The Goods and Services Tax can be paid on self-assessment basis. If the assesse has paid the tax correctly on self-assessment, then there will not be any issue.
If there is any short payment, erroneously refunded, Input Tax Credit wrongly availed; and Non-payment of self-assessed tax or amount collected as representing the Tax then the GST Act contains elaborate provisions for the recovery of tax.
Despite of this provision in case of any failure to pay self-assessed tax by due dates the Input Tax Credit will not be available to customers and also the tax payer will not be able to file any return for further period. The incidence of short payment of tax or erroneous refund or wrong availment of Input Tax Credit may be because of an inadvertent (No Fraud) or it may be a deliberate attempt (Fraud Cases) to evade the tax.
Depending upon the nature offence that has been made by the taxpayer separate provisions for recovery of the tax and the amount of penalty have been made to deal with such type of cases.
Besides that, there are some provisions to encourage voluntary submission from the part of assesse such as no penalty or lesser penalty if the tax dues along with interest, are paid within the specified time limit.
When there is Normal Cases
If there is no motive to evade tax, then the GST authorities will produce a Show Cause Notice. Tax payers required to pay interest and penalty along with the amount due.
Time Incidence.
Within 2 years and 9 months from the due date of filing Annual Return
Time for issuance of Order.
Within 3 years from the due date of filing of Annual Return for the Financial Year
No Penalty cases.
If the assesse pays all their dues along with interest before issuance of Notice or within 30 days 0f issuance of Notice, then the penalty will not be applicable.
Penalty levied cases.
The GST authorities will consider the amount of taxpayer and calculate the rate of interest and penalty on that basis. Penalty will be 10% of tax subject to a minimum of Rs. 10,000 or whichever is higher.
When there is a Fraud.
If the assesse has the motive to evade tax he/she shall have to levy penalty on following basis.
If the Tax amount, along with the interest, paid before issuance of Notice shall pay 15% of the Tax amount and no Notice shall be issued. If the assesse had paid tax amount, along with the interest within 30 days of issuance of Notice then 25% of the tax amount deemed to be the penalty. The tax payer paid tax amount, along with the interest within 30 days of communication of Order then 50% of the Tax amount is to be served as penalty.
The taxpayer paid his goods and service tax base on his self-assessment after 30 days of communication of Order then he shall pay 100% of such amount
Time for issuance of Order.
Within 5 years from the due date of filing of Annual Return for the Financial Year to which the demand pertains or from the date of erroneous refund.
All these provision clearly mention that there are sufficient opportunities availed to the taxpayer for meeting his obligations or discharging his tax liability with nil or nominal penalties. Besides that if any order is passed in favour of the assesse, the department won’t pursue the case further by filing appeals if the amount involved is less than the specified limit.
If the tax dues and other amounts remain unpaid, despite these beneficial provisions, and the tax payer fails to pay the dues after the orders are passed and the statutory limit of 3 months is over, then the proper officer may initiate recovery proceedings.
The recovery proceeding under CGST Act of 2017 lays down well defined procedures as follows:
Read the full text of the Concept Note below.
