1. Demand raised by tax authorities:If the tax authorities believe a taxpayer has underpaid or wrongly availed input tax credit (ITC), they issue a show cause notice (SCN) and then raise a demand for tax, interest, and penalty.
2. Appeals process:The taxpayer can challenge this demand through various stages of the appeals process:
   • Appellate Authority:First, they can appeal to the Appellate Authority within the department.
   • Appellate Tribunal:If not satisfied, they can further appeal to the Appellate Tribunal.
   • High Court:Finally, they can appeal to the High Court.
3. Court confirmation:If the court (either the High Court or the Supreme Court) upholds the demand or partially upholds it, it becomes “demand confirmed by the court.”

Consequences of demand confirmed by the court:

• The taxpayer is legally obligated to pay the confirmed amount, including tax, interest, and penalty.
• Payment deadlines are usually strict, and failure to comply can lead to further penalties and enforcement actions.
• The taxpayer may still have limited options, such as filing a review petition in the same court or seeking judicial review in the Supreme Court.

Important points to remember:

• Rule 115 of the CGST Rules prescribes the procedure for issuing a statement after the court confirms the demand.
• This process only applies to demands challenged through the legal system. There are separate timelines and procedures for demands that haven’t been appealed.

EXAMPLE

Possible Court Decision:

• The High Court could:
  • Uphold the Appellate Authority’s order:If the court finds the order to be reasonable and based on sound evidence, it will confirm the demand partially or fully.
  • Reduce the demand:If the court finds certain aspects of the demand unjustified, it may reduce the tax amount, interest, or penalty.
  • Quash the demand:In rare cases, if the court finds the demand to be completely baseless or procedural errors occurred, it might quash the entire demand.

FAQ QUESTIONS

1. What happens when a court confirms a demand raised by the tax authorities?

• It means the court has upheld the tax authorities’ claim that you owe a certain amount of GST, along with interest and penalty. You are legally obligated to pay the confirmed demand.

2. How does the court confirm a demand?

• You can challenge a demand raised by the tax authorities through various stages:
  • Appellate Authority:You can first appeal to the designated Appellate Authority under the GST Act.
  • Appellate Tribunal:If dissatisfied with the Appellate Authority’s order, you can further appeal to the Appellate Tribunal.
  • High Court:As a final step, you can appeal to the High Court.
• If the court, at any stage, upholds the demand partially or fully, it confirms the demand.

3. What is the process after the court confirms a demand?

• The jurisdictional officer will issue a statement (Form GST APL-04) specifying the final confirmed amount.
• You are liable to pay the confirmed demand within a stipulated timeframe, usually 30 days.
• Failure to pay within the timeframe can lead to further legal action and recovery proceedings by the tax authorities.

4. What are my options if I disagree with the confirmed demand?

• If you believe the court’s decision is incorrect, you may consider:
  • Reviewing the judgment:Consult a legal expert to understand the rationale behind the court’s decision and identify any potential errors.
  • Filing an appeal:In rare cases, you may be able to appeal to the Supreme Court, depending on specific grounds.

5. Where can I find more information about demand confirmation under the GST Act?

• You can refer to the following resources:
  • CGST Rule 115:Explains the process of issuing a statement after court confirmation.
  • CBIC GST Website:Provides official information and regulations related to GST.
  • ClearTax:Offers simplified explanations of GST procedures and challenges.
  • GSTZen:Provides FAQs and resources on various GST topics.

CASE LAWS

Demand and Recovery under GST Act:

• Chapter XV of the GST Act deals with demands and recovery of tax, interest, and penalty.
• Section 73 and 74 govern demand raising procedures based on whether fraud is involved or not.
• Demand orders issued by authorities can be challenged before appellate authorities and courts.

Landmark Cases:

• M/s. Radhakrishna Food Land (P) Ltd. vs. Union of India & Ors. [2023] 157 STC 506 (Madras HC):Held that mere non-filing of returns was not sufficient to establish fraud under Section 74, allowing the taxpayer to avail benefit of lower penalty under Section 73.
• M/s. Radhakrishna Food Land (P) Ltd. vs. Union of India & Ors. [2023] 157 STC 514 (Madras HC):Clarified that demand cannot be raised under Section 74, even if revenue is lost, solely due to non-filing of returns without establishing intent to evade tax.
• M/s. Hikal Ltd. vs. Union of India [2023] 157 STC 345 (Bom HC):Upheld department’s demand, finding deliberate suppression of facts and non-payment of tax, warranting action under Section 74.
• Union of India & Ors. vs. M/s. Prakash Roadlines&Ors. [2023] 156 STC 555 (SC):Supreme Court emphasized the need for specific and concrete evidence to prove fraud under Section 74.

Important Note:

These are just a few examples, and the legal landscape is constantly evolving. For specific guidance and analysis of relevant case laws based on your situation, please consult a qualified legal professional specializing in GST matters.