GST AUDIT U/S 65 AND SHOW CAUSE U/S 73

[BARUN MUKHERJEE]

Respected Sir,

Department has already conducted GST Audit u/s 65 and ADT-2 was issued accordingly for the F.Y. 2018-19 to 21-22. As per audit observation the taxpayer has already paid the tax along with applicable interest and penalty. Now Jurisdiction office has sent show cause notice u/s 73 for the F.Y. 2020-21. Is there any provision or notification by which proceeding u/s 73 can be dropped.

[KASTURI SETHI]

What is the date of issue of the SCN ?

What is the date of payment of tax and interest  ?

[BARUN MUKHERJEE]

Respected sir, SCN is issued on 25/11/2024 and tax along with interest and penalty has already been paid through DRC-03 ON 31/07/2024.

[KASTURI SETHI]

(i) The SCN was not required to be issued under Section 73. However, now the purpose of SCN is meant for only confirmation of demand, interest and penalty.

(ii) You were not required to pay penalty as you deposited due tax along with interest much before the issuance of the SCN. Section 73 (8) does not require to pay penalty. As per Sub-Section 8 all proceedings shall be concluded without payment of penalty.

(iii) Now reply to the SCN has to be filed within stipulated period and while filing reply you must contest the penalty and request for relief i.e. refund of penalty.

(iv) My reply is relevant only if all facts have been disclosed truly and correctly.

[Shilpi Jain]

Can the amount paid be appropriated by the department without issuing SCN? What happens to the other years where SCN is not issued (other than 20-21)

[BARUN MUKHERJEE]

Respected Shilpi Mam, 

Taxpayer has already paid the tax along with applicable interest and penalty u/s 74 as per audit observation before issuance of SCN for the F.Y. 2018-19 to 21-22. Mam for your further information no SCN was issued for those F.Y. other than 20-21.

[KALLESHAMURTHY MURTHY K.N.]

Dear sir,

The query is incomplete. Whether the notice was issued u/s 73 or 74, Pl, specify. Whether the SCN was issued by the same authority and on the same issue.  Sometimes, it happens with the department due to duplication of assignments to different Officers. Even once the audit u/s 65 is completed, Sec. 73 or 74 can also be invoked for any issues that remain non-complined or any other issues found subsequently.

[KASTURI SETHI]

I concur with the following view of Sh.Kallashamurhy Murthy, Sir.

"Even once the audit u/s 65 is completed, Sec. 73 or 74 can also be invoked for any issues that remain non-complied  or any other issues found subsequently".

AI Summary

GST penalty relief where tax and interest were paid before notice, contest penalty and seek refund or adjustment. A show cause notice under the tax determination provisions issued after audit may be merely confirmatory where the taxpayer has already paid the tax and interest; if payment of tax and interest preceded the notice, proceedings are to be concluded without imposing penalty, and the taxpayer should reply contesting penalty and seek refund or appropriate adjustment while ensuring all facts are fully disclosed.