If a taxpayer files an appeal and makes the required pre-deposit under subsection (8) of section 112, recovery of the remaining amount is stayed as per subsection (9)
Trade and field formations have expressed concerns about recovery of outstanding dues in situations where the first appellate authority confirms a demand, either partially or fully, and the appeal process under section 112 of the Central Goods and Services Tax Act, 2017 (CGST Act) is hindered due to the non-constitution of the Appellate Tribunal (GSTAT). Additionally, there are questions regarding the adjustment of payments made through FORM GST DRC-03 against the pre-deposit required for filing appeals under sections 107 and 112 of the CGST Act.
Board Clarifications and Guidelines
1. Filing Appeals and Pre-Deposits
When the first appellate authority confirms a demand, taxpayers currently cannot appeal to the GST Appellate Tribunal due to its non-operation. Under Section 112 of the CGST Act, taxpayers have a statutory right to appeal against orders from the first appellate authority or a revisional authority. Section 78 of the CGST Act stipulates that recovery proceedings begin if the payable amount is not settled within three months of the order’s service.
Typically, if a taxpayer files an appeal and makes the required pre-deposit under subsection (8) of section 112, recovery of the remaining amount is stayed as per subsection (9). However, without the Tribunal, some tax officers believe no stay is in place, leading to recovery actions after the period specified in section 78.
To address this, taxpayers can navigate to Services >> Ledgers >> Payment towards demand on their dashboard to make pre-deposit payments. These payments will be mapped against the selected order, reducing the balance liability accordingly. This amount will count towards the pre-deposit required for filing an appeal with the Tribunal.
2. Submitting Undertakings
Taxpayers must file an undertaking with the jurisdictional proper officer, pledging to appeal to the Appellate Tribunal when it becomes operational. Upon providing this undertaking and making the pre-deposit, recovery of the remaining confirmed demand is stayed under subsection (9) of section 112.
Failure to make the pre-deposit or submit the undertaking implies the taxpayer’s unwillingness to appeal, allowing recovery proceedings to commence. Additionally, if an appeal is not filed within the specified timeline after the Tribunal’s operation begins, the remaining demand will be recovered as per the law.
3. Payments via FORM GST DRC-03
Some taxpayers have inadvertently made payments intended for demand settlements through FORM GST DRC-03. Notification No. 12/2024-CT dated 10.07.2024 introduced sub-rule (2B) of Rule 142 and FORM GST DRC-03A, enabling the adjustment of such payments. Taxpayers can electronically file FORM GST DRC-03A to ensure these payments are considered towards the demand from the date of intimation.
Such payments will also be adjusted against the pre-deposit required for appeals under sections 107 and 112. However, if an appeal is not filed within the specified timeline, the remaining demand will be recovered as per the law.
4. Interim Procedures
Currently, the functionality for filing FORM GST DRC-03A is unavailable on the portal. Until it is available, taxpayers should inform the proper officer if they have made a pre-deposit via FORM GST DRC-03. The officer should then refrain from initiating recovery proceedings. Once the FORM GST DRC-03A functionality is live, taxpayers must promptly file the form to adjust their payments against the pre-deposit requirements.
Failure to file FORM GST DRC-03A will lead to recovery actions as per sections 78 and 79 of the CGST Act.
Conclusion
These guidelines ensure a uniform approach across field formations, facilitating taxpayers in meeting pre-deposit requirements and benefiting from recovery stays while waiting for the Appellate Tribunal to become operational. This clarification aims to streamline the recovery process and provide clarity on handling inadvertent payments through FORM GST DRC-03
For more details, readers can download the official notification of circular through the below link.
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