GST was introduced in India, aiming to streamline the indirect tax system in the country. It aimed to eliminate the burden of the multiplicity of taxes on consumers, simplify compliance, and monitor and check tax evasion. However ever since the introduction of GST, the problem of fake registrations. It is based on fake documents, fake invoices, etc. has caused considerable loss to the government.
Many steps have been taken by the authorities to control the issue of fake invoicing, and strict enforcement. It has been taken to check fraudulent activities. In this regard, the GST council has introduced the new feature of issuing an intimation to the taxpayers if there is a discrepancy in tax payment in Form GST DRC-01. Through the intimation, the taxpayer can pay or explain the difference within the specified time without the intervention of the tax officials and avoid scrutiny. Under the GST Act, Section 73 deals with bona fide or genuine cases of non-payment or underpayment of tax, while Section 74 deals with mala fide or intent to deceive non-payment of tax.
Intimation of tax ascertained through Part A of GST DRC-01A
As per notification no. 49/2019, Central Tax dated October 9, 2019, in Rule 142, related to notice of demand under GST, the following changes have been made:
- Notice and order for the demand of amounts payable under the act: The proper officer shall serve, along with i) notice issued under Sections 52, 73, 74, 76, 122 to 125, Sections 127, 129, and 130, a summary thereof electronically in GST DRC-01.
- The concerned officer shall, before serving the notice chargeable with tax, interest, and penalty under (1) of Section 73 or (1) of Section 74, as the case may be, communicate the details of any tax, interest, or penalty as ascertained by the officer in Part A of GST DRC-01A.
- Statement under (3) of Section 74, a summary thereof electronically in GST DRC-02, specifying the details of the amount payable, or
- Where, before the serving of the notice or statement, the person chargeable with tax makes payment of the tax and interest in accordance with the provisions of (5) of Section 74, or where any person makes payment of tax, interest, penalty, or any other amount due in accordance with the provisions of the act, whether on his own or as communicated by the concerned officer under sub-rule 1(A), shall inform the officer of such payment in GST DRC-03, and the concerned officer shall issue an acknowledgement accepting the payment in GST DRC-04.
- Where the person referred to in sub-rule 1(A) has made a partial payment of the amount communicated to him or wishes to file any reply against the proposed liability, he may submit such reply in Part B of GST DRC-01A.
Explanation of the changes in the rule and its effects
- Before the introduction of Rule 142 (1A), show cause notice was being issued through the Form GST DRC-01. But after the introduction of the rule, the concerned officer has to ensure that the intimation in GST DRC-01A is issued under sub-rule 1 (A) for the amount determined regarding tax, interest, or penalty before serving the show cause notice under Section 73(1), or 74(1). By doing so, the taxpayer gets extra time to pay the differential amount. In other words, after determining the amount payable by the taxpayer, the first communication should be through intimation under Rule 142(1) through GST DRC-01A.
- There have been instances where taxpayers have received GST DRC-01 directly without receiving the intimation in GST DRC-01A. In such cases, the taxpayers can ask the proper officer to first communicate through the Form GST DRC-01A.
- After receiving the intimation in GST DRC-01A, the taxpayer can pay the difference amount under
- Section 73(5), or 74(5), as the case may be, and there would not be any penalty imposed by the officer. If the taxpayer does not agree with the liability, he can reply in Part B of GST DRC-01A, after which normal adjudication will continue.
Conclusion
GST DRC-01A is an intimation of tax liability due to tax short paid, not paid, or input tax credit wrongly claimed. The demand from GST is shown in Part A of the intimation. The taxpayer can either accept the calculation and pay the tax or reply about his disagreement with the demand in Part B.
The intimation in GST DRC-01 provides the taxpayer with the option to resolve the dispute either by depositing the tax or, in the case of disagreement, to face judicial proceedings. This rule was passed with the intent of providing the dealer with a pre-show cause notice stage time to verify the records at his end and either confirm or deny the liability. It is meant to benefit both the taxpayer and the department and reduce litigation.
Also Read: Form DRC-01C: A Comprehensive Guide for GST Taxpayers
Frequently asked questions
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What is GST DRC-01?
GST DRC-01 is a summary of the show cause notice to a taxpayer, while Form GST DRC-01A is an intimation issued before the show cause notice. If the taxpayer agrees with the demand of the department, he can pay the liability through Part B of the form, or if he disagrees with the contention of the department, he can reply with clarifications through Part B of the form. If the taxpayer fails to pay or reply, a show cause notice will be sent, and after that, recovery proceedings will be initiated against him.
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What is a show cause notice in GST?
The GST officer may serve a show cause notice to a taxpayer due to tax not paid or short paid, tax erroneously refunded, or input tax credit wrongly availed or utilized. Along with the show cause notice, he will issue a summary of the show cause notice in Form DRC-01 with the following details:
- Details of the person to whom the show cause notice is issued, including GSTIN, address, etc.
- Tax period, financial year, section reference, notice reference
- Brief facts and grounds of the case
- Taxes and other dues, including interest, penalties, and others
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What is the difference between GST DRC 01 and GST DRC-01 A?
GST DRC-01 is a summary of the show cause notice to a taxpayer, while Form GST DRC-01A is an intimation issued before the show cause notice. If the taxpayer agrees with the demand of the department, he can pay the liability through Part B of the form, or if he disagrees with the contention of the department, he can reply with clarifications through Part B of the form. If the taxpayer fails to pay or reply, a show cause notice will be sent, and after that, recovery proceedings will be initiated against him.
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What is Ascertainment meaning in Hindi?
Ascertainment” in Hindi can be translated as “निर्धारण” (Nirdhāraṇ), which means the act of finding out or making certain of something.
