Ready to receive Show Cause Notice under GST

October 22, 2021 By newtaxindia Off

The last dates of filing of the Annual Return under Section 44 of the Central Goods and Services Tax Act, 2017 (CGST Act, 2017), for the Financial Years 2017-18, 2018-19 & 2019-20 were as under:

Sr. No. PeriodLast date to file Annual Return
12017-1805th & 7th February, 2020 (Notification No. 06/2020-Central Tax, dated 03.02.2020)
22018-1931st December, 2020 (Notification No. 80/2020-Central Tax, dated 28.10.2020)
32019-2031st March, 2021 (Notification No. 04/2021-Central Tax, dated 28.02.2021)

Section 73 and 74 of CGST Act, 2017 deals with determination of tax liability and adjudication of case in respect of normal and fraud/ suppression case respectively. The Proper Officer shall issue notice at least three months prior to passing an order within stipulated period mentioned in sub-section (10) of Section 73/74 of CGST Act, 2017. Further, under Section 73(10) of CGST Act, 2017, the order shall be passed within 3 years from the due date of furnishing of annual return for the financial year (‘FY’) 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. Also, under Section 74(10) of CGST Act, 2017, the order shall be passed within 5 years from the due date of 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 five years from the date of erroneous refund.

It is pertinent to note that the Board has made a detailed analysis to pursue trends in cases of GST evasion & fraudulent ITC availment booked viz-a-viz number of SCNs issued against for the FY 2017-18 [w.e.f. July, 2017], 2018-19 & 2019-20, have been made and it is observed that in GST evasion cases booked and in the Fraudulent ITC cases booked, during the above-mentioned period, SCNs have been issued only in few cases. As the last date for filing the Annual Returns for FYs of 2017 -19, 2018-19 & 2019-20 is already over, therefore, the time limit of 3 years/5 years for issuance of orders under Section 73 & 74 of CGST Act, 2017 has already kicked in.

In this respect, Board has issued an Instruction No. 02/2021-22 [GST-Investigation] dated 22nd September, 2021 to Principal Director General/Director General(s) /Principal Chief Commissioner(s)/Chief Commissioner(s) that they, within their jurisdiction, may take stock of pending investigation cases/other cases which warrant issuance of show cause notices and take appropriate action to ensure timely completion of investigation(s) and issuance of SCNs well before the last date.

The Board examined that if the issuance of SCNs is pushed to close proximity of the end dates/last dates, it may leave very little time with the adjudicating authority to pass orders within stipulated period mentioned in sub-section (10) of Section 73/74 of CGST Act, 2017. This might result in a situation where either the adjudicating authority is not able to pass orders within prescribed time period or quality of adjudication suffers. It is felt that the present situation warrants for extra efforts on the part of filed formations and strict monitoring at supervisory level.