The determination of Tax has been a significant feature of every fiscal taxation structure but at the same time there are certain peripheries which have to be followed by the concerned authorities while making such determination . Sections 73 and 74 of the CGST Act , 2017 ( hereinafter referred to as the Act ) (similar provisions are embodied in UPGST Act , 2017) envisage the circumstances where the determination of tax is to be made by the proper officer whereas section 75 of the Act lays emphasis on general provisions relating to determination of tax under sections 73 and 74
It is pertinent to note that section75 of the Act embodies following provisions :
“75- General Provisions Relating to Determination of Tax :
(1) Where the service of notice or issuance of order is stayed by an order of a court or Appellate Tribunal, the period of such stay shall be excluded in computing the period specified in sub-sections (2) and (10) of section 73 or sub-sections (2) and (10) of section 74, as the case may be.
(2) Where any Appellate Authority or Appellate Tribunal or court concludes that the notice issued under sub-section (1) of section 74 is not sustainable for the reason that the charges of fraud or any wilful mis-statement or suppression of facts to evade tax has not been established against the person to whom the notice was issued, the proper officer shall determine the tax payable by such person deeming as if the notice were issued under sub-section (1) of section 73.
(3) Where any order is required to be issued in pursuance of the direction of the Appellate Authority or Appellate Tribunal or a court, such order shall be issued within two years from the date of communication of the said direction.
(4) An opportunity of 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.
(5) The proper officer shall, if sufficient cause is shown by the person chargeable with tax, grant time to the said person and adjourn the hearing for reasons to be recorded in writing:
Provided that no such adjournment shall be granted for more than three times to a person during the proceedings.
(6) The proper officer, in his order, shall set out the relevant facts and the basis of his decision.
(7) 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 the grounds other than the grounds specified in the notice.
(8) Where the Appellate Authority or Appellate 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.
(9) The interest on the tax short paid or not paid shall be payable whether or not specified in the order determining the tax liability.
(10) The adjudication proceedings shall be deemed to be concluded, if the order is not issued within three years as provided for in sub-section (10) of section 73 or within five years as provided for in sub-section (10) of section 74.
(11) An issue on which the Appellate Authority or the Appellate Tribunal or the High Court has given its decision which is prejudicial to the interest of revenue in some other proceedings and an appeal to the Appellate Tribunal or the High Court or the Supreme Court against such decision of the Appellate Authority or the Appellate Tribunal or the High Court is pending, the period spent between the date of the decision of the Appellate Authority and that of the Appellate Tribunal or the date of decision of the Appellate Tribunal and that of the High Court or the date of the decision of the High Court and that of the Supreme Court shall be excluded in computing the period referred to in sub- section (10) of section 73 or sub-section (10) of section 74 where proceedings are initiated by way of issue of a show cause notice under said sections.
(12) Notwithstanding anything contained in section 73 or section 74, where any amount of self-assessed tax in accordance with a return furnished under section 39 remains unpaid, either wholly or partly, or any amount of interest payable on such tax remains unpaid, the same shall be recovered under the provisions of section 79.
(13) Where any penalty is imposed under section 73 or section 74, no penalty for the same act or omission shall be imposed on the same person under any other provisions of this Act.”
It is quite evident from the comprehensive study of the aforesaid provisions that this section clarifies the general provisions relating to various issues accruing in respect of determination of tax under section 73 and 74 of the Act .
Sub-section (1) of this section envisages that where the service of notice or issuance of order is stayed by an order of a court or Appellate Tribunal, the period of such stay shall be excluded in computing the period specified in sub-sections (2) and (10) of section 73 or sub-sections (2) and (10) of section 74, as the case may be.
It is pertinent to note that sub-section (2) and (10) of section 73 and sub-section (2) and (10) of section 74 embody provisions relating to time limit in which notice and order under these sections can be issued . Sub-section (2) and sub-section (10) of section 73 embody following provisions :
“73(2) The proper officer shall issue the notice under sub-section (1) at least three months prior to the time limit specified in sub-section (10) for issuance of order.”
“73(10) The proper officer shall issue the order under sub-section (9) within three years from the due date for filing of annual return for the financial year to which the tax not paid or short paid or input tax credit wrongly availed or utilised relates to or within three years from the date of erroneous refund.”
Similarly sub-section (2) and sub-section (10) of section 74 embody following provisions :
“74(2) The proper officer shall issue the notice under sub-section (1) at least six months prior to the time limit specified in sub-section (10) for issuance of order.”
“74(10) The proper officer shall issue the order under sub-section (9) within a period of five years from the due date for filing of annual return for the financial year to which the tax not paid or short paid or input tax credit wrongly availed or utilized relates to or within five years from the date of erroneous refund.”
It is pertinent to note that this sub-section does not categorically envisage the date from which the period of stay shall commence . Thus a question may arise whether it will be the date of stay order or it shall be the date of on which such stay order is received by the department ? In such cases it is legal perception that the date of order shall be the date from which the period in question shall be counted and it shall continue till such stay order is operative . As soon as such Stay order is vacated the period of stay will also culminate and such period of such stay shall be excluded in computing the period specified in sub-sections (2) and (10) of section 73 or sub-sections (2) and (10) of section 74, as the case may be.
Sub-section (2) of section 75 envisages that where any Appellate Authority or Appellate Tribunal or court concludes that in respect of the notice issued by the proper officer under sub-section (1) of section 74 , the charges of fraud or any willful misstatement or suppression of facts to evade tax against the person to whom the notice was issued, are not sustainable then in such cases the proper officer shall determine the tax payable by such person deeming as if the notice has been issued under sub-section (1) of section 73.
It is reiterated that the basic difference between the provisions of section 73 and 74 is that whereas for the application of section 73 the default is for any reason other than fraud or any willful misstatement or suppression of facts whereas the provisions of section 74 apply only in such cases where the default is by reason of fraud or any willful misstatement or suppression of facts.
Thus it is quite evident that in the circumstances mentioned in sub-section (2) of section 75 , the proper officer shall not be required to issue a fresh notice under sub-section(1) of section 73 and the earlier notice issued under sub-section (1) of section 74 shall be deemed to be the notice under sub-section (1) of section 73 for the determination of tax liability under this section .
Sub-section (3) of section 75 envisages that where any order is required to be issued in pursuance of the direction of the Appellate Authority or Appellate Tribunal or a court, such order shall be issued within two years from the date of communication of the said direction.
It is quite evident from the provisions embodied in aforesaid sub-section (3) that the period of two years shall not be counted from the date on which the directions are issued by the Appellate Authority or Appellate Tribunal or a Court but it is to be counted from the date on which such directions are communicated to the concerned proper officer.
Sub-section (4) of section 75 envisages that an opportunity of hearing shall be granted
(i) where a request is received in writing from the person chargeable with tax or penalty, or
(ii) where any adverse decision is contemplated against such person.
Thus in circumstances other than those mentioned above , the opportunity of being heard shall not be required to be granted .
Sub-section (5) of section 75 envisages that if the person chargeable with tax shows sufficient cause , the proper officer shall grant time to the said person and adjourn the hearing for reasons to be recorded in writing.
However the proviso to this sub-section makes it quite evident that no such adjournment shall be granted for more than three times to a person during the proceedings.
It is a very significant provision in the GST regime which restricts the number of adjournments to a maximum three . It will certainly help speedy disposal of the cases and will eradicate the prevalent practice of undue adjournments .
Sub-section (6) of section 75 envisages that the proper officer shall set out the relevant facts and the basis of his decision in the order pronounced by him . Thus the order issued shall be a speaking order considering all the facts and circumstances of the case and it shall not be passed arbitrarily .
Sub-section (7) of section 75 envisages that 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 the grounds other than the grounds specified in the notice.
This is another very important sub-section which envisages that the notice should be issued mentioning the payable amount of tax , penalty and interest and also all the grounds on which an action is to be taken in this respect . The proper officer shall not be able to demand any amount in excess to what has been mentioned in the notice , by his order. Also only those grounds shall be relied upon , which have been mentioned in the notice and no new ground which has not been mentioned in the notice shall not be sustainable .
Sub-section (8) of section 75 envisages that where the Appellate Authority or Appellate Tribunal or court modifies the amount of tax determined by the proper officer, the amount of interest and penalty shall stand modified accordingly to the tune of modified tax .
Thus the modification of tax will automatically modify the amount of penalty and interest to the tune of such modification of amount of tax and no separate order of modification shall be required in respect of such penalty and interest .
Sub-section (9) of section 75 envisages that the interest on the tax short paid or not paid shall be payable whether or not specified in the order determining the tax liability.
This sub-section thus clarifies that the liability to pay interest shall automatically run with the tax short paid or not paid and it will have no affect whether interest has been determined or not determined by the order determining the tax .
Sub-section (10) of section 75 envisages that the adjudication proceedings shall be deemed to be concluded, if the order is not issued within three years as provided for in sub-section (10) of section 73 or within five years as provided for in sub-section (10) of section 74.
Thus if the proper officer wants to determine any tax in excess to what the concerned taxable person has paid , then the order determining such tax shall have to be passed within the period prescribed in sub-section (10) of section 73 and sub-section (10) of section 74 , as the case may be . If no order is passed within the aforesaid period then it will be deemed that the adjudicating proceedings have been concluded at the end of the proper officer .
Sub-section (11) of section 75 envisages that an issue on which the Appellate Authority or the Appellate Tribunal or the High Court has given its decision which is prejudicial to the interest of revenue in some other proceedings and an appeal to the Appellate Tribunal or the High Court or the Supreme Court against such decision of the Appellate Authority or the Appellate Tribunal or the High Court is pending, the period spent between
(i) the date of the decision of the Appellate Authority and that of the Appellate Tribunal or
(ii) the date of decision of the Appellate Tribunal and that of the High Court or
(iii) the date of the decision of the High Court and that of the Supreme Court
shall be excluded in computing the period referred to in sub-section (10) of section 73 or sub-section (10) of section 74 where proceedings are initiated by way of issue of a show cause notice under said sections.
The crux of the aforesaid provisions is that where any legal authority or Court has pronounced its decision which is prejudicial to the interest of revenue in some other proceedings and an appeal against such order is pending then the time spent between the date of such impugned order of such legal authority or Court and the date of decision of the concerned appeal by the higher legal authority or Court shall be excluded in computing the period under sub-section (10) of section 73 or sub-section (10) of section 74.
Sub-section (12) ofr section 75 envisages that notwithstanding anything contained in section 73 or section 74, where-
(i) any amount of self-assessed tax in accordance with a return furnished under section 39 remains unpaid, either wholly or partly, or
(ii) any amount of interest payable on such tax remains unpaid,
the same shall be recovered under the provisions of section 79.
It is pertinent to note that section 79 envisages provisions relating to recovery of tax. Thus it is quite evident from the provisions embodies in this sub-section that if the tax admitted in the return furnished by any taxable person remains short paid or unpaid or any amount of interest remains payable in respect of admitted tax , then irrespective of anything contained in section 73 or 74 , such amount of tax or interest shall be recovered according to the provisions embodied in section 79.
Sub-section (13) envisages that where any penalty is imposed under section 73 or section 74, no penalty for the same act or omission shall be imposed on the same person under any other provisions of this Act.
Yogendra Kumara
Retd. Additional Commissioner (Law)
Commercial Taxes , Uttar Pradesh
The PEN TALKS 