Adv. Shailesh Jain
Wrong interpretation of the term self-assessed liability while processing Amnesty Application for granting waiver u/s 128A of the CGST Act.
To provide relief to the taxpayers during initial years of GST era for the financial years 2017-18 to 2019-20, the government has introduced Amnesty scheme for waiver of interest and penalties in certain cases u/s 128A of the CGST Act.
The taxpayers have largely welcome the amnesty scheme to get rid of huge demands of interest and penalties by discharging tax liability as required in the scheme.
The wrong interpretation and applicability of the term “self-assessed liability” in respect of section 75(12) of the CGST Act by the field formations/ assessing officers enhancing burden of the taxpayer and also damaging true spirit and intention of the government to bring waiver scheme for taxpayers.
The taxpayers are facing difficulties due to issuance of notices by field formation in Form SPL-03 for disallowing benefits of waiver scheme on Additional liability declared in Table 10 of GSTR-9 being self-assessed liability by incorrectly interpreted provision of section and circular issued.
The CBIC has issued a circular No. 238/32/2024-GST to clarify of various doubts related to Section 128A of the CGST Act, 2017.
In the circular in point No. 4 certain issues with respect to availing the benefit of waiver of interest or penalty or both provided under Section 128A, are clarified.
The point No. 4(4) the following issue is given which is the main bone of contention-
ISSUE
“Whether the benefit provided under Section 128A will be applicable in cases, where the tax due has already been paid and the notice or demand orders under Section 73 only pertains to interest and/or penalty involved?”
RESOLUTION
“Where the tax due has already been paid and the notice or demand orders under Section 73 only pertains to interest and/or penalty involved, the same shall be considered for availing the benefit of section 128A. However, the benefit of waiver of interest and penalty shall not be applicable in the cases where the interest has been demanded on account of delayed filing of returns, or delayed reporting of any supply in the return, as such interest is related to demand of interest on self-assessed liability and does not pertain to any demand of tax dues and is directly recoverable under sub-section (12) of section 75.”
In the resolution it is very clearly mentioned that the benefit of waiver of interest and penalty shall not be applicable in the cases where the interest has been demanded on account of delayed filing of returns, or delayed reporting of any supply in the return and which is directly recoverable under sub-section (12) of section 75.
Section 75(12) is reproduced here for ready reference-
(12) Notwithstanding anything contained in section 73 or section 74 2[or section 74A], where any amount of self-assessed tax in accordance with a return furnished under section 39 remains unpaid, either wholly or partly, or any amount of interest payable on such tax remains unpaid, the same shall be recovered under the provisions of section 79
The explanation added in the section 75(12) w.e.f. 1st January, 2022 vide Notification No. 39/2021-C.T., dated 21st December, 2021) by s. 114 of The Finance Act, 2021 (No. 13 of 2021) dated 28th March, 2021.is also reproduced as under-
Explanation.-For the purposes of this sub-section, the expression “self-assessed tax” shall include the tax payable in respect of details of outward supplies furnished under section 37, but not included in the return furnished under section 39.]
The CBIC after notifying the above explanation clarify the matter through the twitter as under-
CBIC clarifies as follows:- The registered person declares his outward supplies in GSTR-1, & is required to discharge his tax liability through GSTR-3B. The recipient is able to avail input tax credit on supplies declared by supplier in his GSTR-1 & in respect of which tax has been paid.
Explanation added in Section 75(12) of CGST Act vide Finance Act, 2021 is to clarify that tax on self-declared supplies by registered person in GSTR-1, which has not been paid through GSTR-3B, will be considered as his self-assessed (& admitted) liability & can be recovered.
This amendment is meant to impart payment discipline in the system & to facilitate recipient of a supply to avail ITC in a timely manner. This addresses the concerns of recipients that they are not able to avail ITC if the supplier does not pay the due tax on the said supply. The said amendment is clarificatory in nature and suitable guidelines will be issued to field formations for its implementation in reasonable manner.
Let’s first understand the provisions of Section 75(12) of the CGST Act, 2017. Section 75(12) states that the recovery proceedings will be initiated in case of any unpaid self-assessed tax as per the return furnished under Section 39. The inserted explanation now states the inclusion of ‘self-assessed tax’.
With the help of this explanation in sub-Section(12) of Section 75 of CGST Act, the government has clarified that “self-assessed tax” would include the GST payable for outward supplies reported in the GSTR-1 but not included in the return furnished by the taxpayer in his GSTR-3B.
Now, as per Section 75, where there’s any unpaid self-assessed tax, it could be recovered without issuing any show-cause notice, and the proceedings for recovery under Section 79 could be directly invoked.
From the explanation it is ample clear that Self assessed liability pertains to outward supplies furnished under section 37, but not included in the return furnished under section 39
The assessing officers applying above Self assessed liability theory on the tax demand pertaining to PARAMETER-00103 (SCRUTINY PARA18_ADDITIONAL_LIABILITY).
Whether above demand is directly recoverable u/s 75(12) of the CGST Act?
Additional liability para mentioned in notices and on which demand created are as under-
“PARAMETER-00103 (SCRUTINY PARA18 ADDITIONAL LIABILITY) It is related to differential tax payable on account of additions or amendments to any supplies already declared in the returns of the previous financial year but such amendments were furnished in Table 9A Table 9B and Table 9C of GSTR-1 of April onwards of next financial year. Table 14 of GSTR 9”
While filling GSTR9/9C, the taxpayer has to reconcile the figures reported in GSTR1/GSR3B with books of account. Any short difference of outward tax liability which is not reported in GSR1/GSR3B of the period and discharged in next year GST-3B Returns or through DRC-03 mentioned in table 10 of GSTR9 and considered as Additional liability for discrepancy and covered under PARAMETER-00103 (SCRUTINY PARA18 ADDITIONAL_LIABILITY while issuing notice for scrutiny/Audit by the department.
From the above explanation is very clear that additional liability is the only difference of outward liability of GST Returns and books of account and not at all declared in GSTR1 of any period and not related to delayed filing of returns, or delayed reporting of any supply in the return as defined in section 75(12) of the CGST Act.
It is only a differential amount of liability mentioned in the books of account and not shown in GST Returns and not at all covered under self- assessed liability as defined in section 75(12) of the CGST Act and exclude by the circular for the benefit of waiver under amnesty scheme u/s 128A of the CGST Act.
In view of the above it is desired that the CBIC issue appropriate direction to the subordinate authority to act as per the provision of law and liability created under above para may kindly be allowed for waiver benefit as per section 128A of the CGST Act and rescue the taxpayers from unnecessary burden of compliance and against the sprit and intention of government.
