INTRODUCTION: This section addresses the procedure and implications when a tax is not paid, short paid wrongly refunded, or when input tax credit is wrongly availed or utilized, excluding cases of fraud, willful misstatement, or deliberate suppression of facts.
Tax Discrepancy Notice:
If a tax discrepancy is identified (non-fraudulent), the responsible individual will receive a notice to explain and address the stated tax amount, along with interest as per Section 50, and potential penalties under the Act or its rules.
TIMING OF NOTICE
This notice will be issued at least three months before the deadline mentioned in sub-section (10) for order
issuance.
ADDITIONAL STATEMENT FOR OTHER PERIODS
If a notice is issued for a certain period, the officer can serve a statement detailing discrepancies
for other periods, provided the reasons are the same as in the initial notice.
STATEMENT EQUIVALENT TO NOTICE
Serving this statement is equivalent to serving a notice for those other periods.
PROACTIVE PAYMENT BY TAXPAYER
Before receiving any notice or statement, if a taxpayer realizes and pays their tax dues (including interest), they should inform the proper officer.
NO NOTICE AFTER PROACTIVE PAYMENT
If the officer is informed about proactive payment, they won’t serve any notice or statement concerning that tax amount or any associated penalties.
SHORT PAYMENTS
If the officer believes that the taxpayer’s proactive payment is less than the actual owed amount, they will serve a notice for the outstanding amount.
WAIVER OF PENALTY
If the taxpayer pays their dues (including interest) within 30 days of receiving a notice, they won’t face any penalties, and the matter will be considered
resolved.
FINAL DETERMINATION
After considering any representation from the taxpayer, the officer will decide on the total amount due (tax, interest, and either 10% of the tax or ten thousand rupees as a penalty, whichever is more) and issue an order.
TIME LIMIT FOR THE ORDER
The officer should issue this order within three years from the due date of the annual return for the relevant financial year or from the date of the erroneous refund.
PENALTY FOR LATE SELF-ASSESSED TAX
If any self-assessed tax or tax amount collected isn’t paid within 30 days from its due date, a penalty will be applicable regardless of subsections (6) or (8).
