Category: Demand and Recovery under GST

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What is ‘Suppression’

The term ‘Suppression’ means non-declaration of facts or information which a taxable person is required to declare in the return, statement, report or any other document furnished under the Act or the rules made thereunder, or failure to furnish any information on being asked for, in writing by the proper officer.

(ICAI FAQ PUBLICATIONS 06-09-2017 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: FAQ NO. 18)

 

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If the show cause notice is issued under section 74(1) or 74(3) and thereafter the person chargeable with tax makes payment, is there any need to adjudicate the case

No. Where the person chargeable with tax, pays the tax along with interest under section 50 and applicable penalty within 30 days of communication of the order, all proceedings in respect of such notice except for proceedings under section 132 shall be deemed to be concluded.

(ICAI FAQ PUBLICATIONS 06-09-2017 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: FAQ NO. 16)

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Whether the proper officer can proceed to issue notice in case of shortfall in payment under section 74(5) by the person chargeable with tax

Where the proper officer is of the opinion that the amount paid under section 74(5) falls short of the actual amount payable, he shall proceed to issue show cause notice under section 74(1) for such shortfall.

(ICAI FAQ PUBLICATIONS 06-09-2017 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: FAQ NO. 15)

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Where a case is adjudicated under section 74 and order issued confirming tax demand and penalty, does the Noticee have any option to pay reduced penalty

Yes. The person served with order under section 74(9) along with a summary
electronically in Form GST DRC-07,shall pay the tax along with interest under section 50 and a penalty equivalent to 50% of such tax within 30 days of the communication of the order [Section 74(11)]. On such payment, all proceedings in respect of the said notice except for proceedings under section 132 shall be deemed to be concluded.

(ICAI FAQ PUBLICATIONS 06-09-2017 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: FAQ NO. 14)

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Can the person chargeable with tax pay the amount of demand along with interest and reduced penalty after the issue of notice under section 74(1) or 74(3) , but before the adjudication and issue of order under section 74

Yes. The person chargeable with tax under section 74(1) or the statement under section 74(3) can pay the amount of tax along with interest under section 50 and a penalty equivalent to 25% of such tax within 30 days from the issue of notice [Section 74(8)]. The person chargeable with tax shall inform the proper officer of such payment in Form GST DRC-03 and the proper officer shall issue an order in Form GST DRC-05 concluding the proceedings in respect of the said notice. Please note that on such payment, all proceedings in respect of the said notice except for proceedings under section 132 shall be deemed to be concluded.

(ICAI FAQ PUBLCIATIONS 06-09-2017 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: FAQ NO. 13)

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Can the person chargeable with tax pay the amount of demand along with interest and reduced penalty before the service of show cause notice under section 74(1) or as the case may be, the statement under section 74(3)

Yes. The person chargeable with tax can pay the amount of tax along with interest under section 50 and a penalty equivalent to 15% of such tax based on his own ascertainment of such tax or the tax as ascertained by the proper officer and inform the proper officer in writing of such payment. in Form GST DRC-03. On receipt of such information, the proper officer shall issue an acknowledgement for accepting the payment made by the said person in Form GST DRC-04 and he shall not serve any notice in respect of tax so paid or any penalty payable under the provisions of this Act or rules made there under.

(ICAI FAQ PUBLICATIONS 06-09-2017 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: FAQ NO. 12)

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Whether proper officer can issue similar show cause notice for any periods other than those covered under section 74(1)

Yes. The proper officer may serve a statement under section 74(3) along with a summary electronically in Form GST DRC-02 containing details of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilized, where the grounds relied upon by the proper officer for periods other than those covered in Section 74(1) are the same as are mentioned in the earlier notice issued under section 73 (1), except the ground of fraud or any willful-misstatement or suppression of facts with the intention to evade tax. The service of such statement [under Section 74(3)] shall be deemed to be service of show cause notice [under Section 73(1)]on the person chargeable with tax.

(ICAI FAQ PUBLCIATIONS 06-09-2017 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 : FAQ NO. 11)

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What is the time limit for issue of show cause notice by the proper officer under section 74(2)

The proper officer shall issue show cause notice at least 6 months prior to the time limit of 5 years for issuance of order i.e.:
 Before completion of 5 years from the due date for furnishing of annual return for the financial year to which the tax not paid or short paid or input tax wrongly availed or utilized relates to or
 within 5 years from the date of erroneous refund, as the case may be.

(ICAI FAQ PUBLICATIONS 06-09-2017 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: FAQ NO. 10)

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Under what circumstances, the proper officer shall invoke provisions of section 74(1) to serve show cause notice on the person chargeable with tax

The proper officer shall serve notice under the provisions of Section 74(1) along with a summary electronically in Form GST DRC-01 on the person chargeable with tax for any reason of :
 Fraud
 willful misstatement
 suppression of facts
when he has reasons to believe that tax has not been paid or short paid or erroneously refunded or input tax credit has been wrongly availed or utilized.

(ICAI FAQ PUBLICATIONS 06-09-2017 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 : FAQ NO. 9)