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Notices being issued on mismatch of tax or ITC

Indore (Madhya Pradesh): In a recent development, both the State and Central GST Departments have initiated the process of issuing notices regarding tax mismatches and input tax credit discrepancies. They have also commenced the scrutiny of returns filed from the year 2017-18.

During a seminar organized by the CA Indore Branch and Tax Practitioners Association (TPA), CA Shailendra Porwal shed light on this matter. The seminar focused on understanding the notices and how to respond to them. CA Porwal emphasized the importance of taking these notices seriously upon receipt, as the department may take unilateral action if a timely response is not provided.

Since the implementation of GST, several amendments and changes have been made to its structure. The original return forms envisioned during the implementation process could not materialize as initially intended. Consequently, the department has initiated the scrutiny of returns filed by traders since 2017-2018, taking into account various factors such as discrepancies between tax liabilities reported in GSTR-1 and tax payments made through GSTR-3B, discrepancies in input tax credit reported in GSTR-2B, non-matching of turnover and tax figures in e-way bills with GSTR-3B and GSTR-1, and other similar reasons.

As a result, continuous notices are being issued. Furthermore, late filing of GSTR-3B may lead to the payment of interest under Section 50 if the outstanding amount is paid in cash, which some taxpayers may have overlooked. The department is therefore issuing notices to address these variations and is also seeking payment of tax, interest, and penalties.

Upon receiving a notice, taxpayers are advised to carefully study the provisions mentioned in the notice and review their records to determine the accuracy of the department’s demands.If the demand is valid, immediate action should be taken to fulfill the requirements and avoid penalties. In the case of disagreement with the demand, taxpayers should respond with a suitable reply and include relevant provisions.

During the program, JP Saraf, presiding over the seminar, highlighted instances where taxpayers rectified mistakes in subsequent returns. However, the department issued notices for the specific month or period in which the mistake occurred, which he deemed incorrect. Saraf suggested that the department should only issue notices after considering the discrepancies within the appropriate timeframe.