Section 76 of CGST Act, 2017 : Section 76: Tax Collected But Not Paid To Government

Explanation using Example

Imagine a scenario where a business, "TechGadgets Ltd.," collects GST from its customers on the sale of electronic devices. Despite collecting GST, TechGadgets Ltd. fails to deposit this amount with the government. According to Section 76 of The Central Goods and Services Tax Act, 2017, TechGadgets Ltd. is required to pay this collected amount to the government immediately, even if the devices sold are later determined to be non-taxable.

The tax authorities discover this discrepancy and serve a notice to TechGadgets Ltd., demanding an explanation as to why the GST collected has not been remitted to the government and why a penalty should not be imposed. TechGadgets Ltd. has the opportunity to present their case, but if the explanation is not satisfactory, the proper officer will determine the amount due, which TechGadgets Ltd. must then pay, including interest.

If TechGadgets Ltd. requests a hearing in writing, they will be granted one. The tax authorities must issue their final order within one year of serving the initial notice, unless there is a stay by a court or tribunal. After the payment is made, any amount collected that exceeds the tax liability of TechGadgets Ltd. can be adjusted against future tax payable or refunded, as appropriate.