Legal Analysis on the Consequence of Non-Filing of Declaration under Annexure VII for FY 2025–26 under Notification No. 08/2025 – Central Tax (Rate)
Pursuant to the amended provisions brought into force with effect from 01.04.2025 vide Notification No. 08/2025 – Central Tax (Rate), a revised definition of the term “specified premises” has been introduced, which applies inter alia to establishments engaged in the provision of accommodation and restaurant services. In accordance with the procedural framework prescribed thereunder, any registered person intending to operate as a “specified premises” for the financial year 2025–26 is mandatorily required to furnish a declaration in the prescribed form (Annexure VII) to the jurisdictional proper officer. The window for filing such declaration was stipulated to commence on 01.01.2025 and conclude on 31.03.2025.
It has been brought to our attention that, owing to an apparent understanding based on FAQ No. 7, the taxpayer in the present case did not file the said declaration, presuming automatic applicability of the “specified premises” status for FY 2025–26 on account of previously having qualified under the earlier regime. However, upon closer scrutiny, FAQ No. 22 categorically clarifies that notwithstanding past status, a fresh declaration is required to be filed within the prescribed period in order to be treated as a “specified premises” under the revised framework applicable from 01.04.2025 onwards. Consequently, non-submission of the declaration within the prescribed timeline renders the taxpayer ineligible to be treated as a “specified premises” for the said financial year.
While it is acknowledged that the taxpayer has continued to discharge tax liabilities at the rate of 18% as applicable to specified premises, it is imperative to note that mere payment of tax at a higher rate does not confer legal entitlement to such classification in the absence of procedural compliance. GST being a self-assessed regime, incorrect application of tax rate due to procedural lapses is not cured by voluntary payment. In the event of audit, assessment, or verification proceedings, the department is well within its authority to deny the benefit of the concessional rate and demand differential tax, citing non-compliance with the mandatory requirement of filing the declaration.
In light of the above, while the procedural default is acknowledged, a potential remedy may lie in submitting a detailed representation before the jurisdictional Principal Commissioner or Chief Commissioner seeking condonation of delay and relaxation from the procedural requirement under residual administrative powers. Such representation must be supported by cogent reasons for non-compliance and documentary evidence of tax payment at 18%, thereby demonstrating bona fide intent and absence of any revenue loss to the exchequer. It must, however, be appreciated that acceptance of such representation is subject to administrative discretion and cannot be claimed as a matter of right.
Alternatively, if no relaxation is granted and the premises are denied specified status, the taxpayer may be required to reclassify the services and, in the event of any adverse order, seek recourse to appellate remedies under Section 107 of the CGST Act, 2017, wherein arguments based on substantial compliance, equity, and absence of unjust enrichment may be urged.
In conclusion, in the absence of a timely filed declaration under Annexure VII, the taxpayer is not eligible to be treated as a “specified premises” for the financial year 2025–26 as per the extant provisions and circular guidelines. While belated filing is not permitted as of right, the taxpayer may seek administrative leniency by way of a formal representation, failing which, the matter will have to be pursued through appellate channels if any consequential demand is raised by the department.
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