GST Officers directed to be careful while sending Service Tax Notices

Various trade bodies and associations have complained about the indiscriminate issuance of demand notices by field formations based on ITR-TDS data received from the Income Tax Department.

In this regard, the undersigned is directed to inform that CBIC, via instructions dated 01.04.2021 and 23.04.2021 issued under F.No.137/472020-ST, has directed field formations that while analysing ITR-TDS data received from Income Tax, a reconciliation statement must be sought from the taxpayer for the difference and whether the service income earned by them for the corresponding period is attributable to any of the negative list services specified in Section 66D.

It was also stated that demand notices should not be issued arbitrarily based on the difference between the ITR-TDS taxable value and the taxable value in Service Tax Returns.

It is reiterated that the Board’s instructions to issue show cause notices based on differences in ITR-TDS data and service tax returns only after proper verification of facts should be followed diligently. The Pr. Chief Commissioner/Chief Commissioner (s) may devise a suitable mechanism to monitor and prevent the indiscriminate issuance of show cause notices. Needless to say, in all such cases where notices have already been issued, adjudicating authorities are expected to issue a judicious order after a thorough examination of the facts and the noticee’s submission.

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