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What action is taken for recovery of GST tax in India?

Introduction

The GST department has faced a lot of times a situation where the tax dues are not paid correctly by the taxpayers, mostly inadvertently and sometimes deliberately also. Therefore, the GST tax department has come up with a solution for the same.

To minimize the inadvertent shortage of tax payments, the concept of ‘Outward supplies’ of suppliers with the details of ‘Inward supplies’ of recipients has been introduced in the GST Act. Not only this, but the self-assessed tax has to be paid before the due date, and where there arises failure, the Input Tax Credit (ITC) shall not be available to customers and also the taxpayer will be unable to file any returns of GST in the future.

With the help of this, there appears less mismatch in the payment of taxes which in turn also works as a self-policing system.

Consequence of not filing GST Returns

Primarily, the law provides a great opportunity for taxpayers to either make payment of tax with interest or be liable to pay with a nominal penalty. To make it more clear, the penalty depends on the nature of the offense. And this opportunity is given before the issuance of Notice and emphatically stipulates that in all such cases, no Notice shall be issued and consequently there shall be no other consequences for any default.

However, this is not the end of the road and there is another chance to discharge tax and interest liability with nil or nominal penalty (depending on the nature of offense) within 30 days of issuance of the Notice and the law provides that all proceedings in respect of the said Notice shall be deemed to be concluded. If it becomes inevitable to issue a show cause notice and thereafter pass an Order, the GST Act ensures the timely completion of all these procedures by providing a fixed timeline for issuance of notice and order as follows:

1. In Normal Cases

Time for issuance of NoticeWithin 2 years and 9 months from the due date of filing Annual Return for the Financial Year to which the demand pertains or from the date of erroneous refund
Time for issuance of OrderWithin 3 years from the due date of filing of Annual Return for the Financial Year to which the demand pertains or from the date of erroneous refund

2. In Fraudulent Cases

Time for issuance of NoticeWithin 4 years and 6 months from the due date of filing of Annual Return for the Financial Year to which the demand pertains or from the date of erroneous refund
Time for issuance of OrderWithin 5 years from the due date of filing of Annual Return for the Financial Year to which the demand pertains or from the date of erroneous refund

3. Any amount collected as tax but not paid

Time for issuance of NoticeNo time limit
Time for issuance of OrderWithin one year from the date of issue of notice

4. Non-payment of self-assessed tax

Time for issuance of NoticeNo need to issue a show cause notice. Recovery proceedings can be started directly.
Time for issuance of OrderPenalty, @ 10% of the Tax amount or Rs. 10,000/-, whichever is higher, shall also be payable if the period of non-payment exceeds 30 days from the due date of payment of tax

In order to ensure timely disposal of cases, the GST Act make sure by further providing that if the Order is not issued within the time limit of three to five years, as the case may be, adjudication proceedings shall be deemed to be concluded.

All in all, if the tax dues and other amounts remain unpaid, despite these beneficial provisions, and the tax payer fails to pay the dues after the orders are passed and the statutory limit of 3 months is over, then the proper officer may initiate recovery proceedings. These recovery provisions under the CGST Act, 2017 lay down a well-defined procedure which is as follows:

Provision of Recovery Proceedings

  1. Any amount payable, in pursuance to any order passed in this matter, is required to be paid within 3 months from the date of receipt of the order and the taxpayer should pay the same within this time limit. However, it may be mentioned that in certain cases, considering the interest of revenue, this period of 3 months may be reduced.
  2. If the payable amount is not paid within the specified time limit of 3 months then recovery proceedings shall be initiated and various actions may be taken by the recovery officer, for the realization of Government dues. The options for recovery of Government dues include deduction of money from any amount payable to such taxpayer, by detaining and selling any goods, by directing any other person from whom the money is due to such person, attaching any property belonging to the defaulter etc.
    However, considering various business aspects, the provisions for payment of all such amounts, other than self-assessed tax, in installments have also been made in the Act. A person can avail this benefit of payment in instalments, by making an application to the Commissioner by specifying reasons for such request. On receipt of application, the Commissioner may allow the payment of amount in instalments, subject to maximum 24 monthly instalments and on payment of applicable interest. Here it may be noted that if there is default in payment of any one instalment then the whole outstanding balance shall become due and payable immediately.

Conclusion

Looking at the above-mentioned provisions, it is evident that a sufficient amount of opportunities to amend and discharge tax liabilities are given to the GST taxpayers when they do not file their GST returns.

That was all about the recovery of GST tax in India. Hope you gained knowledge as to how the GST department can avail the GST tax from you if you do not file GST or pay less amount of GST to the department. So, be file your GST Returns carefully and avoid getting into trouble.

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