The Delhi GST Department has issued crucial instructions dated October 31, 2023, concerning the scrutiny of GST returns for the financial year 2017-2018. Show cause notices (SCNs) have been issued by Proper Officers for the year 2017-18. According to Sub-section (8) of Section 73 of the Delhi Goods and Services Tax Act, 2017 (DGST Act), taxpayers have 30 days to file a reply/representation in response to these SCNs. Sub-section (4) of Section 75 of the DGST Act mandates providing a personal hearing before passing any adverse order.
It has been noted that in some cases, SCNs have been issued, setting a date for personal hearing before the 30-day deadline. It is now clarified that conducting personal hearings before receiving a written reply/representation would not be useful.
In addition, some SCNs have been issued pointing out discrepancies for which notices in FORM GST ASMT-10 were previously issued, and proceedings were concluded with information in Form GST ASMT-12. This applies to cases where audit proceedings have been completed. Adjudicating issues that have already been decided or dropped under Section 61 of the DGST Act or settled in audit proceedings would not be appropriate.
To address these concerns, the following clarifications have been issued:
- In cases where SCNs have been issued after completing audit proceedings, they need to be withdrawn after following the required audit report procedures.
- In cases where SCNs have been issued after completing scrutiny of return proceedings, they should be withdrawn to the extent that the subject matter or issues have already been covered in previous proceedings, following due verifications and recording of reasons.
- In cases of Input Tax Credit (ITC) reversal, the Proper Officer will verify the input used for making various supplies and take appropriate action.
- In cases of blocked credit, where SCNs have been issued based on HSN/SAC Codes or transactions with canceled taxpayers, the Proper Officer will examine relevant facts along with supporting records and decide on a case-by-case basis.
- A personal hearing will be provided after the taxpayer files a reply/representation or after the expiry of the 30-day period, as required. Moreover, a personal hearing must be given to the taxpayer before passing any adverse order in accordance with Section 75(4).
- The Proper Officer will duly record/document the proceedings of the personal hearing.
- In cases where it is necessary to withdraw a notice, the Proper Officer may drop the proceedings based on facts and the contents of each case, after recording reasons, without requiring a written submission or personal hearing.
- Taxpayers will be informed of the dropping of proceedings where applicable.
All Proper Officers are required to strictly adhere to legal provisions and relevant guidelines/circulars. Non-compliance will result in strict action. Importantly, it must be ensured that no harassment is caused to any taxpayer, and due taxes are collected by the department.
Below is detailed Instruction
GOVERNMENT OF NATIONAL CAPITAL TERRITORY OF DELHI
DEPARTMENT OF TRADE AND TAXES
(POLICY BRANCH)
The Delhi GST Department issued important Instructions vide F.3/432/GST/Policy/2023/1048-1053 dated October 31, 2023 regarding the scrutiny of GST Returns for the Financial Year 2017-2018
With reference to above mentioned subject, Proper Officers have issued show cause notices (SCNs) for the year 2017-18. Sub-section (8) of Section 73 of Delhi Goods and Service Tax Act, 2017 (hereinafter referred to as “DGST Act” in short) provides a time period of 30 days for the taxpayers to file a reply/representation in response to said SCN. Further, Sub-section (4) of Section 75 of the DGST Act states that a personal hearing must be given before passing any adverse order.
It has been observed that in some cases SCNS have been issued fixing date of personal hearing before the expiry of 30 days. It is hereby clarified that personal hearings before filing any written reply/representation would not serve any useful purpose.
Also, in some cases, SCNs have been issued pointing out discrepancies on which notices in FORM GST ASMT-10 were already issued earlier and proceedings had also been completed by issuing information in Form GST ASMT-12 and in cases where audit proceeding has been completed. Hence, it would not be appropriate to adjudicate issues that have already been decided/dropped under Section 61 of the DGST Act or stand settled in audit proceedings.
In this regard, the following clarifications are issued for compliance by all concerned :-
I. Cases where notices have been issued even after completion of audit proceedings, SCNs need to be withdrawn after following the required course of action on audit report.
II. Cases where notices have been issued after completion of scrutiny of return proceedings, SCNS need to be withdrawn to the extent of subject matter or issues which have already been covered in previous proceeding, after due verifications and recording of reasons.
III. In cases of ITC reversal, Proper Officer shall make due verification of input used for making taxable/non-taxable supplies or input used for non-business or personal purposes or making exempt supply.
IV. In cases of blocked credit where notices have been issued on the basis of HSN/SAC Codes OR cases where transactions have been made with cancelled taxpayers, Proper Officer shall examine relevant facts along with supporting records and take decision on case to case basis, in accordance with law.
V. Proper Officer shall provide a personal hearing after filing of reply/representation by the taxpayer or after the expiry of period of 30 days, as the case may be. Moreover, before passing any adverse order, a personal hearing must be given to taxpayer in terms of Section 75(4).
VI. Proper Officer shall also duly record/document the proceedings of personal hearing.
VII. In cases where it comes/has been brought to the knowledge of the Proper Officer that the notice is required to be withdrawn, the Proper Officer after recording reasons may, without any written submission of the taxpayer or any personal hearing, drop the proceedings on the basis of facts and contents of each case.
VIII. A taxpayer must be informed about dropping of proceeding without fail, wherever applicable.
All Proper Officers must strictly adhere to the legal provisions and relevant guidelines/circulars in this regard. Strict action will be taken for non- compliance. Moreover, it should be ensured that no harassment is caused to any taxpayer and due tax is received by the department.
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