Sec. 20 Recovery of tax not paid or short paid or erroneously refunded
A. Recovery of tax not paid or short paid or erroneously refunded for any reason other than fraud or any wilful misstatement or suppression of facts
(1) Where any tax has not been paid or short paid or erroneously refunded, for any reason, other than the reason of fraud or any wilful misstatement or suppression of facts to evade tax, the proper officer shall, within three years from the relevant date, serve notice on the person chargeable with tax which has not been so paid or which has been so short paid or to whom the refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice.
(2) Where a notice has been issued for any period under sub-section (1), the proper officer may serve, within one year from the date of service of the said notice, a statement, containing the details of tax not paid or short paid or erroneously refunded for the subsequent period, on the person chargeable with tax. The service of such statement shall be deemed to be service of notice on such person under the aforesaid sub-section (1), subject to the condition that the grounds relied upon for the subsequent period are the same as are mentioned in the earlier notice.
(3) The person chargeable with tax may, before service of notice under sub-section (1) or sub-section (2), pay the amount of tax along with interest payable thereon under section 21 on the basis of his own ascertainment of such tax or the tax as ascertained by the proper officer and inform the proper officer in writing of such payment. The proper officer, on receipt of such information, shall not serve any notice under sub-section (1) in respect of the tax so paid or any penalty leviable under the provisions of this Act or the rules made there under.
(4) Where the proper officer is of the opinion that the amount paid under sub-section (3) falls short of the amount actually payable, he shall proceed to issue the notice as provided for in sub-section (1) in respect of such amount which falls short of the amount actually payable within one year from the date of receipt of information under subsection (3).
(5) Where any person chargeable with tax under sub-section (1) or under sub-section (2) pays the said tax alongwith interest payable under section 21 within thirty days of issue of show cause notice, no penalty shall be payable and all proceedings in respect of the said tax shall be deemed to be concluded.
(6) The proper officer shall, after considering the representation, if any, made by person chargeable with tax, determine the amount of tax, interest and a penalty not exceeding ten percent of tax or five thousand rupees, whichever is higher, due from such person and issue an order.
(7)The proper officer shall issue the order within one year from the date of issue of notice under sub-section (1) or, as the case may be, sub-section (4) or statement under sub-section (2).
B. Recovery of tax not paid or short paid or erroneously refunded by reason of fraud or any wilful misstatement or suppression of facts
(1) Where any tax has not been paid or short paid or erroneously refunded by reason of fraud, or any willful misstatement or suppression of facts to evade tax, the proper officer shall, within five years from the relevant date, serve notice on the person chargeable with tax which has not been so paid or which has been so short paid or to whom the refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice along with interest payable thereon under section 21 and a penalty equivalent to the tax specified in the notice.
(2) Where a notice has been issued for any period under sub-section (1), the proper officer may serve, within one year from the date of service of the said notice, a statement, containing the details of tax not paid or short paid or erroneously refunded for the subsequent period, on the person chargeable with tax. The service of such statement shall be deemed to be service of notice on such person under the aforesaid sub-section (1), subject to the condition that the grounds relied upon for the subsequent period are the same as are mentioned in the earlier notice.
(3) The person chargeable with tax may, before service of notice under sub-section (1) or sub-section (2), pay the amount of tax along with interest payable under section 21 and a penalty equivalent to fifteen per cent of such tax on the basis of his own ascertainment of such tax or the tax as ascertained by the proper officer and inform the proper officer in writing of such payment. The proper officer, on receipt of such information, shall not serve any notice under sub-section (1) in respect of the tax so paid or any penalty leviable under the provisions of this Act or the rules made thereunder.
(4) Where the proper officer is of the opinion that the amount paid under sub-section (3) falls short of the amount actually payable, he shall proceed to issue the notice as provided for in sub-section (1) in respect of such amount which falls short of the amount actually payable within one year from the date of receipt of information under subsection (3).
(5) Where any person chargeable with tax under sub-section (1) or under sub-section (2) pays the said tax along with interest payable under section 21 and a penalty equivalent to twenty five per cent of such tax within thirty days of communication of the notice, all proceedings in respect of the said tax shall be deemed to be concluded.
(6) The proper officer shall, after considering the representation, if any, made by the person chargeable with tax, determine the amount of tax, interest and penalty due from such person and issue an order.
(7) The proper officer shall issue the order within a period of eighteen months from the date of issue of the notice under sub-section (1) or statement under sub-section (2).
(8) Where any person served with an order issued under sub-section (6) pays the tax along with interest payable thereon under section 21 and a penalty equivalent to fifty percent of such tax within thirty days of the communication of order, all proceedings in respect of the said tax shall be deemed to be concluded.
C. General provisions relating to demand of tax
(1) Where the service of notice is stayed by an order of a Court or Tribunal, the period of such stay shall be excluded in computing the period of one year, three years or five years, as the case may be.
(2) Where any Appellate Authority or Tribunal or Court concludes that the notice issued under sub-section B(1) or B(2) is not sustainable for the reason that the charges of fraud or any wilful mis-statement or suppression of facts to evade tax has not been established against the person to whom the notice was issued, the proper officer shall determine the tax payable by such person for the period of three years, deeming as if the notice were issued under sub-section A(1) or A(2).
(3) An opportunity of personal hearing shall be granted where a request is received in writing from the person chargeable with tax or penalty, or where any adverse decision is contemplated against such person.
(4) The adjudicating authority shall, if sufficient cause is shown by the person chargeable with tax, grant time, from time to time, to the said person and adjourn the hearing for reasons to be recorded in writing:
Provided that no such adjournment shall be granted more than three times to a person during the proceeding.
(5) The proper officer, in his order, shall set out the relevant facts and the basis of his decision.
(6) The amount of tax, interest and penalty demanded in the order shall not be in excess of the amount specified in the notice and no demand shall be confirmed on grounds other than the grounds specified in the notice.
(7) Where the Appellate Authority or Tribunal or Court modifies the amount of tax determined by the proper officer, the amount of interest and penalty shall stand modified accordingly, taking into account the amount of tax so modified.
(8) Interest on the tax short paid or not paid shall be payable whether or not specified in the order determining the tax liability.
(9) The officer issuing the order under sub-section A(6) or under sub-section B(6) shall be different from the officer who issued the notice to show cause.
(10) The adjudication proceedings shall be deemed to be concluded if the notice to show cause is not decided within one year as provided for in sub-section A(7) or within eighteen months as provided for in sub-section B(7).
D (1) The provisions of sub-section A, B, C above shall apply, mutatis mutandis, to the recovery of interest where interest payable has not been paid or part paid or erroneously refunded.
Explanation: For the purposes of this section, “relevant date” means,—
(i) short-paid:
a) b) no return has been filed; c) under this Act or the rules made thereunder; (ii) (iii) of such refund.
21. In the case of goods and/or services in respect of which tax has not been paid or the date of filing of return under this Act, in a case where a return has been filed; the date on which the return was due to be filed under this Act, in a case where in cases other than (a) and (b), the date on which the tax is required to be paid in a case where the tax is provisionally assessed under this Act or the rules made thereunder, the date of adjustment of tax after the final assessment thereof; in a case where any sum relating to tax has erroneously been refunded, the date
Interest on delayed payment of tax
(1) Every person liable to pay tax in accordance with the provisions of the Act or rules made thereunder, who fails to pay the tax or any part thereof to the account of the Central or a State Government within the period prescribed, shall, on his own, for the period for which the tax or any part thereof remains unpaid, pay interest at such rate as may be notified by the Central or a State Government.
(2) The interest under sub-section (1) shall be calculated from the first day such tax was due to be paid.
Source:- Sub-Committe II Report on Model GST Act, 2016
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