The GST payer will first have the opportunity to explain the short-term payment of tax payable by self-assessment.



People assessed under the Goods and Services Tax (GST) can breathe easy, as the Central Council of Indirect Taxes and Customs (CBIC) first prescribed explanations before initiating the collection of unpaid taxes, which is part of the self-assessed responsibility.

The CBIC has issued detailed guidelines for recovery procedures under the provisions of Article 79 of the CGST Act of 2017 in the cases covered by the explanation in paragraph (12) of Article 75 of the same law. New provisions came into force on January 1. Guidelines for new provisions have been issued to eliminate the apprehension of unauthorized visits by GST officers to taxpayer premises for such collections.

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According to the guidelines, when it turns out that the self-assessed tax declared in the GSTR-I is paid late or not paid in the GSTR-3B, the relevant officer can send a communication to explain the reasons for such late payment or non-payment within a reasonable time. It may not be necessary to initiate a recovery procedure under section 79, where the explanations are appropriate.

However, “if the said registrant does not respond, or does not make the payment of such incomplete or unpaid amount, within the time limit prescribed in the communication, then the procedure for recovering said amount in accordance with the provisions of Article 79 may be initiated by the appropriate officer, ”the guidelines said.

In the current system, the registered person declares their deliveries in the GSTR-1 and is required to fulfill their tax obligations through the GSTR-3B declaration. The recipient can claim the input tax credit (ITC) on the supplies declared by its suppliers in their GSTR-1 and for which the tax has been paid. There are cases where suppliers fail to file a GSTR-3B return or fulfill the full tax liability in the GSTR-3B return with respect to outbound supplies reported in GSTR-1. This not only results in prompt payment of the tax to the government, but also has a negative impact on the recipients, as they are not entitled to receive the input tax credit for those supplies, on which the tax is not. has not been paid by their suppliers. In many cases, the recipient may also have already paid for the supply.

In order to overcome this difficulty, through the 2021 finance law, an explanation has been added to article 75 (12) of the CGST law to specify that “the tax on supplies self-declared by the person registered in the GSTR -1, which was not paid through GSTR-3B, will be considered its self-assessed (and admitted) liability and may be recoverable. This explanation is also in line with the legal position taken by the courts in some cases, the official explained while adding that this addition addresses the concerns of recipients that they cannot avail themselves of the ITC if the supplier does not pay. the tax due on the said supply.

According to Rajat Mohan, a senior partner at AMRG & Associates, a tax consultancy firm, with the circular, the Council has done its best to alleviate the poisonous fangs of the new section 75 (12) provision. This circular from the central tax administration would put an end to the abuse of such provisions by central tax agents; however, the membership of officers at the state level is still in doubt. “By this circular, the chamber has mandated the possibility of being heard before the said recovery procedure. Companies can now protect themselves from the broad power of taxation and collection granted to each tax officer in the district, ”he said.


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