On Tuesday, 17th December, the Karnataka State Chartered Accountants Association sent a representation to the Union Finance Minister, Nirmala Sitaraman. The representation is basically proposed to bring clarity and equity to the GST framework. It contains several noteworthy suggestions. The representations sent to the authorities are as follows:
“The Karnataka State Chartered Accountants Association (R) (in short ‘KSCAA’), established in 1957, is a premier association representing the Chartered Accountancy profession in Karnataka. With a focus on upholding professional ethics and advancing the interests of the business community. KSCAA has consistently contributed through seminars, workshops, representations, and consultations on policy matters impacting trade, commerce, and industry.
We take this opportunity to bring to your kind attention several genuine difficulties being faced by taxpayers and professionals with respect to the interpretation and implementation Of certain
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provisions under the GST framework, particularly in light of the introduction of Section 128A & Sec 16(5) of the Act, and the associated circular. We believe these challenges warrant urgent intervention and clarification by the authorities to ensure the smooth functioning of the GST regime and to uphold its objectives of simplicity, equity, and efficiency.
I. Eligibility under Section 128A for Orders Passed but appeal not filed.
The reading of provisions of Sections 128A(b) and (c) seem to suggest that only cases where order is passed u/s 73 (9) and an appeal is filed before the Appellate authority u/s 107, or where an order is under the scheme. Therefore, cases where an order is passed under Section 73 and no appeal is filed before the Appellate Authority, or where the order is passed under Section 107 and no appeal is filed before the Hon’ble Tribunal, would not qualify for the benefit under the scheme.
However, in the spirit Of the scheme, the benefit should extend to orders passed, irrespective Of
whether a further appeal is filed or now. This is corroborated by the Circular no. 238/16/2024 dated 15.102024 issued u/s 128A. which states that tax recovered can also be considered for scheme purposes, implying coverage of orders classified as arrears.
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We request a clear clarification that allows all such cases to be filed under the scheme, thereby
providing equitable relief to taxpayers.
2. Benefit of Waiver of interest for Delayed Filing of return
In FAQ No. 4 of Circular No. 238/16/2024 dated 15.10.2024 issued u/s 128A, it has been stated that the benefit of the scheme is not available in cases relating to interest and penalty demanded on account of delayed tiling of returns or delayed reporting of any supply in the return.
At the outset, this scheme is intended to address notices/orders as a whole and provide waiver of interest and penalty for specific tax periods. The benefits under the scheme should not be contingent upon the nature of issue comprised within the notice/order.
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Restricting the waiver of interest for delayed filing of returns or delayed reporting of supplies as
provided in FAQ No. 4 of the Circular, undermines the overarching purpose of the scheme and causes undue hardship to taxpayers,
We request the authorities to extend the waiver of interest for delayed filings of returns and delayed reporting of supplies uniformly for all eligible cases under the scheme.
3. Treatment of Multi-year Notices and Erroneous Refund Cases
Certain notices/orders span multiple years. including periods beyond 2019-20, or may involve
erroneous refunds. Current provisions necessitate payment of taxes and interest for other
years/refund portions, which imposes an undue burden on taxpayers.
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We request clarification to allow taxpayers to avail of the scheme’s benefits for the period covered under the scheme while permitting the remaining issues (such as other years/refund matters) to be pursued separately.
4, Notices issued u/s 74 and its subsequent conversion u/s 73
Notices issued by Central Tax department have predominantly been issued u/s 74. Notices issued pursuant to audits conducted u/s 65 have also been issued u/s 74 by the Central Tax department. Additionally, historically, allegations relating to fraud or suppression in Customs, Central Excise, and Service Tax cases have not been decided in favor of the taxpayer at the Adjudication and Appellate Authority levels.
Given this context, we request clarifications or guidelines for converting notices issued under
Section 74 to notices under Section 73 in genuine cases.
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5. Permission to file appeal / Restoration of appeal filed and withdrawn where Application
is rejected
The scheme requires that the appeal filed u/s 107/113 or Writ petition filed before Hon’ble High
Court be withdrawn before filing the application u/s 12BA. However, if for any reason the application is rejected, then the taxpayer should be permitted to pursue the original appeal which was filed and the appeal should be restored.
Similarly, in cases where taxpayers have not filed an appeal u/s 107 or u/s 113 in anticipation of availing the benefit under the scheme, we request that if the application under Section 128A is rejected, the taxpayer should be allowed to file an appeal under Section 107 or Section 113 within a reasonable period.
6. Rectification application filed u/s 161
In certain cases, the taxpayer may file an application for rectification of order u/s 161 and intend to avail the benefit of the scheme after the order is rectified.
In such cases, we recommend that guidelines/directions be issued to prioritize and dispose of the application for rectification expeditiously, allowing taxpayers to avail the benefit of the scheme within the time limits prescribed.
7. Appeals Filed Under Section 107 and Subsequent Scheme Selection
Taxpayers filing appeals under Section 107 are Otten uncertain about whether to pursue the appellate process or opt for the scheme.
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We recommend facilitating a mechanism where appellate hearings are prioritized and disposed of expeditiously, allowing taxpayers to make informed decisions and choose the scheme post-hearing and receipt of order in Form APL-04.
Further, as the scheme is based on the Order issued and not on the specific issue contained in the order, we also recommend that the appeals relating to the tax period 2017-18 to 2019-20 which are pending before the First Appellate authority be disposed of at the earliest so that the taxpayer can avail the benefit of the scheme for the specified period.
8. Adjustment of pre-deposit paid for filing appeal and tax paid under protest
Taxpayers have remitted 10% of the disputed tax amount while filing an appeal before the First
Appellate Authority. In some cases, taxpayers have remitted the tax amount under protest and have filed an appeal. However, Circular no. 238/16/2024 dated 15410.2024 issued u/s 128A does not prescribe any procedure as to how these amounts will be adjusted while filing the application. “
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Thus, with the introduction of Section 16( 5 ) and Section 128 A to the GST Act 2017, the association has come up with recommendations for smooth transactions and to avoid the difficulties faced by the business. As these suggestions are relevant, it is believed that at least a few of them will be definitely accepted and implemented.
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