Reply To GST Notices
Deliverables - Timeline
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Deliverables
Supporting Response Document
Timeline
2 Days
(from receipt of all documents)
What is Notice under GST
Notices under GST are communications by the GST Authorities. These are sent to the taxpayers specifically to remind or caution them of any defaults being noticed, specifically for not following the GST laws. In other cases, notices can be sent out just to collect more information from the taxpayer. Few cases where tax authorities send out notices are – where any movement of goods/ provision of services occurs without coming under tax lens or taxpayers operate suspiciously. GST authorities act based on any hints collected on verifying the taxpayer’s GST Returns or received from another Government department or from any third parties .
A notice can be called by different names like show cause notice (SCN), scrutiny notice or the demand notices, depending upon each case- the purpose or gravity of default or action required from the taxpayer. The common grounds for receiving notices under GST are lapses on the part of the taxpayers such as not registering under GST when otherwise required under law, non-filing or any delay in filing of GST returns, non-payment of GST or short payment of GST, excess Input tax credit claims, etc.
A taxpayer must promptly act or reply to notices within the time limit specified in such notice. Any failure to do so can land the taxpayer in a legal soup. In such eventuality, the authorities can proceed to prosecution or consider that as a willful default and charge penalty.
Most common reasons for GST Notices
1. Mismatch in details reported between GSTR-1 & GSTR-3B: scrutiny notice
2. Differences in Input tax credit claims made in GSTR-3B vis-a-vis GSTR-2B/2A
3. Delay in filing of GSTR-1 and GSTR-3B consecutively for more than six months
4. Inconsistent declaration in GSTR-1 and e-way bill portal
5. Non-reduction of prices due to reduced GST Rates with effect from the date notified by CBIC. Thereby, a default is committed by taxpayer (seller) for non-passing of the benefit of reduced prices (or GST rates) to the ultimate consumers. The practice is known as profiteering. Several anti-profiteering measures are taken by GST authorities to address the default.
6. Non-payment of GST liability (tax) or the short-payment of the tax with or without the intent to defraud: show cause notice (SCN)
GST Refund is wrongly made with or without the intent to defraud: show cause notice (SCN)
7. The Input tax credit is wrongly availed or utilised.
Reply to GST Notices & effects of not replying
Any reply to the GST notices can be submitted online on the GST portal. A taxpayer can use the digital signature or e-signature of the authorised personnel of such taxpayer or himself. Where the payment of tax and interest is required, pay such liability in the requisite form and manner. After such payment, the reply letter in requisite form must be submitted before the tax authority who sent notice.
In case the taxpayer receiving the GST notices does not reply within the stipulated time limit, he shall be liable for penalties and further proceedings as each case demands under the GST law.
A taxpayer can authorise another representative or a practising chartered accountant to look into the matters related to GST notices. He can do so, by issuing Letter of Authorisation under GST. GST authorisation letter gives the power of replying to GST notices by another representative and taking action on behalf of him.
Valid modes of sending GST Notices
Section 169 of the CGST Act states the different means of communicating the notices under GST. Any other mode of sending out the notice will not be valid under the law. Taxpayers must note the different modes of getting notices can be as follows:
1. Hand-delivering the notice either directly or by a messenger by a courier to the taxpayer or his representative.
2. By registered post or a speed post or a courier with an acknowledgement- addressed to the last known place of the business of the taxpayer.
3. Communication to the email address
4. Making it available on the GST portal after logging in.
5. By publication in a regional newspaper being circulated in the locality- that of the taxpayer based on the last known residential address.
Common Types of Notices under GST Law
1. Notice for Assessment (Section 59)
Issued by: GST Authorities
Purpose: Issued when the GST authorities carry out an assessment to determine the correct tax liability of a taxpayer.
Reason:This is usually issued in cases where the authorities believe that the returns filed are incorrect, or there are discrepancies.
Action Required: The taxpayer is expected to submit the necessary documents, records, and other clarifications to the authorities.
2. Notice for Audit (Section 65)
Issued by: GST Authorities
Purpose: A notice for audit is issued when the authorities decide to audit a taxpayer's records to verify their GST compliance.
Reason:This may occur if there are concerns regarding the accuracy of the returns or the volume of business..
Action Required: The taxpayer must cooperate with the auditors, provide access to books, records, and other documents as requested by the authorities.
3. Inspection Notice (Section 67)
Issued by: GST Authorities
Purpose: A notice to inspect goods, documents, and business premises of the taxpayer.
Reason:The authorities may suspect the taxpayer of evading taxes, maintaining false records, or engaging in other non-compliant activities.
Action Required: The taxpayer should allow the inspection and provide all required documents. Non-cooperation may lead to penalties.
4. Notice for Detention of Goods (Section 129)
Issued by: GST Authorities
Purpose: A notice issued when the authorities detain goods in transit due to a violation of GST provisions.
Reason:Violations include improper documentation, non-payment of taxes, or incorrect GSTIN used.
Action Required: The taxpayer must provide correct documents and pay any applicable fines or taxes to release the detained goods.
5. Notice of Non-Compliance (Section 46)
Issued by: GST Authorities
Purpose: This notice is issued when a taxpayer has failed to file returns or meet compliance requirements, leading to penalties or legal actions.
Reason: Non-filing or delayed filing of GST returns.
Action Required: The taxpayer should comply by filing the returns and paying any penalties or fines to rectify the situation.
6. Notice for Cancellation of GST Registration (Section 29)
Issued by: GST Authorities
Purpose: A notice issued when the tax authorities intend to cancel the GST registration of a taxpayer.
Reason:This can occur due to reasons such as non-compliance, closure of business, or failure to file returns for an extended period.
Action Required: The taxpayer must respond within the prescribed period to avoid the cancellation of GST registration.
7. Notice for Refund (Section 54)
Issued by: GST Authorities
Purpose: This notice is issued when there is a request for a refund, or the authorities have rejected a refund claim.
Reason: Rejection could be due to improper documentation, failure to meet eligibility criteria, or missing details in the refund claim.
Action Required: The taxpayer can appeal or submit the correct documentation for a refund.
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FAQs
Neglecting GST notices can lead to severe repercussions, such as:
- Monetary Penalties: Fines imposed for non-compliance or delayed responses.
- Interest Accruals: Accumulation of interest on unpaid tax liabilities.
- Legal Proceedings: Initiation of legal action, including prosecution in cases of serious violations.
- Business Disruptions: Suspension or cancellation of GST registration, hindering business operations.
- Reputational Damage: Tarnishing of the business’s reputation due to perceived non-compliance.
