GST Notices: – Are your business ready for it?
Since the launch of the GST Act, So far it is going on a trust basis, however, as usual, many GST taxpayer seems to be taking Govt and GST department for a ride. We all are well aware of what happens when the trust converts into a trust deficit gap. Obviously, the Department comes crashing on everyone, Firing Notices and So Cause Notice. It seems the department is gearing up for such a Notice firing round. You got two options to be ready for it or take cover (Which is not available in GST.
Get to know all about various GST Notices, the reason behind such notice issue and procedure to handle such notices. Let’s start herewith
GST Notices and types of GST Notices:
Today, in this article, we are going to take a look at what exactly GST Notices are, and some major types of GST Notices like Show Cause Notices, Demand Notices and Scrutiny Notices along with different options available at the disposal of the taxpayer and few rules and regulations regarding GST Notices and a lot more.
1. Meaning of Notice under GST:
Communications by the GST Authorities are referred to as the Notices under GST. In order to inform or make aware the taxpayers of any defaults being noticed, breach or not following the GST laws or maybe to just collect some Intel, these GST Notices are sent to the taxpayers.
Authorities, where there is the illegal movement of goods or provisions of services are carried out suspiciously, are also sending out the notices. The GST authorities on the basis of information take these actions. being received from corresponding departments or from any third parties, after verification of the GST returns of the taxpayers.
On the basis of different cases, the purpose or gravity of default or action required from the taxpayer, a notice is thereby called or known by different names like Show Cause Notice (SCN), Scrutiny Notice or the Demand Notices.
The Notices under GST are also received, when:
- Not registering under GST or any other lapses on the part of the taxpayers, when otherwise required under the GST Law.
- GST returns are not filed or if there comes any delay in filing of GST returns.
- Payments of GST are not done or may have done partly.
- Input Tax Credit (ITC) claims are shown in excess.
With respect to the given notices, the taxpayer is required to reply and act promptly as specified in the given notice, within the said time period. If the taxpayer fails to do so, it will be then considered as a willful default by the authorities and then certain penalties may be charged on him and the authorities may proceed to prosecution.
2. Reasons for Issuance of GST Notices:
1.Scrutiny Notice is issued, if there is any mismatch in details reported between GSTR-1 & GSTR-3B leading to Scrutiny notice.
2. Input tax credit claims made in GSTR-3B are different then what made in GSTR-2A
3.Non-filing or delay in filing of GSTR-1 and GSTR-3B for more than six months consecutively.
4. The Declaration made in GSTR-1 and the e-way bill portal is not consistent.
5. Prices are not reduced after reductions in GST rates from the date notified by the CBIC. Thus, the non-passing of benefits of the reduced prices to the consumers leads to a default being committed by the taxpayer (seller). Such an act or practice is known as profiteering. Although, the GST authorities have taken a number of anti-profiteering measures in order to address the default.
6. Show cause notice (SCN) is issued in the case, GST liability or tax is not paid or paid-shortly with or without any intention of fraud.
7. Wrongly made GST refund with or without any intention of fraud leads to Show cause notice (SCN).
8. Wrongly utilized or availed Input Tax Credit (ITC) by the taxpayer.
9. A liable business being failed to obtain GST registration and proper discharge of tax and other liabilities under the GST Act.
10. The information is lodged accurately on ICEGATE, but there are inconsistencies in the reporting of exports in form GSTR-1.Ex. The bills of exports or shipping bills not reported in GSTR-1, but lodged on ICEGATE.
11. For gathering any additional information by authorities, related to the records to be maintained by a taxpayer
12.When the tax authorities conduct an audit.
13.Where information return is not submitted before the GST authorities within the time limit specified.
3. Different types of GST Notices under GST:
An overview of different types of notices to be received by taxpayers, the time limit to respond to such notices and consequences of not responding to such notices along with the actions to be taken by the taxpayer thereby, is explained as follows:
| Name of the Form- Notice. | Description | Reply or Action to be taken. | Time limit to reply or respond. | A consequence of non-response. |
| GSTR-3A | Default notice being issued to non-filers (taxpayer) of GST returns in GSTR-1 or GSTR-3B or GSTR-4 or GSTR-8. | Necessary GST Returns is to be filed by the taxpayer, which is yet to be filed along with late fees for the delay and interest on the GST liability, if any. | Once the notice is received, it is required to reply within 15 days. | Using the information available by the department, the tax is assessed to the best judgment. The penalty of Rs. 10,000 or 10% of the tax due, whichever is higher, will be applicable. |
| CMP-05 | Show cause notice, as the taxpayer is questioned for his eligibility to be a composition dealer. | The taxpayer must justify the reasons, as to why he should continue to be eligible for the composition scheme. | Once the notice is received, it is required to reply within 15 days. | All the benefits of the composition scheme will be denied as a penalty, specified under section 122 and order in CMP-07. |
| REG-03 | A notice can be sent requiring the clarification for the information provided in the application or documents needed for verification, at the time of verifying the application for GST registration. And for amendment of GST registration, also the same form is applicable. | With clarification for the provided information, respond through a reply letter in REG-04. | Required to reply within the 7 working days, once the notice is received. | Such an application will be rejected and the applicant will be informed in REG-05 electronically. |
| REG-17 | Show cause notice demanding reasons, why should the GST registration not be canceled. | Should reply with the reasons for not canceling the GST registration as in reply letter in REG-18. | Required to reply within the 7 working days, once the notice is received. | The GST registration in REG-19 will be canceled immediately. |
| REG-23 | Show cause notice demanding the reasons for the revocation of the cancellation of the GST registration. | Response or reply should be given in letter in REG-24. | Once the notice is received, it is required to reply within the 7 working days. | Revocation of the cancellation of GST Registration will take place. |
| REG-27 | A notice will be issued in REG-26, for those taxpayers, who migrate to GST from VAT regime, for not making an application after obtaining provisional registration, or for not providing appropriate details in it. | In order to appear before the tax authority, for an opportunity to explain yourself, the reply should be given by applying in REG-26. | Time limit not given or prescribed. | The provisional registration will be canceled in REG-26. |
| PCT-03 | For the misbehavior or misconduct of the GST practitioner, a Show Cause Notice (SCN) will be issued. | Reply or response should be given within the prescribed time limit, as in the show-cause notice. | In between the time period prescribed in the show cause notice. | The GST practitioner’s license will be canceled as order, and certain penalties will be charged upon him. |
| RFD-08 | Show cause notice, as to why the applicant (taxpayer) should not receive the benefits of GST refund if any. | Response or reply should be given in the form of a Reply letter in RFD-09. | Required to reply within the 15 working days, once the notice is received. | GST Refund application will be rejected or canceled as per the order in RFD-06. |
| ASMT-02 | Issuance of notice for provisional assessment under GST, seeking Additional Information. | The reply must be given in ASMT-03 along with the required documents. | Once the notice is received, it is required to reply within 15 days. | Rejection of application for provisional assessment will take place. |
| ASMT-06 | Issuance of notice for those who applied for provisional assessment, as to seek additional information for the final assessment. | Reply in 15 days of receipt of the notice. | 15 days from the date of receipt of this notice. | The views of the taxpayer will not be considered and assessed, ASMT-07 will be passed. |
| ASMT-10 | Scrutiny Notice will be issued, if discrepancies in the GST return are intimated after scrutiny along with any other amount payable in relation to such discrepancies like tax and interest if any. | With reasons for discrepancies in the GST returns, reply in ASMT-11. | At least, thirty days from the date, when the notice was received or whatever time period specified in the notice or any such time limit stipulated. | The taxpayer will be assessed based on information at hand and may face prosecution and certain penalties will be charged upon him. |
| ASMT-14 | Under section 63, a show-cause notice for assessment of. reasons for conducting the assessment on the best judgment basis will be issued. | The applicant is required to present before the GST authority issuing the notice. The reply must be in written form. | Within 15 days of receipt of the notice. | The assessee will not be favored by the order, as issued in ASMT-15. |
| ADT-01 | Notice issued by the Tax authority under Section 65, for conducting an audit. | As the notice specifies, he should appear in person or should produce records. | The response must be given within the prescribed time limit as in the notice. | If not responded, then it be will consider that the applicant doesn’t possess any kind of authentic records, like any kind of books of accounts. And proceeding will take place. |
| RVN-01 | Notice under section 108 issued to the taxpayer, giving him the opportunity of explaining himself by the revisional authority, before passing the revision order of appeals. Revision order is passed to rectify the errors in the appeal orders passed under section 106. | The response must be given in the time stipulated in the notice or appear before the GST authority passing the order of revision on a given date and time. | 7 days from the date of receipt of this notice. | On the basis of available records and on merits, the case will be decided ex parte thereon. |
| Notice of Enquiry by Directorate of Anti-profiteering. | Initiation of proceedings may take place by the Directorate of anti-profiteering if the seller does not pass the benefits of the reduced GST rates or reduced prices to consumers. Notices for seeking additional details will be passed to all interested parties. | The response should be as a co-operation in the proceedings or providing with evidence if any. | The time limit may be as stipulated in the notice. | Proceedings will be initiated ex parte on the basis of available evidence. |
| DRC-01 | In DRC-02, along with with a statement of details, and issuance of show cause Notice for Demand of Tax-demanding tax, which is due or paid shortly, with or without an intent to defraud is served. | Reply in DRC-03 for payment of the demanding tax along with interest, if any applicable. Use DRC-06 to reply to the show-cause notice *Note: The penalty is chargeable only if payment is made beyond the thirty days time limit, where fraud is not committed. | At least, in thirty days after reception of the notice… | For the particular financial year for which tax is demanded, an order can be passed with higher penalty or prosecution, within three years from the due date of annual returns |
| DRC-10 And DRC-17 | Notice of Auction of Goods under section 79(1)(b) of the Act- the order for recovery through specified officer under section 79 will be given with reference to the order of demand OR Execution of decree can be done for the recovery. | The taxpayer, as per DRC-09, must do the payment of outstanding demand. | The last day of the bid or auction cannot be held prior to 15 days when the notice was issued, as specified in the notice before the sale. | The respective goods will proceed to e-auction and sale. |
| DRC-11 | Notice to the successful bidder. | Full payment of the bid amount must be done. | Before 15 days from the date of the auction is going to hold. | The particular officer can do re-auction. |
| DRC-13 | Notice of Recovery of outstanding tax from a third person. | Reply or respond in DRC-14 and deposit the amount specified in the notice. | Time lime not prescribed or applicable. | Subject to prosecution and penalties as a defaulter with respect to the specified amount in the notice. |
| DRC-19 | Under section 79, issuance of a Notice for attachment and sale of immovable/movable goods/shares. | Whosoever, receiving this notice will be prohibited from transferring or claiming the rights of the goods/shares. And any previous charge or claims on the property will be not valid. | The time limit is not applicable or stipulated… | Any kind of contravention of the notice will result in certain prosecution and penalties. |
4. Valid modes of delivering GST Notices:
According to Section 169, different means of communication of the notices under GST are specified under the CGST Act. This concludes that no other mode will be valid under the law.
A taxpayer must note the different modes of getting notices as :
- A messenger by a courier can deliver the notice directly to the taxpayer or his representative.
- With an acknowledgment- addressed to the last known place of the business of the taxpayer, the notice can be delivered either by courier, speed post or registered post.
- Sending the notice by email to the email address of the taxpayer.
- Making the notice available directly on the GST portal after logging in.
- Notice as published in the newspaper being circulated in the local area of the taxpayer with the acknowledgment of his recent residential address.
- If any of the above-mentioned means are not used, then by affixing it in some prominent place at his last known business or residence place. Copy of the notice can also be affixed on the notice board of the office of the concerned officer or authority as a last known means.
If the notice or communication is received in any other modes apart from what is notified by GST law, then the taxpayer needs not to act upon the notice.
5. Reply to GST Notices & Consequences of not replying:
A person receiving GST Notices can reply by any means described below, as specified by the GST Law.
In case, if he doesn’t respond then may have to face several consequences, which are also explained as follows:
- A taxpayer can use the digital signature or e-signature of the authorized personnel of such a taxpayer or himself to submit his response online at the GST portal.
- The liability must be paid in the requisite form and manner, where the payment of tax and interest is required. Also, the reply letter in the requisite form must be submitted before the tax authority that sent the notice, after such payment.
- The taxpayer receiving the GST notices is liable for penalties and further proceedings if he does not reply within the said time limits as each case demands under the GST law.
- A representative or a practicing Chartered Accountant can be authorized by the taxpayer to look into the matters related to GST notices. Issuing a Letter of Authorization under GST can do this. Thus, a representative can take action on behalf of the taxpayer by the power granted to him through the GST authorization letter.
As above, we have seen GST Notices, its types and several rules and regulations binding by these. Moreover, if you have any doubts or queries regarding any of the above, then do let us know through the comments.