Bimal Jain
Quick Summary
There was amendment in sec 75(12) of the Central Goods and Services Tax Act, 2017 (the CGST Act), which were introduced vide the Finance Act, 2021 but brought into effect only from January 1, 2022 through Notification no. 39/2021-central tax dated December 21, 2021. Section 75 - General provision
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FAQ :
While amendments to Section 75(12) of the CGST Act might suggest direct recovery, legal precedents from various High Courts indicate that issuing an SCN is generally a mandatory step before initiating recovery proceedings, especially for disputed amounts.
The amendment, effective from January 1, 2022, was intended to clarify that 'self-assessed tax' includes tax on outward supplies declared in GSTR-1 but not in GSTR-3B, aiming to curb fake billing practices.
High Courts, including the Bombay and Karnataka High Courts, have ruled that issuing an SCN is a 'sine qua non' (essential condition) for recovery proceedings, particularly for interest, to comply with the principles of natural justice.
The CBIC has issued guidelines suggesting that businesses should be given an opportunity to rectify short payments. Genuine errors can sometimes be rectified in subsequent filings, but the necessity of an SCN for recovery remains a key legal point.
Section 78 deals with recovery of amounts due after an order is passed, while Section 79 provides the machinery for recovery. However, legal interpretations suggest these sections are to be followed after proper adjudication, which typically follows an SCN.
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