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 names, 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:
• Hand-delivering
• By registered post or a speed post or a courier
• Communication to the email address
• Making it available on the GST portal
• 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 filing GSTR-3B.
• System-generated notices for blocked credits like motor vehicle credit without accounting for eligible exceptions.
• Best judgment assessments for non-filers of returns.
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.
| TOPICS | SUBJECT FOR THE NOTICE | BRIEF ABOUT NOTICE |
|---|---|---|
| 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. |
| Amendment of Registration | Where the proper officer is of the opinion that the amendment sought is either not warranted or the documents furnished are incomplete or incorrect, he may serve a notice requiring the registered person to submit clarifications or additional documents. | |
| Cancellation of Registration | 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. |
| For rejection of application for revocation of cancellation | The proper officer shall issue a notice requiring the applicant to show cause as to why the revocation application should not be rejected. | |
| For cancellation of provisional registration | Where the details provided are incorrect/incomplete, a show cause notice may be issued. | |
| Return | Non-filers/Scrutiny Return | A notice shall be issued to a registered person who fails to furnish return or in case of discrepancies observed during scrutiny. |
| Refund | Rejection of refund claim | Deficiencies in refund applications are communicated in Form GST RFD-03. |
| Assessment | Assessment under Section 63 (GST ASMT-14) | If the taxable person fails to register or owes taxes post cancellation, the proper officer may estimate tax liability. |
| Revision | Notice in revision cases | Form GST RVN-01 is issued if the revisional authority plans to pass an order adversely affecting the taxpayer. |
| Audit | Section 65 - Audit by tax authorities | Form GST ADT-01 is issued when an audit is undertaken under Section 65. |
Show cause notice under Section 73,74,76 of the CGST Act, 2017
Determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised for any reason, show cause notice can be issued under the Section 73,74,76.
The basic differences between Sections 73, 74 and 76 are presented in the following table:
| Sr. No. | Section 73 | Section 74 | Section 76 |
|---|---|---|---|
| 1 | No fraud, misstatement or suppression involved. | Fraud, wilful misstatement or suppression involved. | Tax collected but not paid to government. |
| 2 | SCN within 2 yrs 9 months from due date of annual return. | SCN within 4 yrs 6 months from due date of annual return. | No time limit prescribed. |
| 3 | Final order within 3 years. | Final order within 5 years. | Final order within 1 year of SCN. |
| 4 | 10% or Rs.10,000 penalty. Option for 0% in some cases. | Penalty from 15% to 100% of tax liability. | Penalty is 100% of the tax amount. |
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 is empowered to issue the notice?
• Whether the service of notice is valid as per law?
• Whether the notice is valid considering statutory provisions and case law?
Once a notice is served, the taxpayer needs to assess the issue carefully. Proper documentation, understanding the legal base, and a detailed reply are essential. As they say: "Be cautious before the flood actually comes." Prevention, preparedness, and proper representation go a long way in avoiding and resolving GST litigation.
