Show Cause Notices, Adjudication & Introduction to Appeals under GST

“ADVANCE GST WORKSHOP:
SHOW CAUSE NOTICES, ADJUDICATION &
INTRODUCTION TO APPEALS”
26th May, 2018
PUNEET AGRAWAL
Partner, ALA LEGAL
1

THIS PRESENTATION COVERS
 Correspondence and provision prior to SCN
 Anatomy of SCN: What to look for, How to identify and spot deficiencies.
 Identification of charge(s) and aspects missed
 Reply to SCN: Preliminary Objections and admissions
 Scope of Writ
 Misapplication of facts or law – identify, bring out and substantiate
 Evidence: Contemporaneous Record, affidavit and new evidences
 Adjournment: Discipline, Right & Reasonable Opportunity
 Written Submission, Record of Verbal Submission
 Filing of Appeal
 Pre- Deposit, and effect of non payment on legality of appeal
 Limitation: effect and remedy
 Grounds of Appeal: Drafting & Prayer
2

SHOW-CAUSE NOTICES – ASSESSMENT,
DEMANDS & RECOVERY
(SECTIONS 73-84, RULES 142-161)
3

PRE-ADJUDICATION CONSULTATION
• Section 28 of the Customs Act, 1962, as amended
vide Finance Act, 2018, provides that the proper
officer, before issuance of the show cause notice,
shall hold pre-notice consultation with the
person chargeable with interest/ duty.
• Pre-notice Consultation Regulations, 2018 dtd.
2nd April 2018 have been formulated in this
regard, regulating the manner and procedure
involved in such consultation.
4

ASSESSMENT UNDER GST
(SECTIONS 59 – 64, RULES 98 – 100)
PART - I

ASSESSMENT
• Article 265 of the Constitution of India, 1950.
“Whole process, including levy, computation
process and manner of assessment to be
authorized by law.”
• Wallace Bros & Co. Ltd. v CIT 16 ITR 240, 244
(1948 – Privy Council)
“The assessment order only qualifies the liability
which is already definitely and finally created by
the charging sections.”

ASSESSMENT UNDER GSTASSESSMENTUNDERGST
(CHAPTERXII,S.59–64,
RULE98–100) Self-Assessment (Section 59
CGST)
Registered person shall Self assess
the taxes payable and furnish a
return
Provisional Assessment
(Section 60 CGST)
Registered person unable to
determine value/ tax payable
Assessment of non-filers of
return (Section 62 CGST)
Where a registered person fails to
furnish return despite notice
Assessment of Unregistered
Persons (Section 63 CGST)
Where person liable to register
but unregistered OR cancelled
registration – liable to pay tax
Summary Assessment
(Section 64)
Where sufficient grounds to
believe delay in affects interest of
revenue

SELF ASSESSMENT (S. 59)
Registered
Person
Self Assess the
taxes payable
Furnish a
Return for each
tax period
Quarterly Furnishing of
GSTR-1 – for registered
persons with turnover upto
`1.5 Crore – upto quarter
ending June 2018
Notification 18/2018 – CT

PROVISIONAL ASSESSMENT (S. 60)
Who can request for PA
• Taxable person unable to determine value of goods/ services OR rate of tax
applicable.
How
• Request in writing to proper officer – in FORM GST ASMT – 01.
Responsibility of Proper officer
• Shall issue a notice in FORM GST ASMT – 02 requiring further information, to
which taxable person shall file a reply in FORM GST ASMT-03.
• Shall pass an order within 90 days of receipt of such request – Allowing payment
of tax on provisional basis – under FORM GST ASMT-04.
Condition for allowance
• Execution of bond (in FORM GST ASMT – 05), with surety/ security (not exceeding
25% of bond amount) – binding the person for differential payable amount of tax
as finally assessed.

CONTD…
Final Assessment Order
• Within 6 months (period can be extended by Joint/ Additional Commissioner,
for not exceeding 4 years) from date of communication of order allowing
provisional payment of tax.
Liability to pay interest
• Registered person liable
• Interest on tax payable under Provisional Assessment, but not paid as on due date of return @
(not exceeding) 18%, from the first day after due date till date of actual payment.
Consequential Refund
• Entitled to refund in consequence of the of final assessment order.
• Subject to provisions of refund, interest shall be paid. unjust enrichment would also apply (S.
54(8))
• Interest only after 60 Days of application for refund filed consequent to assessment order

ASSESSMENT OF NON-FILERS OF RETURN (S. 62)
Notwithstanding the contrary provisions of Sections 73, 74
Registered Person Not filed return
Notice under
Section 46
Not filed return
Proper Officer proceed
to assess tax liability –
considering available
material to the best of
his judgment
Issue an assessment
order within 5 years
from furnishing of
annual return to which
the unpaid tax relates
Where the registered person furnishes a valid return within 30 days of service of
the above assessment order, the same shall be deemed to have been withdrawn
but the person shall be liable to pay interest.
FORM GST
ASMT-13

ASSESSMENT OF UNREGISTERED PERSONS
(S. 63)
Notwithstanding the contrary provisions of Sections 73, 74
Taxable Person
Registration has been cancelled
Fails to obtain registration,
despite liability Liable to pay
tax
Proper Officer proceed
to assess tax liability –
considering available
material to the best of
his judgment
Issue an assessment
order within 5 years
from furnishing of
annual return to which
the unpaid tax relates
FORM GST ASMT-14,
FORM GST ASMT-15

SUMMARY ASSESSMENT (S. 64)
“DRAGON PROVISION”
If Proper Officer has evidence
showing tax liability of a
person coming to his notice
WITH permission from the
Additional/ Joint
Commissioner
Proper Officer
proceed to assess
tax liability – to
protect interest of
revenue
Issue an assessment
order if has sufficient
reasons to believe that
delay affects interest
of revenue
Where the taxable
person is not
ascertainable,
liability pertains to
goods
Person in-charge of
the goods –
DEEMED to be
taxable person.
On application made by the taxable person (within 30 days of
order) or if the Additional/ Joint Commissioner considers the
order erroneous – he may withdraw such order and follow
procedure laid down under Section 73, 74.

SCRUTINY OF RETURNS (S. 61)
Proper Officer may scrutinize the return
and related particulars furnished to
VERIFY THE CORRECTNESS OF RETURN
Inform the taxable person and
seek explanation
No discrepancies Discrepancies noticed
Satisfactory explanationSatisfactory explanation not
provided within 30 days (or
period permitted as extended)
OR
After accepting discrepancies
fails to take corrective
measure in return for the
relevant month
No further action
Proper officer initiates appropriate action under
• Section 65, 66 (Audit),
• S. 67 (inspection, search, seizure, arrest) or
• S. 73/ 74 (Demands and recovery).
Notice under FORM
GST ASMT-10
Explanation under FORM
GST ASMT-11
Within 30 days

DEMAND & RECOVERY
(SECTIONS 73 – 84, RULES 142 – 161)
PART - II

REASONS OTHER THAN FRAUD, ETC.
(SECTION 73)
Proper Officer
shall serve
notice to
show cause as
to why he
should not
pay the
amount of tax
as specified
and the
amount of
interest and
penalty as
applicable
Notice under FORM
GST DRC-01
17

Notice by proper officer
• Time Limit: At least 3 months prior to the time limit to pass order (3 years from due date of annual
return, or from date when erroneously refunded).
• Where Notice is served, proper officer may serve a statement containing the details for PERIODS
OTHER THAN THOSE COVERED UNDER THE NOTICE under FORM GST DRC-02.
• This shall be deemed to be service of notice only if the grounds for the tax period in the
statement are covered in the notice served.
Payment of tax + interest before notice is served
•If payment made – inform the proper officer of such payment
•Thus the proper officer shall not serve any notice
•If the payment made is short of the amount payable, proper officer shall proceed to issue notice w.r.t.
amount it falls short of.
After notice is served
•If Tax + interest paid within 30 days of issue of SCN. Intimate proper officer. no penalty payable. Notice
Concluded.
•Penalty payable if exceeds 30 days.
•If representation follows – proper officer shall consider the same and determine the amount of tax +
interest + penalty (penalty = 10% of tax or `10,000/- whichever is higher).
Order by Proper Officer
• Officer shall issue order within 3 years from due date of furnishing annual return for the financial
year to which the shortfall/ erroneous tax pertains OR within 3 years from date of erroneous
refund.
18

REASONS ARE FRAUD, ETC.
(SECTION 74)
Appeartoproperofficerthat
Tax not paid
Short-paid tax
Erroneously
Refunded
ITC Wrongly Availed
ITC Wrongly Utilized
By reason of fraud/
willful misstatement/
“suppression” of facts
to evade tax
Proper Officer
shall serve
notice to
show cause as
to why he
should not
pay the
amount of tax
as specified
and the
amount of
interest and
penalty as
applicable
“Suppression” – non-
declaration (of facts or
info to be declared in
return, report,
document, etc.), or
failure to furnish info
on being asked for by
proper officer.
19

Notice by proper officer
• Time Limit: At least 6 months prior to the time limit to pass order (5 years from due date of annual
return, or from date when erroneously refunded).
• Where Notice is served, proper officer may serve a statement containing the details for PERIODS OTHER
THAN THOSE COVERED UNDER THE NOTICE.
• This shall be deemed to be service of notice only if the grounds for the tax period in the statement are
covered in the notice served.
Payment before notice is served
• If tax + interest + penalty (15% of tax) is paid before notice– inform the proper officer of such payment
• Thus the proper officer shall not serve any notice
• If the payment made is short of the amount payable, proper officer shall proceed to issue notice w.r.t.
amount it falls short of.
After notice is served
• If Tax + interest + penalty (25% of tax) is paid within 30 days of issue of SCN. Notice Concluded.
• Penalty payable if exceeds 30 days.
• If representation– proper officer shall consider the same and determine the amount due.
Order by Proper Officer
• Officer shall issue order within 5 years from due date of furnishing annual return for the financial year
to which the shortfall/ erroneous tax pertains OR within 5 years from date of erroneous refund.
• If tax + interest + penalty (50% of tax) paid within 30 days or order – proceedings concluded.
20

OTHER PROVISIONS FOR DETERMINATION OF TAX
(SECTION 75)
Issuance of
notice/ order
Stay order by
court/ appellate
tribunal
Period of such stay excluded
from computation of time limit
of issuance or notice/ order.
Concluded by Appellate Authority that notice
issued for fraud/ willful misstatement/
suppression involved is NOT ESTABLISHED.
Proper officer determines tax
payable under Section 73.
Direction by Appellate Authority/
Appellate Tribunal to pass an order.
Time Limit: Within 2 years of
communication of such direction.
Opportunity of
being heard shall
be granted to a
request in writing
Adjournment reasons
recorded in writing–
not more than thrice
to a person
Order – to
contain relevant
facts and basis
of decision.
Tax + interest +
penalty shall not be in
excess of the demand
in notice.
21

CONTD…
Interest and penalty payable, whether mentioned in order or not.
Amount of interest and penalty
is modified accordingly
If Tax + interest + penalty is modified by the
Appellate Authority/ Appellate Tribunal/ court
Proceedings deemed to be
concluded.
Order not passed within 3/ 5 years (as
applicable)
Appeal to Appellate
Tribunal/ HC/ SC
Order prejudicial to
interest of revenue in
some other
proceedings
Period spent between the date of
the order and order of such appeal
excluded from computation of
period under S. 73(10)/ 74(10)
Penalty imposed
under S. 73/ 74
No penalty for the same act/
imposed under any other provision.
22

TAX COLLECTED BUT NOT PAID
(S. 76)
The person who is required to pay
tax to the Govt. shall pay
irrespective whether the supplies
in respect of which tax has been
collected is taxable or not
Proper officer will serve a
Show Cause Notice on such
person
Person shall pay the
amount as determined by
the proper officer
Such amount shall be paid
along with interest
determined u/s. 50
PO shall issue
order within
one year
Opportunity for
Hearing shall be
granted
23

CONTD…
Period of one year shall
exclude the order stayed by
the Appellate Tribunal
Order shall set out
relevant facts and
basis of decision
Treatment of Amount paid by the Person
• Amount paid by the person to the Govt. shall be adjusted against
his liability to pay tax.
• If any surplus is left shall be credited to the fund or refunded to
that person.
• The person can apply for the refund of surplus u/s.54.
24

TAX WRONGFULLY PAID TO THE
GOVERNMENT (S. 77)
Registered person mistakenly
CGST & SGST on inter-state
supply
Registered person mistakenly
IGST on intra-state supply
The amount of tax
paid shall be refunded
and not required to
pay interest on CGST &
SGST
25

INITIATION OF RECOVERY PROCEEDING
(S. 78)
Amount payable by a
person in pursuance of
the order passed under
this Act within 3 months
Recovery proceedings shall be
initiated
Proper officer may ask the
taxable person to pay the
amount before completion of 3
months
If not paid within
3 months
26

RECOVERY OF TAX (SECTION 79)
Modes for Recovery where Amount payable by ‘a person to the government’ – Not paid
by the person.
Proper officer (PO) may proceed to recover in either of the modes.
1.Deduct from money owing to such person (which is under control of PO or specified officer).
2.Detaining & selling goods belonging to such person (which are under control of PO or specified
officer)
3.Garnishee Proceedings: Notice by PO require any other person from whom money is due or holds or
may subsequently hold money on account of such person.
i. Person to whom notice issued – bound to comply. Failure – deemed defaulter.
Consequences under this act follow.
ii. Officer may revoke/ amend the notice/ extend time for making payment.
iii. If such person satisfies to the PO that the amount is not due to that person – not required to
pay.
4.Distrain any movable/ immovable property belonging to/ under control of defaulting person and
detain. Amount/ cost incurred to distrain/ detain – unpaid – property sold.
5.Prepare a certificate signed by him specifying amount due – send to Collector of district In which
such person resides/ owns property/ carries on business. Such Collector shall proceed accordingly for
recovery of amount as arrear of land revenue.
6.PO may file an application to Magistrate – Magistrate proceeds as if it were fine imposed by him.
(Notwithstanding CrPC)
27

CONTD…
• If the bond / any other instrument executed under
the act prescribes recovery as under this sub-
section – it shall so be followed.
• Recovery as if it were arrears of State/ UT Tax &
Credit the amount so recovered to the account of
the “Government”.
• If the amount recovered is less than the amount
due – proportionately credited to the Centre &
State Govts.
28

PAYMENT OF TAX AND OTHER AMOUNT IN
INSTALLMENTS (S. 80)
On application filed by a taxable person the Commissioner
extend the time for payment other than the self-assessed
amount
In default of any one installment on its due date the whole
outstanding balance payable on such date shall become due
and payable forthwith and shall, without any further notice
served on the person, be liable for recovery
Also may allow payment in monthly
installments, not exceeding 24, subject to
payment of interest under S.50 (other
than the self-assessed amount).
29

TRANSFER OF PROPERTY TO BE VOID IN
CERTAIN CASES (S. 81)
Any amount become due from a person,
creates a charge on property belonging to him or in his
possession by anyway or transfers with the intention of
defrauding the Govt. revenue such
transfer shall be void against any claim w.r.t. tax and/or
other amounts payable.
Such transfer shall not be considered
void if it is made for adequate
consideration without pendency of any
notice
30

TAX TO BE FIRST CHARGE ON PROPERTY
(S.82)
Any amount payable by a taxable person or
any other person on account of tax, interest or
penalty to the Govt. shall be a first charge on
the property of such person.
Notwithstanding to any
other law
Save as provisions of the
Insolvency and
Bankruptcy Code, 2016
31

PROVISIONAL ATTACHMENT TO PROTECT
REVENUE IN CERTAIN CASES (S.83)
Proceedings pending u/s.62, 63, 64, 67, 73 & 74
the Commissioner may attach the property,
bank account by order in writing belonging to
the taxable person.
Attachment shall cease
to have effect after the
expiry of one year from
the date of order
“DRAGON PROVISION”
32

CONTINUATION AND VALIDATION OF
CERTAIN RECOVERY PROCEEDINGS (S.84)
• Any notice of demand of any tax, penalty, interest or any other amount payable
(Government Dues) is served AND
• Any appeal or revision application is filed pr any other proceedings is initiated in
respect of such Government dues; then----
Where the Govt. dues are
enhanced
• Commissioner shall serve the
notice w.r.t the enhancement;
• Recovery proceedings before the
appeal, shall continue from the
stage where it has been disposed,
WITHOUT the service of fresh
notice.
Where the Govt. dues are reduced:-
• No fresh notice is required;
•Intimation of such reduction by the
authority
•Any proceeding initiated for the
disposal be continued from the
stage at which proceeding stood
immediately before such disposal
33

EVIDENCE
“The Appellate Tribunal shall not, while disposing
of any proceedings before it or an appeal before it,
be bound by the procedure laid down in the Code of
Civil Procedure, 1908, but shall be guided by the
principles of natural justice and subject to the other
provisions of this Act and the rules made
thereunder, the Appellate Tribunal shall have power
to regulate its own procedure.”
36

ADJOURNMENT
Proper Officer for determination of tax, Appellate
Authority, Appellate Tribunal may, if sufficient
cause is shown, at any stage of hearing, grant time
to the parties or any of them and adjourn the
hearing of the appeal for reasons to be recorded in
writing. Provided that no such adjournment shall
be granted more than three times to a party during
hearing.
37

38
SUPREME COURT
GSTAT
NATIONAL
&
REGIONAL
BENCHES
STATE
&
AREA
BENCHES
ADJUDICATING AUTHORITY
REVISIONAL AUTHORITY
APPELLATE AUTHORITY
HIGH COURT
Only for matters
involving place
of supply
For matters other
than those involving
place of supply
Appeal: 3 months
Application: 6 months
Appeal: 3 months
Application: 6 months
Appeal: 180 days

ADJUDICATING AUTHORITY
• Section 2(4) of the CGST Act, 2017.
“adjudicating authority” means any authority,
appointed or authorised to pass any order or decision under
this Act, but does not include the Central Board of Excise
and Customs, the Revisional Authority, the Authority for
Advance Ruling, the Appellate Authority for Advance
Ruling, the Appellate Authority and the Appellate Tribunal;
• For example: Order of demand under Section 73(9) & 74(9).
39

APPEAL TO APPELLATE AUTHORITY
(SECTION 107, RULE 108)
40
ANY person
Aggrieved by the
decision / order of the
adjudicating authority
May Appeal to the appellate
authority in FORM GST APL - 01
WITHIN 3 MONTHS (extendable by 1 month) OF
COMMUNICATION OF SUCH ORDER/ DECISION.

APPLICATION TO THE APPELLATE AUTHORITY
(SECTION 107, RULE 109)
41
Commissioner (suo moto), OR
Upon request of the Commissioner of State/ UT Tax
Call for and examine the record of any proceedings in which an adjudicating
authority has passed a decision/ order (under CGST/ SGST/ UTGST)
And
Satisfy himself as to the legality or propriety of the decision/ order.
Direct any subordinate officer
To
APPLY TO APPELLATE AUTHORITY
WITHIN 6 MONTHS (extendable by 1 month)
From communication of decision/ order.
TO BE TREATED BY THE APPELLATE AUTHORITY AS IF IT WERE AN APPEAL
AGAINST THE DECISION/ ORDER OF THE ADJUDICATING AUTHORITY

PRE-DEPOSIT
42
Appeal filed only when
appellant has paid
In full – such amount of
tax, penalty, interest, fine,
fees, penalty from the
impugned order, as is
admitted by him.
Sum = 10% of the
remaining amount of tax
in dispute arising from
the impugned order in
relation to which appeal
is filed.
When this payment is
made, the recovery
proceedings for the
remaining amount –
DEEMED TO BE STAYED.
+

CONTD…
43
The appellate authority
MAY
Confirm, annul or
modify the decision.
SHALL NOT
Refer it back to the
adjudicating authority
that passed the order
appealed against.
Any enhancement of fee/ penalty/ fine/ confiscation/ reduction in amount of
refund or ITC – ONLY UPON GIVING THE APPELLANT A REASONABLE
OPPORTUNITY OF SHOWING CAUSE AGAINST THE PROPOSED ORDER.
The Appellate Authority shall pass the order within 1 YEAR of date of
filing of the appeal, whenever possible.

(SECTION 108)
44
Commissioner
Suo Moto Upon Information
received
Upon request of
State/ UT
Commissioner
Call for
records
Examine
such records
May stay the
operation of
the decision
Further
inquiry
Pass an
order
If the order/ decision is erroneous
in terms of:
• Prejudicial to revenue interest
& illegal/ improper
• Missing material facts,
• As a consequence of
observation of the CAG.
As also give
the person
aggrieved an
opportunity
of being
heard.

LIMITATION TO EXERCISE OF POWERS BY
• The revisional authority shall not exercise powers if:
– Order is subject to appeal under S. 107 (to appellate
authority), S. 112 (to appellate Tribunal), S. 117 (to HC)
or S. 118 (to SC). {Except for if the point/ issue is not
raised/ decided in the appeal, before 1 year of order of the
appeal, or before 3 years, whichever is earlier}
– Before the expiry of 6 months, and after the expiry of 3
years. {Application by Commissioner}
– Order already taken for revision at earlier stage.
– The order sought for revision is the order of the revisional
authority.
• Order passed in revision subject to provisions of S. 113
(Order of Appellate Tribunal), S. 117 (Appeal to the HC), and
S. 118 (Appeal to the SC).
45

GOOD & SERVICES TAX APPELLATE TRIBUNAL
(GSTAT) – SECTION 109
46
Appellate Tribunal
National Appellate Tribunal
(New Delhi)
State Appellate Tribunal
(State-wise)
Only cases where one of the
issues involved relates to the
Place of Supply
All other cases
Other Regional Tribunals. Other Area Tribunals.
Members of NAT
• President
• Technical Member (Centre) (1)
• Technical Member (State) (1)
Members of State Tribunal
• Judicial Member

47
Members of Regional Appellate
Tribunals
• Judicial Member
Members of Area Tribunals
• Judicial Member
Jurisdiction
• Appeals against order of
the Appellate & Revisional
Authority. AND
• Cases where one of the
issues involved is Place of
Supply
Jurisdiction
• Appeals against order of
the Appellate & Revisional
Authority. AND
• Cases other than those
where one of the issues
involved is Place of Supply
Senior most State Judicial
Member – President

ORDERS OF THE GSTAT
48
The Appellate Tribunal
MAY
Confirm, annul or
modify the decision/
order appealed.
MAY
Refer it back to the
Revisional Authority/
Appellate Authority/
adjudicating authority.
Any enhancement of fee/ penalty/ fine/ confiscation/ reduction in amount of
refund or ITC – ONLY UPON GIVING THE APPELLANT A REASONABLE
OPPORTUNITY OF SHOWING CAUSE AGAINST THE PROPOSED ORDER.
The Appellate Tribunal shall pass the order within 1 YEAR of date of
filing of the appeal, whenever possible.

APPEAL TO HIGH COURT
(SECTION 117)
• May lie only from the State/ Area Bench of the
Appellate Tribunal, within a period of 180 days from
the date of receipt of order by the aggrieved person.
• Only on a case involving a substantial question of
law.
• The HC may determine an issue –
– Not taken up the State/ Area bench, or
– Wrongly determined by the State/ Area bench.
• The provisions of CPC, 1908 shall apply for appeals
under this section.
49

APPEAL TO SUPREME COURT
(SECTION 118)
• Appeal to the SC may lie:
A. From the National/ Regional Bench of the Appellate
Tribunal, or
B. From the judgment/ order of the High Court under
Section 117.
• The provisions of CPC, 1908 shall apply for
appeals under this section.
50

APPEAL NOT TO BE FILED IN CERTAIN CASES
(SECTION 120)
• Fixed monetary limits (As may be directed by the
Board)
• The above shall not preclude the officer from
filing an appeal in any other case with similar
factual/ legal circumstances .
51

NON- APPEALABLE DECISIONS/ ORDERS
(SECTION 121)
• An order of the commissioner or other authority
empowered to direct transfer of proceedings from
one officer to another officer; or
• An order pertaining to the seizure or retention of
books of account, register and other documents; or
• An order sanctioning prosecution under this act; or
• An order passed under section 80 (Payment of tax &
other amounts in installments).
52

THANK YOU
CONTACT US:
PUNEET AGRAWAL
ADVOCATE
+91-9891898911
PUNEET@ALALEGAL.IN
WEBSITE: ALALEGAL.IN
BLOG: WWW.GSTLAWINDIA.COM
53

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Show Cause Notices, Adjudication & Introduction to Appeals under GST