details of tax not paid or short paid or erroneously refunded or Input tax credit wrongly availed or utilised for such periods other than those covered under sub-section (1).
Statement to be treated as notice under sub section (1)
The service of such statement shall be deemed to be service of notice on such person under sub-section (1), subject to the condition that the grounds relied upon for such Tax periods other than those covered under sub-section.
Provision to pay tax before notice or statement
A taxpayer may suo moto pay tax and applicable interest before the issue of notice under sub-section (1) in DRC-01 and such has to be intimated to the Proper officer in writing.
Waiver of notice or statement if tax and interest paid
Where tax and interest have been paid under sub-section (5) no notice or statement shall be issued under sub-section (1) & (3).
Notice for tax amount falling short of the amount actually payable
Where the Proper officer is of the opinion that the amount paid under sub-section (5) falls short of the amount actually payable, he shall proceed to issue the notice as provided for in subsection (1) in respect of such amount which falls short.
Waiver of penalty if tax and interest paid within 30 days of notice
Where the taxpayer pays the said tax along with interest payable under section 50 within thirty days of the issue of show cause notice, no penalty shall be payable and all proceedings in respect of the said notice shall be deemed to be concluded.
Determination of amount of tax, interest and penalty
The Proper officer shall determine the amount of tax, interest and a penalty equivalent to ten per cent. of tax or ten thousand rupees, whichever is higher, due from such person and issue an order. A summary of such an order shall be issued in Form DRC-07.
Time limit for issuance of order
The Proper officer shall issue the order under sub-section (9) within three years from the due date for furnishing of the annual return for the financial year or within three years from the date of the erroneous refund.
Penalty for non-payment of self-assessed tax or collected tax within 30 days
Notwithstanding anything contained in sub-section (6) or sub-section (8), penalty under sub-section (9) shall be payable where any amount of self-assessed tax or any amount collected as tax has not been paid within a period of thirty days from the due date of payment of such tax.
CA Pranay Jain is a young and aspiring Chartered accountant. He qualified Chartered Accountancy Course in 2021 and has a well-established practice in various fields of taxation and auditing, with his core area of practice being in the field of litigation i.e., handling assessment and appeal-related matters and representing assesses before various tax departments.
He is also socially active on LinkedIn at linkedin.com/in/capranayjain
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