The Delhi GST Department has recently issued important instructions (F.3/432/GST/Policy/2023/1048-1053 dated October 31, 2023) concerning the scrutiny of GST Returns for the Financial Year 2017-2018.
As per the aforementioned subject, show cause notices (SCNs) have been issued by the Proper Officer for the year 2017-18. A period of 30 days is provided to taxpayers to file a reply/representation in response to the SCN under sub-section (8) of Section 73 of the Delhi Goods and Services Tax (DGST) Act, 2017. Moreover, as per Sub-section (4) of Section 75 of the DGST Act, a personal hearing must be provided before passing any adverse order.
It has come to notice that in certain cases, GST Show Cause Notices (SCNs) have been issued setting up a date for a personal hearing before the expiration of the 30 days. It is hereby clarified that holding personal hearings before filing a written reply/representation would not be considered a useful purpose.
Furthermore, there have been instances where show cause notices (SCNs) have been issued highlighting specific discrepancies that were already addressed through previous notices in FORM GST ASMT-10, and the related proceedings were concluded by providing information in Form GST ASMT-12. Similarly, when audit proceedings have been finalized, it would not be suitable to re-examine matters that have already been resolved or dismissed under Section 61 of the DGST Act or have been settled during the audit process.
To ensure compliance by all concerned, the following clarifications are issued:
- If show cause notices (SCNs) have been issued even after the completion of audit proceedings, they should be withdrawn by following the necessary actions based on the audit report.
- In cases where SCNs have been issued after the completion of scrutiny of return proceedings, they should be withdrawn for the subject matter or issues that have already been addressed in previous proceedings, after thorough verification and recording of reasons.
- When it comes to reversing Input Tax Credit (ITC), the Proper Officer must carry out the due verification of the usage of input for taxable/non-taxable supplies, non-business or personal purposes, or exempt supplies.
- In cases where SCNs have been issued based on HSN/SAC Codes or transactions carried out with cancelled taxpayers, the Proper Officer should carefully examine relevant facts and supporting records to make decisions on a case-by-case basis, following the law.
- The Proper Officer should give a chance for a personal hearing to the taxpayer once they have submitted a reply/representation or after the expiration of the 30-day period, whichever is applicable. It is essential to provide the taxpayer with a personal hearing before issuing any adverse order under Section 75(4).
- The proceedings of the personal hearing should be properly documented and recorded by the Proper Officer.
- If the Proper Officer becomes aware that a notice should be withdrawn, they may drop the proceedings without requiring written submissions or a personal hearing, provided reasons are recorded. This decision should be based on the facts and content of each specific case.
- Whenever applicable, the taxpayer must be promptly informed about the withdrawal of proceedings.
Read Also: CBIC GST Instruction No. 02/2023 on SOP for Scrutiny of Returns
All Proper Officers must strictly comply with the legal provisions and relevant guidelines/circulars in this matter. Non-compliance will result in strict action. Furthermore, it is crucial to ensure that no harassment is caused to any taxpayer and that the department receives the due tax amounts in a fair manner.
