Demands and Recovery under GST

By | September 5, 2016

DEMANDS AND RECOVERY UNDER GST

Demand and Recovery under GST

BUY

Demands for tax short paid or not paid or erroneously refunded ( Clause 51 of Model GST Law)

Since tax is payable on self assessment basis, it is possible that the taxable person may not have correctly paid the tax or may not have paid the tax at all. It is also possible that the taxable person might have claimed refund and got refund of tax or input tax credit.

In such case, department can issue show cause notice and adjudicate the demand.

In normal cases, such order is required to be passed within three years from the due date of filing return. However, if the non-payment was on account of fraud, wilful mis-statement or suppression of facts to evade tax, the order can be passed within five years from the due date of filing return.

The provisions apply to recovery of interest also.

Demand when no charge of fraud, wilful mis-statement or suppression of facts

Where any tax has not been paid or short paid or erroneously refunded, or where input tax credit has been wrongly availed or utilized for any reason, other than the reason of fraud or any wilful-misstatement or suppression of facts to evade tax, the proper officer shall serve notice on the person chargeable with tax which has not been so paid or which has been so short paid or to whom the refund has erroneously been made, or who has wrongly availed or utilized input tax credit.

The notice should require him to show cause why he should not pay the amount specified in the notice along with interest payable thereon under section 36 and penalty leviable under the provisions of this Act or the rules made thereunder – clause 51A(1) of GST Model Law, 2016.

The provisions apply to recovery of interest also.

Statement if SCN on same grounds was issued for earlier period – Once a SCN has been issued, repeat notices are required till matter is finally adjudicated. Where a notice has been issued for any earlier period, the proper officer may serve a statement, containing the details of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilized for such periods other than those covered under earlier SCN, on the person chargeable with tax.

The service of such statement shall be deemed to be service of notice on such person, if the grounds relied upon for such tax periods are the same as are mentioned in the earlier notice – clause 51A(2) of GST Model Law, 2016.

Taxable Person can pay tax on own before SCN – The person chargeable with tax may, before service of notice pay the amount of tax along with interest payable thereon under section 36 on the basis of his own ascertainment of such tax or the tax as ascertained by the proper officer and inform the proper officer in writing of such payment.

The proper officer, on receipt of such information, shall not serve any show cause notice in respect of the tax so paid or any penalty leviable under the provisions of this Act or the rules made there under – clause 51A(3) of GST Model Law, 2016.

This is to promote voluntary compliance and reduce litigation. ‘Shall not serve show cause notice‘ means it is a mandatory provision. The issue has to be closed any notice even for penalty or late fee or co-noticees cannot be issued.

Show cause notice if amount short paid – Where the proper officer is of the opinion that the amount paid under section 51A(3) falls short of the amount actually payable, he shall proceed to issue the notice in respect of such amount which falls short of the amount actually payable.clause 51A(4) of GST Model Law, 2016.

No penalty if tax with interest paid within 30 days from issue of SCN – Where any person chargeable with tax pays the said tax along with interest payable under section 36 within thirty days of issue of show cause notice, no penalty shall be payable and all proceedings in respect of the said tax shall be deemed to be concluded – clause 51A(5) of GST Model Law, 2016.

‘All proceedings in respect of the said tax shall be deemed to be concluded’ means any further notice even to co-noticee for penalty, late fee etc. cannot be issued.

Demand with maximum 10% penalty – if taxable person does not voluntarily pay the tax and interest, the proper officer shall, after considering the representation, if any, made by person chargeable with tax, determine the amount of tax, interest and a penalty not exceeding ten per cent of tax or ten thousand rupees, whichever is higher, due from such person and issue an order – clause 51A(6) of GST Model Law, 2016.

Note: Penalty not exceeding 10% means lower penalty can be imposed.

Time limit for issue of order – The proper officer shall issue the order under section 51A(6) within three years from the due date or the actual date, whichever is earlier, for filing of annual return for the year to which the tax not paid or short paid or input tax credit wrongly availed or utilized relates or, as the case may be, within three years from the date of erroneous refund — clause 51A(7) of GST Model Law, 2016.

Note : that the time limit is for issue of demand order and not for issuing show cause notice.

However, if the SCN was kept pending and transferred call book as department had filed appeal against an order adverse to revenue in some other proceedings on same issue, that period shall be excluded – clause 51C(10) of GST Model Law, 2016.

Demand when there is fraud, wilful mis-statement or suppression of facts

Where any tax has not been paid or short paid or erroneously refunded or where input tax credit has been wrongly availed or utilized by reason of fraud, or any wilful- misstatement or suppression of facts to evade tax, the proper officer shall serve notice on the person chargeable with tax which has not been so paid or which has been so short paid or to whom the refund has erroneously been made, or who has wrongly availed or utilized input tax credit.

The notice should require him to show cause why he should not pay the amount specified in the notice along with interest payable thereon under section 36 and a penalty equivalent to the tax specified in the notice – clause 51B(1) of GST Model Law, 2016.

The provisions apply to recovery of interest also.

Statement if SCN on same grounds was issued for earlier period – Once a SCN has been issued, repeat notices are required till matter is finally adjudicated. Where a notice has been issued for any earlier period, the proper officer may serve a statement, containing the details of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilized for such periods other than those covered under earlier SCN, on the person chargeable with tax.

The service of such statement shall be deemed to be service of notice on such person, if the grounds relied upon for such tax periods are the same as are mentioned in the earlier notice – clause 51B(2) of GST Model Law, 2016.

Taxable Person can pay tax with 15% of tax as penalty on own before SCN – The person chargeable with tax may, before service of notice pay the amount of tax along with interest payable thereon under section 36 and 15% of tax as penalty on the basis of his own ascertainment of such tax or the tax as ascertained by the proper officer and inform the proper officer in writing of such payment.

The proper officer, on receipt of such information, shall not serve any show cause notice in respect of the tax so paid or any penalty leviable under the provisions of this Act or the rules made there under – clause 51B(3) of GST Model Law, 2016.

This is to promote voluntary compliance and reduce litigation. ‘Shall not serve show cause notice’ means it is a mandatory provision. The issue has to be closed any notice even for penalty or late fee or co-noticees cannot be issued.

Show cause notice if amount short paid – Where the proper officer is of the opinion that the amount paid under section 51B(3) falls short of the amount actually payable, he shall proceed to issue the notice in respect of such amount which falls short of the amount actually payable.

25% penalty if tax with interest paid within 30 days from issue of SCN – Where any person chargeable with tax pays the said tax along with interest payable under section 36 and 25% of tax as penalty within thirty days of issue of show cause notice, no penalty shall be payable and all proceedings in respect of the said tax shall be deemed to be concluded – clause 51B(5) of GST Model Law, 2016.

‘All proceedings in respect of the said tax shall be deemed to be concluded’ means any further notice even to con-noticee for penalty, late fee etc. cannot be issued.

Demand with penalty equal to tax, in case of suppression, misstatement etc. – If taxable person does not voluntarily pay the tax and interest, the proper officer shall, after considering the representation, if any, made by person chargeable with tax, determine the amount of tax, interest and penalty equal to tax, due from such person and issue an order – clause 51B(6) of GST Model Law, 2016.

There is no discretion to reduce penalty in case of fraud, suppression of facts and wilful mis-statement. However, if the taxable person pays tax, interest and 50% penalty within 30 days of communication of order, balance 50% penalty stands waived – clause 51B(8) of GST Model Law, 2016.

Time limit for issue of order – The proper officer shall issue the order under section 51B(6) within five years from the due date or the actual date, whichever is earlier, for filing of annual return for the year to which the tax not paid or short paid or input tax credit wrongly availed or utilized relates or, as the case may be, within five years from the date of erroneous refund – clause 51B(7) of GST Model Law, 2016.

Note: that the time limit is for issue of demand order and not for issuing show cause notice.

However, if the SCN was kept pending and transferred call book as department had filed appeal against an order adverse to revenue in some other proceedings on same issue, that period shall be excluded – clause 51C(10) of GST Model Law, 2016.

General provisions relating to demand of tax under GST

The following provisions apply to both types of demands i.e. with charge of fraud, wilful mis-statement or suppression of facts to evade tax or without such charge.

Period of stay to be excluded for computing period of three/five years – Where the service of notice or issuance of order is stayed by an order of a Court or Tribunal, the period of such stay shall be excluded in computing the period of three years or five years – clause 51C(1) of GST Model Law, 2016.

If charge of suppression, fraud not established – If Appellate Authority or Tribunal or Court concludes that the charge of fraud or any wilful mis-statement or suppression of facts to evade tax has not been established, the proper officer shall determine the tax payable by such person for the period of three years – clause 51C(2) of GST Model Law, 2016 [why fresh adjudication?]

Opportunity of personal hearing – An opportunity of personal hearing shall be granted where a request is received in writing from the person chargeable with tax or penalty, or where any adverse decision is contemplated against such person.

Adjournment of hearing – The proper officer shall, if sufficient cause is shown adjourn the hearing for reasons to be recorded in writing. Maximum three adjournments can be given – – clause 51C(4) of GST Model Law, 2016

Order with reasons – The proper officer, in his order, shall set out the relevant facts and the basis of his decision.

Demand cannot be more than specified in notice and cannot be confirmed on other ground – The amount of tax, interest and penalty demanded in the order shall not be in excess of the amount specified in the notice and no demand shall be confirmed on grounds other than the grounds specified in the notice – clause 51C(6) of GST Model Law, 2016

Interest and penalty gets automatically modified – Where the Appellate Authority or Tribunal or Court modifies the amount of tax determined by the proper officer, the amount of interest and penalty shall stand modified accordingly, taking into account the amount of tax so modified.

Interest mandatory even if not specified in order – Interest on the tax short paid or not paid shall be payable whether or not specified in the order determining the tax liability – – clause 51C(8) of GST Model Law, 2016

Adjudication concludes if order not issued within three/five years – The adjudication proceedings shall be deemed to be concluded if the order is not issued within three/five years.

However, if the SCN was kept pending and transferred call book as department had filed appeal against an order adverse to revenue in some other proceedings on same issue, that period shall be excluded – clause 51C(10) of GST Model Law, 2016.

 Burden of proof is on taxable person

If any person claims that he is not liable to pay tax under the Act in respect of any supply of goods and/or services, or that he is eligible for input tax credit under section 16, the burden of proving such claim or claims shall lie on him – clause 123 of GST Model Law, 2016.

Assessment, adjudication, notice etc. not to be invalid on minor grounds

No assessment, re-assessment, adjudication, review, revision, appeal, rectification, notice, summons or other proceedings done, accepted, made, issued, initiated, or purported to have been done, accepted, made, issued, initiated in pursuance of any of the provisions of the Act shall be invalid or deemed to be invalid merely by reason of any mistake, defect or omission therein, if such assessment, re-assessment, adjudication, review, revision, appeal, rectification, notice, summons or other proceedings is/are in substance and effect in conformity with or according to the intents, purposes and requirements of the Act or any earlier law- clause 128(1) of GST Model Law, 2016.

Rectification of clerical mistakes in order

If there is clerical or arithmetical error or mistake, arising from any accidental slip in any order, summons, notice, certificate etc., it can be rectified if mistake is brought to notice of CGST/SGST officer within three months. Rectification cannot be done after six months – clause 129 of GST Model Law, 2016.

Mode of service of notice

Any decision, order, summons, notice or other communication under the Act or the rules made thereunder shall be served by any one of the following methods, as specified in clause 136(1) of GST Model Law, 2016 [Any one mode is sufficient. It need not be in sequence]

(a) by giving or tendering it directly or by a messenger including a courier to the addressee or the taxpayer or to his manager or to agent duly authorized or an advocate or a tax practitioner holding authority to appear in the proceeding on behalf of the taxpayer or to a person regularly employed by him in connection with the business, or to any adult member of family residing with the taxpayer, or
(b) by post or courier with acknowledgement due, to the person for whom it is intended or his authorised agent, if any at his last known place of business or residence, or
(c) by facsimile message, if such address is furnished, or
(d) by sending a communication to his e-mail address, or
(e) on dashboard of the taxpayer if available on the web-site, or
(f) by sending a message on his registered mobile number, or
(g) by publication in a newspaper circulating in the locality in which the taxpayer or the person to whom it is issued is last known to have resided, carried on business or personally worked for gain, or
(h) if none of the modes aforesaid is practicable, by affixing it in some conspicuous place at his last known place of business or residence, or
(i) if the mode prescribed under (h) is also not practicable for any reason, then by affixing a copy thereof on the notice board of the officer or authority who or which passed such decision or order or issued such summons or notice.

Date of service of decision or notice – Every decision, order, summons, notice or any communication shall be deemed to have been served on the date on which it is tendered or published or a copy thereof is affixed in the manner provided in section 136(1).

Presumption of delivery when communication sent by registered post – When such decision, order, summons, notice or any communication is sent by registered post, it shall be deemed to have been received by the addressee at the expiry of the period normally taken by a registered letter in transit unless the contrary is proved – clause 166(3) of GST Model Law, 2016.

The only way by which non-delivery can be proved is by filing affidavit of non-delivery.

Notice served valid if acted upon or not challenged at earliest opportunity – The service of any notice, order or communication shall not be called in question if the notice, order or communication, as the case may be, has already been acted upon by the person to whom it is issued or where such service has not been called in question at or in the earliest proceedings commenced, continued or finalised pursuant to such notice, order or communication – clause 128(2) of GST Model Law, 2016.

Tax collected but not deposited with Government

Every person who has collected from any other person any amount as representing the tax under this Act, and has not paid the said amount to the Government, shall forthwith deposit the said amount to the credit of the regardless of whether the supplies in respect of which such amount was collected are taxable or not – clause 52(1) of GST Model Law, 2016.

Proper Officer can issue show cause notice to him and confirm demand after giving him personal hearing.

The person shall be liable to pay interest. Penalty upto tax so collected can be imposed.

The person who has borne the incidence of the amount may apply for the refund of the same and for such refund provisions of unjust enrichment will apply – clause 52(11) of GST Model Law, 2016.

CGST/SGST paid when IGST was payable and vice versa

A taxable person who has paid CGST/SGST (in SGST Act) on a transaction considered by him to be an intra-state supply, but which is subsequently held to be an inter-state supply, shall, upon payment of IGST, be allowed to take the amount of CGST/SGST (in SGST Act) so paid as refund subject to the provisions of section 38 and subject to such other conditions as may be prescribed – clause 53 of GST Model Law, 2016.

Parallel provision is made in IGST, which reads as follows –

A taxable person who has paid IGST on a transaction considered by him to be an inter-state supply, but which is subsequently held to be an intra-state supply, shall, upon payment of CGST and SGST in the appropriate State, be allowed to take the amount of IGST so paid as refund subject to the provisions of section 38 of the CGST Act, 2016 and such other conditions as may be prescribed – clause 30 of Model IGST Law.

Recovery of tax

If demand is not paid, department can start recovery proceedings.

As per clause 54(1) of GST Model Law, 2016, he proper officer shall proceed to recover the amount by one or more of the modes mentioned below: –

Deduct from other amount payable – The proper officer may deduct or may require any other specified officer to deduct the amount so payable from any money owing to such person which may be under the control of the proper officer or such other specified officer.

Detaining and selling goods under control of department – The proper officer may recover or may require any other specified officer to recover the amount so payable by detaining and selling any goods belonging to such person which are under the control of the proper officer or such other specified officer.

Garnishee proceeding s – The proper officer may, by a notice in writing, require any other person from whom money is due or may become due to such person or who holds or may subsequently hold money for or on account of such person, to pay to the credit of the Central or a State Government either forthwith upon the money becoming due or being held, or at or within the time specified in the notice not being before the money becomes due or is held, so much of the money as is sufficient to pay the amount due from such person or the whole of the money when it is equal to or less than that amount.

Every person to whom the notice is issued under this section shall be bound to comply with such notice, and in particular, where any such notice is issued to a post office, banking company or an insurer, it shall not be necessary to produce any pass book, deposit receipt, policy or any other document for the purpose of any entry, endorsement or the like being made before payment is made, notwithstanding any rule, practice or requirement to the contrary.

In case the person to whom a notice under this section has been issued, fails to make the payment in pursuance thereof to the Central or a State Government, he shall be deemed to be a defaulter in respect of the amount specified in the notice and all the consequences of this Act or the rules made thereunder shall follow;

The officer issuing notice (garnishee notice) may, at any time or from time to time, amend or revoke such notice or extend the time for making any payment in pursuance of the notice;

Any person making any payment in compliance with a notice issued under sub-clause (i) shall be deemed to have made the payment under the authority of the person in default and such payment being credited to the appropriate Government shall be deemed to constitute a good and sufficient discharge of the liability of such person to the person in default to the extent of the amount specified in the receipt;

Any person discharging any liability to the person in default after service on him of the notice issued under sub-clause (i) shall be personally liable to the Central or a State Government to the extent of the liability discharged or to the extent of the liability of the person in default for tax, interest and penalty, whichever is less.

Where a person on whom a notice is served under sub-clause (i) proves to the satisfaction of the officer issuing the notice that the money demanded or any part thereof was not due to the person in default or that he did not hold any money for or on account of the person in default, at the time the notice was served on him, nor is the money demanded or any part thereof, likely to become due to the said person or be held for or on account of such person, nothing contained in this section shall be deemed to require the person on whom the notice has been served to pay to the credit of the appropriate Government any such money or part thereof, as the case may be.

Distrain and sale any property belonging to the person – The proper officer may, on an authorisation by the competent authority and in accordance with the rules made in this behalf, distrain any movable or immovable property belonging to or under the control of such person, and detain the same until the amount payable is paid; and in case, any part of the said amount payable or of the cost of the distress or keeping of the property, remains unpaid for a period of thirty days next after any such distress, may cause the said property to be sold and with the proceeds of such sale, may satisfy the amount payable and the costs including cost of sale remaining unpaid and shall render the surplus amount, if any, to such person.

Certification proceedings – The proper officer may prepare a certificate signed by him specifying the amount due from such person and send it to the Collector of the district in which such person owns any property or resides or carries on his business and the said Collector, on receipt of such certificate, shall proceed to recover from such person the amount specified there under as if it were an arrear of land revenue.

Application to Magistrate to recover amount as fine – Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (Act 2 of 1974), the proper officer may file an application to the appropriate Magistrate and such Magistrate shall proceed to recover from such person the amount specified thereunder as if it were a fine imposed by him.

Recovery if bond was executed

Where the terms of any bond or other instrument executed under this Act or any rules or regulations made thereunder provide that any amount due under such instrument may be recovered in the manner laid down in sub-section (1), the amount may, without prejudice to any other mode of recovery, be recovered in accordance with the provisions of that sub-section.

 Dues to Central Government can be recovered by State Government officer

Where any amount of tax, interest or penalty is payable by a person to the credit of the Central Government under any of the provisions of this Act or the rules made thereunder and which remains unpaid, the proper officer of SGST, during the course of recovery of SGST arrears, may recover the amount from the said person as if it were an arrear of SGST and credit the amount so recovered to the account of the Central Government, and vice versa – clause 54(3) of GST Model Law, 2016.

Payment of tax and other amount in instalments

On an application filed by a taxable person, the Commissioner/Chief Commissioner may, for reasons to be recorded in writing, extend the time for payment or allow payment of any amount due under the Act, other than the amount due as per the liability self-assessed in any return, by such person in monthly instalments not exceeding twenty four, subject to payment of interest under section 36 with such restrictions and conditions as may be prescribed – clause 55 of GST Model Law, 2016.

However, where there is default in payment of any one instalment on its due date, the whole outstanding balance payable on such date shall become due and payable forthwith and shall, without any further notice being served on the person, be liable for recovery.

Transfer of property to be void in certain cases

Where a person, after any tax has become due from him, creates a charge on or parts with the property belonging to him or in his possession by way of sale, mortgage, exchange, or any other mode of transfer whatsoever of any of his properties in favour of any other person with the intention of defrauding the Government revenue, such charge or transfer shall be void as against any claim in respect of any tax or any other sum payable by the said person – clause 56 of GST Model Law, 2016.

However, such charge or transfer shall not be void if it is made for adequate consideration and without notice of the pendency of such proceeding under this Act or, as the case may be, without notice of such tax or other sum payable by the said person, or with the previous permission of the proper officer.

Tax to be first charge on property

Notwithstanding anything to the contrary contained in any law for the time being in force, any amount payable by a taxable person or any other person on account of tax, interest or penalty which he is liable to pay to the Central or a State Government shall be a first charge on the property of such taxable person, or as the case may be, such person – clause 57 of GST Model Law, 2016.

 Provisional attachment to protect revenue in certain cases

Where during the pendency of any proceedings under section 46, section 47, section 48 or section 51, the Commissioner is of the opinion that for the purpose of protecting the interest of the Government revenue, it is necessary so to do, he may by order in writing attach provisionally any property belonging to the taxable person in such a manner as may be prescribed.

Every such provisional attachment shall cease to have effect after the expiry of a period of one year from the date of the order – clause 58 of GST Model Law, 2016.

Continuation of certain recovery proceedings

Where any notice of demand in respect of any tax, penalty, interest or any other amount payable under this Act, (hereinafter in this section referred to as “Government dues”), is served upon any taxable person and any appeal, revision application is filed or other proceedings is initiated in respect of such Government dues, then, if Government dues are enhanced in appeal, revision or other proceedings, the fresh demand will be issued only of additional amount.

If Government dues are reduced in appeal, revision or other proceedings, fresh demand notice is not required. Only reduced Government dues will be recovered.

Recovery proceedings initiated on the basis of the demand served upon him prior to the disposal of such appeal, revision application or other proceeding may be continued in relation to the amount so reduced from the stage at which such proceedings stood immediately before such disposal – clause 59 of GST Model Law, 2016.

Liability in case of transfer of business

Where a taxable person, liable to pay tax under this Act, transfers his business in whole or in part, by sale, gift, lease, leave and license, hire or in any other manner whatsoever, the taxable person and the person to whom the business is so transferred shall jointly and severally be liable wholly or, as the case may be, to the extent of such transfer, to pay the tax, interest or any penalty due from the taxable person up to the time of such transfer, whether such tax, interest or penalty has been determined before such transfer, but has remained unpaid or is determined thereafter.

Where the transferee or the lessee of a business referred to in sub-section (1) carries on such business either in his own name or in some other name, he shall be liable to pay tax on the supply of goods and/or services effected by him with effect from the date of such transfer and shall, if he is an existing taxable person, apply within the prescribed time for amendment of his certificate of registration – clause 108 of GST Model Law, 2016.

Liability in case of amalgamation/merger of companies

When two or more companies are amalgamated or merged by the order of court or of Tribunal or of the Central Government and the order is to take effect from a date earlier to the date of the order and any two or more of such companies have supplied or received any goods and/or services to or from each other during the period commencing on the date from which the order takes effect till the date of the order, then such transactions of supply and receipt shall be included in the turnover of supply or receipt of the respective companies and shall be liable to tax accordingly.

Notwithstanding anything contained in the said order, for all purposes of this Act, the said two or more companies shall be treated as distinct companies for the period up to the date of the said order and the registration certificates of the said companies shall be cancelled, where necessary, with effect from the date of the said order. Explanation – Words and expressions used in this section but not defined shall have the respective meanings assigned to them in the Companies Act, 2013 – clause 109 of GST Model Law, 2016

Liability in case of company in liquidation

When any company is being wound up whether under the orders of a court or Tribunal or otherwise, every person appointed as receiver of any assets of a company (hereinafter referred to as the “liquidator”), shall, within thirty days after his appointment, give intimation of his appointment to the Commissioner.

The Commissioner shall, after making such inquiry or calling for such information as he may deem fit, notify the liquidator within three months from the date on which he receives intimation of the appointment of the liquidator, the amount which in the opinion of the Commissioner would be sufficient to provide for any tax, interest or penalty which is then, or is likely thereafter to become, payable by the company.

When any company is wound up and any tax, interest or penalty determined under this Act on the company for any period, whether before or in the course of or after its liquidation, cannot be recovered, then every person who was a director of such company at any time during the period for which the tax was due, shall jointly and severally be liable for the payment of such tax, interest or penalty, unless he proves to the satisfaction of the Commissioner that such non-recovery is not attributed to any gross neglect, misfeasance or breach of duty on his part in relation to the affairs of the company – clause 110 of GST Model Law, 2016.

Liability of partners of firm to pay tax

Notwithstanding any contract to the contrary, where any firm is liable to pay any tax, interest or penalty under this Act, the firm and each of the partners of the firm shall jointly and severally be liable for such payment:

Liability of partner who has retired – Where any partner retires from the firm, he or the firm, shall intimate the date of retirement of the said partner to the Commissioner by a notice in that behalf in writing and such partner shall be liable to pay tax, interest or penalty due up to the date of his retirement whether determined or not, on that date:

If no such intimation is given within one month from the date of retirement, the liability of such partner under the first proviso shall continue until the date on which such intimation is received by the Commissioner – clause 111 of GST Model Law, 2016.

Liability of partners after dissolution of firm – Where a taxable person, liable to pay tax under this Act, is a firm, and the firm is dissolved, then every person who was a partner shall be jointly and severally liable to pay the tax, interest or penalty due from the firm under this Act, up to the time of dissolution whether such tax, interest or penalty has been determined before the dissolution, but has remained unpaid or is determined after dissolution – clause 114(3) of GST Model Law, 2016.

Liability if business discontinued or constitution changed – If business is continued, tax payable upto date of discontinuation will be determined as if discontinuance has not taken place. Persons who were members will be held jointly and severally liable. If constitution is changed, earlier members will be liable till date of reconstitution. For this purpose, LLP will be considered as firm – clause 115 of GST Model Law, 2016.

Liability of guardians, trustees etc.

Where the business in respect of which any tax, is payable under this Act is carried on by any guardian, trustee or agent of a minor or other incapacitated person on behalf of and for the benefit of such minor or other incapacitated person, the tax, interest or penalty shall be levied upon and recoverable from such guardian, trustee or agent, as the case may be, in like manner and to the same extent as it would be determined and recoverable from any such minor or other incapacitated person, as if he were a major or capacitated person and as if he were conducting the business himself, and all the provisions of this Act shall, so far as may be, apply accordingly – clause 112 of GST Model Law, 2016.

Liability of Court of Wards etc.

Where the estate or any portion of the estate of a taxable person owning a business in respect of which any tax, interest or penalty is payable under this Act is under the control of the Court of Wards, the Administrator General, the Official Trustee or any receiver or manager (including any person, whatever be his designation, who in fact manages the business) appointed by or under any order of a court, the tax, interest or penalty shall be levied upon and be recoverable from such Court of Wards, Administrator General, Official Trustee, receiver or manager, as the case may be, in like manner and to the same extent as it would be determined and be recoverable from the taxable person as if he were conducting the business himself, and all the provisions of this Act shall, so far as may be, apply accordingly – clause 113 of GST Model Law, 2016.

Liability of guardian or trustee after termination – Where a taxable person liable to pay tax under this Act,-(a) is the guardian of a ward on whose behalf the business is carried on by the guardian, or (b) is a trustee who carries on the business under a trust for a beneficiary, then if the guardianship or trust is terminated, the ward or, as the case may be, the beneficiary shall be liable to pay the tax, interest or penalty due from the taxable person upto the time of the termination of the guardianship or trust, whether such tax, interest or penalty has been determined before the termination of guardianship or trust but has remained unpaid or is determined thereafter – clause 114(4) of GST Model Law, 2016.

Liability if a person dies

Where a person, liable to pay tax under this Act, dies, then-(a) if a business carried on by the person is continued after his death by his legal representative or any other person, such legal representative or other person, shall be liable to pay tax, interest or penalty due from such person under this Act, and (b) if the business carried on by the person is discontinued, whether before or after his death, his legal representative shall be liable to pay out of the estate of the deceased, to the extent to which the estate is capable of meeting the charge, the tax, penalty or interest due from such person under this Act, whether such tax interest or penalty has been determined before his death but has remained unpaid or is determined after his death – clause 114(1) of GST Model Law, 2016.

Liability in case of HUF or AOP

Liability after partition – Where a taxable person, liable to pay tax under this Act, is a Hindu Undivided Family or an association of persons and the property of the Hindu Undivided Family or the association of persons, as the case may be, is partitioned amongst the various members or groups of members then each member or group of members shall jointly and severally be liable to pay the tax, interest or penalty due from the taxable person under this Act upto the time of the partition whether such tax, penalty or interest has been determined before partition but has remained unpaid or is determined after the partition – clause 114(2) of GST Model Law, 2016

Liability if business discontinued or constitution changed – If business is continued, tax payable upto date of discontinuation will be determined as if discontinuance has not taken place. Persons who were members will be held jointly and severally liable. If constitution is changed, earlier members will be liable till date of reconstitution – clause 115 of GST Model Law, 2016.

Related Post

Direct Taxes Ready Reckoner Service Tax Ready Reckoner Company Law Ready Reckoner tax deduction at source
New Books Released on Tax , GST and law

One thought on “Demands and Recovery under GST

  1. Pingback: Refund in GST- Goods and Service Tax | Tax Heal

Leave a Reply