GST authorities send out more notices, industries claim harassment

Industries have raised red flags over fresh notices being issued denying input tax credit (ITC), alleging wrongful claims, in turn leading to hardships for businesses.

According to sources, the Directorate General of GST Intelligence has been issuing these notices over the past month and now industries have escalated the matter to North Block.
“Companies in sectors like steel, steel scrap, real estate, IT, e-commerce, etc, are getting such notices very often and are the worst affected sectors,” sources told CNBCTV18.
Companies have submitted a detailed representation to GST authorities and the Central Board of Indirect Taxes and Customs (CBIC) to avoid hardships.
As per the industry representation complaints, reviewed by CNBCTV18, some of the technical issues include notices containing denial of input tax credit on comparison of GSTR 3B with GSTR 2A, seeking GSTR2A for FY18, when the facility had not even started.
“Notices being issued for supplier not having deposited due tax, tax department treating both the ‘guilty purchasers’ and ‘innocent purchasers’ at par violating the principles,” representation says.
Businesses have complained against “wrongful recoveries, which are adding significantly to the cost of the business on account of double payment of tax with additional interest and penalty.”
“In many cases, entire ITC is being blocked by the GST authorities, even if one vendor has not deposited GST. This is resulting in huge losses for companies. The companies could, at best, be required to do due diligence, which includes verifying the GST details of the vendor from the portal. However, blocking entire ITC due to fault of one vendor is an extreme step,” said a CFO of a leading IT company, which has recently faced a similar notice, but refused to reveal the identity.
What has irked them the most is the extreme steps taken by the tax officials where, “there have been instances of detaining vehicles, where, due to administrative requirements, a consignment destined to be delivered belatedly may have to be delivered in advance. Instead of having to knock the doors of courts, the field officers may be instructed to objectively and practically assess the situations, as long as there is no evasion of tax. This in addition hampers carrying out business and meeting contract deadlines,” industry representation adds.
Further, businesses have actually informed the taxman that “letters seeking huge/voluminous information, are issued by the GST officers, often without mentioning any provisions of the law. Enquiries are often long drawn, with information being sought in batches, which projects an unjustified use of power by the officers. And the search/raids are sometimes conducted on the flimsy grounds such as non-filing of GST return for couple of months, which is contrary to the section 67(2) of Act,” said a senior tax expert who has signed one of these representations on the condition of anonymity.
The industry has also suggested one of the much-awaited steps, which can help dealing in such cases with better judgement and providing the right platform for such complaints. One such measure is “formation of GST Appellate Tribunal on immediate basis so as to follow the appeal procedure and avoiding the route of writ petition, which will reduce the litigation cost to the company,” the industry representation adds.
Sources say the government is analysing these representations and is soon going to instruct officers to avoid loopholes and hardships, without leaving any scope for tax leakages and proper enforcement of the law.

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