Demands and Recovery under GST
By:
Diksha Khaneja
Assistant Professor,
GIBS
Meaning of Demands and Recovery
under GST
People are liable to pay tax on every product or service that
they consume. If a person fails to oblige to his duty of paying
tax, then the Government will ‘Recover’ the tax from the
nonpayer. Taxes are inevitable part of the Government’s
measure to run the economy and paying is the dutiful action of
every citizen. So basically, Demand is the want for
product/service and Recovery is the stringent measures taken
by the government to recover tax from a defaulter who failed
to pay tax.
GST Demand where there is no Fraud
(Section 73)
1) Section 73 is applied to non-fraud cases. Following
are the conditions applied:
• Tax is unpaid or paid short
• Wrong refunds claimed
• Wrongly availed ITC
2) Time limit: The proper officer is required to issue
the show-cause notice 3 months before the time
limit. The maximum time limit for the order of
payment is 3 years from the due date for filing of
annual return for the year to which the amount
relates.
Penalty
Paid all dues Penalty amount
Before notice No Penalty
Within 30 days from notice No Penalty
After 30 days from notice or issue of A higher of 10% of the demanded tax
order or Rs.10,000 is the penalty
GST Demand where there is Fraud
(Section 74)
1) Section 74 applies to cases when there has been an
attempt made by the taxpayer to evade tax.
Following are the conditions applied under this
section.
Fraudulent
Purposeful misstatement
Hiding or suppressing facts
GST Demand where there is Fraud
(Section 74)
1) Section 74 applies to cases when there has been an
attempt made by the taxpayer to evade tax.
Following are the conditions applied under this
section.
Fraudulent
Purposeful misstatement
Hiding or suppressing facts
GST Demand where there is Fraud
(Section 74)
2) The taxpayer will get the following benefits as a
result of misrepresenting facts:
Tax is unpaid or paid short
Wrong refunds claimed
Wrongly availed ITC
The GST authority will issues a show case notice to
the taxpayer and will mandate him to pay the due
amount along with interest and penalty.
Additional Information
1) GST is payable on a self-assessment basis. If the assessee
pays the tax on self-assessment correctly then there will not
be any problem.
2) If there is any short payment or wrong utilization of input tax
credit, then the GST authorities will initiate demand and
recovery provisions against the assessee. Provisions of
demand under the GST Act.
3) For cases of fraud, the proper officer is required to issue the
notice 6 months before the time limit. The maximum time
limit is 5 years from the due date for filing of annual return
for the year to which the amount relates.
Additional Information
4) If the person pays the tax along with interest and a 15%
penalty based on their own calculations (or the officer’s
calculations) before the notice/statement is issued and
informs the officer in writing, then the officer will not issue
any notice.
5) However, if the officer finds that there is a short payment,
they can issue a notice for the balance amount.
6) If the taxpayer pays all their dues and a penalty of 25%
within 30 days from the date of the notice, then all
proceedings (excluding proceedings under Section 132, i.e.,
prosecution) regarding the notice will be closed.
Penalty
Paid all dues Penalty amount
Before notice 15% of the demanded tax is the
penalty
Within 30 days from notice 25% of the demanded tax is the
penalty
After 30 days from the order 50% of the demanded tax is the
penalty
For other cases (Section 122)- 100% of the demanded tax is the
penalty
THANK YOU!!!
