To maintain uniformity and efficiency in the process of issuing notices under the Kerala State Goods and Services Tax Act, 2017, the Commissioner's office in Thiruvananthapuram has released Circular No. 16/2023. This circular provides clear instructions on the subject-wise issuance of separate notices to taxpayers under Sections 73 and 74 of the KSGST Act, aiming to streamline the process.

Sections 73 and 74: 

Sections 73 and 74 of the Kerala State Goods and Services Tax Act, 2017, address different aspects of tax determination. Section 73 focuses on instances where tax has not been paid, is short-paid, or erroneously refunded, without fraud or willful misstatement. Section 74, on the other hand, deals with similar issues but in cases involving fraud, willful misstatement, or suppression of facts.

The circular highlights Section 6(2)(b) of the Act, which states that if a proper officer initiates proceedings under one of these sections, no further proceedings can be initiated on the same subject matter under another section. This provision ensures that each subject matter of a taxpayer is treated independently, allowing central and state GST administrations to initiate proceedings on different matters without interference.

Under the GST law, subject matter-based litigation is emphasized. This approach allows tax authorities to treat each issue as a separate case, even when dealing with the same taxpayer. This is important because it ensures that the actions of one GST administration do not affect proceedings initiated by another.

The circular acknowledges that there can be situations where a single taxpayer is involved in multiple subject matters. In some cases, the issues may not meet the conditions of Section 74, especially the definition of "suppression" as per Explanation 2 to Section 74. To address this, the circular recommends that separate notices be issued under Sections 73 and 74 for the respective subject matters.

To effectively implement this, the circular emphasizes the need for clear separation of subject matters between Sections 73 and 74. This responsibility lies with the JC Intelligences, the audit monitoring committee, and the proper officers involved in scrutinizing returns.

The circular points out that the closure of proceedings under Sections 73 and 74 should occur at the notice level, not the subject matter level. For instance, a notice issued under Section 73(1) concludes entirely in Section 73(8). This approach ensures that each subject matter remains distinct, making adjudication and closure more efficient.

Independence of Adjudication:

 Finally, the circular underscores that, in line with existing instructions and provisions, the adjudication and closure of each notice or proceeding under Sections 73 and 74 should be independent of one another.

Conclusion: The circular from the Commissioner's office provides essential guidelines for issuing separate notices to taxpayers under Sections 73 and 74 of the KSGST Act. By maintaining a clear distinction between subject matters and ensuring independent adjudication, this directive seeks to streamline the process and enhance the efficiency of the State Goods and Services Tax administration in Kerala. This move will not only benefit taxpayers but also improve the effectiveness of tax-related proceedings.

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