The Kerala Goods and Service Tax Department issued the guidelines for the Determination of tax under Section 73 and 74 of the SGST or CGST Act, 2017.
There may arise some instances where the tax under GST was either not paid or not paid correctly. The determination of tax by a proper officer may thus become necessary under the KSGST/CGST Act, 2017. Chapter 15 of the said Acts deals with “Demands and Recovery” and it is covered in section 73 to 84.
The incidence of short payment of tax or erroneous refund or wrong availing of Input Tax Credit may be because of an inadvertent bonafide mistake or it may be a deliberate attempt (Fraud Cases) to evade the tax.
The determination of tax in all cases where there is an element of mens rea has to be done under Section 74 and in all other cases the determination has to be done under Section 73 of the Act. In order to distinguish whether mens rea is present, an intent to evade tax by way of fraud or through willful misstatement or through suppression of facts, has to be established.
Section 73(1) prescribes a time limit for issuance of order under Section 73. It is required that the proper officer shall determine tax, interest and penalty if any, within 3 years from the due date for filing annual return for the financial year to which the amount relates and in the cases of erroneous refunds within 3 years from the date of such erroneous refund. Section 73 (2) further provides that notice under Section 73 (1) (SCN) shall be issued at least three months prior to the limitation period for issuance of order under section 73. Period of Stay, if any, shall be excluded in computing the above periods.
The person chargeable with tax, who either on his own ascertainment or on receipt of intimation (in Form DRC-01A) communicated by the proper officer can pay tax along with interest and a penalty in cases specified under Section 73 (11) and shall inform the proper officer of such payment in FORM GST DRC-03.
The proper officer, on receipt of such information, shall issue an acknowledgment, accepting the payment made by the said person in FORM GST DRC–04 and thereafter shall not serve any Show Cause Notice under 73(1) or Statement under 73(3).
Section 74(10) prescribed a time limit for the issuance of orders under Section 74. It is required that the proper officer shall determine tax, interest, and penalty if any, within 5 years from the due date for filing the annual return for the financial year to which the amount relates and in the cases of erroneous refunds within 5 years from the date of such erroneous refund. Section 74 (2) further provides that notice under Section 74 (1) (SCN) shall be issued at least six months prior to the limitation period for issuance of order u/s 74. Period of Stay, if any, shall be excluded in computing the above periods.
The person to whom the show cause notice (SCN) has been issued along with form DRC-01 or form DRC-02, can make representation against such notice in form GST DRC -06 to the proper officer.
If the person chargeable with a tax who has been issued with an SCN has not paid any tax along with interest payable or has made any short payment or has not given any satisfactory explanation within 30 days of issue of SCN, the proper officer, after considering the representation, if any, filed by the said person in GST DRC -06, and after providing an opportunity for a personal hearing as provided u/s 75(4) shall determine the tax; interest under Section 50 of the Act due from such person and a penalty equivalent to said tax And shall issue an Order along with a summary of such order to be uploaded electronically in Form GST DRC- 07 stating the amount of demand and the due date for making the payment of said taxes along with interest and penalty.
Where any penalty is imposed under Section 73 or Section 74, no penalty for the same act or omission shall be imposed on the same person under any other provisions of this Act.
Section 83 of the Act authorizes provisional attachment to protect revenue in certain cases. Where during the pendency of any proceedings under section 62 or section 63 or section 64 or section 67 or section 73 or section 74, the Commissioner is of the opinion that for the purpose of protecting the interest of the Government revenue, it is necessary so to do, he may, by order in writing attach provisionally any property, including bank account, belonging to the taxable person.
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