GST Charcha on Union Budget 2021: Recovery of self-assessed tax

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The Hon’ble Finance Minister, in Budget 2021-22, hailed as a ‘development-oriented’ and ‘visionary’ budget amid the pandemic-induced disruptions, inter alia, announced multiple changes to the Goods and Services Tax (“GST”) framework. The changes have been proposed vide the Finance Bill, 2021, that amends the Central Goods and Services Tax Act, 2017 (“CGST Act”) and the Integrated Goods and Services Tax Act, 2017 (“IGST Act”), in order to ease doing of business, curb input credit frauds, safeguard Government revenues and to provide statutory backing to debated Rules.

This GST Charcha deciphers into recent changes in GST Laws made vide Clause No. 105 of the Finance Bill, 2021 with respect to recovery of self- assessed tax.

Relevant provision:

Explanation proposed to be inserted in Section 75(12) of the CGST Act:

General provisions relating to determination of tax

(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.

Explanation.––For the purposes of this sub-section, the expression “self-assessed tax” shall include the tax payable in respect of details of outward supplies furnished under section 37, but not included in the return furnished under section 39.”

Discussion and Comments:

Recovery of self-assessed tax:

An explanation is proposed to be inserted to Section 75(12) of the CGST Act to clarify that “self-assessed tax” shall include the tax payable in respect of outward supplies, the details of which have been furnished in Form GSTR-1 under Section 37 of the CGST Act, but not included in the return furnished in Form GSTR-3B under Section 39 of the CGST Act.

The ambit of the term “self-assessed tax” is proposed to be widened. Meaning thereby that now recovery can be initiated by the officer even for the outward supply liability shown in the GSTR-1 filled under Section 37 of the CGST Act.

But it is to be noted that Section 75(12) of the CGST Act starts with non-obstante clause that Notwithstanding anything contained in section 73 or section 74….”

Thus, an exceptional view can be given to the said amendment that, the recovery proceedings, in respect of ‘self-assessed tax’ on outward supplies which have been declared in Form GSTR-1 but not included in Form GSTR-3B, can be initiated straightaway under Section 79 (i.e. through various modes like detaining/selling goods belonging to defaulter which are under control of the department, garnishee proceedings, distaining and selling of movable or immovable property belonging to the defaulting person, etc.) without even resorting to proceedings under Section 73 or Section 74 of the CGST Act.

To know more, kindly watch our video “Difference in GST Liability as per GSTR 1 and GSTR 3B – Caution and Warning” by CA Bimal Jain- https://www.youtube.com/watch?v=bnCqOmYKJx4&t=150s

Note: Amendments carried out in the Finance Bill, 2021 will come into effect from the date when the same will be notified and when the said clause also gets concurrently notified with the corresponding amendments passed by the respective States and Union territories in respective SGST/ UTGST Act.

DISCLAIMER: The views expressed are strictly of the author and A2Z Taxcorp LLP. The contents of this article are solely for informational purpose. It does not constitute professional advice or recommendation of firm. Neither the author nor firm and its affiliates accepts any liabilities for any loss or damage of any kind arising out of any information in this article nor for any actions taken in reliance thereon.

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