GST notices – AI generated to thousands of taxpayers sent

GST noticesAI- Generated GST notices: The Goods and Services Tax (GST) department has sent bulk automated show cause notices to many traders, demanding clear dues on alleged discrepancies in tax payments for the financial year 2017-18 as the September 30 deadline to send such notices comes. Tax experts are concerned about the development and the effectiveness and fairness of the process.

The GST department has issued these notices to masses, alleging discrepancies in GST payments. These allegations encompass a range of issues, including:

Mismatch in GST Output Liability (GSTR 1 vs. GSTR 9): This allegation pertains to inconsistencies between the data reported in GSTR 1 (monthly or quarterly returns of outward supplies) and GSTR 9 (annual return).

Mismatch in GST Input Tax Credit (GSTR 3B vs. GSTR 2A): Here, the GST department claims disparities in input tax credit calculations between GSTR 3B (monthly summary of outward and inward supplies) and GSTR 2A (auto-populated data on inward supplies).

Ineligible Input Tax Credit (ITC) claims: Airlines, hotels, and construction contracts have come under scrutiny for claiming ITC where it may not be permitted.

Reversal of ITC on exempt supplies: Traders are facing challenges related to ITC reversals for supplies that fall under the category of exempt goods or services.

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As per the industry experts, What sets these notices apart is the apparent lack of human intervention. The notices have been issued without the application of critical human judgment. They have been sent out without reviewing any supporting documents or confirming whether taxpayers have already addressed these issues.

Both central and state GST authorities have sent these notices over the last fortnight, a government official said.

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Tax authorities can send notices even after September 30, but they would need to prove a case of ‘tax evasion’ or ‘fraud’ on the part of the taxpayer.

“Many of them should be dropped later, though it will lead to avoidable disputes and paperwork for the industry. Going forward, the authorities may want to plan ahead so that these instances can be minimised,” he added.

“Short payment of tax on related party transactions, incorrect claims of input tax credit, export positions (including refunds granted), and state-wise credit availment and distribution are some of the common areas of disputes,” said the expert.

Read Also: Ranking of Suppliers on GST compliance from next Financial Year
Tax experts said this would lead to an increase in litigation over the next three months while hitting cash flows of companies as they would be required to furnish 10% of the total liability as a deposit for filing an appeal. “Given that the adjudication deadline for these show cause notices is December 31, we are going to see a huge litigation glut in the next three months,” tax expert added. “Also, given that a deposit of 10% is necessary for appeal, a lot of money is going to be taken out of the cash flows of these industries.”


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