Understanding GST Notices: A Comprehensive Guide

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Published Date:  29-01-2024   Author:   ujjwal-goel
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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
  • Outstanding GST payments
  • Insufficient GST payments
  • Non-registration

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.

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Also Read: Managing Multiple GST Notices Simultaneously: A Comprehensive Guide

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:

Sr. No  Name of the Form- Notice  Description  Reply or Action to be Taken  Time Limit to Respond  Consequence of Non-Response 
GSTR-3A  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) 
CMP-05  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 
REG-03  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 
REG-17  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. 
REG-23  Show cause notice for revoking cancellation of GST registration  Reply in REG-24  Within 7 working days from notice  Revocation of GST Registration cancellation 
REG-27  Notice for non-application after obtaining provisional registration or providing incorrect details  Reply in REG-26 and appear before the tax authority  None prescribed  REG-28 provisional registration cancellation 
PCT-03  Show Cause Notice for GST Practitioner Misconduct  Reply within the time prescribed  Within the time prescribed  Cancellation of GST practitioner’s license 
RFD-08  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 
ASMT-02  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 
10  ASMT-06  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 
11  ASMT-10  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. 
12  ASMT-14  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 
13  ADT-01  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 
14  RVN-01  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 
15  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 
16  DRC-01  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 
17  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 
18  DRC-11  Notice to the successful bidder  Pay the full bid amount  Within 15 days of the auction’s conclusion  Re-auction may be conducted 
19  DRC-13  Notice of Recovery of Overdue Tax from a Third Party  Deposit the required amount in the notification and respond in DRC-14.  Not applicable  Deemed defaulter; subject to prosecution and penalties 
20  DRC-16  Section 79 Notice of attachment and sale of immovable/movable goods/shares  Prohibited from transferring or creating a charge on the said goods  Not applicable  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.

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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

1. Penalties

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.

Conclusion

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.

Also Read: Compilation of GST Notifications and Circulars

Frequently Asked Questions 

Q1. How do you View Notices in the GST Portal?

You must follow the steps given below:

  1. Find the “Services” tab, then select “User Services,” followed by “View Additional Notices/Orders.”
  1. The page for Additional Notices and Orders will appear.
  1. Click the “View” hyperlink in the Action Column to access more details.
  1. 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.

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Ujjwal Goel

Ujjwal Goel is a B2B Technical and Finance Writer. With 5 years of experience, he has established himself as a skilled and knowledgeable blogger and content creator. Hailing from a BBA background, he is passionate about the Technical and Finance field and strives to create engaging, informative, and thought-provoking content for his readers. His writing style is conversational and informative, and he is committed to delivering high-quality work that meets the needs of his clients and readers. When he is not writing, he enjoys binge-watching Netflix or traveling

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