MM TAX CLUB

INSTRUCTION NO. 02/2021-22 [GST-Investigation]

A detailed analysis to pursue trends in cases of GST evasion & fraudulent ITC availment booked viz-a-viz number of SCNs issued against for the FY 2017-18 [w.e.f. July, 2017], 2018-19 & 2019-20, have been made and it is observed that in GST evasion cases booked and in the Fraudulent ITC cases booked, during the above mentioned period, SCNs have been issued only in few cases.

Apparently, cases of ITC frauds or GST evasion are covered under the provisions of Section 74 of CGST Act, 2017 [the extended period clause], However, there may be certain other situations where issuance of a notice under Section 73 of the CGST Act, 2017, is 2.1 intended.

Kind attention is invited to sub-section (2) & sub-section (10) of the Section 73 of the CGST Act, 2017, which read as under:

• (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.

• (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 utilized relates to or within three years from the date of erroneous refund.

Attention is also invited to sub-section (2) & sub-section (10) of the Section 74 of the CGST Act, 2017, which read as under:

• (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.

• (10) The proper officer shall issue the order under sub-section (9) within a period of five 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 uilised relates to or within five years from the date of erroneous refund.

Further, the last dates of filing of the “Annual Return" under Section 44 of the CGST Act, 2017, for the Financial Y ears 2017-18, 2018-19 & 2019-20 are as below:

Board has examined the matter in the background of issuance of SCNs in meager number of cases booked/detected as mentioned above. It may be seen that the last date for filing the Annual Returns for the FYs of 2017-18, 2018-19 & 2019-20 is already over. As a result, the time limit of three years/five years for issuance of orders under Section 73 & Section 74 of the CGST Act, 2017 has already kicked in. If the issuance of SCNs is pushed to close proximity of the end dates/last dates, it may leave very little time with the adjudicating authority to pass orders within stipulated period mentioned in sub-section (10) of Section 73/ Section 74. This might result in a situation where either the adjudicating authority is not able to pass orders within prescribed time period or quality of adjudication suffers. It is felt that the present situation warrants for extra efforts on the part of field formations and strict monitoring at supervisory level.

Accordingly, Board desires that Principal Director General(s)/Principal Chief Commissioner(s)/Chief Commissioner(s) within their jurisdiction may take stock of the pending investigation cases/other cases which warrant issuance of show cause notices and take appropriate action to ensure timely completion of investigation(s) and issuance of SCNs well before the last date. The respective Pr. Chief Commissioners/Chief Commissioners may draw an action plan so that no case is pending investigation beyond one year. Needless to mention that once SCN is issued, timely adjudication must follow.

Government vide notification number 113/2021 dated 17 September 2021 extended certain timelines under income tax to address the hardship faced by the taxpayers due to covid-19 pandemic.

Press release in this regard can be read as under;

The Central Government, in continuation of its commitment to address the hardship being faced by various stakeholders on account of the Covid-19 pandemic, has, on consideration of representations received from various stakeholders, decided to extend timelines for compliances under the Income-tax Act, 1961 (hereinafter referred to as “the Act”) in the following cases, as under:

• Time limit for intimation of Aadhaar number to the Income tax Department for linking of PAN with Aadhaar has been extended from 30^th September, 2021 to 31^st March, 2022.

• The due date for completion of penalty proceedings under the Act has also been extended from 30^th September, 2021 to 31^st March, 2022.

• Further, the time limit for issuance of notice and passing of order by the Adjudicating Authority under the Prohibition of Benami Property Transactions Act, 1988 has also been extended to 31^st March, 2022.

Central government vide press release and notification number 110/2021 dated 17-09-2021 exempted TDS on interest, other than interest on securities, u/s 194A of the income tax act, for the member of scheduled tribe residing in specified area as referred in section 10(26) of the Act.

The relaxations are given subject to the conditions as specified in notification, content of the full press release can be read as under;

 The Central Government in exercise of the powers conferred by sub-section(1F) of section 197A of the Income-tax Act, 1961(“the Act”) notified that no deduction of tax shall be made on the following payment under section 194A of the Act, namely payment in the nature of interest, other than interest on securities, made by a Scheduled Bank (hereinafter the ‘payer’) located in a specified area to a member of Scheduled Tribe  (hereinafter the ‘receiver’) residing in any specified area as referred to in s.10(26) of the Act, subject to the following conditions:

1. the payer satisfies itself that the receiver is a member of Scheduled Tribe residing in any specified area, and the payment as referred above is accruing or arising to the receiver as referred to in section 10(26) of the Act, during the previous year relevant for the assessment year in which the payment is made, by obtaining necessary documentary evidences in support of the same;
2. the payer reports the above payment in the statements of deduction of tax as referred to in sub-section (3) of section 200 of the Act;
3. the payment made or aggregate of payments made during the previous year does not exceed twenty lakh rupees.

           For the purposes of the said notification, ‘Scheduled Bank’ means a bank included in the Second Schedule of the Reserve Bank of India Act,1934.