Section 75 of CGST Act, 2017 sets out the general principles governing the adjudication under the GST law. It provides for the principles and norms to be observed by proper officer carrying out any adjudication under section 73 and 74 or any other provisions of the GST law.
The adjudication is done by the departmental officers, and in this capacity they act as quasi-judicial officers. It is an important function of the officers and casts heavy responsibility on the officers invested with the powers of adjudication to use it with utmost care and caution, free from any prejudice or bias. It is important to know and understand the facts of the case, processing them properly and to apply correctly the sections and rules of law or Notifications that may be relevant to the facts of each case.
The adjudication requires issuance of Show Cause Notice which has to be replied by the taxpayer. How to reply to show cause notice is matter of fact and requires skills of drafting and interpretation. Following points should be noted while handling and replying to show cause notice:
Handling Show Cause Notice (SCN) and reply
Any Show Cause Notice (SCN) may be avoided only in two situations:
- The events triggering issuance of SCN, i.e., scrutiny or audit or other investigation is handled properly to the satisfaction of the officer.
- Pre-SCN consultation is attended to and addressed so that SCN stage is not reached, if officer is convinced.
- SCN should be verified as to its completeness i.e., whether it is accompanied by all annexures, if any mentioned in SCN and whether all relied upon documents (RUD’s) are also annexed to it.
- SCN must be read completely and minutely before any attempt is made to draft a reply.
- Any show cause notice ought to be replied invariably. Taxpayer in order to get relief, if any, must reply to SCN.
- SCN shall contain a date upto which noticee (taxpayer / assessee) is supposed to reply to SCN. Efforts should be made to do so within stipulated time.
- Sometimes, SCN issuing authority and adjudicating authority may be different (e.g. in cases of audit / investigation). In such cases, SCN may be looked into to ensure that SCN reply is submitted to the correct authority only.
- Generally SCN provides for 30 days time to furnish reply to SCN. However, if the noticee feels that it may not be in a position to submit reply within the given time frame, extension of time may be requested for. Such a date line is not rigidly fixed and a reasonable extended time can be provided.
- Such extension of time cannot be assumed which is generally granted.
- However, repeated extensions may be discouraged and may also not be granted.
- Reason for seeking extension must be provided in writing.
- If no reply is submitted as per SCN, the proper officer may proceed for adjudication.
- Reply to SCN, if not submitted earlier, may also be furnished on the date of hearing of SCN itself.
- Reasons for extension of time could be any reasonable reason such as on health grounds, some exigencies in business premises / family, labour strike or lock down etc.
- Reply to show cause notice should be invariably submitted.
- Reply should be comprehensive and complete in all respects.
- An attempt should be made to ensure that all allegations and/or entire demand sought to be recovered are properly addressed with detailed factual matrix, applicable legal provisions and the grounds on which proposed demand is contested.
- Reply should be duly supported by documents not on record in support of reply such as agreements, contracts, invoices, bills, books of accounts, details etc including any other evidences in support.
- Reply should also refer to all relied upon documents (RUDs) wherever required.
- Reply should also mention that the noticee would like to avail the opportunity of being heard personally.
- Reply should be indexed, page numbered, paragraphed and submitted against proper acknowledgment or by registered post.
- Reply should be duly dated and signed.
(To be continued…)
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