In Goods and Service Tax there are two types of Sections or Powers available with Department of Indirect Tax to Collect Tax from Taxpayers which are as follows:
Section 73: 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 74: 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 75: General; Provisions relating to Determination of Tax
Section 76: Tax Collected but not paid to government
Section 77: Tax wrongfully collected and paid to Government
Section 78: Initiation of recovery proceedings.
Section 79: Recovery of tax
Section 80: Payment of tax and other amount in instalments
Since, we all have filed Annual Return for the Period F.Y 2017-18 and Due date of Annual Return for F.Y 2018-19 is extended to 30th September by Notification No. 41/2020- Central Tax ,dt. 05-05-2020. Department can now initiate proceeding for F.Y 2017-18 before the expiry of Prescribed Time Period. Due to which we should prepare ourselves for the notices to come. In this article I am going to share you three important Judgments rather Tools which you can refer for filing your reply in response to notices under Section 73 and Section 74 of CGST Act, 2017which will be useful for you to complete the Proceedings.
Brief :- Assessee was liable to pay tax within 20th day of succeeding month for which he was liable to file his monthly return GSTR-3B. However, on GSTN Portal for months of February and March, 2018, due date for filing return was reflecting as 31st March, 2019. Revenue claimed that said due date had been reflected on GSTN Portal only for waiver of Late Fee but due date for filing such return was not extended. Assessee filed his monthly return for months of February and March, 2018 in GSTR-3B prior to 31st March, 2019. Authority concerned issued an order directing payment of interest for delay in filing of GSTR-3B Return. Subsequently, in exercise of powers under Section 79 of the Central Goods and Services Tax Act, 2017, garnishee notice issued to assessee’s Banker for recovery of interest.
Held: – In view of section 73 of the Central Goods and Services Tax Act, 2017, if there was a short-payment of tax or non-payment of tax, a notice was required to be issued even for recovery of interest under Section 50 of the Central Goods and Services Tax Act, 2017 . From a conjoint reading of sub-sections (5), (6) and (7) of Section 73 of the Central Goods and Services Tax Act, 2017 it would be evident that, even in a case where an assessee files his return as per his own ascertainment, pays tax and even pays interest, but if said amount paid by assessee is falling short of amount actually payable, Proper Officer is required to initiate proceedings under Section 73(1) for recovery of amount of “short paid” or “not paid” interest on tax amount . Till such adjudication is completed by Proper Officer, amount of interest cannot be termed as an amount payable under CGST Act, 2017 or Rules made there under
As per Section 73(2) of the CGST Act, 2017 , The proper officer shall issue the notice under section 73(1) at least three months prior to the time limit specified in sub-section (10) for issuance of order.
Hence if you have Received notice under Section 73 or 74 for the period 2017-18 then the First thing to consider is the Order passed by Proper Officer. Initiation of notice u/s 73 and 74 is null and void if no order is passed by proper officer.
JUDGMENT NO. 2
Brief: – The Deputy Commissioner, Central Goods and Service Tax (CGST) informed the Branch Manager where the Petitioner holds a bank account that in view of the proceedings filed against one Yusuf Fauzdar Shaikh, proprietor of M/s. Fashion Creations, proceedings have been launched against the said taxable person and the Respondents were of the belief that amounts were being transferred to various persons, including the Petitioner. Hence, a direction was issued to the bank not to allow any debit
Held: – Bank account of taxable person could be attached against whom proceedings under sections 62, 63, 64, 67, 73 and 74 of Central Goods and Services Tax Act, 2017 were initiated. Section 83 of Central Goods and Services Tax Act, 2017 did not provide for an automatic extension to any other taxable person from an inquiry specifically launched against a taxable person under those provisions. Accordingly, Petitioner was entitled to succeed. Hence, order passed by Deputy Commissioner attaching bank account of Petitioner, was to be quashed and set aside.
As per Section 83 provisional Attachment can be made only if proceedings Under Section 62 or section 63 or section 64 or section 67 or section 73 or section 74 are pending. It does not give power to the Officer if proceedings are initiated for Inquiry or any other Provision as per Act.
No attachment can be initiate under Section 83 if only an inquiry is initiated against the tax payer for the period 2017-18.
JUDGEMENT NO. 3
Brief :- Noticed had been issued to assessee under Section 73 for non-payment of OGST/CGST for period June, 2018 to December, 2018 — However, without responding to prayer of assessee for time and without giving them an opportunity of personal hearing, impugned orders were passed, which were under challenged here
Held :- Held, on perusal of Section 75(4) it was cleared that whenever an assessee, chargeable with tax and penalty makes a request in writing for opportunity of hearing, such an opportunity should be granted to him — Here, admittedly though a request was made for personal hearing, however, without granting same impugned orders had been passed — Hence, impugned order was quashed — Appeal Allowed.
Here the Order was passed against the assessee however no Opportunity of Heard was given to assessee and Interest under Section 73 was initiated. Assessee filed a writ against the High Court and his appeal was allowed.
Notice or Order passed without giving an opportunity to assessee is null and void under the principles of Audi Alteram Partem.
In the above article I have covered all high court judgments taken place in context to Section 73 and Section 74. However, there are many Advance Rulings have also taken place but same is only restricted to each Taxpayer only as per CGST Act, 2017.
We must also keep in mind whenever any notice in respect to Section 74 have received that the onus to proof misstatement or suppression is by reason of fraud or not is on the assessee. Hence after receipt of notice first action to be taken is to proof that misstatement and suppression was not due to fraud once we are in receipt of notice
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