Recovery of demand through adjustment with refund claim when the appeal period of said demand not yet over.

[Shashi Thakur]

Please let us know whether the Department as per GST Act can recover the confirm demand either in the form of adjustment with assessee’s refund claim or any other way, when the period to appeal against the said demand is yet to expire.

If no, how the demand being reflected in the GST Portal be “by-passed/ ignored” to sanction the full refund

[KASTURI SETHI]

In this scenario, such demand is not in letter and spirit of GST Laws. It is the result of disharmony between Common Portal System and GST Acts. It is unconstitutional. The matter should be brought to the Notice of jurisdictional Commissioner and Nodal Officer, GSTN.

[Amit Agrawal]

Kindly see sub-section 10 of Section 54 of the CGST Act, 2017, which reads as under:

"Where any refund is due ⁷[****] to a registered person who has defaulted in furnishing any return or who is required to pay any tax, interest or penalty, which has not been stayed by any court, Tribunal or Appellate Authority by the specified date, the proper officer may-

(a) withhold payment of refund due until the said person has furnished the return or paid the tax, interest or penalty, as the case may be;

(b) deduct from the refund due, any tax, interest, penalty, fee or any other amount which the taxable person is liable to pay but which remains unpaid under this Act or under the existing law.

Explanation.––For the purposes of this sub-section, the expression “specified date” shall mean the last date for filing an appeal under this Act."

In view of above provision, Dept. sought to give you other eligible refund-claim in your situation.

I am not sure if I understood what is real problem and valid legal reasons behind such problem (if any), which you facing. May you please elaborate.

These are ex facie views of mine and the same should not be construed as professional advice / suggestion.

[KASTURI SETHI]

No coercive step can be taken until and unless appeal period is over. There is no doubt about it.

[Shilpi Jain]

Agreed. Recovery cannot happen before expiry of the appeal period.

AI Summary

GST Department Can't Adjust Confirmed Demand with Refund Before Appeal Period Ends, Violates Section 54(10) CGST Act 2017. A query was raised about whether the GST Department can recover a confirmed demand by adjusting it with an assessee's refund claim before the appeal period expires. Responses indicated that such recovery is not in line with GST laws and is seen as unconstitutional due to discrepancies between the Common Portal System and GST Acts. It was suggested to notify the jurisdictional Commissioner and Nodal Officer, GSTN. According to Section 54(10) of the CGST Act, 2017, the department can withhold or deduct refunds if the taxpayer has outstanding liabilities. However, coercive recovery actions are not permissible before the appeal period ends.