Returns, Payment, Refunds, Assessment, Audit, Search and Demands
This domain tests the compliance cycle: periodic returns, payment through electronic ledgers, refund mechanics, assessment and audit powers, inspection and search, and recovery of short-paid tax.
Returns and payment
Sections 37 and 39 govern outward supply returns and periodic returns, principally GSTR-1 and GSTR-3B. Section 44 requires an annual return; GSTR-9 is optional below the prescribed turnover threshold, while GSTR-9C self-certified reconciliation applies above ₹5 crore. Section 45 requires a final return. Payment is through the electronic cash and credit ledgers under section 49, with utilisation governed by section 49A and rule 86B restrictions. Section 50 charges interest at 18% on delayed payment and 24% on excess or undue refund claims.
Refunds
Section 54 allows refund claims within two years. Zero-rated and inverted duty claims may receive 90% provisional refund under rule 91 on fulfilment of conditions. Section 56 provides interest for delayed refunds.
Assessment and audit
Section 59 is self-assessment; section 61 scrutiny; section 62 best judgment; section 63 summary assessment. Section 65 authorises departmental audit and section 66 special audit by a chartered accountant or cost accountant nominated by the Commissioner.
Inspection, search and seizure
Section 67 permits inspection and search; section 69 governs arrest; section 70 summons; sections 129 and 130 deal with detention, seizure and confiscation of goods in transit.
Demands
For periods up to 31 October 2024, section 73 applies to non-fraud cases and section 74 to fraud, suppression or wilful misstatement, with three-year and five-year limitation periods. Section 74A, effective 1 November 2024, consolidates demands for later periods, with a 42-month notice period and penalty of 10% or ₹10,000 for non-fraud, and 100% for fraud.
Worked example
A taxpayer collects ₹5,00,000 tax but pays ₹4,00,000. Under section 73, the demand is ₹1,00,000 with penalty of 10% (₹10,000) if paid before notice; under section 74 the penalty would be ₹1,00,000.
Traps
- Missing the two-year refund limitation.
- Applying section 74A retrospectively to pre-November 2024 periods.
- Ignoring interest on delayed refunds.