The scrutiny of Goods and Services Tax (GST) returns for the financial year 2017-2018 has raised concerns among taxpayers. The issuance of notices under Section 73(1) of the CGST Act, 2017, and the subsequent proceedings have not always followed a smooth and fair process. This article delves into the challenges faced by taxpayers and the recent instructions issued by the Delhi GST department to address these issues.
Challenges Faced by Taxpayers:
1. Lapsed Due Dates and Haphazard Notices: The due date for issuing notices under Section 73(1) of the CGST Act, 2017 for the financial year 2017-2018 has passed, and the current financial year is nearing its end. Despite this, taxpayers have observed that the proper officer has been issuing Show Cause Notices (SCNs) without strong grounds and facts. These SCNs have been issued in a haphazard manner, often without a clear reason to believe, leaving taxpayers in a state of confusion. In some instances, the allegations in the SCNs lack a proper ground and basis, making it extremely challenging for taxpayers to understand the issues at hand. This has, in turn, made it difficult for them to prepare and submit responses to the SCNs and attend personal hearings.
2. Timelines and Personal Hearings: Section 73(8) of the CGST Act, 2017 provides taxpayers with a 30-day window to file a reply or representation in response to SCNs. Furthermore, Section 75(4) of the same Act mandates a personal hearing (PH) to be granted before passing any adverse order. However, in various cases, proper officers have scheduled personal hearings even before the expiry of the 30-day response period. This practice renders personal hearings ineffective and places an additional burden on taxpayers.
3. Repetitive Notices: Taxpayers have also been troubled by the issuance of SCNs for discrepancies that have already been addressed through previous notices in FORM GST ASMT-10, with proceedings concluded via information in Form GST ASMT-12. This repetitive issuance of SCNs not only adds to the taxpayer’s compliance burden but also raises questions about the necessity of revisiting issues that have been previously resolved.
4. Audit and Adjudication: In certain instances where audit proceedings have been completed, SCNs continue to be issued based on the same points that were earlier decided or dropped under Section 61 of the CGST Act. This raises concerns about the appropriateness of re-adjudicating issues that have already been settled through earlier processes.
Delhi GST Department’s Instructions:
In response to the challenges and difficulties faced by genuine taxpayers, the Delhi GST department has issued a set of instructions and clarifications. These instructions are designed to streamline the GST return scrutiny process and ensure that SCNs are issued following the legal provisions and relevant guidelines. The key points of these instructions are as follows:
1. Withdrawal of SCNs: In cases where SCNs have been issued even after the completion of audit proceedings, the instructions state that these SCNs need to be withdrawn after following the necessary course of action as per the audit report.
2. Partial Withdrawal of SCNs: For cases where SCNs have been issued after the completion of scrutiny of return proceedings, the instructions suggest that SCNs should be withdrawn concerning the subject matter or issues that have already been covered in previous proceedings, following due verifications and recording of reasons.
3. ITC Reversal Verification: In cases related to Input Tax Credit (ITC) reversal, proper officers are instructed to make a due verification of the input used for making taxable/non-taxable supplies or input used for non-business or personal purposes or making exempt supply.
4. Blocked Credit Cases: For cases where SCNs have been issued based on Harmonized System of Nomenclature (HSN) or Service Accounting Code (SAC) codes, or for transactions made with canceled taxpayers, proper officers are directed to examine relevant facts along with supporting records and make decisions on a case-to-case basis, in accordance with the law.
5. Personal Hearings: The instructions emphasize that personal hearings should be provided after the taxpayer has filed a reply/representation or after the expiry of the 30-day period, as the case may be. Moreover, before passing any adverse order, a personal hearing must be granted to the taxpayer in accordance with Section 75(4) of the CGST Act.
6. Documentation of Proceedings: Proper officers are also instructed to duly record and document the proceedings of personal hearings, ensuring transparency and accountability.
7. Efficient Resolution: In cases where it becomes evident to the proper officer that the notice is required to be withdrawn, the officer, after recording reasons, may drop the proceedings without requiring a written submission or personal hearing. This approach allows for a swifter resolution of matters when necessary.
8. Taxpayer Communication: The instructions stress the importance of informing taxpayers promptly about the withdrawal of proceedings when applicable. This transparent and efficient communication is essential to ensure a fair and efficient process.
The challenges faced by genuine taxpayers during the scrutiny of GST returns for FY 2017-18 are being addressed through recent instructions from the Delhi GST department. These instructions aim to streamline the process, ensuring that SCNs are issued following legal provisions and relevant guidelines. The ultimate goal is to prevent harassment and ensure the collection of due taxes without causing undue burden to taxpayers. It is expected that these instructions will lead to a fair and more efficient GST return scrutiny process.