NOTICE U/S 74(5) FOR THE CURRENT F.Y., Goods and Services Tax - GST

[Renju Joy]

I have missed to show reverse charge on inward supplies in GSTR 3B for the month of June 2019.

Now I have received a notice dated 29.02.2020 u/s 74(5) for this non payment. Am I able to show this in the GSTR 3B of Feb, which is pending to be filed or should I pay the tax along with penalty and interest through DRC-03.

Thanks & Regards.

Posts / Replies

[Ganeshan Kalyani]

When no reply received, notice must have issued by the department. When the department issued notice u/s 74 i.e. short paid not paid tax willfully then even if the absence of willful intention of evading tax is proved the notice remains to be issued u/s 74. Then the provision 17(5) comes into play and input tax credit may be denied. It simply states any tax paid u/s 74.

[KASTURI SETHI]

Sh.Ganeshan Kalyani Ji,

First of all I am grateful to you for your intervention. You have done in-depth study of the issue. Section 74 must not have come into play. It is beyond doubt that this lapse is detection of the department. Even if a simple letter is issued or a visit is made by the GST officer in the premises of the assessee or records are called for by the GST Officer for scrutiny by way of a letter or summons, it amounts to detection by the department. Moreover, as per records, the element of mens rea with an intent to evade tax is present. All these factors led to issuance of notice under Section 74. This is how the assessee has missed the bus which was comfortably leading to his destination. Now the 'benefits' of Section 73 are not available.

[KASTURI SETHI]

Sh.Ganeshan Kalyani Ji,

With reference to your views at serial no. 15 above, you are right. The querist has mentioned in his query that he has missed the details of RCM in GSTR 3B for June, 2019. This amounts to mis-declaration as well as concealment from the department. That is why notice has been issued under Section 74 and not under Section 73. The department is correct de jure. Thus the party has contravened which has become foundation for these proceedings. Hence the jugglery of words will not click.

This is my response to your views and not prejudiced and should be read with healthy spirit.

[YAGAY andSUN]

Let Department Decide this matter. It Tax is payable, then, it should be paid accordingly along with Statutory Interest. Prayer should be made for waiver of any penalty.

[Ganeshan Kalyani]

Sri Kasturi Sir, I agree with you.

[KASTURI SETHI]

Chances are bleak.

[Renju Joy]

Department has issued notice under section 74(5) for mere delay in payment of reverse charge.The credit for reverse tax paid in a month can be availed for the subsequent month and can be set off against the tax dues as provided in sub section 62 (b) of section 2 of the CGST Act. Had there been any reverse tax liability in a return period and remitted the same could have been taken credit in the subsequent return period, in such a situation there is no loss of revenue to the department in any manner, that being the procedure, the only omission caused from my part is reverse tax was not remitted as and when due and subsequently credit was not availed.Why was notice issued under sec.74 and not 73?

[CSSANJAY MALHOTRA]

Mr. Renju,

Show the tax liability alongwith interest in forthcoming GSTR-3B to be filed and avail the tax credit. RCM is Revenue Neutral and does not amount to suppression of facts, .....Don't make any payment for penalty. In RCM, department does not stand to loose revenue if you are eligible for ITC.

It's on the department to establish that provisions of Section 74 of CGST applies in your case and if you have recorded transactions in accounting books, no suppression. Mere notice from department does not amount to fraud, suppression. Department in majority of cases have tendency to issue letter u/s 74(5) of CGST Act and they failed to establsih same in higher courts.

We should understand what exactly Section 74 in context with section 17(5) of CGST Act refers to. Nothing has been concluded or agreed upon by you at this stage as to contravention of Section 74. You pay tax and avail ITC, catera of citations are available of higher courts.

[SHARAD ANADA]

GUJARAT HIGH COURT

M/S. CERA SANITARYWARE LIMITED VERSUS STATE OF GUJARAT & 1 OTHER (S) = 2020 (7) TMI 445 - GUJARAT HIGH COURT

 

[KASTURI SETHI]

A notice issued under Section 74(5) of CGST Act to any tax payer is a matter of grave concern. The department does not issue such notice without any basis. The charge of fraud, suppression etc. with an intent to evade tax whether it is by way of notice or show cause notice should not be taken lightly by any person. Such notice is an opportunity to deposit Govt. dues and settle the matter at the first stage.

[CA Seshukumar]

Honerable High Court has cleared mentoned that it is just a notice and whch is upto the petitioner to give weightage or not. if not given then Department may issue actual notice i.e SCN under sec.74(1). hence if any assessee pays tax upon being served any notice under 74(5) will not have any serious actions that are envisaged under Sec.17(5).

[KASTURI SETHI]

I agree with Sh.Seshu Kumar CA. Correctly understood and expressed.

[KASTURI SETHI]

In continuation of above , but if paid under Section 74 (5) ITC will not be allowed.

[Ganesh Pawle]

Buying dealer has got valid tax invoice, e way bills, transport receipts, goods actually received. All payments including tax has also been paid by account payee cheques. The supplier has also filed GSTR 3B. Buyer is not involved in any kind of fraud in the transaction. Department has cancelled the registration of supplier retrospectively and issued notice under section 73(5) and 74(5). What is the remedy available to the buyer? and what are the case laws to defend?.

[SHARAD ANADA]

Notification No. 79 /2020 – Central Tax New Delhi, the 15th October, 2020

In the said rules, in rule 142, in sub-rule (1A), (i) for the words “proper officer shall”, the words “proper officer may” shall be substituted;

(ii) for the words “shall communicate”, the word “communicate” shall be substituted.

So now it is not mendatory for proper officer to issue Notice in Form DRC 01 before show-cause notice.