News

Published: December 30, 2023
Updated: December 30, 2023

GST Council Grants Extension for Tax Recovery: Businesses Get Breathing Room

In a recent development, the Goods and Services Tax (GST) Council has provided tax officials with an extended timeline for the recovery of dues from businesses for the financial years 2019 (FY19) and 2020 (FY20). This decision aims to address backlogs in tax recovery, offering central and state tax authorities additional time to navigate the complexities.

Extended Deadlines: A Reprieve for Tax Officials

The GST Council's decision translates into extended deadlines for tax officials. For FY19 dues, officials now have until the end of April 2024, while the deadline for FY20 dues has been stretched to the end of August next year. This move is particularly significant in light of the challenges faced by tax authorities in managing pending cases and ensuring a thorough tax recovery process.

Legal Framework: Section 73 of the Central GST Act

The prescribed time limit for recovering dues, as per section 73 of the Central GST Act, is three years from the date of filing GST annual returns. The extension allows tax officials the necessary time to address instances of tax discrepancies, including underpayment of taxes, misuse of tax credits, or incorrect tax refunds.

Exclusionary Clause: Fraud, Misstatement, or Suppression of Facts

It's crucial to note that the extended time limit does not apply to cases involving fraud, wilful misstatement, or suppression of facts. The focus remains on addressing discrepancies and ensuring a fair and transparent tax recovery process.

Expert Opinions: Responding to Industry Concerns

Tax experts view this extension as a response to the growing number of cases with adjudicating authorities and concerns about businesses facing challenges in providing requested information within the initially stipulated timelines.

Insights from Saurabh Agarwal, Tax Partner at EY

Saurabh Agarwal notes, "For FY19, the extension aims to provide taxable persons sufficient time for submitting necessary information, facilitating a more thorough assessment process." For FY20, the extension grants the department additional time for issuing show cause notices, ensuring a comprehensive review.

Move Criticised by Accounting and CA Professionals

The extended deadlines though strike a balance between the need for thorough assessments and the practical challenges faced by businesses, put unnecessary pressure on small businesses to reconcile and find deviations in their GST returns leading to the Show Cause Notice.