GST Enforcement: Timelines, Documentation, and Appeals

The statutory time limitations and required documentation governing GST enforcement actions vary significantly based on the type of proceeding, such as scrutiny of returns, determination of tax demand, or interception of goods in transit.

Here are the key aspects governing major GST enforcement actions:

1. Statutory Time Limitations for Determination of Tax (Sections 73 & 74)

The time limitations for issuing Show Cause Notices (SCNs) and passing final adjudication orders depend on whether the case involves fraud, wilful misstatement, or suppression of facts (Section 74 - Malafide) or pertains to other reasons (Section 73 - Bonafide). These deadlines are tied to the due date for furnishing the Annual Return (AR) for the relevant financial year (FY).

Note on Stay Exclusion: If the service of the notice or issuance of the order is stayed by a Court or Appellate Tribunal, the period of such stay must be excluded when computing these time limits.

2. Required Documentation in Demand and Adjudication

The process of determination of tax and adjudication (under Sections 73, 74, and 76) involves specific, prescribed forms:

• Pre-SCN Intimation: The proper officer may communicate the details of tax, interest, and penalty ascertained in FORM GST DRC-01A (Part A) before serving the formal notice.

• Show Cause Notice (SCN) / Statement: The officer serves the notice (under Sections 73, 74, 76, 129, 130, etc.) along with a summary in FORM GST DRC-01 electronically. For subsequent periods under Section 73(3) or 74(3), a statement is served with a summary in FORM GST DRC-02.

• Voluntary Payment/Intimation: A person making a voluntary payment (before or after SCN) must intimate the proper officer using FORM GST DRC-03. If the payment is accepted, the officer issues an acknowledgement in FORM GST DRC-04.

• Conclusion of Proceedings: If voluntary payment is made within 30 days of the SCN (under S. 73 or S. 74) or within 14 days of detention/seizure (under S. 129), the proper officer issues an order in FORM GST DRC-05 concluding the proceedings.

• Reply to SCN: The registered person must furnish a representation/reply to the SCN in FORM GST DRC-06.

• Final Order (Demand Order): The summary of the final adjudication order (under S. 73(9), 74(9), 76(3), etc.) must be uploaded electronically in FORM GST DRC-07. This summary order is treated as the notice for recovery.

• Rectification/Withdrawal: A summary of any rectification or withdrawal order (under Section 161) is uploaded in FORM GST DRC-08.

Specific Documentation for ITC Discrepancies (FY 2017-18 & 2018-19)

In proceedings for Financial Years 2017-18 and 2018-19, specific documentary requirements are mandated to prove the genuineness of Input Tax Credit (ITC) claimed when discrepancies exist between FORM GSTR-3B and FORM GSTR-2A:

1. Possession of Tax Invoice: The recipient must possess the tax invoice or debit note.

2. Receipt of Goods/Services: The recipient must have actually received the goods or services.

3. Payment to Supplier: The recipient must have paid the value of the supply along with the tax payable to the supplier.

4. Proof of Tax Payment by Supplier: 

   • If the difference between ITC claimed (GSTR-3B) and ITC available (GSTR-2A) for a supplier exceeds Rs 5 lakh, the recipient must produce a certificate from a Chartered Accountant (CA) or Cost Accountant (CMA) confirming that supplies were made and tax was paid by the supplier in their GSTR-3B return. This certificate should contain the UDIN.

   • If the difference is up to Rs 5 lakh, the recipient must produce a certificate from the concerned supplier confirming the supplies and payment of tax in GSTR-3B.

3. Statutory Time Limitations in Scrutiny of Returns (Section 61 / Rule 99)

The scrutiny process begins with the selection of returns based on risk parameters by DGARM.

• Notice of Discrepancies: The proper officer (Superintendent) issues a notice in FORM GST ASMT-10 informing the registered person of discrepancies and requesting an explanation/action.

• Time for Reply: The registered person must furnish a reply in FORM GST ASMT-11 within a time not exceeding thirty days from the date of service of ASMT-10, unless a further period is permitted by the proper officer.

• Conclusion of Scrutiny: If the explanation is accepted, the proper officer issues an order in FORM GST ASMT-12 within thirty days from the receipt of the reply.

• Initiation of Demand Action (u/s 73 or 74): 

  • If the reply is furnished but deemed unacceptable, action under Section 73 or 74 must be initiated within thirty days from the receipt of FORM GST ASMT-11.

  • If no reply is received, action must be initiated within fifteen days after completion of 30 days of issuance of FORM GST ASMT-10 (i.e., within 45 days of issuing ASMT-10).

4. Statutory Time Limitations in Goods in Transit Enforcement (Sections 129 & 130)

Enforcement actions concerning goods in transit under Section 129 (detention and seizure for non-compliance) and Section 130 (confiscation for intent to evade tax) are subject to strict timelines.

A. Detention and Seizure (Section 129)

• Documents to be Carried: The person in charge of a conveyance must carry documents like the invoice, bill of supply, or delivery challan, and a valid E-Way Bill (FORM EWB-01) in physical or electronic form, if the goods value exceeds the specified limit (e.g., Rs 50,000/-).

• Inspection Report Timeline (Rule 138C): 

  • A summary report of inspection must be recorded in Part A of FORM GST EWB-03 within 24 hours of inspection.

  • The final report must be recorded in Part B of FORM GST EWB-03 within three days of inspection.

  • The Commissioner can extend the time for the final report by up to three more days using FORM GST MOV-03.

• Detention Notice and Order: 

  • The proper officer detaining the goods must issue a notice in FORM GST MOV-07 specifying the tax and penalty payable within 7 days of detention or seizure.

  • The order for payment of tax and penalty (Form GST MOV-09) must be passed within 7 days from the date of service of the notice. Failure to meet this 7-day deadline renders the proceedings "fatal".

• Release Timeline: The owner must pay the required tax and penalty (or furnish security) within 14 days of the issue of the order of detention (FORM GST MOV-06). The payment should be intimated using FORM GST DRC-03.

B. Confiscation (Section 130)

• Initiation: If the required tax and penalty under Section 129 are not paid within 14 days of the detention order (FORM GST MOV-06), proceedings for confiscation (Section 130) are initiated by serving a notice in FORM GST MOV-10.

• Notice for Confiscation (Seized Goods): If goods are seized under Section 67(2), a show cause notice (SCN) for confiscation proceedings (u/s 130) must be issued within 6 months of the seizure. This period may be extended once for a maximum of another 6 months by the proper officer if sufficient cause exists.

• Provisional Release Documentation (Seized Goods under S. 67): For provisional release, the person must execute a bond in FORM GST INS-04 and furnish a security (Bank Guarantee) equivalent to the applicable tax, interest, and penalty. Perishable or hazardous goods can be released immediately upon payment of the lower of market price or the amount of tax, interest, and penalty, confirmed by order in FORM GST INS-05.

• Final Confiscation Order: The confiscation order is passed in FORM GST MOV-11, offering a suitable time, generally not exceeding three months, to pay the penalty and fine in lieu of confiscation to get the goods/conveyance released.

5. Appeal Limitations

An aggrieved person may appeal an adjudication order:

• First Appeal (to Appellate Authority, S. 107): The appeal must be filed in FORM GST APL-01 within three months from the date the decision/order is communicated. The Appellate Authority may condone a delay of up to one additional month. A certified copy of the order must be submitted within seven days of filing the appeal.

• Second Appeal (to Appellate Tribunal, S. 112): The appeal must be filed within three months from the date the order sought to be appealed against is communicated. The Tribunal may admit an appeal within three months after the initial period if sufficient cause is shown. The department may file an appeal within six months.

• High Court Appeal (S. 117): Appeal must be filed within 180 days, though the High Court has the power to condone delay for sufficient cause.

Notice for conducting audit u/s 65(3) (gst adt-01) | DRC-01a format | GST anti evasion department powers | How to reply for asmt-13