NOTICES UNDER GST ACT: MODES, TYPES OF NOTICES, COMMON AREAS OF ISSUES
GST notices—talk of the town, whether they are from AI, system-generated, or otherwise. Is ease of doing business truly ease of doing business? I wonder how. When the same notices are issued by two different departments, sometimes a matter already resolved by one department is questioned again by another investigator for the same reason. Or, it may be that, due to a mistake not on the taxpayer's part at all, a system-generated algorithm leads to the issuance of notices, and its response becomes a time-evolving process. Let's discuss the scope of notices in GST and the areas in which notices can be issued. In this article, we will talk about GST notices.
Communication sent by GST Authorities to assessee is named as notice under GST. A notice can be called by different name. I.e. Show cause notice, demand notice, scrutiny notice etc.
VALID MODES OF SENDING GST NOTICES: -
Section 169 of the CGST Act states the different means of communicating the notices under GST. Taxpayers must note the different modes of getting notices can be as follows:
1) Hand-delivering
2) By registered post or a speed post or a courier
3) Communication to the email address
4) Making it available on the GST portal
5) By publication in a regional newspaper
The taxpayer need not act upon the notice or communication if it is received in any other modes apart from what is notified by GST law from time-to-time.
SOME OF THE COMMON AREAS OF ISSUES ARE LISTED AS UNDER:
Mismatch in details reported between GSTR-1, GSTR-3B & E-Way Bill portal.
Differences in Input tax credit claims made in GSTR-3B vis-a-vis GSTR-2A/2B.
Reversal of ITC invoking Rule 36(4) – Reversal of ITC to the extent not reflected in GSTR 2A.
Difference in turnover between Monthly/Quarterly Return (i.e, GSTR-1 , GSTR-3B) and Annual Return ( GSTR-9 ).
ITC related to RCM shown under Table 4(A)(5) as “All other ITC” while filling GSTR-3B.
Section 17(5) contains provisions related to blocked credits. If a taxpayer is eligible for such credit as per the provision, but is still considered in the general category, notices are issued to them. For example, motor vehicle credit is a blocked credit, but there are certain exceptions to this, like if you are in the business of driving school classes, you are eligible for that vehicle credit. However, system-generated notices will ignore this nature of business.
Best judgment assessments for non-filers of returns.
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TYPES OF NOTICES UNDER GST LAW: - Under the Goods and Service Tax Law, there are multiple situations where we encounter the provision for issuance of show cause notice. |
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TOPICS |
SUBJECT FOR THE NOTICE |
BREIF ABOUT NOTICE |
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Registration |
Denial of option to pay tax under composition scheme |
Where the proper officer has reasons to believe that the registered person was not eligible to pay tax under composition scheme, he may issue a notice. |
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Amendment of Registration |
Where the proper officer is of the opinion that the amendment sought is either not warranted or the documents furnished therewith are incomplete or incorrect, he may serve a notice requiring the registered person to submit his clarifications or additional documents. |
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Cancellation of Registration
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For cancellation of regular registration |
Where the proper officer has reasons to believe that the registration of a person is liable to be cancelled, he shall issue a notice. |
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For rejection of application for revocation of cancellation of registration |
The proper officer shall, before passing the order, issue a notice requiring the applicant to show cause as to why the application submitted for revocation of cancellation should not be rejected. |
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For cancellation of provisional registration |
Where the particulars or information specified have either not been furnished or not found to be correct or complete, the proper officer will issue a show cause notice. |
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Return |
Notice to non-filers of Returns/Scrutiny Return |
A notice shall be issued, electronically, to a registered person who fails to furnish return under Section 39 or Section 44 or Section 45 or Section 52. Where any return furnished by a registered person is selected for scrutiny and in case of any discrepancy is observed by the officer then, he shall issue a notice to the said person in FORM GST ASMT-10. |
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Refund |
Rejection of refund claim |
Where any deficiencies are noticed in refund application, the proper officer shall communicate the deficiencies to the applicant in FORM GST RFD-03 through the common portal electronically. He may ask him to file a fresh refund application after rectification of such deficiencies. |
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Assessment
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Assessment under Section 63 GST-ASMT-14
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If a taxable person fails to register when required, or if their registration is cancelled but they still owe taxes, the proper officer can estimate their tax liability for the relevant periods and issue an assessment order within five years from the specified date. |
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Revision |
Notice to person and order of revisional authority in case of revision |
Where the Revisional Authority decides to pass an order in revision under section 108 which is likely to affect the person adversely, the Revisional Authority shall serve on him a notice in FORM GST RVN-01. |
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Audit
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Section 65: - Audit by tax authorities (Notice regarding Conduct of the audit by tax authorities) |
Where it is decided to undertake the audit of a registered person in accordance with the provisions of Section 65, the proper officer shall issue a notice in FORM GST ADT01 in accordance with the provisions of the said section. |
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Show cause notice under Section 73,74,76 of the CGST Act, 2017
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Sr. No. |
Section 73 |
Section 74 |
Section 76 |
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1 |
No allegation of fraud, wilful mis-statement or suppression. |
Allegation of fraud, Wilful mis-statement or suppression. |
Collection of amounts by way of tax and not paying to the Government is sufficient to invoke this section. |
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2. |
Show cause notice shall be issued within 2 years and 9 months from the due date of Filing of annual return. |
Show cause notice shall be issued within 4 years and 6 months from the due date of Filing of annual return. |
No time limit is prescribed for Issuance of SCN. |
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3.
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The final order needs to be passed within the time limit of 3 years from the due date of filing of annual return or refund of input tax credit. |
The final order can be passed within the time limit of 5 years from the due date of filing of annual return or refund of input tax credit. |
The final order needs to be passed within 1 year from the date of issuance of SCN. |
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4. |
Option for zero penalty is available when the disputed amount is other than self –assessed tax or any amount collected as tax. Penalty is 10% of tax liability or Rs.10,000/-whichever is higher. |
No question of zero Penalty. Penalty will be imposed at 15%, 25%, 50% and also up to 100% of tax liability. |
No question of zero Penalty. 100% of tax will be imposed as penalty. |
BEFORE RESPONDING TO ANY NOTICE OR ANY OTHER COMMUNICATION, THE TAXPAYER MUST ENSURE THE FOLLOWING:
• Whether the notice is issued by the proper jurisdictional officer?
• Whether the officer who has issued the notice is empowered to do so?
• Whether the service of notice is valid?
• Whether notice issued is valid considering the statutory provisions and settled jurisprudence?
In the above article, we discussed the modes of the notices, the reasons for the notices, and important scenarios when a notice can be received. Once a notice is served to the assessee, the taxpayer needs to assess the issues. Before answering the notice, it is necessary to consider a few aspects. However, there is a saying: "Be cautious before the flood actually comes." Therefore, before receiving notices, we need to assess a few important aspects, and even after receiving a notice, proper documentation checking and a detailed reply help us at all stages of litigation.
