Simplified GST SERIES –Section 75-77 /CGST ACT 2017– Article explains Section 75- General provisions relating to determination of tax, Section 76 – Tax collected but not paid to the Government and  Section 77- Tax wrongfully collected and paid to Central or State Government .

Section 75- General provisions relating to determination of tax-

(1) Where the service of notice or issuance of order is stayed by an order of a court or Appellate Tribunal, the period of such stay shall be excluded in computing the period specified in sub-sections (2) and (10) of section 73 or sub-sections (2) and (10) of section 74, as the case may be.

(2) Where any Appellate Authority or Appellate Tribunal or court concludes that the notice issued under sub-section (1) of section 74 is not sustainable for the reason that the charges of fraud or any wilful-misstatement or suppression of facts to evade tax has not been established against the person to whom the notice was issued, the proper officer shall determine the tax payable by such person, deeming as if the notice was issued under sub-section (1) of section 73.

Analysis– These provisions are general provisions for determination of tax and are applicable irrespective of whether the notice invokes the extended period or not.

  • If an order of court or Appellate Tribunal stays the service of notice or issuance of order then, the period of such stay will get excluded from the period of issuance of order i.e.3 years or 5 years as the case may be.
  • When a notice has been issued considering the case to be for fraud or for willfulrepresentation or for suppression of facts, and whereas the charges of fraud,suppression and misstatement of facts were not sustainable or not established by an order of Appellate Authority or Appellate Tribunal, then in such case the officer shalldetermine the tax as if the notice is issued for the normal period of 3 years

(3) Where any order is required to be issued in pursuance of the direction of theAppellate Authority or Appellate Tribunal or a court, such order shall be issued within two years from the date of communication of the said direction. 

(4) An opportunity of hearing shall be granted where a request is received in writing from the person chargeable with tax or penalty, or where any adverse decision is contemplated against such person.

(5) The proper officer shall, if sufficient cause is shown by the person chargeable     with tax, grant time to the said person and adjourn the hearing for reasons to be  recorded in writing:

Provided that no such adjournment shall be granted for more than three times to a person during the proceedings.

Analysis- An order required to be issued in pursuance of the direction of the Tribunal or a Court shall be issued within two years from the date of communication of the said direction.

  • Opportunity of personal hearing has to be granted when requested for in writing by the person chargeable with tax or where any adverse decision is proposed to be taken against the person.
  • Personal hearing can be adjourned when sufficient cause is shown in writing. However, such adjournment can be granted for a maximum of 3 times. 

(6) The proper officer, in his order, shall set out the relevant facts and the basis of his decision. 

(7) The amount of tax, interest and penalty demanded in the order shall not be in excess of the amount specified in the notice and no demand shall be confirmed on the grounds other than the grounds specified in the notice. 

(8) Where the Appellate Authority or Appellate Tribunal or court modifies the amount of tax determined by the proper officer, the amount of interest and penalty shall stand modified accordingly, taking into account the amount of tax so modified. 

(9) The interest on the tax short paid or not paid shall be payable whether or not specified in the order determining the tax liability. 

(10) The adjudication proceedings shall be deemed to be concluded, if the order is not issued within three years as provided for in sub-section (10) of section 73 or within five years as provided for in sub-section (10) of section 74. 

(11) An issue on which the Appellate Authority or the Appellate Tribunal or the High Courthas g iven its decision which is prejudicial to the interest of revenue in some other proceedings and an appeal to the Appellate Tribunal or the High Court or the Supreme Court against such decision of the Appellate Authority or the AppellateTribunal or the High Court is pending, the period spent between the date of the decision of the Appellate Authority and that of the Appellate Tribunal or the date of decision of the Appellate Tribunal and that of the High Court or the date of the decision of the High Court and that of the Supreme Court shall be excluded in computing the period referred to in sub-section (10) of section 73 or sub-section (10) of section 74 where proceedings are initiated by way of issue of a show cause notice under the said sections. 

(12) Notwithstanding anything contained in section 73 or section 74, where any amount ofself -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. 

(13) 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 provision of this Act. 

  • Analysis- The relevant facts and basis of the decision shall be set out in the order, which means a speaking order needs to be placed.
  • The amount of tax along with interest and penalty should not exceed the amount mentioned in the notice and the grounds shall not go beyond what is mentioned in the notice.
    • When the decision of Tribunal/ Court/ Appellate authority modifies the amount of tax, correspondingly interest and penalty shall also be modified to that extent by the proper officer.
    • Interest shall be payable in all cases whether specifically mentioned or not.
    • If the order is not issued within the time limits as prescribed in sub-section (10) of section 73 or (10) of section 74, i.e., 5 years in case of fraud, misstatement or suppression and 3 years in any other case, the adjudication proceedings shall be deemed to be concluded.
  • An issue on which a first appellate authority or Tribunal or High Court has given its decision which is prejudicial to the interest of the revenue and an appeal to the Appellate Tribunal or High Court or Supreme Court against such decision is pending, then the period spent between the two dates of decision shall be excluded in computing the period of 3 years or 5 years respectively, for issue of order.
  • Any amount of self-assessed tax or intent payable, whether wholly or in part in  accordance with a return furnished under section 39 shall be recovered under the provisions of section 79.
  • It is also provided that when the penalty is imposed under Section 73 & 74 that no penalties shall be imposed under any other provisions of this Act for the same act or omission.

Section 76 – Tax collected but not paid to the Government-

This provision deals with payment of any amount collected as tax but not remitted to the Central/State Government or Union Territory. This section requires him to make the payment forthwith regardless of whether the related supplies are taxable or not. 

Important points related to above- 

> This section makes it obligatory on every person who has collected from any other person any amount representing “tax under this Act”, to pay the said amount to the credit of the Central or State Government regardless of whether the supplies in respect of which the amount was collected are taxable or not.

> There is NO TIME LIMIT also called ‘period of limitation’ for issue of notice under this section unlike under section 73 or 74.

> Before effecting recovery the Proper Officer has to serve a notice along with a summary in FORM GST DRC-01, on to any person who has collected any amount representing as tax requiring to show cause as to why –

– the said amount should not be paid by him to the Government;

 – penalty equivalent to such amount specified in the notice should not be imposed on him.

> The person is permitted to make representation in FORM GST DRC-06, against the notice served on to him. The person ought to be given an opportunity of being heard where a request is made by such person in writing.

> After considering such representation made by the person, the Proper Officer shall determine the amount due from the person and pass an order within one year from the date of issue of notice. Where the service of notice is stayed by order of the Court or Tribunal, the period covered by the stay shall stand excluded for the purpose of computing the time limit.

> The Proper Officer must pass a speaking order.

> Upon such determination, the Person has to pay such amount determined.

> Interest at the rate specified under section 50 shall be paid on the amount collected as representing tax (either paid voluntarily or on determination by the Proper Officer).

> Interest shall be calculated from the date of collection of amount till the date of deposit of amount.

> The amount paid by such person to the credit of the Central Government or a State Government shall be adjusted against the tax payable by the person.

> If any surplus is left after adjustment against the tax liability, it will be

 – Credited to consumer welfare fund; or

– Refunded to the person who has borne the incidence of such amount.

> The person claiming such refund shall follow the conditions and procedure contained in section 54 of CGST Act. 

Section 77- Tax wrongfully collected and paid to Central or State Government 

(1) A registered person who has paid the Central tax and State tax or, as the case may be, the Central tax and the Union territory tax on a transaction considered by him to be an intra-State supply, but which is subsequently held to be an inter-State supply, shall be refunded the amount of taxes so paid in such manner and subject to such conditions as may be prescribed. 

(2) A registered person who has paid integrated tax on a transaction considered by him to be an inter-State supply, but which is subsequently held to be an intra-State supply, shall not be required to pay any interest on the amount of central tax and State tax or, as the case may be, the Central tax and the Union territory tax payable. 

Analysis-   This provision deals with a situation where a taxable person wrongly pays CGST/SGST or CGST/UTGST on the transaction treating it as intra-state supply, but which is subsequently held to be inter-state supply. Upon payment of IGST on such transaction, the CGST/SGST or CGST/UTGST will to be refunded in such manner and subject to prescribed conditions. 

> If a taxable person wrongly pays IGST by treating a supply as inter-state supply, which is subsequently held to be intra-state supply, interest is not required to be paid on the CGST/SGST or CGST/UTGST payable. The law in such situations does not require any further payment of tax which implies that the Government will make suitable tax settlements at their end. 

> Jurisdiction to demand for CGST (and SGST) is contained in section 77(1) whereas jurisdiction to demand IGST is contained in section 19(1) of IGST Act. And relief from payment of interest on CGST-SGST is allowed under section 77(2) whereas relief from payment of interest on IGST is allowed under section 19(2) of IGST

Act.

Queries/doubts related to above mailed at mamta0581@gmail.com.

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