How to tackle Show Cause Notices and related Judgments
Introduction
- In Pre GST era section 11A of the Central Excise Act, section 28 of the Customs Act and Section 73 of Finance Act 1994 dealt with SCNs
• In GST law following sections deal with SCN:
a) Section 73: Determination for reason other than fraud or wilful misstatement or suppression of facts to evade tax
b) Section 74: Determination by reason of fraud or wilful misstatement or suppression of facts to evade tax
Related Topic:
Legal Process of Adjudication
Pre Show Cause Notice
- The person chargeable with tax
Ø may pay tax
Ø along with interest payable u/s 50
Ø Before the service of Show Cause Notice(SCN)
Ø on the basis of his own ascertainment
Ø In case of ascertainment u/s 74, a penalty equivalent to 15% of tax also needs to be paid.[S.73(5)/74(5)]
Note: It is strange why a person on own ascertainment admits fraud, wilful misstatement or suppression of facts. Whether a person can be compelled to be evidence against self
2. Ø The person chargeable with tax
Ø may pay tax
Ø along with interest payable u/s 50
Ø Before the service of Show Cause Notice(SCN)
Ø As ascertained by the proper officer
Ø In case of ascertainment u/s 74, a penalty equivalent to 15% of tax also needs to be paid. [S.73(5)/74(5)]
3. Where ascertainment is made by the proper officer, The proper officer may, before service of notice to the person chargeable with tax, interest and penalty, under sub-section (1) of Section 73 or sub-section (1) of Section 74, as the case may be, communicate] the details of any tax, interest and penalty, in Part A of FORM GST DRC-01A. [R. 142(1A)]
From 9-10-19 to 15-10-2020, it was obligatory on the proper officer to communicate the details in Part A of DRC-01A. However w.ef. 15-10-2020, it is optional. He may or may not communicate such details
Related Topic:
Show cause notice (SCN) in GST
Pre SCN Consultation Pre GST Era [Para 5 of Circular dtd 19-01-2017]
- Board has made pre show cause notice consultation by the Principal Commissioner/ Commissioner prior to issue of show cause notice in cases involving demands of duty above Rs. 50 lakhs (except for preventive/ offence related SCN’s) mandatory vide instruction issued from F No. 1080/09/DLA/MISC/15 dated 21st December 2015. Such consultation shall be done by the adjudicating authority with the assessee concerned. This is an important step towards trade facilitation and promoting voluntary compliance and to reduce the necessity of issuing show-cause notice.
Related Topic:
NECESSARY INGRIEDIENTS & ADJUDICATION OF SHOW CAUSE NOTICE
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