Navigating the Goods and Services Tax (GST) landscape can be challenging for businesses. Recently, the Central Board of Indirect Taxes and Customs (CBIC) issued Circular No. 224/18/2024. This circular provides crucial guidelines on recovering outstanding dues when the first appeal has been resolved, and the GST Appellate Tribunal is not yet operational.
Understanding the Context
Businesses often face uncertainty about recovering outstanding dues. This happens when their first appeal is partially or fully confirmed. The appellate authority handles this confirmation. Because the GST Appellate Tribunal is not yet constituted, taxpayers cannot file appeals under Section 112 of the CGST Act, 2017. Therefore, this situation raises questions about the process. It also raises questions about the obligations of taxpayers during this interim period.
Key Clarifications and Guidelines
Appeal and Recovery Process
- No Appeal to GST Appellate Tribunal: If the first appellate authority confirms the demand, taxpayers cannot currently appeal to the GST Appellate Tribunal.
- Recovery Proceedings: According to Section 78 of the CGST Act, recovery proceedings begin if the amount is not paid within three months from the order’s service date.
- Pre-Deposit Requirements: When taxpayers meet the pre-deposit requirements under Section 112(8) of the CGST Act, recovery proceedings for the remaining amount stay until the appeal resolves, as per Section 112(9).
Payment of Pre-Deposit
- How to Pay: Taxpayers can navigate to Services >> Ledgers >> Payment towards demand on their dashboard to pay the pre-deposit amount.
- Reducing Liability: This payment reduces the balance liability in the Electronic Liability Register (ELL) Part-II.
Declaration and Undertaking
- Filing an Undertaking: Taxpayers must file an undertaking with the proper officer. They commit to filing an appeal once the Appellate Tribunal becomes operational.
- Stay on Recovery: Upon this undertaking and pre-deposit payment, recovery of the remaining confirmed demand stays.
Adjustments for Payments through FORM GST DRC-03
- Accidental Payments: Taxpayers who accidentally paid amounts towards a demand through FORM GST DRC-03 can file FORM GST DRC-03A on the common portal.
- Payment Adjustments: The amount adjusts as if paid towards the demand on the original date of intimation through FORM GST DRC-03.
Interim Measures
- Notify Proper Officer: Until FORM GST DRC-03A is available on the portal, taxpayers should notify the proper officer of the inadvertent pre-deposit payment via FORM GST DRC-03.
- Avoiding Recovery: Proper officers should not insist on recovery for the remaining amount until the functionality becomes available.
Implications for Businesses
These guidelines provide much-needed clarity and a structured process for businesses during the interim period before the GST Appellate Tribunal becomes operational. Therefore, businesses must:
- Ensure timely payment of the pre-deposit amounts.
- Submit the required undertakings to the proper officer.
- Keep abreast of updates regarding the availability of FORM GST DRC-03A on the common portal.
Conclusion
To stay compliant with GST regulations, businesses must pay diligent attention to updates and guidelines issued by the authorities. By following the steps outlined in Circular No. 224/18/2024, businesses can manage the recovery of outstanding dues efficiently and avoid potential recovery actions.
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This article is only a knowledge-sharing initiative and is based on the Relevant Provisions as applicable and as per the information existing at the time of the preparation. In no event, RMPS & Co. or the Author or any other persons be liable for any direct and indirect result from this Article or any inadvertent omission of the provisions, update, etc if any.
