Taxes whether Direct or Indirect, are the main source of revenue for the government. So, it has to make sure that it gets this revenue either voluntarily or forcefully. Even though Goods and Services Tax is a newly introduced tax, the government has got all its bases covered when it comes to the collection of the tax. Provisions for raising the demand for tax and recovering it where its unpaid have been prescribed in the GST Act. GST has replaced indirect taxes like Service tax, VAT and Excise duty etc. and demand and recovery provisions under GST Act are similar to such provisions under Service Tax Act and Excise Act. Provisions of demand and recovery of GST are covered from section 73 to section 84 of Chapter XV of the CGST Act, 2017.
Broadly speaking, the demand for tax can be raised by the GST officials for short payment or non-payment of tax in two different cases:
Section 73 of the CGST Act deals with the cases where taxes are short paid or unpaid, but without invocation of fraud by the assessee. Let’s have a look at the time frame specified for the adjudication of such cases.
Section 74 deals with cases where there is non-payment or short payment of tax by the assessee and the authorities find willful suppression of facts or misstatement or fraud to be involved. Let’s have a look at the time frame specified for the adjudication of such cases.
If the defaulter takes appropriate action, i.e. pay tax, interest and penalty on time, he can escape prosecution.
So, after the payment of the tax, interest and penalty, the Proper officer will not serve any show cause notice under section 73(1) & section 74(1) as the case may be.
[ Read: Offences and Penalties under GST ]
Even after show cause notice is issued by the Proper officer, the taxpayer can avoid prosecution by taking certain actions, i.e. pay tax, interest and penalty on time.
Note: If the Proper officer fails to act timely and pass an order after issuing show cause notice then the adjudication will be considered complete.
Even after the order is issued, the taxpayer can avoid prosecution by taking certain actions, i.e. pay tax, interest and penalty on time.
Note: All proceedings, in respect of the said notice, shall not include proceeding under section 132 i.e. punishable offences.
|Situations||No Fraud Cases (Sec 73)||Fraud Cases (Sec 74)|
|Before issue of show cause notice||Nil||15% of the tax due|
|Within 30 days from issue of show cause notice||Nil||25% of the tax due|
|Within 30 days from issue of order||Higher of 10% of Tax or INR 10,000||50% of the tax due|
|Any other case||100% of the tax due|
If a transaction was considered intra-state supply which actually was interstate supply and wrong tax was collected and paid, then a refund of such tax can be claimed.
If a registered person paid integrated tax on a transaction which is actually an intra-state supply but considered an inter-State supply, then he does not need to pay any interest on the amount of CGST / SGST or CGST / UTGST as the case may be.