TAX DEMANDED UNDER SEC 7(1) & SEC 9 OF CGST ACT, Goods and Services Tax - GST

[Vinod jadhav]

After Audit the department issued SCN and demand tax under sec 7 (1) & sec 9 of CGST Act.

one of the issue of SCN is as below.

During the course of Audit, on P&L and Balance sheet and VAT returns, it is observed that there is a short declaration in the value of taxable turnover when compared VAT returns, GSTRs and P&L of Rs. 77,59,004/- during the financial year 2017-18 under Sec 7 (1) of CGST Act, 2017. Further Tax payer has not provided any clarification on non-payment of GST on the above turnover. Hence the same is liable to tax on which the taxpayer has to discharge tax liability @ 18% Rs 13,96,621/-.

In view of the above, the TP requested to pay an amount of Rs. 13,96,621/-.(CGST Rs. 698311/- SGST Rs. 698311/-) under Sec 7 (1) & Sec 9 of CGST Act, 2017 along with interest under Section 50 of CGST Act, 2017 and Penalty under Section 74 of CGST Act, 2017.

My Question is :

The SCN issued under Section 7 (1) (Scope of Supply) and Section 9 (Levy and Collection) is vague and lacks supporting details, basis of liability, or nature of liability. Because the GST is ultimately levied under Section 7 (1) within the scope of supply.

Posts / Replies

[Shilpi Jain]

Agreed. Mere reco differences cannot lead to demand of tax. The department is bound to show what is the supply made against which the demand is being raised.

[Vinod jadhav]

Are there any case laws regarding sSCN issued only based on Sections 7 and 9 without providing the nature of service, classification, etc.?

[Shilpi Jain]

Many such cases exists in the previous tax regime. Service Tax to be more specific. 

The same principle can apply to GST as well , legislations being pari materia.

[KASTURI SETHI]

Case laws are available on this issue in your support.