Changes in procedure of issuance of Show cause notice under GST

This Article discusses the changes made by  Notification No. 49/2019- Central tax  dated 9^th October 2019 in Rule 142 related the ‘notice of demand’ under GST. There has been a appreciable change made regarding the procedure of issuance of show cause notice which has been incorporated below, changes have been highlighted.

As per Rule 142 of CGST Rule 2017:-

142. Notice and order for the demand of amounts payable under the Act.- (1) The proper officer shall serve, along with the

(a) notice issued under section 52 or section 73 or section 74 or section 76 or section 122 or section 123 or section 124 or section 125 or section 127 or section 129 or section 130, a summary thereof electronically in FORM GST DRC-01,

1(A) The proper officer shall, before service of notice to the person chargeable with tax, interest, and penalty, under sub-section (1) of Section 73 or sub-section (1) of Section 74, as the case may be, shall communicate the details of any tax, interest and penalty as ascertained by the said officer, in Part A of FORM GST DRC-01A.

(b) statement under sub-section (3) of section 73 or sub-section (3) of section 74, a summary thereof electronically in FORM GST DRC-02, specifying therein the details of the amount payable.

(2) Where, before the service of notice or statement, the person chargeable with tax makes payment of the tax and interest in accordance with the provisions of sub-section (5) of section 73 or, as the case may be, tax, interest, and penalty in accordance with the provisions of sub-section (5) of section 74, or where any person makes payment of tax, interest, penalty or any other amount due in accordance with the provisions of the Act, whether on his own ascertainment or, as communicated by the proper officer under sub-rule (1A), he shall inform the proper officer of such payment in FORM GST DRC-03 and the proper officer shall issue an acknowledgment, accepting the payment made by the said person in FORM GST DRC–04.

(2A) Where the person referred to in sub-rule (1A) has made a partial payment of the amount communicated to him or desires to file any submissions against the proposed liability, he may make such submission in Part B of FORM GST DRC-01A.

Explanation to the above Rule and the effect of changes brought

• This rule relates to the demand being raised by the department through the issuance of show cause notice through FORM GST DRC-01. If any differential amount is being determined by the proper officer, subsequently Form GST DRC-01 is issued normally.
• Due to the introduction of Rule 142(1A) proper officer has to issue  FORM GST DRC-01A. The proper officer shall, before service of notice to the person chargeable with tax, interest, and penalty, under section 73 or section 74, as the case may be, shall communicate the details of any tax, interest and penalty as ascertained by the said officer, in Part A of FORM GST DRC-01A.
• Usually before the introduction Rule 142(1A) show cause notice was being issued but after the introduction of this new sub-rule it is the responsibility of the proper officer to issue intimation under sub-rule 1(A) for the determined amount regarding tax, interest & penalty before serving the show cause notice under section 73(1) or 74(1) and the taxpayers will get extra time to submit the differential amount. In other words, it can be said that proper office after determining any amount the first communication would be through intimation under rule 142(1A) through FORM GST DRC-01A.
• There have been instances where it has been found that department is still following the same process of directly issuing FORM GST DRC-01 without first communicating through FORM GST DRC-01A, in case you receive show cause notice directly through FORM GST DRC-01 then you can ask you’re the proper officer to first communicate through FORM GST DRC-01A.
• After receiving intimation in FORM GST DRC-01A taxpayer can pay under section 73(5) or 74(5) as the case may be and there would not be any penalty that can be imposed by the proper officer. Reply to FORM GST DRC-01A would be made in part B of FORM GST DRC-01A and after that, if proper officer is not satisfied then he will issue FORM GST DRC-01 and normal adjudication will continue.

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