Summary of the Guidelines for Recovery of Dues and Pre-deposit adjustment by Circular No 224/18/2024
Government has issued Guidelines for Recovery of Dues and Pre-deposit adjustment by Circular No 224/18/2024. Commercial sector and Fileld offices has raised issues regarding the process of collecting unpaid taxes in case when first appellate authority has confirmed the demand created by the adjudicating authority either partially or fully.
Highlights of Circular No.224/18/2024 dated 11-07-2024
- Recovery of dues in case of appeals
- Pre-deposit adjustment
1. Recovery of dues in case of appeals
In cases, when first appellate authority confirmes the tax demand either fully or partially, taxpayer can not file appeal against this due to GST Appellate Tribunal is not in operation. As per section 112 of CGST Act,2017 a person has right to appeal to the tribunal against the order of appllate authority or revisional authority.
Recovery proceedings are to be initiated under section 78 of CGST Act,2017, if the amount of the order is not paid within 3 month from the date of service of said order.If the person file appeal on the payment of Pre-deposit, the recovery process for remaining amount is paused until the appeal is resolved. However, since the taxpayers can not file appeal to the tribunal due to non working position,they also can not make the pre-deposit.
Tax officers are still procedings with recovery actions afrer the 3 months allowed as per section 78 of CGST Act,2017 in some cases,where the taxpayers have paid or willing to pay the required pre-deposit through Form DRC-03 or by crediting liability register.If taxpayer wants to appeal an order from apellate authority they can do so by making pre-deposit payment. This payment will count towards the required pre-deposit when filling appeal before the appellate tribunal.
The taxpayer is also required to submit declaration including their intend to file appeal to jurisdictional tax officer within specified time limit u/s 112 of CGST Act,2017. Once the taxpayer provides this declaration and make pre-deposit payment, the recovery of remaining tax demand will be paused as per section 112(9) of the CGST Act,2017. If the taxpayer does not make the payment of Pre-deposit and fails to provide the declarations to tax officer, it will bhe assumed that the taxpayer doesnt want to file appeal. In such case the authorities can further proceed with recovery.
On the functioning of Tribunal if taxpayer does not file appeal with in time specified in section 112 of CGST Act,2017, the remaining unpaid amount will be recovered by the authorities.
2. Pre-deposit adjustment
New Notification No.12/2024-CT Dated 10-07-2024 has been issued for introduction of new sub rule 142(2B) and new form GST-DRC-03A in CGST Rules,2017. This new rule provides a way to handle the cases where a person who is required to pay Tax, Interest and penalty under the sections of CGST Act, has accidently made such payment through Form GST DRC-03.
In such case the person can file an application through GST DRC-03A on the portal. This application will allow the amount that was paid through FORM GST DRC-03 to be adjusted as if it had been paid towards actual demand on the date it was originally reported using FORM GST DRC-03. This amount can also be used as part of Pre-deposit if the tax payer decides to file an appeal against the demand . either with appellate authority or appellate tribunal.
The Payment made through DRC-03 can not adjusted if the proceedings related to that payment have already been completed by issuance of order in FORM GST DRC-05 as per Rule 142(3) of CGST Rules,2017.
At present the Facility to file FORM DRC-03A is not available on the portal, Hence in case if tax payer has make the payment of Pre-deposit by mistake , he should inform the proper tax officer. after such information the tax officer may not insist the recovery of the remaining amount payable by the taxpayer till the FORM GST DRC-03A is made available on the common portal.
On the avability of such FORM GST DRC-03A , the taxpayer should submit his application for adjustment of payment made through GST DRC-03 under section 107 or section 112 of CGST Act,2017. If the taxpayer does not file the application using FORM GST DRC-03A, the tax officer may start the process of recovery under section 78 and 79 of CGST Act,2017.
