Sec 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 wilfulmisstatement or suppression of facts

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Sec 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 wilfulmisstatement or suppression of facts 2017-04-14T11:17:50+00:00

GST India Forum – Goods and Services Tax (GST) in India Forums Bare Law Sec 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 wilfulmisstatement or suppression of facts

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  • Ashish BadalaCA Ashish Badala
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    (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.
    (2) The proper officer shall issue the notice under sub-section (1) at least three months prior to the time limit specified in sub-section (10) for issuance of order.
    (3) Where a notice has been issued for any period under sub-section (1), the proper officer may serve a statement, containing the details of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised for such periods other than those covered under sub-section (1), on the person chargeable with tax.
    (4) The service of such statement shall be deemed to be service of notice on such person under sub-section (1), subject to the condition that the grounds relied upon for such tax periods other than those covered under sub-section (1) are the same as are mentioned in the earlier notice.
    (5) The person chargeable with tax may, before service of notice under sub-section (1) or, as the case may be, the statement under sub-section (3), pay the amount of tax along with interest payable thereon under section 50 on the basis of his own ascertainment of such tax or the tax as ascertained by the proper officer and inform the proper officer in writing of such payment.
    (6) The proper officer, on receipt of such information, shall not serve any notice under sub-section (1) or, as the case may be, the statement under sub-section (3), in respect of the tax so paid or any penalty payable under the provisions of this Act or the rules made thereunder.
    (7) Where the proper officer is of the opinion that the amount paid under sub-section (5) falls short of the amount actually payable, he shall proceed to issue the notice as provided for in sub-section (1) in respect of such amount which falls short of the amount actually payable.
    (8) Where any person chargeable with tax under sub-section (1) or sub-section (3) pays the said tax along with interest payable under section 50 within thirty days of issue of show cause notice, no penalty shall be payable and all proceedings in respect of the said notice shall be deemed to be concluded.
    (9) The proper officer shall, after considering the representation, if any, made by person chargeable with tax, determine the amount of tax, interest and a penalty equivalent to ten per cent. of tax or ten thousand rupees, whichever is higher, due from such person and issue an order.
    (10) The proper officer shall issue the order under sub-section (9) within three years from the due date for furnishing of annual return for the financial year to which the tax not paid or short paid or input tax credit wrongly availed or utilised relates to or within three years from the date of erroneous refund.
    (11) Notwithstanding anything contained in sub-section (6) or sub-section (8), penalty under sub-section – (9) shall be payable where any amount of self-assessed tax or any amount collected as tax has not been paid within a period of thirty days from the due date of payment of such tax.

    Priya MadrechaPriya Madrecha
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    73.1  Introduction
    1.      Section 73 deals with determination of tax
    •    not paid; or
    •    short paid; or
    •    tax erroneously refunded; or
    •    input tax credit wrongly availed or utilised.
    This section covers determination under circumstances of cases not involving fraud, wilful misstatement or suppression of facts;
    2.  This section also covers the time limit within which the proper officer shall issue the Notice and order can be issued for the determination/ recovery of tax payment defaulted by the taxable person. As per the table below, all the proceedings up to the issue of an order requires to be: the time limit for issuance of Notice and order is provided herewith:
    Particulars     Time limit for issuing show cause notice.     Time limit for issuing order.
    Cases involving other than fraud, wilful misstatement or
    suppression of facts     At least 3 months prior to the time limit specified under subsection (10) for issuance of order.      3 years from the due date of filing annual returns/3 years from the date of erroneous refund.
    Section 73 also applies for recovery of interest payable which is not paid or partly paid or interest erroneously refunded.

    73.2 Analysis
    Section 73 is applicable under the cases other than fraud, or wilful misstatement or suppression of facts with an intention to evade payment of tax.
    1.    The provision provides for –
    (a)    Service of notice by proper officer ;
    (b)    Notice shall be served on the person who is chargeable with tax, who has –
         Not paid or short paid the tax;
         Received the erroneous refund;
         Wrongly availed or utilized input tax credit;
    (c)    Such amounts as mentioned above shall be required to be determined along with the applicable interest as per Section 50 and penalty as specified.
    (d)    The notice has to be issued at least three months prior to the time limit of three years   for  issuance of order
    2.    Where no notice is required to be issued for demand: In case proper officer has already issued an notice on the person for the period specified under section 73(1), subsequently if such officer finds similar issue for any subsequent period, then in such case instead of issuing a detailed notice for such subsequent period, proper officer may issue a statement for for recovering the amount from such person and such statement shall be deemed to be a notice as per Section 73(1) on the condition that the grounds relied upon are the same, for the earlier notice issued for previous period.
    3.    Voluntary payment of tax and interest before issue of notice/statement: Voluntary payment of tax and interest as per Section 50 before issue of notice/statement can be done either
    •    As per the ascertainment of the notice or;
    •    As per the ascertainment of the proper officer;  and the same shall be intimated to the proper officer after receipt of which the officer shall not serve any notice / statement to the extent of such payment. There can be no further proceedings with regard to tax and penalty so paid.
    4.    When the amount paid as per the ascertainment of the assessee falls short, the proper officer shall issue a notice for the amount of shortfall.
    5.    Where the assessee makes the payment of tax along with interest within 30 days of issuance of Notice / Statement, then in such case no penalty shall be payable and it shall be deemed that all the proceedings have been concluded.
    6.    After considering the representations of the person, the proper officer shall issue an order consisting the amount of  tax, interest and penalty. tax + interest + penalty. The amount of penalty of shall be higher of 10% of tax or ` 10,000/-, whichever higher.
    7.    The proper officer shall pass an order within a period of 3 years from the
    •    due date for filing of Annual return for the year to which the short payment or non-payment or input tax credit wrongly availed or utilised relates
    •    date of erroneous refund Penalty implications, in summary:
    If tax, interest and penalty (as indicated below is paid), it is Provided that further proceedings should not be continued to that extent:
    Pay tax plus interest     Amount of penalty
    Before issuance of show cause notice      No penalty
    Within 30 days after the issuance of show cause notice      No penalty
    In any other case     10% of the tax or Rs. 10,000 whichever is higher.

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