The recent ruling from the Madras High Court coupled with the introduction of a new feature by GSTN will significantly alleviate the concerns addressed in the petition pertaining to this matter
Legal Provisions
DRC-01: Rule 100(2):
The proper officer shall issue a notice to a taxable person in accordance with the provisions of section 63 in FORM GST ASMT-14 containing the grounds on which the assessment is proposed to be made on best judgment basis and shall also serve a summary thereof electronically in FORM GST DRC-01, and after allowing a time of fifteen days to such person to furnish his reply, if any, pass an order in FORM GST ASMT-15 and summary thereof shall be uploaded electronically in FORM GST DRC-07.
Rule 142 (1) (a):
Provisions under Rule 142 of the Central Goods and Services Tax ( CGST ) Rules, 2017 relating to “Notice and Order for Demand of Amounts Payable under the Act”, are as under:
(a) notice issued under section 52 or section 73 or section 74 or section 76 or section 122 or section 123 or section 124 or section 125 or section 127 or section 129 or section 130, a summary thereof electronically in FORM GST DRC-01.
The system compares the Input Tax Credit (ITC) available as per Form GSTR-2B with the ITC claimed in Form GSTR-3B/3BQ for each return period. If the ITC available in Form GSTR-2B exceeds the ITC claimed in Form GSTR-3B/3BQ by a predetermined limit or percentage difference for a return period, an intimation is sent to you.
Upon receiving an intimation in Form GST DRC-01C, indicating a variance between the ITC available in Form GSTR-2B and that claimed via Form GSTR-3B/3BQ beyond the specified threshold, you are required to respond by submitting a reply in Form GST DRC-01C Part B.
Applicability of GST DRC – 01
The Form GST DRC-01C is applicable to various types of taxpayers, including regular taxpayers (including SEZ units and SEZ developers), casual taxpayers, and taxpayers who have opted out of the composition scheme.
Steps to View and Download GSTR DRC-01
To view filed Form GST DRC-01C :
- Navigate to Returns
- Then move to Return Compliance > ITC Mismatch (DRC-01C)
- Select the radio button for Status.
- Select Completed from drop-down list
- Click the SEARCH button.
- Click the Reference number hyperlink for the order you want to view or download. The completed form will be displayed.
- Click the DOWNLOAD DRC-01C button to download the final PDF of Form DRC-01C.
Time limit to issue SCN/Summary of SCN (DRC-01)
- 2 years and 9 months from due date of filing of Annual return of relevant FY for bona-fide defaulter
- 4 years and 6 months from due date of filing of Annual return of relevant FY for mala-fide defaulter
In the cases where tax is not paid but collected by the recipient, SCN can be issued any time with no time limit.
Mandatory Hearing even if not Opted by Assessee
According to the Madras High Court, in the case of Gabriel India Limited Vs State Tax Officer, 2023, it was ruled that the respondents / GST department has to provide opportunity for personal hearing mandatorily even if it was not opted by the assessee.
The GST department submitted that when downloading the assessee’s filed reply from the portal, “No” appeared under the “option for personal hearing” column. However, the assessee’s counsel argued that they had selected “Yes” for personal hearing. The issue arises when the downloaded printout of the reply indicates “No” for personal hearing despite selecting “Yes” during upload. This discrepancy is a widespread concern among taxpayers across India.
The court noted that even if no reply is filed, it is mandatory on the part of the respondents to provide opportunity to the petitioner for personal hearing. Without giving any such opportunity of personal hearing, the impugned order came to be passed, which amounts to violation of provision specified under Section 75(4) of the Act.
The recent ruling from the Madras High Court coupled with the introduction of a new feature by GSTN will significantly alleviate the concerns addressed in the petition pertaining to this matter.
