Determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilisedm:
Section 51 of the Model GST Law deals with the powers of proper officer to determine tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised. Section 51 has 4 sub-divisions, namely, (A) determination of tax not paid or short paid or erroneously refunded, wrong availment and utilisation of credit where there is no fraud or willful-misstatement or suppression of facts to evade tax, (B) determination of tax not paid or short paid or erroneously refunded or wrong availment and utilisation of credit where there is fraud or willful-misstatement or suppression of facts to evade tax, (C) general provisions relating to demand of tax, and (D) recovery of interest.
(i) Determination of tax where no fraud, willful-misstatement or suppression of facts involved;
Where any tax has not been paid or short paid or erroneously refunded, or the input tax credit has been wrongly availed or utilised for any reason other than fraud or willful-misstatement or suppression of facts to evade tax, the proper officer is required to issue a notice of demandunder sub-sec. (1) of sec. 51(A), to the person chargeable with tax to show cause why he should not pay the amount specified in the notice along with interest and penalty. Sub-section (2) of section 51(A) provides for serving a statement, instead of a notice, containing the details of taxes not paid etc. for subsequent periods provided the grounds relied upon are the same as mentioned in the notice issued under sub-sec. (1).
Before issue of notice under sub section (1) or a statement under sub section (2), a person chargeable with tax, shall have an option to pay the amount of tax along with interest, ascertained either on his own or informed by the proper officer, and on such payment, no notice shall be issued with respect to the tax so paid. No penalty is also leviable in such cases. [Sub sec. (3)]. However, this does not preclude the proper officer to proceed to issue the notice where the amount paid under sub section (3) falls short of the amount actually payable. Where the person to whom a notice has beenunder sub section (1) issued, pays the tax along with interest within 30 days of issue of notice, no penalty shall be payable and all proceedings in respect of such notice shall be deemed to be concluded.
Where any person to whom a notice under sub section (1)or statement under sub sec.(2) issued do not come forward to pay the tax along with interest , the proper officer shall proceed to determine the amount of tax, interest and penalty, after considering representation, if any, made by such person and issue an order within the time limit prescribed under sub section (7) i.e. within 3 years from the due date or the actual date, whichever is earlier, for filing of Annual Return for the year to which such short paid tax or input tax credit or erroneous refund relates. Unlike the existing provisions under central laws which provide separate time limit for issue of notice and issue of an adjudication order, the Model GST Law provides a combined time period of 3 years both for issue of notice and issue of adjudication order in cases involving no suppression.
(ii) Determination of tax where fraud, willful-misstatement or suppression of facts involved
Where any tax has not been paid or short paid or erroneously refunded, or the input tax credit has been wrongly availed or utilised involving fraud or willfulmisstatement or suppression of facts to evade tax, the proper officer is required to issue a notice of demandunder sub-sec. (1) of sec. 51(B), to the person chargeable with tax to show cause why he should not pay the amount specified in the notice along with interest and penalty. Sub-section (2) of section 51(B) provides for serving a statement, instead of a notice, containing the details of taxes not paid etc. for subsequent periods provided the grounds relied upon are the same as mentioned in the notice issued under sub-sec. (1).
Before issue of notice under sub section (1) or a statement under sub section (2), a person chargeable with tax, shall have an option to pay the amount of tax along with interest and fifteen percent penalty, ascertained either on his own or informed by the proper officer, and on such payment, no notice shall be issued with respect to the tax so paid.However, this does not preclude the proper officer to proceed to issue the notice where the amount paid under sub section (3) falls short of the amount actually payable. Where the person to whom a notice has beenunder sub section (1) issued, pays the tax along with interest with twenty five percent penalty within 30 days of issue of notice all proceedings in respect of such notice shall be deemed to be concluded.
Where any person to whom a notice under sub section (1)or statement under sub sec.(2) issued do not come forward to pay the tax along with interest and penalty , the proper officer shall proceed to determine the amount of tax, interest and penalty, after considering representation, if any, made by such person and issue an order within the time limit prescribed under sub section (7) i.e. within 5 years from the due date or the actual date, whichever is earlier, for filing of Annual Return for the year to which such short paid tax or input tax credit or erroneous refund relates. The Model GST Law provides a combined time period of 5 years both for issue of notice and issue of adjudication order in cases involving suppression.Where any person served with an order issued under sub-section (6) pays the tax along with interest and a penalty equivalent to fifty percent of such tax within thirty days of the communication of order, all proceedings in respect of the said tax shall be deemed to be concluded.
(iii) General provisions relating to demand of tax
Where the service of notice or issuance of order is stayed by an order of a Court or Tribunal, the period of such stay shall be excluded in computing the period of three /five years. Where any Appellate Authority or Tribunal or Court holds that the notice issued under sub-section B (1) or B (2) is not sustainable for the reason that the charges of fraud or any wilful mis-statement or suppression of facts to evade tax has not been established,the proper officer has to determine the tax payable for the period of three years, deeming as if the notice were issued under sub-section A (1) or A .
Personal hearing to be granted where a request is received in writing from the person chargeable with tax or penalty, or where any adverse decision is contemplated against such person. On sufficient cause being shown by the person issued with notice, the proper officer may grant adjournment of hearing for a maximum number of 3 times.
The proper officershall set out the relevant facts and the basis of his decision. Under no circumstances, the amount of tax, interest and penalty demanded in the order shall be in excess of the amount specified in the notice and no demand shall be confirmed on grounds other than the grounds specified in the notice.
Where the Appellate Authority or Tribunal or Court modifies the amount of tax determined by the proper officer, the amount of interest and penalty shall stand modified accordingly, taking into account the amount of tax so modified.Interest on the tax short paid or not paid shall be payable whether or not specified in the order determining the tax liability.
The Model GST Law provides for deemed conclusion of the adjudication proceedings if the order is not issued within three years as provided for in sub-section A (7) or within five years as provided for in sub-section B (7).