Consequences if 20% ITC RULE 36 (4) is not followed

Through this article we have summarised some of the relevant sections below to discuss the Consequences if 20% ITC RULE 36 (4) is not followed

1. Notice may be served in Form ASMT 10, reply to which will be given in GST Form ASMT 11

Text of Section 61 reads as follows:

Scrutiny of returns.

61 [1] The proper officer may scrutinize the return and related particulars furnished by the registered person to verify the correctness of the return and inform him of the discrepancies noticed, if any, in such manner as may be prescribed and seek his explanation thereto.

[2] In case the explanation is found acceptable, the registered personshall be informed accordingly and no further action shall be taken in this regard.

[3] In case no satisfactory explanation is furnished within a period of thirty days of being informed by the proper officer or such further period as may be permitted by him or where the registered person, after accepting the discrepancies, fails to take the corrective measure in his return for the month in which the discrepancy is accepted, the proper officer may initiate appropriate action including those under Section 65 or Section 66 or Section 67, or proceed to determine the tax and other dues under Section 73 or Section 74.

2. Section 73 deals with wrong availment of ITC.

Text of Section 73 reads as follows:

DEMANDS AND RECOVERY

Determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised for any reason other than fraud or any wilful misstatement or suppression of facts.

73 [1] Where it appears to the proper officer that any tax has not been paid or short paid or erroneously refunded, or where input tax credit has been wrongly availed or utilised for any reason, other than the reason of fraud or any wilful-misstatement or suppression of facts to evade tax, he shall serve notice on the personchargeable 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 utilised input tax credit, requiring him to show cause as to why he should not pay the amount specified in the notice along with interest payable thereon under Section 50 and a penalty leviable under the provisions of this Act or the rules made thereunder.

[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.

[3] Where a notice has been issued for any period under sub-section [1], 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 utilised for such periods other than those covered under sub-section [1], on the person chargeable with tax.

[4] The service of such statement shall be deemed to be service of notice on such person under sub-section [1], subject to the condition that the grounds relied upon for such tax periods other than those covered under sub-section [1] are the same as are mentioned in the earlier notice.

[5] The person chargeable with tax may, before service of notice under sub-section [1] or, as the case may be, the statement under sub-section [3], pay the amount of tax along with interest payable thereon under Section 50 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.

[6] The proper officer, on receipt of such information, shall not serve any notice under sub-section [1] or, as the case may be, the statement under sub-section [3], in respect of the tax so paid or any penalty payable under the provisions of this Act or the rules made thereunder.

[7] Where the proper officer is of the opinion that the amount paid under sub-section [5] falls short of the amount actually payable, he shall proceed to issue the notice as provided for in sub-section [1] in respect of such amount which falls short of the amount actually payable.

[8] Where any person chargeable with tax under sub-section [1] or sub-section [3] pays the said tax along with interest payable under Section 50 within thirty days of issue of show cause notice, no penalty shall be payable and all proceedings in respect of the said notice shall be deemed to be concluded.

[9] 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 equivalent to ten per cent. of tax or ten thousand rupees, whichever is higher, due from such person and issue an order.

[10] The proper officer shall issue the order under sub-section [9] within three years from the due date for furnishing 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.

[11] Notwithstanding anything contained in sub-section [6] or sub-section [8], penalty under sub-section [9] shall be payable where any amount of self-assessed tax or any amount collected as tax has not been paid within a period of thirty days from the due date of payment of such tax.

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You May Also Refer :

• GST ITC without invoice reflecting in GSTR 2A capped at 20%
• Changes in GST ITC Availment Conditions

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Tags : GST, Rule 36(4), 20% ITC Restriction