Key Highlights of Circular No. 224/18/2024-GST

2025-03-04 06:27:05 02March

02March

Key Highlights of Circular No. 224/18/2024-GST

The Government of India, through Circular No. 224/18/2024-GST, issued on July 11, 2024, provides guidelines on the recovery of outstanding GST dues in cases where first appeals have been disposed of but the GST Appellate Tribunal is not yet operational. This clarification ensures fair treatment for taxpayers facing pending appeals.<hr><h3>1. Background of the Issue</h3><ul><li>When the first appellate authority confirms a tax demand, taxpayers should have the right to appeal before the GST Appellate Tribunal under Section 112 of the CGST Act.</li><li>However, due to the non-constitution of the Appellate Tribunal, many taxpayers cannot file an appeal or make the mandatory pre-deposit.</li><li>Confusion arose regarding whether recovery proceedings should continue and whether pre-deposits could be adjusted against voluntary payments made via FORM GST DRC-03.</li></ul><hr><h3>2. Clarification on Recovery and Pre-Deposits</h3><ul><li>If an appeal cannot be filed due to the non-constitution of the Tribunal, recovery proceedings should be stayed once the taxpayer makes the required pre-deposit (as per Section 112(8)).</li><li>Payment of the pre-deposit should be made through the Electronic Liability Register (ELL) Part-II via "Payment towards demand" on the GST portal.</li><li>A taxpayer must submit an undertaking stating they will file an appeal once the Tribunal becomes operational.</li><li>If the taxpayer fails to submit the pre-deposit or undertaking, recovery proceedings will continue.</li></ul><hr><h3>3. Adjustment of Pre-Deposits Paid Through FORM GST DRC-03</h3><ul><li>Some taxpayers mistakenly made payments via FORM GST DRC-03, intending to pay towards a demand.</li><li>A new FORM GST DRC-03A has been introduced (via Notification No. 12/2024-CT) to allow taxpayers to adjust such payments against pre-deposits required for appeals under Sections 107 and 112.</li><li>If the taxpayer submits FORM GST DRC-03A, the payment made earlier will be treated as a pre-deposit.</li><li>If the taxpayer does not file an appeal within the given timeline, the remaining demand will be recovered as per law.</li></ul><hr><h3>4. Temporary Relief Until FORM GST DRC-03A Is Available</h3><ul><li>Since FORM GST DRC-03A is not yet available on the GST portal, taxpayers can inform the proper officer about their earlier DRC-03 payment.</li><li>Tax officers should not initiate recovery proceedings until the functionality is made available.</li><li>Once the FORM GST DRC-03A is live, taxpayers must submit it promptly to adjust their payments correctly.</li></ul><hr><h3>5. Implications for Taxpayers</h3><ul><li>No immediate GST recovery if the pre-deposit is made and the intent to appeal is communicated.</li><li>Easier adjustment of mistaken payments made through FORM GST DRC-03.</li><li>Ensures fair treatment for taxpayers until the GST Appellate Tribunal becomes functional.<a href="https://cms.plasament.com/storage/nisha/circular-no-224-2024.pdf">circular-no-224-2024</a>  </li></ul>