Fraud Cases Time Limit for GST Officer to Issue Orders
·
Court concludes that the notice issued by
proper officer under sub-section (1) of section 74 is not sustainable for reason
that the charges of fraud or any willful-misstatement or suppression of facts to
evade tax have not been established
Section 75. General provisions relating to determination of tax.
(1) Where the service of notice or issuance of order is stayed
by an order of a court or Appellate Tribunal, the period of such stay shall be
excluded in computing the period specified in sub-sections (2) and (10) of section 73 or sub-sections (2) and (10) of section 74, as the case may be.
(2) Where any Appellate Authority or Appellate Tribunal or court
concludes that the notice issued under sub-section (1) of section 74 is not sustainable for the reason that the charges of fraud or
any wilful-misstatement or suppression of facts to evade tax has not been
established against the person to whom the notice was issued, the proper
officer shall determine the tax payable by such person, deeming as if the notice
were issued under sub-section (1) of section 73.
(3) Where any order is required to be issued in pursuance of the
direction of the Appellate Authority or Appellate Tribunal or a court, such
order shall be issued within two years from the date of communication of the
said direction.
**
Section 73. Determination of tax not paid or short paid or
erroneously refunded or input tax credit wrongly availed or utilised for any
reason other than fraud or any willful-misstatement
or suppression of facts.-
(1) Where it appears to the proper officer that any tax has not
been paid or short paid or erroneously refunded, or where input tax credit has
been wrongly availed or utilised for any reason, other than the reason of fraud
or any wilful-misstatement or suppression of facts to evade tax, he shall serve
notice on the person chargeable with tax which has not been so paid or which
has been so short paid or to whom the refund has erroneously been made, or who
has wrongly availed or utilised input tax credit, requiring him to show cause
as to why he should not pay the amount specified in the notice along with
interest payable thereon under section 50 and a penalty leviable under the provisions of this Act or the
rules made thereunder.
**
[Circular No. 185/17/2022-GST dated 27th
December, 2022]
Subject:
Clarification with regard to applicability of provisions of section 75(2) of Central
Goods and Services Tax Act, 2017 and its effect on limitation.
Attention
is invited to sub-section (2) of section 75 of Central Goods and Services Tax Act,
2017 (hereinafter referred to as CGST Act) which provides that in cases where
the appellate authority or appellate tribunal or court concludes that the notice
issued by proper officer under sub-section (1) of section 74 is not sustainable
for reason that the charges of fraud or any willful-misstatement or suppression
of facts to evade tax have not been established against the person to whom such
notice was issued (hereinafter called as noticee), then
the proper officer shall determine the tax payable by the noticee,
deeming as if the notice was issued under sub-section (1) of section 73.
2.
Doubts have been raised by the field formations seeking clarification regarding
the time limit within which the proper officer is required to re-determine the amount
of tax payable considering notice to be issued under sub-section (1) of section
73, specially in cases where time limit for issuance of order as per sub-section
(10) of section 73 has already been over. Further, doubts have also been expressed
regarding the methodology for computation of such amount payable by the noticee, deeming the notice to be issued under sub-section (1)
of section 73.
3.
In order to clarify the issue and to ensure uniformity in the implementation of
the provisions of law across the field formations, the Board, in exercise of its
powers conferred by section 168(1) of the CGST Act, hereby clarifies the issues
as under:
|
S.No. |
Issue |
Clarification |
|
1. |
In some of the cases where the show cause notice has been issued by
the proper officer to a noticee under sub-section
(1) of section 74 of CGST Act for demand of tax not paid/ short paid or
erroneous refund or input tax credit wrongly availed or utilized, the
appellate authority or appellate tribunal or the court concludes that the
said notice is not sustainable under sub-section (1) of section 74 of CGST
Act for the reason that the charges of fraud or any willful-misstatement or
suppression of facts to evade tax have not been established against the noticee and directs the proper officer to re-determine
the amount of tax payable by the noticee, deeming
the notice to have been issued under sub-section (1) of section 73 of CGST
Act, in accordance with the provisions of sub-section (2) of section 75 of
CGST Act. What would be the time period for re-determination of the tax,
interest and penalty payable by the noticee in such
cases? |
Sub-section (3) of section 75 of CGST Act provides that an order,
required to be issued in pursuance of the directions of the appellate
authority or appellate tribunal or the court, has to be issued within two
years from the date of communication of the said direction. Accordingly, in cases where any direction is issued by the appellate
authority or appellate tribunal or the court to re-determine the amount of
tax payable by the noticee by deeming the notice to
have been issued under sub-section (1) of section 73 of CGST Act in
accordance with the provisions of sub-section (2) of section 75 of the said
Act, the proper officer is required to issue the order of redetermination of
tax, interest and penalty payable within the time limit as specified in under
sub-section (3) of section 75 of the said Act, i.e. within a period of two
years from the date of communication of the said direction by appellate
authority or appellate tribunal or the court, as the case may be. |
|
2. |
How the amount payable by the noticee,
deeming the notice to have been issued under sub-section (1) of section 73,
shall be re-computed/ re- determined by the proper officer as per provisions
of sub-section (2) of section 75? |
In cases where the amount of tax, interest and penalty payable by
the noticee is required to be re-determined by the
proper officer in terms of sub-section (2) of section 75 of CGST Act, the
demand would have to be re-determined keeping in consideration the provisions
of sub-section (2) of section 73, read with sub- section (10) of section 73
of CGST Act. Sub-section (1) of section 73 of CGST Act provides for
issuance of a show cause notice by the proper officer for tax not paid or
short paid or erroneously refunded, or where input tax credit has been
wrongly availed or utilized, in cases which do not involve fraud or wilful
misstatement or suppression of facts to evade tax. Sub-section (2) of
section 73 of CGST Act provides that such show cause notice shall be
issued at least 3 months prior to the time limit specified in sub-section
10 of section 73 for issuance of order. As per sub-section (9) of section
73 of CGST Act, the proper officer is required to determine the tax,
interest and penalty due from the noticee and issue
an order. As per sub-section (10) of section 73 of CGST Act, an order
under sub-section (9) of section 73 has to be issued by the proper officer within
three years from the due date for furnishing of annual return for the
financial year in respect of which tax has not been paid or short paid or
input tax credit has been wrongly availed or utilized or from the date of
erroneous refund. It transpires from a combined reading of these provisions that in
cases which do not involve fraud or willful-misstatement
or suppression of facts to evade payment of tax, the show cause notice in
terms of sub-section (1) of section 73 of CGST Act has to be issued within 2
years and 9 months from the due date of furnishing of annual return for
the financial year to which such tax not paid or short paid or input tax
credit wrongly availed or utilized relates, or within 2 years and 9 months
from the date of erroneous refund. Therefore, in cases where the proper officer has to re-determine the
amount of tax, interest and penalty payable deeming the notice to have been
issued under sub-section (1) of section 73 of CGST Act in terms of sub-
section (2) of section 75 of the said Act, the same can be re-determined for
so much amount of tax short paid or not paid, or input tax credit wrongly
availed or utilized or that of erroneous refund, in respect of which show
cause notice was issued within the time limit as specified under sub-section
(2) of section 73 read with sub-section (10) of section 73 of CGST Act.
Thus, only the amount of tax short paid or not paid, or input tax credit
wrongly availed or utilized, along with interest and penalty payable, in
terms of section 73 of CGST Act relating to such financial years can be
re-determined, where show cause notice was issued within 2 years and 9
months from the due date of furnishing of annual return for the respective
financial year. Similarly, the amount of tax payable on account of
erroneous refund along with interest and penalty payable can be re-
determined only where show cause notice was issued within 2 years and 9
months from the date of erroneous refund. |
|
|
|
In case, where the show cause notice under sub-section (1) of
section 74 was issued for tax short paid or tax not paid or wrongly availed
or utilized input tax credit beyond a period of 2 years and 9 months from the
due date of furnishing of the annual return for the financial year to which
such demand relates to, and the appellate authority concludes that the notice
is not sustainable under sub-section (1) of section 74 of CGST Act thereby deeming
the notice to have been issued under sub-section (1) of section 73, the
entire proceeding shall have to be dropped, being hit by the limitation of
time as specified in section 73. Similarly, where show cause notice under
sub-section (1) of section 74 of CGST Act was issued for erroneous refund
beyond a period of 2 years and 9 months from the date of erroneous refund,
the entire proceeding shall have to be dropped. |
|
|
|
In cases, where the show cause in terms of sub-section (1) of
section 74 of CGST Act was issued for tax short paid or not paid tax or
wrongly availed or utilized input tax credit or on account of erroneous
refund within 2 years and 9 months from the due date of furnishing of the
annual return for the said financial year, to which such demand relates to,
or from the date of erroneous refund, as the case may be, the entire amount
of the said demand in the show cause notice would be covered under re-
determined amount. |
|
|
|
Where the show cause notice under sub- section (1) of section 74 was
issued for multiple financial years, and where notice had been issued before
the expiry of the time period as per sub-section (2) of section 73 for one
financial year but after the expiry of the said due date for the other
financial years, then the amount payable in terms of section 73 shall be
re-determined only in respect of that financial year for which show cause
notice was issued before the expiry of the time period as specified in
sub-section (2) of section 73. |
4.
It is requested that suitable trade notices may be issued to publicize the contents
of this Circular.
5.
Difficulty, if any, in implementation of this Circular may please be brought to
the notice of the Board.
F. No. CBIC-20001/2/2022 GST