In Goods and Service
Tax there are two types of Sections or Powers available with Department of
Indirect Tax to Collect Tax from Taxpayers which are as follows:
DEMAND
SECTIONS
Section 73: Determination of tax not paid or short paid
or erroneously refunded or input tax credit wrongly availed or utilized for any
reason other than fraud or any willful misstatement or suppression of facts.
Section 74: Determination
of tax not paid or short paid or erroneously refunded or input tax credit wrongly
availed or utilized by reason of fraud or any willful misstatement or suppression
of facts.
Section 75: General;
Provisions relating to Determination of Tax
Section 76: Tax
Collected but not paid to government
Section 77: Tax wrongfully collected and paid to
Government
RECOVERY
SECTIONS
Section 78: Initiation
of recovery proceedings.
Section 79: Recovery
of tax
Section 80: Payment
of tax and other amount in installments
Since, we all have filed Annual Return for the
Period F.Y 2017-18 and Due date of Annual Return for F.Y 2018-19 is extended to
30th September by Notification No. 41/2020- Central Tax ,dt. 05-05-2020.
Department can now initiate proceeding for F.Y 2017-18 before the expiry of
Prescribed Time Period. Due to which we should prepare ourselves for the notices
to come. In this article I am going to share you three important Judgments
rather Tools which you can refer for filing your reply in response to notices
under Section 73 and Section 74 which will be useful for you to complete the
Proceedings.
Judgement No.1
MAHADEO CONSTRUCTION CO. vs. UNION OF INDIA (High Court Of Jharkhand)
(2020) 04 CCHGST 0178 JHARHC
Brief :- Assessee was liable to pay tax
within 20th day of succeeding month for which he was liable to file his monthly
return GSTR-3B. However, on GSTN Portal for months of February and March, 2018,
due date for filing return was reflecting as 31st March, 2019. Revenue claimed
that said due date had been reflected on GSTN Portal only for waiver of Late Fee
but due date for filing such return was not extended. Assessee filed his
monthly return for months of February and March, 2018 in GSTR-3B prior to 31st
March, 2019. Authority concerned issued an order directing payment of interest
for delay in filing of GSTR-3B Return. Subsequently, in exercise of powers
under Section 79 of the Central Goods and Services Tax Act, 2017, garnishee
notice issued to assessee’s Banker for recovery of interest.
Held: - In view of section 73 of the Central Goods
and Services Tax Act, 2017, if there was a short-payment of tax or non-payment
of tax, a notice was required to be issued even for recovery of interest under
Section 50 of the Central Goods and Services Tax Act, 2017 . From a conjoint
reading of sub-sections (5), (6) and (7) of Section 73 of the Central Goods and
Services Tax Act, 2017 it would be evident that, even in a case where an
assessee files his return as per his own ascertainment, pays tax and even pays
interest, but if said amount paid by assessee is falling short of amount
actually payable, Proper Officer is required to initiate proceedings under
Section 73(1) for recovery of amount of “short paid” or “not paid” interest on
tax amount . Till such adjudication is completed by Proper Officer, amount of
interest cannot be termed as an amount payable under CGST Act, 2017 or Rules made
there under
Interpretation
As per Section 73(2) of the CGST Act,2017 , The
proper officer shall issue the notice under section 73(1) at least three months
prior to the time limit specified in sub-section (10) for issuance of order.
Concluding Remarks
Hence if you have Received notice under Section
73 or 74 for the period 2017-18 then the First thing to consider is the Order
passed by Proper Officer. Initiation of notice u/s 73 and 74 is null and void
if no order is passed by proper officer.
JUDGMENT NO. 2
M/S. GEHNA TRADING LLP vs. UNION OF INDIA AND
ORS. (High Court of Bombay)
(2020) 04
CCHGST 0117 MumHC
Brief: - The Deputy Commissioner, Central
Goods and Service Tax (CGST) informed the Branch Manager where the Petitioner
holds a bank account that in view of the proceedings filed against one Yusuf
Fauzdar Shaikh, proprietor of M/s. Fashion Creations, proceedings have been
launched against the said taxable person and the Respondents were of the belief
that amounts were being transferred to various persons, including the
Petitioner. Hence, a direction was issued to the bank not to allow any debit
Held: - Bank account of taxable person
could be attached against whom proceedings under sections 62, 63, 64, 67, 73
and 74 of Central Goods and Services Tax Act, 2017 were initiated. Section 83
of Central Goods and Services Tax Act, 2017 did not provide for an automatic
extension to any other taxable person from an inquiry specifically launched
against a taxable person under those provisions. Accordingly, Petitioner was
entitled to succeed. Hence, order passed by Deputy Commissioner attaching bank
account of Petitioner, was to be quashed and set aside.
Interpretation
As per Section 83
provisional Attachment can be made only if proceedings Under Section 62 or section
63 or section 64 or section 67 or section 73 or section 74 are pending. It does
not give power to the Officer if proceedings are initiated for Inquiry or any
other Provision as per Act.
Concluding Remarks
No attachment can be initiate under Section 83
if only an inquiry is initiated against the tax payer for the period 2017-18.
JUDGEMENT NO. 3
M/S. SERAJUDDIN AND CO. vs. UNION OF
INDIA (HIGH COURT OF ORISSA)
(2020) 04 CCHGST 0019 Ori HC
Brief :- Noticed had been issued to assessee under Section
73 for non-payment of OGST/CGST for period June, 2018 to December, 2018 — However,
without responding to prayer of assessee for time and without giving them an
opportunity of personal hearing, impugned orders were passed, which were under
challenged here
Held :- Held, on perusal of Section 75(4) it was cleared
that whenever an assessee, chargeable with tax and penalty makes a request in
writing for opportunity of hearing, such an opportunity should be granted to
him — Here, admittedly though a request was made for personal hearing, however,
without granting same impugned orders had been passed — Hence, impugned order
was quashed — Appeal Allowed.
Interpretations: -
Here the Order was
passed against the assessee however no Opportunity of Heard was given to
assessee and Interest under Section 73 was initiated. Assessee filed a writ
against the High Court and his appeal was allowed.
Concluding Remarks
Notice or Order passed
without giving an opportunity to assessee is null and void under the principles
of Audi Alteram Partem.
In the above
article I have covered all high court judgments taken place in context to
Section 73 and Section 74. However, there are many Advance Rulings have also
taken place but same is only restricted to each Taxpayer only as per CGST
Act,2017.
We must also keep
in mind whenever any notice in respect to Section 74 have received that the onus
to proof misstatement or suppression is by reason of fraud or not is on the assessee.
Hence after receipt of notice first action to be taken is to proof that
misstatement and suppression was not due to fraud once we are in receipt of
notice
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Very nicely stated, very useful.
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