Increasing GST notices denying ITC claims provokes trade to represent before the CBIC.

Several industries and trade have flagged their concerns over the GST notice slapped on them that denies Input Tax Credit (ITC). Sources revealed that the Directorate General of GST Intelligence has alleged wrongful ITC claims and issued multiple GST notices to businesses in the last month, causing them hardship. 

In turn, the aggrieved representatives of these industries have represented this matter before the Central Board of Indirect Taxes and Customs (CBIC) at North Block, New Delhi. The affected sectors include steel scrap, real estate, steel, information technology, e-commerce, etc. Companies operating in these sectors are receiving such notices more often, as reported on CNBC TV18.

These notices predominantly pertain to the ITC denial due to discrepancies between GSTR-3B and GSTR-2A for FY 2017-18, while the facility was not commissioned on the GST portal. Further, matters on not depositing tax dues and keeping ‘guilty purchasers’ at par with the ‘innocent purchasers’ have been highlighted in the representation.

The trade has pointed out that they are facing an increased cost of compliance due to wrongful recoveries. It has led to the double payment of taxes with a burden of additional penalties. In several cases, the authorities block complete ITC even if a single vendor has reported invoices and paid GST leading to enormous losses for certain companies. 

According to one of the aggrieved IT companies, taxpayers are only responsible for carrying out their vendor compliance due diligence to the extent it is available on the GST portal. However, they claim it is harsh to disallow the total ITC amount for utilisation because one vendor has defaulted.

Additionally, tax officers have detained vehicles of consignments. It resulted in these being delivered belatedly instead of being delivered in advance, failing to adhere to administrative needs. The representation points out that the field officers must be guided on subjectively assessing the circumstances instead of approaching courts while ensuring no tax evasion on such consignment. Not doing this has hampered business and left businesses unable to meet the delivery deadlines given under their contracts.

The businesses have also poured out their concerns to CBIC about dragging and baseless enquiries and assessments. The notices issued by GST officers have sought information more than required, without referring to provisions of the law contravened. They have claimed an unjustified misuse of the power given to the authorities. 

Additionally, an experienced tax expert has signed the representation. He mentioned that the officers conduct searches for insubstantial reasons. These include not filing GST returns by a few months, mostly contravening Section 67(2) of the CGST Act.

The trade and industry representatives have voiced the need to set up the GST Appellate Tribunal at the earliest. It helps both the taxpayers and authorities to look into such cases with better judgement. It provides a trusted platform for processing complaints. It allows everyone to comprehend the appeal procedure and avoid the writ petition route, ultimately cutting down the litigation cost incurred by the companies.

Sources have indicated that the government is examining these representations. The CBIC will soon instruct the officers to fix loopholes and plug any revenue leakage while ensuring no hardships to taxpayers.

For any clarifications/feedback on the topic, please contact the writer at annapoorna.m@cleartax.in