GST: Request for issuance of instructions to stay recovery proceedings in cases where requisite part payment is made by the taxpayer

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GST: Request for issuance of instructions to stay recovery proceedings in cases where requisite part payment is made by the taxpayer

Tejasvi

@tejasvi

August 9, 2022

Public Policy

677

As you may be aware, State and Central GST departments are undertaking scrutiny of GST returns, investigations, audits, assessments, etc. which result into passing of number of orders with huge demands. Aggrieved by the said orders, taxpayers file appeal before the first Appellate Authority after making payment of 10% disputed tax amount. In case where the taxpayer is still aggrieved with the Order, they can file an appeal before Appellate Tribunal after making payment of further 20% of disputed tax amount.

However, even after completion of five years of GST, the Appellate Tribunal is yet to be formed. In such cases, (i.e., no possibility of filing appeal), a taxpayer who is aggrieved by the order of Appellate authority is forced to –

Pay entire demand including interest and penalty as no stay of recovery is in place and the taxpayer will have to wait for formation of Appellate Tribunal to file an appeal to get relief. In some instances, tax officers have started recovering demand amount from electronic credit and cash ledgers without issuance of any intimation, despite of taxpayers informing their decision to go for second appeal.
Approach the high court for stay of demand and if the demand has already been recovered, to decide the case on merits to get the relief.

This is against the intent of CGST law which provides an opportunity to the taxpayer to file an appeal before the Appellate Tribunal with payment of 30% of disputed tax amount and deeming stay to recovery of remaining amount till disposal of the appeal. Further, filing of writ petitions before High Court against each order would hamper functioning of high courts which are already overburden with cases and would result in additional costs for the taxpayers as well as for the revenue.

In this regard, we have made a submission to GST officials requesting them to issue appropriate instructions / directions to the field officers for not initiating recovery proceeding against the taxpayers who are aggrieved by an order passed under S.107 or S. 108 and have made payment of 30% of disputed tax amount. This is subject to the condition that the taxpayer should have informed the jurisdictional officer about his intent to file an appeal as and when the Tribunal is made operational. This will ease the hardship and help businesses to avoid unnecessary litigation at High Court level.

We hope you will find the update useful. We will keep you posted on further developments in this regard.

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Tejasvi

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