The receipt of a notice from the tax departments usually induces anxiety in the minds of the taxpayers. However, the easy-to-use common portal can put their minds at ease. Let us look at what is the procedure followed when the following notices are issued:
In this artcile, we will cover the following:
1. Notices issued by the department
- Request for payment of interest on delayed payment.
- GSTR-3B information as per Section 16(4) of the CGST Act, 2017.
2. What are the reasons for this particular notice?
The following are the reasons for the issue of the notices:
- The GST return for any tax period has been filed after the due date.
- The ITC claimed based on a document has been availed after the expiry of the prescribed time limit for claiming ITC.
The time limit for claiming ITC on a particular invoice is either of the following:
- The due date for filing the return for September of the following financial year.
- The date of filing the relevant annual return.
3. How to reply to this notice?
In response to the notice, the applicable interest on the late payment of tax should be discharged. For the ineligible ITC notices, the ITC must be reversed by paying the equivalent tax amount along with the applicable interest. The following steps may be followed:
Step 1: Log in to the GST common portal with your credentials.
Step 2: Go to Services > User Services > My Applications.
Step 3: Select ‘Intimation of Voluntary Payment – DRC-03’ and click on ‘New Application’. Note that the draft of this application will only be available for 15 days after which it will be purged from the system.
Step 4: Since these notices have arrived without any SCN numbers, under ‘Cause of payment’, select ‘Voluntary’.
Step 5: Select the section number as applicable.
Step 6: The ‘Financial year’ and ‘From’ and ‘To’ dates should be filled corresponding to the relevant tax period for which payment is to be made.
Step 7: Calculate and enter the details of the payment of tax, interest, penalty, etc.
Step 8: A challan is created with the amounts entered. The amount available in the electronic cash ledger or electronic credit ledger is shown and the same can be used to set off the tax liability. The balance amount can be paid in cash.
Note: It should be noted that interest and penality amount should be paid through electronic cash ledger only.
Step 9: Check the verification checkbox and select the name of the authorised signatory and click on ‘Create Challan’.
Step 10: The relevant steps for payment can be followed based on the mode of payment. The draft statement of Form GST DRC-03 will be made available for download.
Step 11: Verify the details present, check the verification checkbox, select the name of the authorised signatory and click on ‘File’. A confirmation message will be displayed followed with the option to either file with DSC or file with EVC. You can select whichever applicable.
A success message with the ARN will be displayed.
- Upon plain reading of the first notice, it can be inferred that the notice is nothing but a reminder to pay the interest in terms of Section 50 of the CGST Act. The notice also mentions that the same may be ignored if such payment of tax is already done.
- The second notice is a more specific notice issued in cases where ITC has been availed beyond the expiry of the time limit to do so.
4. Precautions to be taken to avoid such notice in particular:
- All the returns need to be filed regularly and before the due date to avoid the first notice. Ensure that all the details are declared in the relevant returns.
- It has to be ensured that ITC is claimed as soon as possible within the prescribed time limits in the GST Act – Also, check if there is any claim of ITC in contravention of the GST law.