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Informist, Wednesday, Aug 28, 2024

 

--Govt source: Got 1.25 trln rupee from GST notices sent for FY18-FY21

--Govt source: Sent GST notices worth 4 trln rupees for FY18-FY21

 

By Priyasmita Dutta

 

NEW DELHI – The flood of notices sent by goods and services tax authorities for the four-year period starting 2017-18 (Apr-Mar) have fetched the government around 1.25 trln rupees in recoveries, against the total tax demand of 4 trln rupees, a senior finance ministry official said.

 

"A little over 30% of the total amount for which notices were sent are coming back to the system, the rest are all stuck in litigation at different courts and appellates," the official said.

 

"Based on data so far, the majority of the tax notices were for the first two years of GST as the system was new for both the taxpayers and the officers....going forward, the volume of demand notices will only decline," the official told Informist. The GST regime was rolled out on Jul 1, 2017. 

 

Though the number of tax notices that has kept businesses on their toes will reduce, the official said the government is assuming that 28-30% of the amount for which notices were sent will be paid. "We don't expect more than that, courts take time to move. So, even if there is scope of recovery, it will be spread out," the official said. 

 

Experts and tax officials have said that these recoveries also aided GST collections to an extent, though they were staggered across many financial years. In the current fiscal year so far, monthly GST collections have averaged 1.85 trln rupees, against 1.68 trln rupees in the year-ago period. GST collections in 2024-25 are projected at 10.62 trln rupees, up 11% on year.

 

Since September, state and central GST authorities have issued several notices to some of the biggest public and private sector companies, including Life Insurance Corp of India, State Bank of India, Maruti Suzuki India, ICICI Bank, Hindustan Unilever, UltraTech Cement, and Bharti Airtel.

 

Amandeep Singh Oberoi, director - indirect tax at SW India, said the number of notices sent and the amount demanded would be huge, as notices were sent on an automated basis because of system mismatches, or have been sent out to meet deadlines. "While the demand will be huge, recovery will be much lower because most notices will not have merit," Oberoi said. 

 

The deadline to issue orders for assessment year 2018-19 was Apr 31. For 2019-20, it is Aug 31 and for 2020-21, it is Nov 28. 

 

GST authorities are issuing system-generated tax notices, flagging cases where there are discrepancies in the details filled by companies in their GSTR form 1 and 3B, experts said. Some of these notices involve large sums, especially for insurance companies. The New India Assurance Co Ltd, for instance, has received a GST demand for 23.8 bln rupees, while LIC has got notices for over 8 bln rupees.

 

The reasons for issuing notices are discrepancies in annual compliance, reversals of input tax credit, and reconciliation of form GSTR 2A with form GSTR 3B - essentially matching of input tax credits and reversal of common input tax credit in case of exempt supplies.

 

Ankur Gupta, practice leader - indirect tax at SW India, said that the surge in the volume of notices issued by the department was partly due to procedural delays.

 

"To mitigate the risk of cases becoming time-barred, the department often issues notices or orders close to the deadline. This approach is typically taken without adequately considering the submissions made by companies or the discussions held during hearings, leading to an increase in last-minute notices or orders," Gupta said.  End

 

Edited by Avishek Dutta

 

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