As we all know that, Goods and Service Tax (GST) is the consumption based tax and self-assessment based system i.e. the GST law empowers taxpayers to self-assessed the CGST, SGST and IGST liability and pay the same to the government exchequer. In other words, it could be said that a trust has been placed, by the law makers, on the taxable person i.e. a taxable has given a right to the taxpayer to assessed his tax liability and discharge the same.
Imposing trust on the taxpayer has two implications- either they pay the tax correctly i.e. rational taxpayers or short paid or not paid the tax i.e. irrational taxpayers which lead to tax evasion.
In order to check the accuracy of the calculation of tax liability, to mitigate tax evasion, to prevent the genuine taxpayers over tax evaders, the officers has keep an eye over the taxpayers. Here in this article, the author will elaborate the various sections which empower the officers to further assessed the self- assessed tax and to knock the door anytime along with issues arises and action taken against the same.
Two important Points:
√ Sub section (11) of section 2 of CGST Act, 2017 define the term “Assessment means determination of tax liability under this Act and includes self-assessment, re-assessment, provisional assessment, summary assessment and best judgment assessment.
√ As per section 59 of the CGST Act, 2017 every registered person shall self-assess the taxes payable under this Act and furnish a return for each tax period as specified under section 39.
Section 61- Scrutiny of Returns:
“The proper officer may scrutinize the return and related particulars furnished by the registered person to verify the correctness of the return and inform him of the discrepancies noticed, if any, in such manner as may be prescribed and seek his explanation thereto. “
Notice of Scrutiny of Return:
Scrutiny of documents viz. Ledger accounts, return of tax, compliances etc. is nothing but a strong compliances verification procedure or mechanism. In case of scrutiny of return, the purpose of the proper officer is to ensure completeness of the information furnished in the return or he may verify-
Current issues and action taken by the officers: The main issue that arose during the scrutiny of return till now is- (a) Mismatch of export invoice in GSTR-1 vis-à–vis GSTR-3B ; (b) Interest on delayed payment of tax, whether on net liability or gross liability (debated and controversial one); (c) difference in GSTR-2A and GSTR-3B.
Action taken (Wrongful):
√ Issued letters calculating the delays in no. of days in delay payment of tax and calculation of interest on gross tax liability i.e. without considering the Input Tax Credit
√ The Central Board of Indirect Taxes & Custom (CBIC) has asked GST officials to collect interest of nearly INR 46,000/- crore on account of delayed payment of GST i.e. Special Secretary and Member in the Board, in a letter to Principal Chief Commissioner and Chief Commissioner, said that according to the law, the taxpayer has to assess and pay interest on delayed payment of GST.
√ Issuance of notice in FORM DRC-01 believing that to be a show cause notice u/s 73/74 of the Central Goods and Service tax Act 2017.
√ Insertion of Rule 36(4): Mismatch of Input tax credit as per GSTR-2A (auto-populated) and GSTR-3B is the never ending issue. To mitigate the same to the lower extent, CBIC vide Notification No. 49/2019-CT dated 09-10-2019 has inserted Rule 36(4). The Rule States that “Input tax credit to be availed by a registered person in respect of invoices or debit notes, the details of which have not been uploaded by the suppliers under sub-section (1) of section 37, shall not exceed 10 percent of the eligible credit available in respect of invoices or debit notes the details of which have been uploaded by the suppliers under sub-section (1) of section 37”.
√ Levy of Late fees on delayed filing of GSTR-1: The late fees for delay filing of Outward Supply i.e. GSTR-1 from December 2019 applicable.
Section 62- Assessment of Non-filers of returns
Where a registered person fails to furnish the return under section 39 or section 45, even after the service of a notice under section 46, the proper officer may proceed to assess the tax liability of the said person to the best of his judgement taking into account all the relevant material which is available or which he has gathered and issue an assessment order in FORM GST ASMT-13 and a summary thereof shall be uploaded electronically in FORM GST DRC-07 [Rule 100(1) of CGST Rules 2017] within a period of five years from the date specified under section 44 for furnishing of the annual return for the financial year to which the tax not paid relates
Where the registered person furnishes a valid return within thirty days of the service of the assessment order under sub-section (1), the said assessment order shall be deemed to have been withdrawn but the liability for payment of interest under sub-section (1) of section 50 or for payment of late fee under section 47 shall continue.
Note: Where a registered person fails to furnish a return under section 39 or section 44 or section 45, a notice shall be issued requiring him to furnish such return within fifteen days in such form and manner as may be prescribed [Section 46].
Action taken by the GST officers:
> Cancellation of Registration: As per section 29 of the CGST Act 2017, the proper officer may cancel the registration of a person from such date, including any retrospective date, as he may deem fit, where (a) a person paying tax under section 10 has not furnished returns for three consecutive tax periods; or (b) any registered person, other than a person specified in clause (b), has not furnished returns for a continuous period of six months; or
> Standard Operating Procedure: In the 38th Council meeting, one of the recommendations was to set a Standard Operating Procedure (SOP) for tax officer in respect of action to be taken in cases of non-filing of GST Return u/s 39 or 45. In order to give effect to the above recommendation, CBIC vide Circular No. 129/48/2019 dated 24-12-2019 has issued Standard operating procedure to be followed in case of non-furnishing of GST return.
> Blocking of Eway Bill- As per Rule 138E of the CGST Rules 2017, if the tax payers have not filed the latest two successive month returns on the GST Common Portal, then these tax payers will be blocked for the generation of the e-way bills as per the rule. The E-way Bill system will communicate with the GST Common Portal to find out the filing details of the taxpayers.
Section 63: Assessment of Unregistered Person
where a taxable person fails to obtain registration even though liable to do so or whose registration has been cancelled under sub-section (2) of section 29 but who was liable to pay tax, the proper officer issue a notice in FORM GST ASMT-14 containing the grounds and also serve a summary thereof electronically in FORM GST DRC-01 and after allowing a period of fifteen days-time, the proper officer may proceed to assess the tax liability of such taxable person to the best of his judgment for the relevant tax periods and pass an order in FORM GST ASMT-15 and a summary thereof in FORM GST DRC-07 within a period of five years from the date specified under section 44 for furnishing of the annual return for the financial year to which the tax not paid relates after providing an opportunity of being heard.
Section 64: Summary Assessment in Certain Special cases:
The proper officer may, on any evidence (not a mere change in opinion) showing a tax liability of a person coming to his notice, with the previous permission of Additional Commissioner or Joint Commissioner, proceed to assess the tax liability of such person to protect the interest of revenue and issue an assessment order in FORM GST ASMT-16, if he has sufficient grounds to believe that any delay in doing so may adversely affect the interest of revenue.
Provided that where the taxable person to whom the liability pertains is not ascertainable and such liability pertains to supply of goods, the person in charge of such goods shall be deemed to be the taxable person liable to be assessed and liable to pay tax and any other amount due under this section
On an application made by the taxable person within thirty days from the date of receipt of order passed under sub-section (1) or on his own motion, if the Additional Commissioner or Joint Commissioner considers that such order is erroneous, he may withdraw such order in FORM GST ASMT-18 and follow the procedure laid down in section 73 or section 74.
Section 70: Power to summon persons to give evidence and produce documents
The proper officer under this Act shall have power to summon any person whose attendance he considers necessary either to give evidence or to produce a document or any other thing in any inquiry in the same manner, as provided in the case of a civil court under the provisions of the Code of Civil Procedure, 1908. Every such inquiry referred to in sub-section (1) shall be deemed to be a “judicial proceedings” within the meaning of section 193 and section 228 of the Indian Penal Code.
Section 67 to Section 69 of the Central goods & Service Tax Act 2017 covers the Provision of Investigation, search & seizure, which is- where the proper officer, not below the rank of Joint Commissioner, has reasons to believe that, a taxable person has suppressed any transaction, has escaped payment of tax or has kept his accounts or goods in such a manner as is likely to cause evasion of tax, he may authorise any officer to inspect, search and seize. Section 71 empowers the officer to access the business premises of the taxpayer.