Sikar Tax Bar Association, Sikar
(Affiliated with RTCA, Jaipur)


Jitendra Sharma, Advocate
133, Ganpati Tower
Bajaj Road, Sikar (Raj.)
Mob. : 94146 64218
Email. : [email protected]

Secretary: CA. Sanjay Kumawat
1st Floor, Opp. Shekhawati Zanana Hospital
Station Road, SIKAR -332001 (Raj.)
Mob. : 98291 85306
Email. : [email protected]

Date: 27/01/2022

Smt. Nirmala Sitharaman
Hon’ble Union Minister of Finance,
Ministry of Finance,
Government of India,
New Delhi

Sub: Difficulties under GST – faced by small and medium scale taxpayers

Respected Madam,

At the outset we want to state that ours is an organization of tax professionals, rendering services of compliances under tax laws.  MSME sector is totally dependent upon our support for very complicated compliances under GST laws. We have to face the MSME tax payers.  Hence, we are affected party. During last year the GST collection is robust and therefore there is a perception that everything is fair and just. Reality is different. The upper classes of tax payers are not facing any problems or are sufficiently strong to find ways. But MSME are the silent sufferers of unjust GST provisions and unfair treatment by officials. By this letter we

would like to invite your attention to some of the many problems. And appeal to you to use your good offices to solve these pressing issues.

Issues related to Registration:

We appreciate that registration process is much more improved under GSTN system than earlier laws. Due to Aadhar card, Pan card the KYC norms are reliable to decide the Genuineness of a person. Other documents may be considered accordingly. It is experienced that for minor discrepancies application is rejected. Some instances are as follows:

1) Discrepancy in name or address: In India the way names and addresses are written is different. There is no uniformity. Hence the name appearing in one document may be different than other documents of same person. Similarly address appearing in one document may not be ad verbatim with other.

The registration officers treat it as discrepancy in application and reject it. If the applicant is otherwise genuine the registration shall not be denied.

2) Proof of Place of Business: India is known for undivided large families where many relatives stay together as one family. But such person may not be from family as defined by western notion of family. The property is in the name of one person, electricity bill in the name of another. The rules provide for consent letter of property owner/holder. But many officers insist upon registered rent agreement otherwise registration is rejected. Further registration of rent agreement can be done within 4 months of execution. Hence registered rent agreement may not be insisted.

3) Documents are not visible to officer, due to size restriction on portal, resulting in rejection in rejection of Application: Rent Agreement, Lease Agreement, Ownership document in general runs into number of pages (upto 50-100). However, on GST Portal, while uploading said document at the time of registration, there is size limit of file, restricted to 2 mb. It means, max 2mb file can be uploaded. Due to said restriction in file size, less quality file gets uploaded on GST portal, which is not visible to officer properly and hence he reject the application. Registration documents are important for government to preserve. Therefore, it is recommended that said size limit should be increased to 20 mb. This will solve number of unrequired rejections in Registration process.

Issues related to Cancellation of Registration:

The GST authorities are authorized to cancel registration on their own for lapse in compliances. The main purpose for which large number of registrations are cancelled is default in filing returns. The major reason for not able to pay tax is that many small and medium scale tax payers depend upon recovery and do not have any other source of finance. Cancellation of registration is not only forcing him in further deep trouble but has cascading effect of his customers also.

1) Delink return filing and payment of tax: ITC is not granted till it is received by Govt. If returns are allowed without payment of tax there is no loss of revenue. Filing return and Payment of tax be treated as two different activity and be delinked. Further part payment of tax and in installments also be provided for. By allowing returns without payment at least the information about outward supply will be available for further action.

2) No retrospective cancellation: Registration shall not be retrospectively cancelled as it hurts innocent, honest tax payers. His customers do not have any knowledge of cancellation. Fact of cancellation becomes known to customers when the ITC is refused to him. He has to bear the impact of cancellation of other persons. The problem gets compounded if the cancellation is with retrospective effect. In this case innocent customers are worst sufferer.

3) Financial stress in covid period: During covid period many MSME tax payers are facing serious financial problems. Govt is trying to help by giving them financial assistance. In such a situation cancellation of registration is detrimental to the needs of the hour i.e. handholding of MSME by Government. Even if the registration is cancelled, he cannot afford to suspend or stop his business. Survival is more important than tax compliances. Mostly tax payers in unorganized sector face this problem. They are semi-literate and do not have any other skill or avenue of livelihood.

Therefore, Cancellation of their registration virtually means forcing them in gray market.

Issues related to Input tax credit

Sec 16 of CGST/SGST Acts has provided some time limits to claim and/or declare outward supply necessary to claim ITC. They are proving to be  major thorn in business and are resulting into substantial additional cost. It has caused lot of resentment in honest tax payers.

1) Time limit of six months be removed: After recent amendment to sec 16(2) tax payer cannot take credit of ITC unless it is reflected in Form 2B. The GSTN system is very effective to cross verify and rules out duplication of claims. Therefore, time limit of six months be totally removed. It serves no purpose except to deny otherwise valid ITC claims.

2) Time limit of 180 days serves no meaningful purpose:

The payment terms are decided by parties. Many times, terms of payment exceed the limit of 180 days. In such case it is apprehended that ITC has to be reversed and added to outward tax. And when payment is made ITC is required to be reclaimed. Post sale discount or mutually agreed less payment adds to the confusion, whether the provision is applicable in such case. This exercise does not increase the tax revenue but puts added compliance cost as well as blocking of capital. If there are large number of transactions then monitoring the same, is challenging job. When the Government has already received the tax, reversal and reclaim of ITC is unnecessary exercise. To think that those who delay the principal amount will pay it to supplier because they have to reverse ITC for sometime is only wishful thinking and not reality.

3) Sec. 16(2) relevant proviso be removed.

We sincerely feel that GST as concept is very business friendly, but many provisions are unjust and unfair to honest tax payers which is increasing burden on them. We are sure that if above suggestions are accepted then the GST will be fair, just to honest tax payers.

4) IGST Credit not reflected in Form2B:

Non-auto population of Bill of entry data is not captured or reflected in GSTN portal. Therefore, the taxpayers have difficulty in getting input tax credit. This needs urgent solution by way of linking IGST payment on imports to GSTN portal.

As GST was new and there were various unintentional mistakes made by tax payers while filing GST Return and also regarding compliance on various rules like E-way Bill, reporting of B2B as B2C, reporting Invoice to incorrect GSTIN due to typographical mistake etc. Hence, we request you to give onetime opportunity to rectify the genuine & unintentional mistakes. It will help all the taxpayers to comply with the GST law and also help free flow of ITC.

We are sure that you will agree with the above points raised for the simplification of GST and do the needful in the matter.

With Thanks & Regard,

Adv. Jitendra Sharma

CA Sanjay Kumawat

CC to :

1) Hon’ble Shri. Narendra Modi, The Prime Minister of India

152, South Block, Raisina Hills, New Delhi 110 011

2) Hon’ble Shri Pankaj Choudhary, Union Minister of State Finance

North Block, New Delhi 110 001

3) Hon’ble Shri Bhagwat Karad, Union Minister of State Finance

North Block, New Delhi 110 001

4) Hon’ble GST Council Secretariat

5th Floor, Tower II, Jeevan Bharati Building, Janpath Road, Connaught Place, New Delhi 110 001

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One Comment

  1. C. Radhakrishnan says:

    A timely appeal!! But the request on behalf of MSME shall be with waiver of late fee, interest, along with above and one time relaxation is too little the Govt can relax rules for compliance for MSME

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