The Kerala Goods and Services Tax ( GST ) Department has issued comprehensive instructions and guidelines for adjudication of non-compliance, non-filing and short payment of the Kerala Flood Cess ( KFC ).
The Kerala Flood Cess, introduced under the Kerala Finance Act, 2019, was implemented following the catastrophic floods of August 2018 to fund the state’s reconstruction and rehabilitation efforts. The cess, applicable from August 1, 2019, to July 31, 2021, was levied on intra-state Business-to-Consumer (B2C) transactions and certain non-business supplies.
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Despite this levy, the GST Department has found that several taxpayers have either failed to file the required monthly KFC returns (Form KFC-A) or have not paid the correct amount of cess. To streamline the process of penalising and adjudicating such cases, the department has laid out specific guidelines for tax officers.
Key directives include issuing show-cause notices to defaulters and proceeding with adjudication based on the Kerala State GST Act, 2017. The adjudication process will be manual, as the common portal cannot be used for Kerala Flood Cess-related proceedings. Officers are instructed to ensure all communications contain a computer-generated reference number (RFN) and that cess payments must be made through the state’s e-treasury portal, not via the GST common portal.
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In cases where taxpayers fail to respond or comply, show-cause notices will be issued under Section 74(1), detailing the cess, interest, and penalties due. The Kerala GST Department has also clarified that interest will be charged at 18% per annum on unpaid amounts, and penalties may range from 15% to 50%, depending on the timing of the payment. If no payment is made within 30 days of the issuance of a notice, a more stringent adjudication process will follow, potentially including the issuance of an Order in Original and recovery proceedings.
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