Invoke the extended period of limitation for the financial years 2017-18 and 2018-19

[vinod jadhav]

Respected Sir,

I require your valuable opinion on the below-mentioned issue. One of my clients has executed a works contract for canal works, serving as a sub-sub-contractor for the F.Y 2017-18 and 2018-19.

Moreover, the department initiated an audit in June 2023, covering the period from April 2017. Below are the specific details of the works contract:

Below are the details of the works contract details;

1. He worked as a sub-sub-contractor within the project.
2. However, he incorrectly claimed a sub-contractor exemption, charging 5% instead of the required 18%.

My questions are:

1. Can the department invoke the extended period of limitation for the financial years 2017-18 and 2018-19, despite the audit commencing in June 2023, and no Show Cause Notice (SCN) being issued within the normal period, i.e., by December 31, 2023?
2. If a demand is raised for the F.Y 2017-18 and 2018-19 under section 74 of the GST Act, can we contest it since there was no suppression of facts? The sales details were already submitted in GSTR-1 to the department and were also provided to the audit party in June 2023.

AI Summary

Debate on Extended Limitation Under Section 74 GST Act for 2017-19: Incorrect Tax Rate & Suppression Issues A discussion on a forum revolves around the applicability of the extended period of limitation under Section 74 of the GST Act for the financial years 2017-18 and 2018-19. A client, a sub-sub-contractor, incorrectly claimed a tax exemption, charging 5% instead of 18%. The audit began in June 2023, and the question is whether the department can invoke the extended period without issuing a Show Cause Notice by December 31, 2023. Opinions vary: some argue that incorrect tax rates imply suppression of facts, while others believe no suppression occurred since details were disclosed. The debate also touches on the necessity of proving intent to evade taxes for Section 74 proceedings.