Demands and Recovery under GST (Volume 1.1)

Demands and Recovery under GST (Volume 1.1)

This Article will highlight about demands and recovery in the case of

·         In the case of Fraud

·         In case of wilful misstatement

·         In case of suppression of facts

Section 74 of the Central Goods and Service Tax Act, 2017 says that ….

·         If tax is not paid

·         Erroneously refunded or

·         Input Tax Credit (ITC) is wrongly availed or utilised  by fraud

·         Wilful misstatement or suppression of facts

A Proper officer can demand and recover such amount of tax along with the interest and penalty.

show cause notice (SCN)

A proper officer can serve a show cause notice (SCN) for recovery of tax (GST) along with interest and penalty applicable.

SCN (show cause notice) can be issued at least 6 months prior to the period of 5 years from the due date for furnishing of annual return for the financial year to which the tax (GST) not paid or short paid or within 5 years from the date of erroneous refund.

ISSUE OF STATEMENT

If any SCN was previously issued on same grounds for earlier period, a proper officer can issue a statement instead of a SCN which will include details of tax not paid or short paid etc. for tax period other than those already covered under Section 74(1)

PAYMENT OF TAX BEFORE SCN

To promote the voluntary compliance & to reduce litigation, the Act provides that a person chargeable to tax, can on the basis of own ascertainment, pay tax (GST) along with interest under section 50 as well 15% penalty of the said ascertainment of tax (GST) or ascertainment made by the proper officer before the issue of SCN. To be very careful if the proper officer finds that tax (GST) and penalty paid by person is short officer is empower to issue SCN in respect of the amount falling short.

            If the tax along with the interest payable under section 50 and 25% of tax as penalty is paid within 30 days of SCN, all proceedings in respect of the said notice shall be deemed to be concluded.

If any person made any representation in front of the officer after assessing all the facts of the case the Proper officer is empowered to issue order in that particular case or in the said case. Order issued by the proper officer will include

·         Amount of tax (GST) payable

·         Interest on the said amount

·         Penalty if any

If a person served with an order issued by the proper officer pays tax, along with interest payable thereon under section 50 and penalty equivalent to 50% of such amount within 30 days of communication of the order, all proceedings in respect of the said notice be deemed to be concluded.

  

Demands and Recovery under GST

Demands and Recovery under GST

To recover any tax not paid unintentionally, GST provides for various provisions whereby a proper officer can demand and recover such amount of tax along with interest & penalty. Section 73 states that under the following circumstances a proper officer can serve a show cause notice for recovery of tax along with interest or penalty or both applicable.

Determination of

Ø  Tax not paid

Ø  Tax short paid

Ø  Tax erroneously refunded

Ø  ITC wrongly utilised

Ø  For any other reason other than fraud

It can be easily explained in below graph

The GST act further specifies that if a show cause notice was previously issued on same grounds for earlier period, a proper officer can issue a statement instead of show cause notice which will include details of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilized for such periods.

Payment of GST before Show Cause Notice (SCN)

A person chargeable to tax can on the basis of his own ascertainment pay tax along with interest payable thereon under section 50 before the service of SCN or statement as the case may be.

If the amount paid by such person is falling short of the amount actually payable, the proper officer may issue SCN in respect of the amount falling short of the amount actually payable.

Penalty

Ø  If the tax along with interest is paid within the 30 days of SCN, no penalty will be levied.

Ø  The proper officer shall, after considering the representation, if any, made by such person chargeable with GST, determine the amount of GST, and a penalty equivalent to 10% of the GST or Rupees 10,000 whichever is higher, due from such person and issue an order.

Order within 3 years in following case

Ø  Issue of order within 3 years from the due date for furnishing of annual return for the financial year to which the GST not paid or short paid or input tax credit (ITC) wrongly availed or utilised.

Ø  Issue of order within 3 years from the date of erroneous refund

GST Authority against Anti-profit

GST Authority will take strict action against Anti-profit.

Ø  The proposed anti-profiteering authority under the new GST regime will take up for scrutiny only those cases where undue profit of more than Rs 1 crore has been earned.

Ø  A five member National Anti-Profiteering Authority, headed by a secretary-level officer, will be set up soon to keep a tab on businesses that have not passed on to consumers the benefit of lower tax rates under the Goods and Services Tax (GST) regime. 

Ø  Authority will take two to three month’s time to confirm whether the benefits of GST are being passed on to consumers.

Ø  There  will be Different screening committee to receive the complaints at State level and National Level

Ø  GST Implementation Committee (GIC) will decide which case to give to state screening committee.

Ø  The investigation must be finished within the 3 Months.

Ø  After finding the anti-profiteering the authority will pass the order in another 3 months.

Ø  The issues which have a national or mass impact will be taken up by the authority.

Ø  There may be many small cases which would be coming to the GIC, but only those cases where the financial implication is more than Rs 1 crore would be taken up by the authority. Rest would be transferred to the state screening committee.

Ø  The anti-profiteering authority, if it finds that a company has not passed on the GST benefits, will either direct it to pass on the benefits to consumers or if the beneficiary cannot be identified will ask the company to transfer the amount to the consumer welfare fund within a specified timeline. 

Ø  According to the authority undue profit will attract interest @18% P.A. in addition to penalty.

Ø  A five member committee, will be there to monitor the Anti- profiting.

 Tenure of the committee will be for just two years unless the GST Council extends the tenure. 

GST ( Taxes Subsumed, Levy, Rates, Impacts of GST)

Taxes subsumed

 

A single GST replaced several existing taxes and levies which include:

1.  central excise duty, 
2. services tax, 
3. Additional customs duty, 
4. surcharges, 
5. state-level value added tax (VAT) and
6.  Octroi Duty. 
7. Other levies which were applicable on inter-state transportation of goods has also been done away with in GST regime.

Levy

 

(Levy means an act of levying a tax, fee, or fine.)

·              GST is levied on all transactions such as sale, transfer, purchase, barter, lease, or import of goods and/or services.

·         India adopted a new tax model i.e. dual GST model, meaning that taxation is administered by both the Union and State Governments.

·         Transactions made within a single state will be levied with Central GST (CGST) by the Central Government and State GST (SGST) by the government of that state. For inter-state transactions and imported goods or services, an Integrated GST (IGST) is levied by the Central Government.

·         GST is a consumption-based tax, therefore, taxes are paid to the state where the goods or services are consumed not the state in which they were produced. IGST complicates tax collection for State Governments by disabling them to collect the tax owed to them directly from the Central Government.

Rates

The GST is imposed at different rates on different items.

For Example

1.      The rate of GST is 18% for soaps and 28% on washing detergents.

2.      GST on movie tickets is based on slabs, with 18% GST for tickets that cost less than Rs. 100 and 28% GST on tickets costing more than Rs.100.

Note if you want complete rate list please visit:

http://www.cbec.gov.in/resources//htdocs-cbec/gst/goods-rates-booklet-03July2017.pdf

Impacts of GST

 

Following are the few impacts of GST

1.      The introduction of the GST increased the costs of most consumer goods and services in India including food, hotel charges, insurance and cinema tickets. Upon its introduction in the country, GST led to a number of protests by the business community, primarily due to an increase in overall taxes and hence the prices of goods.

2.      Check posts across the country were abolished ensuring free and fast movement of goods. Due to abolishing of the Check posts movement of the goods will increase due to which several benefits people will get.

3.  Control of black money circulation as the system normally followed by traders and     shopkeepers will be put to a mandatory check.
4. Boost to the Indian economy in the long run.

Goods and Services Tax (GST) is an Indirect tax applicable throughout India which replaced multiple cascading taxes levied by the central and state governments. It was introduced as The Constitution (One Hundred and First Amendment) Act 2017, following the passage of Constitution 122nd Amendment Bill. The GST is governed by a GST Council and its Chairman is the Finance Minister of India.

Under GST, goods and services are taxed at the following rates, 0%, 5%, 12%, 18% and 28%. There is a special rate of 0.25% on rough precious and semi-precious stones and 3% on gold. In addition a cess of 15% or other rates on top of 28% GST applies on few items like aerated drinks, luxury cars and tobacco products.

This is the India's biggest tax reform in 70 years of independence, the Goods and Services Tax (GST) was finally launched on the midnight of 30 June 2017, though the process of forming the legislation took 17 years (since 2000 when it was first proposed). The launch was marked by a historic midnight (30 June - 1 July 2017) session of both the houses of parliament convened at the Central Hall of the Parliament.

Many critics pointed out that the GST would increase costs of daily goods and affect many Indians adversely, especially the middle, lower middle and poorer classes. GST was initially proposed to replace a slew of indirect taxes with a unified tax and was therefore set to dramatically reshape the country's 2 trillion dollar economy. However, it has been met with sharp criticism from various fronts due to the increased costs and troubles that it will cause to common citizens.

However if we compare the rate of GST in India is between double to four times that levied in other countries like Singapore.