9911796707
TMI Blog"Rule 88C" - A tool or Weapon?X X X X Extracts X X X X X X X X Extracts X X X X ..... "Rule 88C" - A tool or Weapon? X X X X Extracts X X X X X X X X Extracts X X X X ..... h Council Meeting * The 48th Council Meeting commenced with a discussion of the Recommendation put forth by the Law Committee. * After extensive deliberation, the Committee suggested the inclusion of a novel Rule 88C in the CGST Rules of 2017. * This rule aims to notify taxpayers via the portal about the disparity between their tax liabilities in FORM GSTR-1 and FORM GSTR-3B for a given tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... period, particularly if the former exceeds the latter by a significant margin. * Moreover, the Law Committee proposed the addition of a new clause (d) in sub-rule (6) of Rule 59 within the CGST Rules of 2017. * This clause would empower the authorities to block the submission of GSTR-1 for subsequent tax periods until the taxpayer settles the amount specified in the notification or provides a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... response elucidating the reasons for any outstanding dues. * Further, Law Committee recommended the insertion of a new clause (d) in sub-rule (6) of Rule 59 of CGST Rules, 2017 to enable the blocking of GSTR-1 for a subsequent tax period unless the taxpayer has deposited the amount specified in the intimation or has furnished a reply explaining the reasons for any amount remaining unpaid. Rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 88C * Following due process, the rule was officially introduced through NOTIFICATION No. 26/2022 - Central Tax, issued on the 26th of December 2022. Consequently, Part A of Form DRC-01B will be issued if the tax payable indicated in GSTR-1 surpasses that in GSTR-3B. (Not every time, but if exceeds a certain % specified) The taxpayer is then required to do either. * remit the differential tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liability, along with interest as per section 50, via FORM GST DRC-03 or * Pay the variance in tax payable on the common portal within a span of 7 days. Curiously, failing to respond within the stipulated period allows the authorities to recover the outstanding amount using Section 79 as the governing provision for recovery. Functionality active on GSTN Portal * In an advisory issued on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 29th of June 2023, it was announced that the functionality for issuing Part A of DRC-01B is now active on the GSTN Portal. * The detailed procedure can be accessed through the following link: https://tutorial.gst.gov.in/downloads/news/return_compliance_in_form_drc_01b.pdf Our 2 Cents In our analysis, we observe that the government has bestowed tax officers with yet another tool, given that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... measures initiated under Rule 99 through the issuance of ASMT did not yield favorable outcomes for them. * Notably, Rule 59(6) of the CGST Act, 2017 was also introduced via Notification No. 26/2022 - Central Tax on the 26th of December 2022. This implies that non-responsive taxpayers may face a block on their GSTR-1 submission. We hope that the restriction and applicability of the rule of for p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rospective periods only. * The Intent of Rule 88C is from Section 79, which states that liability is shown in GSTR-1 (S.37) but not in GSTR-3B (S.39) such self-assessed tax can be recovered through Section 79 {88C(3)}. The rule provides an alternate resolution to address discrepancies highlighted in return mismatch notices dispatched through ASMT-10 (Rule 99), which are followed by proceedings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Section 73/74. Thus, it would be prudent to say that Rule 88C appears to bypass Section 73/74 proceedings. Could it be considered a more optimal course of action to address the disparities arising from the reconciliation of GSTR-1 and GSTR-3B? We have observed instances where officials have adopted stringent positions, leading to unwarranted requisitions, even for minor concerns. * Now, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e procedure does not straight away direct recover the amount but provides an opportunity to submit a response in Part -B of DRC-01B. But with a mere 7-day window stipulated, the initiation of Section 79 seems imminent. If the government intends to automate error detection and preempt the need for ASMTs, then why such a brief and stringent provision? Will recoveries initiated under Rule 88C withsta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd judicial scrutiny? Considering the language of the rule, it is advisable to file returns with utmost diligence. In case any discrepancies exist, it is prudent to prepare a reconciliation to address the same. While the rule specifies that DRC-01B will only be issued in the event of a difference exceeding the "Specified %" threshold, it is better to exercise caution as prevention is su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perior to cure.
Author may be reached at [email protected] X X X X Extracts X X X X X X X X Extracts X X X X
|
