The Bangalore Zonal Unit of Directorate of Systems and Data management is entrusted with the task of development of Dispute settlement and resolution (DSR), Investigation, Audit, Mobility and E-way Bill modules.
Adjudication is one of the modules encompassed in the compendious Dispute Settlement and Resolution(DSR) module, for which it was deemed necessary to hold personal hearings to meet the principles of natural justice.
Thus keeping in mind the necessity and principles of natural equity, the functionality for the personal hearing proceedings of Adjudication module is now available for use by the departmental officers via the DSR Advisory no. 04/2021 which was issued on April 26, 2021.
1. What are the Legal provisions in effect
Below are given the sections which are necessary to be explained in order to understand what is given in the advisory.
The incidence of the erroneous payment of tax or wrong availing of Input Tax Credit may be caused because of an inadvertent mistake or might be a case of intentional attempt (fraud) to evade the tax under section 73 and 74 off the act.
Thus, section 75 provides that an opportunity of hearing shall be granted to the person chargeable with tax where a request is received or where any adverse decision is contemplated.
Herein it is mandatory for the proper officer to issue a speaking order and to set out all relevant facts and the basis of his decision in the Order issued by him so as to refer the same for personal hearings.
Given below are mentioned the sections and rules that are mentioned in the advisory to facilitate the proceedings of e personal hearing.
- Section 75(4) which states that:
An order is required to be issued in certitude of the direction of the Tribunal or a Court shall be issued within two years from the date of communication of the said direction and an opportunity of hearing shall be given where a request is received in writing from the person chargeable with tax or penalty, or where any adverse decision is scrutinized against such person.
- Section 75(5) which states that:
The proper officer, if sufficient cause is shown by the person chargeable with tax, grant time to the said person and adjourn the hearing for reasons to be recorded in writing.
But no such adjournment shall be granted for more than three times to a person during the proceedings.
- Rule 142(4) which states that:
The representation of a person chargeable with tax, determine the amount of tax, interest and a penalty equivalent to ten per cent of tax or ten thousand rupees, whichever is higher, due from such person and issue an order [s.73(9)], where the person makes the payment of tax and interest along with penalty, the proper officer shall issue an order in FORM GST DRC-05 concluding the proceedings [s. 74(9)], and where the proper officer shall, after considering the representation, if any, made by the person on whom the notice is served, determine the amount due from such person and thereupon such person shall pay the amount so determined..shall be in FORM GST DRC-06.
2. What are the forms used
1.FORM GST DRC-01
If a person is chargeable with tax, interest and penalty then the proper officer hereafter will first need to communicate the details of tax, interest and penalty, as ascertained by him, in Part A of Form GST DRC-01.
As per the Rules, previously, at the time of serving of a notice or statement, the proper officer had to issue a summary. However, now, with this new sub-rule inserted, the tax, interest and penalty payable will need to be communicated to the taxpayer first, before the notice or statement gets served. Hence, it is an intimation rather than a show-cause notice.
2.FORM GST DRC-02
After issuing the show cause notice under FORM GST DRC-01, if the proper officer wants to issue details of tax unpaid or short paid for the same ground but for any other period, then he can issue a statement abiding the respective sections.
3.FORM GST DRC-06
This is a reply to the show cause notice as mentioned above in form DRC-01. Under the GST regime, tax is paid on a self-assessment basis. If the self-assessment is incorrect, the Department can issue a Notice. A Notice can be issued for short payment/non-payment of taxes, claiming an erroneous refund, wrong availment of ITC, etc. after which if the person wants to reply to the same, they reply under this FORM GST DRC-06.
3. What has been brought in via the advisory for E-Personal Hearing
An online platform for E-personal hearings. This is built for the Adjudicating Authority and is the process that is to be held after the issuance of DRC-01/02 (Show Cause Notice/Statement of Demand) to meet the principles of natural Justice.
The opportunity for personal hearing can be allowed by the officer through FORM GST DRC-01 (Show Cause Notice) or as desired by the taxpayer through FORM GST DRC-06 (which is a reply) or provided by the Adjudicating Authority himself by fixing the personal hearing.
The pre-requisite for executing this functionality is that FORM GST DRC-01/DRC-02 should have been issued in the system i.e. the online platform itself.
The online platform provides space where the adjudicating authority can function, but for that the authority first of all has to select DRC-01 Number from the ‘DRC-01s pending for adjudication’ list.
After the authority has selected the same, they have to follow a specific path i.e. to click on the DISPUTE SETTLEMENT AND RESOLUTION (DSR) tab where they will find an option ‘common list page’, after clicking on the same they will be able to the ‘SHOW CAUSE NOTICE’ (SCN) list, from where they will be able to view all the scheduled hearing and notices.
Options such as ‘View Reply’ and ‘Fix PH’ are provided in the list and the Adjudicating Authority can make use of such options depending upon the circumstances.
‘View Reply’ displays the FORM GST DRC-06 and its contents.
‘Fix PH’ leads to ‘Personal Hearing Management’, wherein platform for 1st ‘Personal Hearing’ gets created and the officer can select date & time and issue personal hearing notice to the tax payer through GSTN portal.
In case personal hearing is fixed while issuing FORM GST DRC-01, the system displays that the personal hearing is fixed and accordingly the Adjudicating Authority can proceed further.
4. What happens after the 1st personal hearing is setup
Any of the following circumstances may take place:
Herein the personal hearing already fixed is adjourned and the next personal hearing is enabled. The officer has to select date and time and issue a personal hearing notice. Limitations of such adjournments are a maximum of three times.
This changes the status of personal hearing already fixed to a record hearing, and the officer afterwards can enter details of representative and record the personal hearing.
This option closes the hearing proceedings and changes the status to closed.
This leads to the next process i.e. ‘preparation and issue of order-in-original’. This option is a mandatory one and is required for using to move to the next stage of adjudication, otherwise the task of adjudication stops at this stage only.
However, the request for adjournment or cancellation of personal hearing has to be made by the taxpayer offline. This can be documented by the adjudicating authority while adjourning or cancelling ’Remarks’ text box and at the same time the offline document/record can be uploaded in the tabs provided.
It may also be noted that the advisory includes to ensure that notices or any other documents, which are legal in nature are signed by the respective authorities offline, as the facility for digital signature is not available for the time being.