Section 76 of GST – Tax collected but not paid to Government

Section 76 of GST – Tax collected but not paid to Government. Everything you want to know about GST Section 76. In this section you may find all details for “Tax collected but not paid to Government” as per GST Act 2017. This Act may be called the CGST Act, 2017. Detailed Analysis of GST Section 76 of GST Act 2017. We Provide Complete Details for All GST Section’s and In this article you may find all details for GST Section 76. Check Section Wise Analysis of GST Act 2017, Chapter Wise Analysis of GST All Sections. in this article you may find complete details regarding Section 76 of GST Act 2017 – Tax collected but not paid to Government, gst all sections and definitionsNow Check more details from below…..

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Section 76 of GST – Tax collected but not paid to Government

(1) Notwithstanding anything to the contrary contained in any order or direction of any Appellate Authority or Appellate Tribunal or court or in any other provisions of this Act or the rules made thereunder or any other law for the time being in force, every person who has collected from any other person any amount as representing the tax under this Act, and has not paid the said amount to the Government, shall forthwith pay the said amount to the Government, irrespective of whether the supplies in respect of which such amount was collected are taxable or not.

(2) Where any amount is required to be paid to the Government under sub-section (1), and which has not been so paid, the proper officer may serve on the person liable to pay such amount a notice requiring him to show cause as to why the said amount as specified in the notice, should not be paid by him to the Government and why a penalty equivalent to the amount specified in the notice should not be imposed on him under the provisions of this Act.

(3) The proper officer shall, after considering the representation, if any, made by the person on whom the notice is served under sub-section (2), determine the amount due from such person and thereupon such person shall pay the amount so determined.

(4) The person referred to in sub-section (1) shall in addition to paying the amount referred to in sub-section (1) or sub-section (3) also be liable to pay interest thereon at the rate specified under section 50 from the date such amount was collected by him to the date such amount is paid by him to the Government.

(5) An opportunity of hearing shall be granted where a request is received in writing from the person to whom the notice was issued to show cause.

(6) The proper officer shall issue an order within one year from the date of issue of the notice.

(7) Where the issuance of order is stayed by an order of the court or Appellate Tribunal, the period of such stay shall be excluded in computing the period of one year.

(8) The proper officer, in his order, shall set out the relevant facts and the basis of his decision.

(9) The amount paid to the Government under sub-section (1) or sub-section (3) shall be adjusted against the tax payable, if any, by the person in relation to the supplies referred to in sub-section (1).

(10) Where any surplus is left after the adjustment under sub-section (9), the amount of such surplus shall either be credited to the Fund or refunded to the person who has borne the incidence of such amount.

(11) The person who has borne the incidence of the amount, may apply for the refund of the same in accordance with the provisions of section 54.

Introduction

This provision deals with payment of any amount collected as tax but not remitted to the Central/State Government or Union Territory. This section requires him to make the payment forthwith regardless of whether the related supplies are taxable or not.

Analysis

  1. This section makes it obligatory on every person who has collected from any other person any amount representing “tax under this Act”, to pay the said amount to the credit of the Central or State Government regardless of whether the supplies in respect of which the amount was collected are taxable or not.
  2. Please note that there is NO TIME LIMIT also called ‘period of limitation’ for issue of notice under this section unlike under section 73 or 74. Take the example, sale of MRP goods where the MRP includes output tax carrying the ‘maximum price’ for sale in retail. Experts hold the view that MRP actually contains output tax and when goods are sold ‘at MRP’, it would be hit by this section. Experts who hold this view caution unregistered persons, composition taxpayers and taxpayers making exempt supplies to steer clear of selling MRP goods. It appears they need sell ‘below MRP’ excluding output tax but after including input credit lost (refer below for effect of collecting ‘credit lost’). Refer discussions under section 32 for a conjoint reading and understanding on this topic.
  3. Before effecting recovery the Proper Officer has to serve a notice along with a summary in FORM GST DRC-01, on to any person who has collected any amount representing as tax requiring to SCN as to why –
    • the said amount should not be paid by him to the Government;
    • penalty equivalent to such amount specified in the notice should not be imposed on him.
  4. The person is permitted to make representation in FORM GST DRC-06, against the notice served on him. The person ought to be given an opportunity of being heard where a request is made by such person in writing.
  5. After considering such representation made by the person, the Proper Officer shall determine the amount due from the person and pass an order within one year from the date of issue of notice. Where the service of notice is stayed by order of the Court or Appellate Tribunal, the period covered by the stay shall stand excluded for the purpose of computing the time limit. Further, a summary of such order shall be uploaded electronically in FORM GST DRC-07, specifying therein the amount of tax, interest and penalty payable by the person chargeable with tax.
  6. The Proper Officer must pass a speaking order.
  7. Upon such determination, the Person has to pay such amount determined.
  8. Interest at the rate specified under section 50 shall be paid on the amount collected as representing tax (either paid voluntarily or on determination by the Proper Officer). Interest shall be calculated from the date of collection of amount till the date of deposit of amount.
  9. The amount paid by such person to the credit of the Central Government or a State Government shall be adjusted against the tax payable by the person.
  10. If any surplus is left after adjustment against the tax liability, it will be
    •  Credited to consumer welfare fund; or
    • Refunded to the person who has borne the incidence of such amount.
  11. The person claiming such refund shall follow the conditions and procedure contained in section 54 of CGST Act.
  12. There appears to be no time limit to commence proceedings under this section. It is important to note that in the context of Central Excise, where input credit was to be reversed on account of Customer being entitled to exemption from payment of duties, the Larger Bench of the Hon’ble Tribunal held in Unison Metals Ltd. v. CCE, Ahd-I [(2006) 204 ELT 323 (LB-Tri.)], that recovery of ‘Cenvat Loss’ would not attract the mischief of section 11Das it was not ‘duty of excise’ collected liable to be paid to the Government. GST too denies credit under section 17(2) of CGST Act where supplies made are exempt. Please note that rate Notification 11/2017-Central Tax (Rate) dated 27.06.2017 prescribing reduced rate of tax with condition of non-availment of input tax credit as well as exemption Notification No 12/2017-Central Tax (Rate) dated 27.06.2017 prescribing exemption up to certain value limit or in certain circumstances, both are enjoined with a ‘condition’ of reversal of credit as read under explanation 4(iv)(b) along with section 17(2) of the CGST Act.

Comparative analysis

Under the erstwhile tax laws, similar provision exists in Central Excise Law5 , Customs Law6 as well as Service Tax Law7 .

 Also, similar provision also exists in all most all the State VAT laws as well.

Frequently Asked Questions

What is the interest rate applicable on delayed payment of amount collected representing it as tax?

According to Section 50, the rate of interest cannot exceed 18%. The rate of interest has been specified @ 18% per annum by Notification No. 13/2017 – Central Tax dated 28.06.2017.

How is the amount of surplus left after adjustment with tax payable dealt with?

Where any surplus is left after the adjustment against the tax payable, the amount of such surplus shall either be credited to the Consumer Welfare Fund or, as the case may be, refunded to the person who has borne the incidence of such amount.

What is the procedure to be followed by the person on receipt of determination of demand of tax collected but not deposited with the Central or a State Government from the proper officer?

The person will be given an opportunity of being heard and after that if any demand arises, then tax, interest and penalty has to be paid accordingly.

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