Did you know the GST regime experienced a tax evasion of ₹54000 crore in the financial year 2021-22? Out of this enormous discrepancy, they successfully recovered around ₹21000 crore. Despite being quite less than the evaded amount, these recoveries prove to be very handy, as they provide the government with extra liquidity and create a force of compliance.
However, this might make you wonder about the ways the GST department recovers these amounts. One of the most common and effective techniques is the issuance of a GST notice. These notices are not just used for tax evasion but for any type of tax fraud done by an individual.
If you do not know much about a GST notice, read this article till the end. It will cover in detail the types of GST notices and the adequate ways to reply to them. But let’s first start by understanding GST notifications.
What are GST Notices?
GST Notices serve as official communications from tax authorities to taxpayers in order to facilitate GST compliance. These notifications are dispatched for a variety of reasons. Some of these reasons can be suspected irregularities or non-compliance with GST regulations. Instances that may trigger a notice include:
- Tardy or omitted GST return submissions
- Unwarranted Input Tax Credit (ITC) claims
- Outstanding GST payments
- Insufficient GST payments
Taxpayers must respond promptly to these notices, as neglecting them may lead to legal consequences such as penalties and prosecution. Addressing the concerns raised in a GST notice is pivotal for maintaining smooth and lawful business operations within the framework of the Goods and Services Tax.
What are the Types of GST Notices?
GST notices play a crucial role in the regulatory framework, addressing various aspects of compliance and taxation. Here is a comprehensive guide to the different types of GST notices, the actions required, and the consequences of non-response:
|Name of the Form- Notice
|Reply or Action to be Taken
|Time Limit to Respond
|Consequence of Non-Response
|Non-filers of GST returns in GSTR-1, GSTR-4, GSTR-3B, or GSTR-8 would receive a default notice.
|File the particular GST Returns, along with late fees and interest.
|15 days from the date of notification
|Tax assessed to best judgment; Penalty of Rs. 10,000 or 10% of the tax due (the higher one)
|Show Cause – challenging eligibility to be a composition dealer
|Justify continued eligibility for the composition scheme
|15 days of receipt of the notice.
|Penalty under section 122; Order in CMP-07 denying composition scheme
|Notice at the time of verifying GST registration application, requiring clarification or documents
|Reply in REG-04 with clarification or information
|Within 7 working days from notice.
|Rejection of application in REG-05
|Show cause notice for GST registration cancellation
|Reply in REG-18 with reasons for non-cancellation.
|Within 7 working days from notice.
|Cancellation of GST registration in REG-19.
|Show cause notice for revoking cancellation of GST registration
|Reply in REG-24
|Within 7 working days from notice
|Revocation of GST Registration cancellation
|Notice for non-application after obtaining provisional registration or providing incorrect details
|Reply in REG-26 and appear before the tax authority
|REG-28 provisional registration cancellation
|Show Cause Notice for GST Practitioner Misconduct
|Reply within the time prescribed
|Within the time prescribed
|Cancellation of GST practitioner’s license
|Show cause notice for withholding GST refund
|Reply in RFD-09
|Within 15 days of receiving the notification
|Order in RFD-06 rejecting GST application for GST refund
|Notice requesting further information for GST provisional assessment
|Reply in ASMT-03, along with documents
|Within 15 days of notice
|Rejection of application for provisional assessment
|Notice requesting further information for the final GST assessment
|Reply within 15 days
|Within 15 days of notice
|ASMT-07 passed without considering taxpayer’s views
|Scrutiny notice for discrepancies in GST return after scrutiny
|Reply in ASMT-11 giving reasons for discrepancies
|The time prescribed in the notice or a maximum of 30 days
|Assessment based on available facts; prosecution and penalties may result.
|Show Cause Notice for Section 63 Assessment
|Respond in writing and appear before the GST authorities.
|Within 15 days of notice
|Assessment order in ASMT-15 may not favour the assessee
|Notice for conducting an audit under Section 65
|Attend in person or produce records
|The time prescribed in the notice
|Proceedings initiated if not attended
|Notice under section 108 issued by the revisional authority before passing the revision order
|Respond within the timeframe specified or/and appear before the GST authorities
|Within 7 working days from notice
|The case was decided ex parte based on available records and merits
|Directorate of Anti-profiteering Enquiry
|Proceedings for non-passing of ITC or reduced GST rates benefit
|Cooperate in proceedings and provide evidence
|As specified in the notice
|Proceedings initiated ex parte based on available evidence
|Show cause Notice for Demand of Tax
|Reply in DRC-03 for paying tax demanded with interest and penalty
|Within 30 days of notice
|The order passed with a higher penalty or prosecution within three years
|DRC-10 and DRC-17
|Notice of Goods Auction Under Section 79(1)(b)
|Must pay outstanding demand as per DRC-09
|As specified in the notice before the sale
|Proceed to e-auction and sale
|Notice to the successful bidder
|Pay the full bid amount
|Within 15 days of the auction’s conclusion
|Re-auction may be conducted
|Notice of Recovery of Overdue Tax from a Third Party
|Deposit the required amount in the notification and respond in DRC-14.
|Deemed defaulter; subject to prosecution and penalties
|Section 79 Notice of attachment and sale of immovable/movable goods/shares
|Prohibited from transferring or creating a charge on the said goods
|Contravention may invite prosecution and/or penalties
What are the Possible Reasons for Getting a GST Notice?
Receiving a GST notice is a serious matter that demands immediate attention from taxpayers. The most common triggers for these notices include discrepancies between reported details in GSTR-1 and GSTR-3B, variations in Input Tax Credit claims, and delays in consecutively filing GSTR-1 and GSTR-3B for over six months.
Here are some key reasons that may lead to the issuance of a GST notice:
- Discrepancies between the details reported in GSTR-1 and GSTR-3B may prompt a scrutiny notice.
- Variances in ITC claims made in GSTR-3B compared to GSTR-2B/2A can lead to a notice.
- Continuous delay in filing GSTR-1 and GSTR-3B for more than six months may result in a notice.
- Discrepancies in declarations between GSTR-1 and the e-way bill portal may trigger attention.
- Failure to reduce prices in line with revised GST rates, known as profiteering, can lead to action.
- Whether intentional or unintentional, failure to pay GST liability may result in a show cause notice.
- Wrongful GST refund claims, whether intentional or not, may lead to a show-cause notice.
- Incorrect availing or utilisation of Input Tax Credit may attract scrutiny.
- Businesses liable for GST but failing to register and discharge tax liabilities may face consequences.
- Discrepancies between GSTR-1 and information on ICEGATE regarding exports can trigger notice.
- Failure to furnish information related to required record-keeping may lead to action.
- Conducting an audit by tax authorities may be a reason for a GST notice.
- Failure to submit required information returns within stipulated time limits can result in a notice.
What are the Ways of Sending GST Notices?
Under Section 169 of the CGST Act, specific modes have been outlined for the valid communication of GST notices. It is crucial for taxpayers to be aware of these designated means, as any other mode of sending notices will not be considered legally valid. The recognised methods of dispatching GST notices include:
- Notices can be hand-delivered directly or through a messenger by courier to the taxpayer or their representative.
- Notices may be sent by registered post, speed post, or courier with an acknowledgement addressed to the last known place of the taxpayer’s business.
- Notices can be communicated to the taxpayer’s email address as per the records available.
- Notices may be made available on the GST portal after the taxpayer logs in.
- Notices may be published in a regional newspaper distributed in the taxpayer’s locality, depending on the taxpayer’s last known living address.
- If none of the above methods is feasible, the notice can be affixed in a prominent place at the last known place of business or residence.
- If none of the aforementioned solutions are feasible, tax authorities may post a copy on the notice board of the involved officer’s or authority’s office.
What are the Ways to Reply to GST Notices?
Replying to GST notices is a critical step in maintaining compliance with tax regulations. The following methods can be employed for responding to these notices:
1. Online Submission on GST Portal
Taxpayers can submit their replies online through the official GST portal. The portal offers a user-friendly interface for responding to notices efficiently.
2. Digital or E-Signature Usage
When sending responses to the GST site, a taxpayer can utilise the digital signature or e-signature of approved individuals or themselves to ensure the legitimacy of the response.
3. Payment of Tax and Interest
Where the notice necessitates the payment of tax and interest, the taxpayer must fulfil this obligation in the prescribed form and manner before submitting the reply.
4. Submission of Reply Letter
After making the required payment, the taxpayer should submit the reply letter in the requisite form on the GST portal, addressing the concerns raised by the tax authority.
5. Authorising a Representative
Taxpayers can authorise another representative or a practising chartered accountant to handle GST notice matters on their behalf. This can be done by issuing a Letter of Authorisation under GST.
What is the Impact of not Reverting to GST Notices?
Failure to respond to GST notices within the stipulated time frame can have severe consequences, including
Non-compliance with notice requirements may result in the imposition of penalties, which can escalate based on the nature and severity of the issues raised in the notice.
2. Further Legal Proceedings
The tax authorities may initiate additional legal proceedings against the non-responsive taxpayer. This potentially leads to more complicated and protracted legal challenges.
3. Financial Consequences
Unresolved issues identified in the notice may lead to financial repercussions, such as additional tax liabilities, interest, and penalties. This impacts the overall financial health of the business or individual.
4. Risk of Prosecution
Persistent non-compliance may elevate the case to a level where prosecution becomes a possibility, subjecting the taxpayer to legal actions that can include fines and imprisonment.
5. Loss of Control
Failing to respond promptly relinquishes control over the narrative. This potentially results in adverse decisions being made by the tax authorities without the taxpayer’s input.
Understanding GST notifications is critical for taxpayers to ensure compliance with the intricate Indian GST framework. This comprehensive guide sheds light on an array of notices under GST law, each demanding distinct actions and responses within stipulated time frames. Failure to heed these notices may lead to severe consequences.
Therefore, taxpayers are obligated to understand the specific requirements of each notice and utilise the designated channels to respond promptly and effectively. This will thereby safeguard their interests and maintain adherence to GST regulations.
Frequently Asked Questions
Q1. How do you View Notices in the GST Portal?
You must follow the steps given below:
- Find the “Services” tab, then select “User Services,” followed by “View Additional Notices/Orders.”
- The page for Additional Notices and Orders will appear.
- Click the “View” hyperlink in the Action Column to access more details.
- The Case Details page will then be presented for your review.
Q2. How do I Respond to SCN in GST?
Compose a detailed written response to the show cause notice, addressing each allegation with clear and concise explanations backed by supporting evidence where necessary. Ensure timely submission of the response to the GST authorities as per the notice’s specified timeframe.
Q3. What Does SCN Mean in GST?
The GST proper officer may issue a show cause notice for reasons such as non-payment or short payment of tax, erroneous tax refunds, or incorrect utilisation of input tax credit, prompting the individual’s response and clarification within the GST framework.
Q4. Why is SCN Issued in GST?
The issuance of a Show Cause Notice is a statutory obligation, serving as a fundamental document for resolving tax disputes or initiating punitive actions (civil proceedings) in cases of violations of Customs, Central Excise, Service Tax laws, or related statutes.
Q5. What is the Reply Period for Show Cause Notice?
It is essential to note that a reasonable response time to a Show Cause Notice (SCN) is typically set at 30 days. It is crucial that any SCN issued under Section 73 of the CGST Act or any other provision includes sufficient and pertinent material forming the basis for initiating proceedings against the concerned party.
Q6. What is the Difference Between a Memo and a Show-Cause Notice?
In cases where an official fails to offer a satisfactory explanation or address concerns raised in a show cause notice, such non-compliance can be considered evidence of misconduct, potentially resulting in disciplinary action. It’s important to note that a memo, as a document, serves to communicate information or instructions within an organisation.
Q7. Is Show Cause a Warning Letter?
A show-cause notice represents a more severe disciplinary measure than a warning letter. It is usually administered to address instances of significant misconduct, including but not limited to absenteeism, insubordination, or dishonesty, indicating a more critical response to the employee’s actions.
Q8. Does Show Cause Mean Termination?
Receiving a show cause order demands the utmost priority and serious consideration, as it could be the sole opportunity to avert termination, expulsion, or potential criminal charges. Responding promptly with a comprehensive explanation is imperative to address the situation effectively.
Q9. How do you Respond to a Show-Cause Notice for Not Attending a Meeting?
I acknowledge the notification about my non-attendance at the meeting on [date and time]. Recognising the significance of meeting attendance, I understand the inconvenience caused to the team and the potential impact on project progress.
Q10. How do you Politely Reschedule a No-Show meeting?
Compose a polite email addressing the individual who missed the meeting. Clearly state the purpose and value of the meeting, attach relevant documents for their reference, and offer information on rescheduling if applicable. Ensure the email is sent promptly.