Section 8A of The Union Territory Goods and Services Tax Act, 2017
Power not to recover Goods and Services Tax not levied or short-levied as a result of general practice.
1[8A. Power not to recover Goods and Services Tax not levied or short-levied as a result of general practice.--- Notwithstanding anything contained in this Act, if the Government is satisfied that---
- (a)a practice was, or is, generally prevalent regarding levy of Union territory tax (including nonlevy thereof) on any supply of goods or services or both; and
- (b)such supplies were, or are, liable to---
- (i)Union territory tax, in cases where according to the said practice, Union territory tax was not, or is not being, levied; or
- (ii)a higher amount of Union territory tax than what was, or is being, levied, in accordance with the said practice, the Government may, on the recommendation of the Council, by notification in the Official Gazette, direct that the whole of the Union territory tax payable on such supplies, or, as the case may be, the Union territory tax in excess of that payable on such supplies, but for the said practice, shall not be required to be paid in respect of the supplies on which the Union territory tax was not, or is not being, levied, or was, or is being, short-levied, in accordance with the said practice.]
Summary
- Sometimes, there is a widespread, common practice where a specific good or service is either not taxed at all or taxed at a lower amount than the law actually requires.
- If the government realizes this mistake was a general practice across the market, it has the power to forgive the unpaid taxes.
- By issuing a public notice, the government can officially direct that businesses do not have to pay the back taxes or the shortage that resulted from following this common practice.
Practical examples
FAQ
1. What happens if an entire industry has been charging too little tax by mistake?
If the government confirms it was a generally prevalent practice, they can issue a notice to not recover the short-levied tax from those businesses.
2. Can a single business use this rule to avoid paying taxes they forgot to collect?
No, this rule only applies if the failure to collect the correct tax was a generally prevalent practice across the market, not just one person's mistake.
3. Who recommends that the government forgive these taxes?
The government makes this decision based on the recommendation of the Goods and Services Tax Council.
Test yourself
1.Under Section 8A of The Union Territory Goods and Services Tax Act, 2017, what specific condition must be satisfied for the Government to decide not to recover unpaid taxes on a supply?
2.Under Section 8A of The Union Territory Goods and Services Tax Act, 2017, what action does the Government take to officially forgive the recovery of short-levied taxes caused by a general practice?
3.Under Section 8A of The Union Territory Goods and Services Tax Act, 2017, whose recommendation is required before the Government can direct that unpaid taxes resulting from a general practice should not be paid?
4.Under Section 8A of The Union Territory Goods and Services Tax Act, 2017, which of the following scenarios is covered by the Government's power not to recover tax?