Question
Our one client get registration under GST for Man power supply after registration he not filed its GST returns not made nay payment to Government for One and half year. But get GST payment form company on regular basis.
Now company stop his services for non payment and non filling returns. But till date he has not received any notice form GST department. What will be consequenes now.

Answer

Law Applicable:

(i) As per Section 73(5):
The person chargeable with tax may, before service of notice under sub-section (1) or, as the case may be, the statement under sub-section (3), pay the amount of tax along with interest payable thereon under section 50 on the basis of his own ascertainment of such tax or the tax as ascertained by the proper officer and inform the proper officer in writing of such payment.

(ii) As per Section 74(5):
The person chargeable with tax may, before service of notice under sub-section (1), pay the amount of tax along with interest payable under section 50 and a penalty equivalent to fifteen per cent. of such tax on the basis of his own ascertainment of such tax or the tax as ascertained by the proper officer and inform the proper officer in writing of such payment.

(iii) As per Section 76:
(1) 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 there under or any other law for the time being in force, every person  who has collected from any other person any amount as representing the tax under this Act, and has not paid the said amount to the Government, shall forthwith pay the said amount to the Government, irrespective of whether the supplies in respect of which such amount was collected are taxable or not.

(2) Where any amount is required to be paid to the Government under sub-section (1), and which has not been so paid, the proper officer may serve on the person liable to pay such amount a notice requiring him to show cause as to why the said amount as specified in the notice, should not be paid by him to the Government and why a penalty equivalent to the amount specified in the notice should not be imposed on him under the provisions of this Act.

Interpretation:
By a reading of Section 73(5) it can be interpreted that there is no penalty when payment is made on voluntary basis i.e. before issue of SCN in case tax is not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised for any reason other than fraud or any wilful misstatement or suppression of facts. In Section 74(5) a penalty of 15% is attracted when payment is made on voluntary basis i.e. before issue of SCN in case tax is not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised by reason of fraud or any wilfull misstatement or suppression of facts. In section 76, penalty can be upto an amount equivalent to the amount of tax amount at the will of the officer.

Conclusion:
Although it appears from the facts that the case would fall under Section 76 in case SCN is issued, still it is advisable to pay tax on voluntary basis under section 73/74 before the issue of SCN to avoid higher penalty.