TaxTMI 
TaxTMI 
TaxTMI 
"Rule 88C" - A tool or Weapon?
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....Rule 88C" - A tool or Weapon?<br>By: - Navjot Singh<br>Goods and Services Tax - GST<br>Dated:- 4-7-2023<br><br>The Goods and Service Tax Network (GSTN) recently released an Advisory on June 29, 2023, regarding the online compliance related to the liability or discrepancies found in R1 - R3B (DRC-01B). However, it is crucial to familiarize ourselves with the underlying context of this form. 48th....
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.... Council Meeting * The 48th Council Meeting commenced with a discussion of the Recommendation put forth by the Law Committee. * After extensive deliberation, the Committee suggested the inclusion of a novel Rule 88C in the CGST Rules of 2017. * This rule aims to notify taxpayers via the portal about the disparity between their tax liabilities in FORM GSTR-1 and FORM GSTR-3B for a given tax p....
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....eriod, particularly if the former exceeds the latter by a significant margin. * Moreover, the Law Committee proposed the addition of a new clause (d) in sub-rule (6) of Rule 59 within the CGST Rules of 2017. * This clause would empower the authorities to block the submission of GSTR-1 for subsequent tax periods until the taxpayer settles the amount specified in the notification or provides a r....
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....esponse elucidating the reasons for any outstanding dues. * Further, Law Committee recommended the insertion of a new clause (d) in sub-rule (6) of Rule 59 of CGST Rules, 2017 to enable the blocking of GSTR-1 for a subsequent tax period unless the taxpayer has deposited the amount specified in the intimation or has furnished a reply explaining the reasons for any amount remaining unpaid. Rule 8....
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....8C * Following due process, the rule was officially introduced through NOTIFICATION No. 26/2022 - Central Tax, issued on the 26th of December 2022. Consequently, Part A of Form DRC-01B will be issued if the tax payable indicated in GSTR-1 surpasses that in GSTR-3B. (Not every time, but if exceeds a certain % specified) The taxpayer is then required to do either. * remit the differential tax l....
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....iability, along with interest as per section 50, via FORM GST DRC-03 or * Pay the variance in tax payable on the common portal within a span of 7 days. Curiously, failing to respond within the stipulated period allows the authorities to recover the outstanding amount using Section 79 as the governing provision for recovery. Functionality active on GSTN Portal * In an advisory issued on the 2....
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....9th of June 2023, it was announced that the functionality for issuing Part A of DRC-01B is now active on the GSTN Portal. * The detailed procedure can be accessed through the following link: https://tutorial.gst.gov.in/downloads/news/return_compliance_in_form_drc_01b.pdf Our 2 Cents In our analysis, we observe that the government has bestowed tax officers with yet another tool, given that the ....
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....measures initiated under Rule 99 through the issuance of ASMT did not yield favorable outcomes for them. * Notably, Rule 59(6) of the CGST Act, 2017 was also introduced via Notification No. 26/2022 - Central Tax on the 26th of December 2022. This implies that non-responsive taxpayers may face a block on their GSTR-1 submission. We hope that the restriction and applicability of the rule of for pr....
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....ospective periods only. * The Intent of Rule 88C is from Section 79, which states that liability is shown in GSTR-1 (S.37) but not in GSTR-3B (S.39) such self-assessed tax can be recovered through Section 79 {88C(3)}. The rule provides an alternate resolution to address discrepancies highlighted in return mismatch notices dispatched through ASMT-10 (Rule 99), which are followed by proceedings u....
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....nder Section 73/74. Thus, it would be prudent to say that Rule 88C appears to bypass Section 73/74 proceedings. Could it be considered a more optimal course of action to address the disparities arising from the reconciliation of GSTR-1 and GSTR-3B? We have observed instances where officials have adopted stringent positions, leading to unwarranted requisitions, even for minor concerns. * Now, the....
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.... procedure does not straight away direct recover the amount but provides an opportunity to submit a response in Part -B of DRC-01B. But with a mere 7-day window stipulated, the initiation of Section 79 seems imminent. If the government intends to automate error detection and preempt the need for ASMTs, then why such a brief and stringent provision? Will recoveries initiated under Rule 88C withstan....
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....d judicial scrutiny? Considering the language of the rule, it is advisable to file returns with utmost diligence. In case any discrepancies exist, it is prudent to prepare a reconciliation to address the same. While the rule specifies that DRC-01B will only be issued in the event of a difference exceeding the "Specified %" threshold, it is better to exercise caution as prevention is sup....
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....erior to cure. Author may be reached at [email protected]<br> Scholarly articles for knowledge sharing by authors, experts, professionals ....