How to Effortlessly Check Validity of GST SCN & Orders

Verifying the legitimacy of issued Show Cause Notices and Orders under GST holds utmost importance within the sphere of tax compliance. This article explores the importance of closely examining these documents, bringing attention to essential aspects of the CGST Act, 2017.

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What is the Need to Verify the Served Show Cause Notice and Order Validity

• The ineffective service of any notice, order, or communication must be questioned in the initial stage of the adjudication to prove the invalidity of the assessment proceedings
• The assessment proceedings will not be acknowledged invalid when-
  • The taxpayer has acted on the certain notice, order or communication, or
  • The service has not been called in question at or in the former proceedings started, continued, or finalized concerning the mentioned notice, order, or communication
• Legal Provision: Section 160(2) of CGST Act, 2017

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A. Deadline for Issuing the Show Cause Notice Under GST

For the case concerned with Section 73: The case concerned other than fraud or any willful misstatement or suppression of facts.

• Show Cause Notice under section 73 shall be issued at least 3 months before the time limit defined for issuance of the order.
• The appropriate office must issue an order under section 73 within three years from the due date of furnishing the annual return for the relevant financial year or the date of the erroneous refund, whichever is later.
• For the FY 2018-19 and 2019-20, the time limit for issuing an order concerning show cause notice under section 73 has been fixed as undermentioned vide Notification No. 56/2023- Central Tax dated 28-12-2023.

• Legal Provision:
  • Section 73(2)
  • Section 73(10)

For the case related to section 74- The cases concerned with bogus activities or any willful misstatement or suppression of facts

• The show cause notice under section 74 will be issued at least 6 months before the time limit mentioned for the order issuance.
• The relevant office is obligated to issue an order under section 74 within five years from the due date of furnishing the annual return for the corresponding financial year or within three years from the date of an erroneous refund, whichever comes later.
• Legal Provision:
  • Section 74(2)
  • Section 74(10)

B. Proof of Authenticity of Orders, Notices and Certificates

1. Under Rule 26(3), all notices, certificates, and orders will be issued electronically via:

• Digital signature certificate, or
• Through e-signature as specified under the provision of the Information Technology Act,2000 (21 of 2000), or
• Any other mode of signature or verification as notified by the Board.

2. Case Laws Reference:

Railsys Engineers Pvt. Ltd. vs. Addl. Commr. of CGST (Appeals-II) 2022 (65) G.S.T.L. 159 (Del.)

C. SCN & Order for Show Cause Must be Issued, Along with a Summary in Forms DRC-01 and DRC-07

1. Under Rule 142(1)(a), the proper officer is required to electronically serve a summary of the notice using Form GST DRC-01 along with the Notice.
2. Following Rule 142(5), an electronic upload of the summary of the order in FORM GST DRC-07 is mandated, specifying the amounts of tax, interest, and penalty as prescribed.
3. Case Law Reference:
   • M/s Shyam Baba Edible Oil vs Chief Commissioner in W.P. No. 16131 of 2020 dated 19/11/2020.
   • Shri Tyres vs State Tax Officer (Madras High Court) in W.P. No. 19756 of 2021 dated 21/09/2021.

D. Generation and Specifying the Document Identification Number (DIN)

• Circular No. 122/41/2019-GST from the board stipulates that, as of November 8, 2019, no officer under the Board shall issue any search authorization, summons, arrest memo, inspection notices, or letters in the course of an inquiry to a taxpayer or any other person without prominently quoting a computer-generated Document Identification Number (DIN) in the body of such communication.
• Thus, officials must quote DIN No. in each communication.

E. Order Must be Aligned with Show Cause Notice

As per Section75(7) of CGST Act, 2017:

• The order should not demand an amount of Tax, Interest, and Penalty that exceeds the amount specified in the notice.
• Additionally, the confirmation of any demand should be based solely on the grounds specified in the notice.

F. Opportunity of Being Heard

According to Section75(4) of CGST Act, 2017, the opportunity of hearing shall be granted as cited:

• Where the request is obtained in writing from the person levied to tax or penalty, or
• Where any adverse decision is contemplated against such person.

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G. Non-Speaking Order

1. As per Section 75(6) of the CGST Act, 2017, an order issued via the proper officer will set out the pertinent facts and basis of his decision.
2. That order issued must be a speaking order that includes the basis to charge the Tax, Interest, and Penalty. Conclusion:

Closure: Reviewing Show Cause Notices and Orders is crucial in ensuring compliance with the CGST Act, 2017. From adhering to time constraints and legal provisions to verifying authenticity and alignment, a thorough grasp of these intricacies is essential for a solid approach to tax-related processes.

This in-depth examination functions as a valuable resource for businesses and professionals manoeuvring through the complex terrain of taxation, fostering transparency and compliance with statutory regulations.