Section 32 of GST – Prohibition of unauthorised collection of tax
(1) A person who is not a registered person shall not collect in respect of any supply of goods or services or both any amount by way of tax under this Act. (2) No registered person shall collect tax except in accordance with the provisions of this Act or the rules made thereunder.
Analysis
Collection of tax is not a statutory right but a contractual obligation. The person collecting taxes, acts as an agent of the Government. As such, no recipient is obliged to reimburse the supplier taxes due on the supply. At the same time, every taxable person (in case of forward charge) remains liable to deposit the applicable tax to the Government. This provision casts an obligation on each – unregistered person and registered person with regard to collection of tax on supply
unregistered person is not to collect any amount ‘by way of’ tax; andregistered person is to collect tax only in accordance with the provisions of the Act and the Rules.
It is important to differentiate between the restriction placed by this provision and the contractual route necessary to recoup tax by the supplier. Only tax that is collected as ‘CGST’ or ‘IGST’ or ‘SGST-UTGST’ is to be paid to the Government. Any other loss recoupment of input tax credit ‘foregone or forfeited’ does not fall within this restriction. It is important to differentiate between the restriction placed by this provision and the contractual route necessary to recoup tax by the supplier. Only tax that is collected as ‘CGST’ or ‘IGST’ or ‘SGST-UTGST’ is to be paid to the Government. Any other loss, recoupment of input tax credit ‘foregone or forfeited’ does not fall within this restriction. Question that arises for consideration is, if taxes that are not applicable are collected by taxable person from his customer, whether such amounts (purported to be tax) is to be paid to the Government and will it be lawful for the Government to retain such amounts knowing that it is not ‘tax’. Reference may be had to RS Joshi, STO, Gujarat v. Ajit Mills & Anr. 1977 (40) STC 497 (SC) where it was first laid-down that the law that is applicable to the taxpayer is the same law that is applicable to the tax administrator. And if tax is not lawfully leviable, then the same is not lawfully collectible by the Government. That is, if tax levied is not lawful, its collection cannot be any more lawful. This was derived from art. 265 and 300A of our Constitution. It is to overcome this jurisprudence that Parliament has laid down provision like section 32 that first places this embargo on the taxpayers from collecting any amount that is not lawfully leviable as tax, from customers. Then in Mafatlal Industries Ltd & Ords v. UoI & Ors. 1997 (89) ELT 247 (SC), it was laid down that where it comes to choose between the State (Government) and the subject (taxpayer) to retain unlawful collection of (inapplicable) taxes, the Hon’ble SC voted in favour of the State to retain such amounts as it would ultimately be utilized for the benefits of citizens and the State (Government) is the position of parens patria and concept of unjust enrichment against the State does not apply. Section 32 provides for unauthorised collection of tax but if the same been collected and not paid to the government, then section 76 provides that notwithstanding anything to the contrary contained in any order or direction of any Appellate Authority or Appellate Tribunal or court or in any other provisions of this Act or the rules made thereunder or any other law for the time being in force, such amount shall forthwith be paid to the Government, irrespective of whether the supplies in respect of which such amount was collected are taxable or not. Further, such person shall also be liable to pay interest and penalty thereon. Unregistered person should first create a user ID and then a challan using that user ID for making payment. Steps to create user ID: · Go to https://www.gst.gov.in · Click on Services>User Services>generate user ID for unregistered applicant · Follow the steps mentioned there. Steps to create challan for making payment: · Go to https://www.gst.gov.in · Click Services > Payment > Create Challan. · Follow the steps mentioned there. Section 76(11) further provides that the person who has borne the incidence of the amount, may apply for the refund of the same in accordance with the provisions of section 54. Recommended Articles –
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