Latest GST News, Information, Notifications & Announcements

GST WEEKLY UPDATE :09/2024-25 (02.06.2024)

1. GSTN Introduces Option to Choose Personal Hearing in GST DRC-01 Responses:

The GSTN has enabled a new feature allowing taxpayers to select ‘Yes’ or ‘No’ for a personal hearing while replying to GST DRC-01 on the GST Portal. Previously, the portal automatically selected the ‘No’ option for a personal hearing in GST DRC-01.

2. CBIC issued Important Guidelines for initiation of recovery proceedings before three months from the date of service of demand order (Instruction No. 01/2024-GST dated May 30, 2024):

Attention is invited to sub-section (1) of section 79 of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as the ‘CGST Act’), which provides that where any amount payable by a person to the Government under any of the provisions of CGST Act or Rules made thereunder is not paid, the proper officer shall proceed to recover the amount by one or more of the modes specified in the said sub-section. Attention is further invited to Section 78 of the CGST Act, which provides for the time for initiation of such recovery proceeding. These sections are reproduced below for ease of reference:

“Section 78: Initiation of recovery proceedings.-

Any amount payable by a taxable person in pursuance of an order passed under this Act shall be paid by such person within a period of three months from the date of service of such order failing which recovery proceedings shall be initiated:

Provided that where the proper officer considers it expedient in the interest of revenue, he may, for reasons to be recorded in writing, require the said taxable person to make such payment within such period less than a period of three months as may be specified by him. “

“Section 79: Recovery of tax.-

“1. Where any amount payable by a person to the Government under any of the provisions of this Act or the rules made thereunder is not paid, the proper officer shall proceed to recover the amount by one or more of the following modes, namely:-

…”.On reading the above sections, it becomes clear that the general rule for initiating recovery proceedings is that, where any amount payable by a taxable person in pursuance of an order passed under the CGST Act is not paid within a period of three months from the date of service of such order, recovery proceedings shall be initiated by the proper officer only after the expiry of the said period of three months.

Only in exceptional cases, where it is necessary in the interest of revenue, the proper officer may require the said taxable person to pay the said amount within a period less than the period of three months from the date of service of the order, as may be specified by him, after recording the reasons for doing so in writing. If the said amount is not paid by the said taxable person within the period specified by the proper officer under the proviso to section 78 of CGST Act or even after the expiry of three months from the date of the service of the order, the same can then be recovered by the proper officer as per provisions of sub-section (1) of section 79 of CGST Act.

It has been brought to the notice of the Board that some of the field formations are initiating recovery before the specified period of three months from the date of service of the order, even in the cases where the taxable person has not been specifically required by the proper officer, for reasons to be recorded in writing, for payment of such amount within a period less than the period of three months from the date of service of the order. Therefore, in order 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 of the CGST Act, hereby issues the following instructions to be followed in cases where it is necessary, in the interest of revenue, to initiate recovery before the period of three months from the date of service of the order.

As per Circular No. 3/3/2017-GST dated the 5th July 2017, the proper officer for recovery under Section 79 of the CGST Act is the jurisdictional Deputy or Assistant Commissioner of Central Tax. It is also mentioned that the proper officer under proviso to Section 78 is the jurisdictional Principal Commissioner/ Commissioner of Central Tax.

Therefore, while recovery proceedings under sub-section (1) of section 79 of CGST Act are required to be undertaken by the jurisdictional Deputy or Assistant Commissioner of Central Tax, however, in the cases, where it is felt that recovery proceedings in respect of an amount payable by a taxable person in pursuance of an order need to be initiated in the interest of revenue before completion of three months from the date of service of the order, the matter needs to be placed by the jurisdictional Deputy or Assistant Commissioner of Central Tax before the jurisdictional Principal Commissioner/ Commissioner of Central Tax, along with the reasons/ justification for such an action. The jurisdictional Principal Commissioner/ Commissioner of Central Tax shall examine the reasons/justification given by the jurisdictional Deputy or Assistant Commissioner at the earliest and if he is satisfied that it is expedient in the interest of revenue to ask the said taxable person to pay the said amount before completion of three months from the date of service of the order, he must record in writing, the reasons as to why the concerned taxable person is required to make payment of such amount within such period, less than a period of three months, as may be specified by him. After recording such reasons in writing, he may issue directions to the concerned taxable person to pay the said amount within the period specified by him in the said directions. Copy of such directions must also be sent to the jurisdictional Deputy or Assistant Commissioner of Central Tax for information.

It is further mentioned that jurisdictional Principal Commissioner/ Commissioner of Central Tax should provide the specific reason(s) for asking the taxable person for early payment of the said amount, clearly outlining the circumstances prompting such early action. Such reasons could include high risk to revenue involved in waiting till the completion of the three month period due to apprehension that the concerned taxable person may close the business operations in near future, or due to possibility of default by the taxable person due to his declining financial conditions or impending insolvency, or likely initiation of proceedings under Insolvency and Bankruptcy Act, etc. Reasons to believe for the apprehension of risk to revenue should be based on credible evidence, which may be kept on record to the extent possible. While issuing any such directions, the proper officer must duly consider the financial health, status of business operations, infrastructure, and credibility of the taxable person, and strike a balance between the interest of the revenue and ease of doing business. It is implicit that such directions for early payment of the confirmed demand should not be issued in a mechanical manner, and must be issued only in cases where interest of revenue is required to be safeguarded due to specific apprehension/ circumstances in the said case.

Wherever such directions are issued by the jurisdictional Principal Commissioner/ Commissioner of Central Tax as per powers conferred under proviso to section 78 of CGST Act, and where the taxable person fails to make payment of the said amount within the period specified in the said directions, the jurisdictional Deputy or Assistant Commissioner of Central Tax shall proceed to recover the said amount as per the procedure specified in subsection (1) of section 79 of CGST Act.

3. Kerala GST Dept issued an Order for Streamlining the Appellate Functions and the Role of Review Cell and Legal Cell of the State GST Department.

• Review of first adjudicating authority’s orders

The Review function in case of first adjudicating authority’s orders is governed by sections 107(2) and 107(3) of the Kerala State GST Act 2017 which are as follows:

Section 107(2): The Commissioner may, on his own motion, or upon request from the Commissioner of Central Tax, call for and examine the record of any proceedings in which an adjudicating authority has passed any decision or order under this Act or the Central Goods and Services Tax Act 2017 (Central Act 12 of 2017) for the purpose of satisfying himself as to the legality or propriety of the said decision or order and may, by order; direct any officer subordinate to him to apply to the Appellate Authority within six months from the date of communication of the said decision or order for the determination of such points arising out of the said decision or order as may be specified by the Commissioner in his order.

Section 107(3): Where, in pursuance of an order under sub-section (2), the authorised officer makes an application to the Appellate Authority, such application shall be dealt with by the Appellate Authority as if it were an appeal made against the decision or order of the adjudicating authority and such authorised officer were an appellant and the provisions of this Act relating to appeals shall apply to such application.

• Revision of decisions and orders

The GST Acts also provide an opportunity for the Revision of decisions and orders. The powers of Revision are governed by section 108 of the Kerala State GST Act 2017,

The authority to issue revisional orders under section 108 has already been delegated to the Joint Commissioner in the TPS HQ in the case of orders/decisions up to the rank of Deputy Commissioner, and to the Additional Commissioner TPS HQ in the case of orders/decisions issued by Joint Commissioners.

• Review of first appellate authority’s orders

The Review function in case of first appellate authority’s orders is governed by sections 112(3) and 112(4) of the Kerala State GST Act 2017

In order to operationalize and streamline the above functions provided in the Kerala State GST Act 2017, in the interest of revenue, the following orders are issued in exercise of the powers conferred under section 168 the Kerala State GST Act 2017.

4. AAR & Important Judgements:

(i) The Hon’ble Madras High Court Decision Regarding No recovery proceedings shall be initiated within three months following the issuance of an Order:

(Applicant – TVL. Cargotec India (P) Ltd)

Held that no recovery measures shall be undertaken by the GST Authorities for a period of three months from the date of such order as per the proviso to Section 78 of the Central Goods and Services Tax, 2017 (“the CGST Act”) provided the GST Authority satisfies in writing.

Held:

The Hon’ble Madras High Court in Writ Petitioner No. 13104 of 2023 held as under:

Observed that, the proviso to Section 78 of the Tamil Nadu Goods and Services Tax Act, 2017 (“the TNGST Act”), may be invoked only if the proper officer records in writing the reason as to why he considers it expedient in the interest of the revenue to require the taxable person to make payment even before the expiry of the prescribed three-month period. In the case in hand, no material was placed on record to justify invoking the proviso to Section 78 CGST Act.

Held that, the Respondents either refund the recovered amount or recredit the same to the Petitioner’s Electronic Cash or Credit Ledgers, as the case may be, within one month from the date of receipt of the copy of the said Order because the Respondents failed to satisfactorily explain the recourse to the proviso to Section 78 of the CGST Act. Hence, the writ petition was allowed.

Disclaimer:

This publication contains information for general guidance only. It is not intended to address the circumstances of any particular individual or entity. Although the best of endeavour has been made to provide the provisions in a simpler and accurate form, there is no substitute to detailed research with regard to the specific situation of a particular individual or entity. We do not accept any responsibility for loss incurred by any person for acting or refraining to act as a result of any matter in this publication.