In this article, an attempt has been made to understand what a registered tax-payer is supposed to do, where he has been issued a notice for scrutiny u/s 61 of CGST Act and he accepts the deficiency pointed out in the notice.
As we all know, provisions relating to scrutiny of returns is dealt by Section 61 of the CGST Act. Section 61 is divided into three sub-sections:
Sub-Section (1): 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. Rule 99 prescribes the manner prescribed u/s 61(1).
Sub-Section (2): In case the explanation is found acceptable, the registered person shall be informed accordingly and no further action shall be taken in this regard
Sub-Section (3): In case no satisfactory explanation is furnished within a period of thirty days of being informed by the proper officer or such further period as may be permitted by him or where the registered person, after accepting the discrepancies, fails to take the corrective measure in his return for the month in which the discrepancy is accepted, the proper officer may initiate appropriate action including those under section 65 or section 66 or section 67, or proceed to determine the tax and other dues under section 73 or section 74.
Section 61(3) contemplates two situations:
a) In case no satisfactory explanation is furnished within a period of thirty days of being informed by the proper officer or such further period as may be permitted by him
b) where the registered person, after accepting the discrepancies, fails to take the corrective measure in his return for the month in which the discrepancy is accepted
The question that crops up now is: What is the correction measure prescribed under the Act or Rules which a registered person can take up after accepting the deficiencies pointed out in the notice?
The answer to it is provided in Rule 99(2) which states:
The registered person may accept the discrepancy mentioned in the notice issued under sub-rule (1), and pay the tax, interest and any other amount arising from such discrepancy and inform the same or furnish an explanation for the discrepancy in FORM GST ASMT-11 to the proper officer.
So far, so good. But the next question that comes to mind is: What should be the method to pay the tax, interest or any other amount? The logical answer would be: Either by paying through DRC-03 or through monthly return GSTR-3B. Lets discuss both, one by one.
Payment through DRC-03
Section 61(3) states that the registered person should take the corrective measure in his return for the month in which the discrepancy is accepted. Certainly, DRC-03 is not a return prescribed under the Act (it’s a form prescribed under ‘Demand and Recovery’ Chapter) and hence although the discrepancy amount has been deposited through DRC-03, but the same is not in the manner suggested by Section 61(3) i.e through return for the month.
Corrective measure in the return
The corrective measure, as it may seem, can be through rectification in GSTR-3B. Section 39(9) deals with rectification of a return and it reads as under:
Subject to the provisions of sections 37 and 38, if any registered person after furnishing a return under sub-section (1) or sub-section (2) or sub-section (3) or subsection (4) or sub-section (5) discovers any omission or incorrect particulars therein, other than as a result of scrutiny, audit, inspection or enforcement activity by the tax authorities, he shall rectify such omission or incorrect particulars in such form and manner as may be prescribed, subject to payment of interest under this Act:
Provided that no such rectification of any omission or incorrect particulars shall be allowed after the due date for furnishing of return for the month of September or second quarter following the end of the financial year to which such details pertain, or the actual date of furnishing of relevant annual return, whichever is earlier.
As is evident from section 39(9), any rectification of any omission or incorrect particulars can be carried in the month when such omission or incorrect particulars are found, subject to time restrictions stipulated by the Proviso to Section 39(9) but no rectification can be carried which is as a result of scrutiny, audit, inspection or enforcement activity by the tax authorities. Thus, even where the Proper Officer informs any deficiency u/s 61, a rectification for correcting that deficiency cannot be carried as it is expressly barred by Section 39(9).
Taxpayer: lost in the maze
In conclusion of the above, Payment through DRC-03 is not what the Section requires; What the section requires is expressly barred by another section; Neither there is any other provision under GST which prescribes the corrective measure as stipulated u/s 61(3), nor any of the sections [Section 61(3) or 39(9)] start with a non-obstante clause which can override another. Would it be apt to say that registered person gets lost in the maze even if he accepts the deficiency and is willing to make good the deficiency? Huhhh!!!
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