Time Limit to Issue Notices and Orders Under Section 73 of the CGST Act

Section 73 of the CGST Act, 2017, specifies the timelines for issuing notices and passing orders in cases of non-payment or short payment of tax, without the presence of fraud or willful misstatement. Recent extensions in timelines under notifications (NN) issued by the Central Board of Indirect Taxes and Customs (CBIC) have clarified due dates as follows:

Current Scenario and Issues Faced by Taxpayers

While the timeline for FY 2020-21 extends until 30th November 2024 for issuing notices, many GST officers are preemptively issuing show-cause notices (SCNs) without properly analyzing submissions already made by taxpayers against assessments such as ASMT-10. This approach is raising significant concerns among taxpayers and creating unnecessary hurdles for stakeholders in the GST compliance ecosystem.        

Key Concerns

1. Issuance of Premature or Baseless Notices: Officers, citing the looming deadline of 30th November 2024, are issuing SCNs even when taxpayers have provided sufficient information or explanations. This reflects a lack of due diligence and understanding, potentially penalizing compliant taxpayers.
2. Impact on Taxpayers: Taxpayers are being burdened with the need to respond to repetitive or redundant SCNs, which diverts their resources and disrupts business operations. Even when there is no merit in the notices, taxpayers are compelled to prepare extensive replies or face adverse actions.
3. Pressure on Tribunals and Courts: The issuance of unnecessary SCNs leads to an increase in litigation, as many taxpayers will appeal unreasonable orders passed under Section 73. Tribunals and courts, already dealing with a backlog of cases, will face additional pressure, delaying justice for genuine cases.
4. Waste of Administrative Resources: GST officers’ focus on issuing SCNs without prioritizing substantive issues reflects poor resource utilization. Instead of fostering compliance, it undermines trust in the tax administration.

?Need for Intervention

The issuance of baseless notices and lack of logical application calls for immediate intervention by the Finance Ministry and CBIC.

Some recommendations include:

• Guidance and Training: CBIC should issue clear instructions to GST officers to ensure that SCNs are issued only after thoroughly analyzing the facts and submissions made by taxpayers.
• Audit and Accountability: Regular audits of notices issued by officers should be conducted to identify patterns of non-compliance with procedural fairness.
• The current approach to issuing show-cause notices for FY 2020-21 not only creates undue stress for taxpayers but also places an unnecessary burden on the judicial and administrative ecosystem. A balanced and logical approach is essential to foster trust, reduce litigation, and ensure the effective administration of GST. The Finance Ministry and CBIC must act promptly to address this issue, ensuring that the principles of natural justice and fairness are upheld.

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