With the due date approaching, businesses brace for a flurry of show cause notices from GST officials for the Fiscal Year 2018-19 regarding any possible shortfall in tax payment.
Section 73 of GST Act deals with the determination of tax not paid, or short-paid, or erroneously refunded, or input tax credit wrongly availed or utilised for any reason other than fraud, or any wilful misstatement, or suppression of facts. Under this section, an officer shall issue the notice at least three months prior to the time limit specified for issuance of order.
Earlier, the time limit for issuance of order related to the recovery of tax not paid, short paid, or input tax credit wrongly availed, or utilised for FY 2018-19 was March 31, 2024. However, on December 28, the Finance Ministry, through a notification, extended the timeline to April 30, 2024. This means the timeline for the issuance of show cause notices also get extended by one month, i.e., January 31, 2024. It may be noted that the extended deadlines mentioned above apply specifically to time-barring periods under Section 73. The GST department will still have an additional two years to issue notices and orders under suppression/misrepresentation cases under Section 74.
It is expected that following court ruling, the department might give businesses 15-30 days to reply to ensure that taxpayers have a reasonable opportunity to be heard.
Industry sources say that a large number of notices were issued just before the due date for the Fiscal Year 2017-18. Various reports suggest that in December itself, GST authorities issued demand notices totalling ₹1.45 lakh crore to around 1,500 businesses for inconsistencies in annual returns and input tax credit claims for the financial year 2018. Experts expect similar trend now, but they also feel there is a possibility of more arbitrariness.
According to Rajat Mohan, Executive Director of Moore Singhi, in situations where tax officers rapidly issue notices to meet deadlines, such as the extended deadline for FY 2018-19 in January 2024, it risks compromising the quality and fairness of tax assessments. “This approach can lead to errors, unnecessary disputes, and undermines taxpayer rights. It highlights the need for more efficient processes, better tax administration, and policy changes to ensure accurate, fair tax collection,” he said.
Experts advised that taxpayers should carefully review such notices and consult professionals if needed, while authorities should focus on balancing procedural efficiency with accuracy and fairness in their assessments. “In recent days, there has been a noticeable increase in the eagerness of field officers to swiftly conclude tax cases and issue notices, frequently overlooking the basic principles of natural justice. Many of these officers are taking extreme measures, compelling taxpayers to settle tax payments on questionable grounds or face the threat of having their cases escalated to the intelligence unit for alleged non-cooperation. This approach not only disregards the essential norms of procedural fairness but also places undue pressure on taxpayers, coercing them into making unwarranted payments under the menace of increased scrutiny,” Mohan said.